EXHIBIT (e)(2)
ONE GROUP DEALER SERVICES, INC.
FORM OF
MUTUAL FUND SALES AND SERVICE AGREEMENT
SECURITY CAPITAL REAL ESTATE MUTUAL FUNDS
INCORPORATED - SECURITY CAPITAL U.S. REAL ESTATE
SHARES
This Agreement is entered into between the financial institution executing this
Agreement ("Financial Institution") and One Group Dealer Services, Inc.
("OGDS"), with respect to Security Capital U.S. Real Estate Shares, a series of
Security Capital Real Estate Mutual Funds Incorporated (referred to as the
"Fund") for whose shares of beneficial interest ("Shares") OGDS serves as
Distributor and for whom OGDS provides or coordinates shareholder services.
A. Financial Institution.
1. STATUS OF FINANCIAL INSTITUTION AS REGISTERED BROKER-DEALER OR "BANK".
(a) Financial Institution represents and warrants to OGDS:
(i) That it is a broker or dealer as defined in Section
3(a)(4) or 3(a)(5) of the Securities Exchange Act of
1934 ("Exchange Act"); that it is registered with the
Securities and Exchange Commission ("SEC") pursuant to
Section 15 of the Exchange Act; that it is a member of
the National Association of Securities Dealers, Inc.
("NASD") or, in the alternative, that it is a foreign
dealer not eligible for membership in the NASD but
nevertheless agrees to abide by all the rules and
regulations of the SEC and the NASD which are binding
upon underwriters and dealers in the distribution of
securities of open-end investment companies; that its
customers' accounts are insured by the Securities
Investors Protection Corporation ("SIPC"); and that,
during the term of this Agreement, it will abide by all
of the rules and regulations of the NASD including,
without limitation, the NASD Conduct Rules. Financial
Institution agrees to notify OGDS immediately in the
event of (1) the termination of its coverage by the
SIPC; (2) its expulsion or suspension from the NASD, or
(3) its being found to have violated any applicable
federal or state law, rule or regulation arising out of
its activities as a broker-dealer or in connection with
this Agreement, or which may otherwise affect in any
material way its ability to act in accordance with the
terms of this Agreement. Financial Institution's
expulsion from the NASD will automatically terminate
this Agreement immediately without notice. Suspension of
Financial Institution from the NASD for violation of any
applicable federal or state law, rule or regulation will
terminate this Agreement effective immediately upon
OGDS' written notice of termination to Financial
Institution; or
(ii) That it is a "bank," as that term is defined in Section
3(a)(6) of the Exchange Act, that engages in activities
described in Section 3(a)(4) of the Exchange Act and
that, during the term of this Agreement, it will abide
by the rules and regulations of those state and federal
authorities with appropriate jurisdiction over the
Financial
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Institution, especially those regulations dealing with
the activities of the Institution as described under
this Agreement. Financial Institution agrees to notify
OGDS immediately of any action by or communication from
state or federal banking authorities, state securities
authorities, the SEC, or any other party which may
affect its status as a bank or which may otherwise
affect in any material way its ability to act in
accordance with the terms of this Agreement. Any action
or decision of any of the foregoing regulatory
authorities or any court of appropriate jurisdiction
which affects Financial Institution's ability to act in
accordance with the terms of this agreement, including
the loss of its exemption from registration as a broker
or dealer, will terminate this Agreement effective upon
OGDS' written notice of termination to Financial
Institution; and
(b) That Financial Institution is registered with the appropriate
securities authorities in all states, territories and
jurisdictions in which its activities make such registration
necessary.
2. FINANCIAL INSTITUTION ACTS AS AGENT FOR ITS CUSTOMERS.
The parties agree that in each transaction in the Shares and with regard to any
services rendered pursuant to this Agreement:
(a) Financial Institution is acting as agent for the customer;
(b) The customer is for all purposes the customer of Financial
Institution;
(c) Each transaction is initiated solely upon the order of the
customer;
(d) As between Financial Institution and its customer, the customer
will have full beneficial ownership of all Shares;
(e) Each transaction shall be for the account of the customer and
not for Financial Institution's account; and
(f) Each transaction shall be without recourse to Financial
Institution provided that Financial Institution acts in
accordance with the terms of this Agreement.
Financial Institution will offer and sell the Shares only in accordance with the
terms and conditions of the applicable current Prospectus and Statement of
Additional Information ("SAI") and will make no representations not included in
said Prospectus or SAI or in any authorized supplemental material supplied by
OGDS. Financial Institution shall not have any authority in any transaction to
act as agent for OGDS or the Fund.
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B. Sales of Fund Shares.
1. EXECUTION OF ORDERS FOR PURCHASE AND REDEMPTION OF SHARES.
(a) All orders for the purchase of any Shares shall be executed at
the then-current public offering price per share (i.e., the net
asset value per share plus the applicable initial sales load, if
any) and all orders for the redemption of any Shares shall be
executed at the net asset value per share, in each case as
described in the applicable Fund prospectus. Any applicable
redemption fee, or similar charge or fee will be deducted by the
Fund prior to the transmission of the redemption proceeds to
Financial Institution or its customer. OGDS and the Fund reserve
the right to reject any purchase request in their sole
discretion.
The procedures relating to all orders will be subject to the
terms of the prospectus of the Fund and OGDS' written
instructions to Financial Institution from time to time.
Specifically,
(i) orders to purchase and redeem shares received by
Financial Institution or its "Correspondents" (as
defined in Section B.1.(d)) prior to the earlier of the
close of trading on the New York Stock Exchange or the
close of the Fund (generally, 4:00 p.m., Eastern Time
("ET")) ("Market Close") on any day that the Fund is
open for business ("Day 1") will be electronically
transmitted to the Fund by 8:00 a.m., ET on the next day
that the Fund is open for business ("Day 2")(such orders
are referred to as "Day 1 Trades"); and
(ii) orders to purchase and redeem shares received by
Financial Institution or its Correspondents after the
Market Close on Day 1, but prior to the Market Close on
Day 2 ("Day 2 Trades") will be electronically
transmitted to the Fund on the second day that the Fund
is open for business following Day 1.
(iii) If the Financial Institution cannot electronically
transmit Day 1 Trades by 8:00 a.m. on Day 2, Financial
Institution will transmit such orders by facsimile prior
to the beginning of trading on the New York Stock
Exchange (generally 9:30 a.m ET) ("Market Open") on Day
2.
(b) Day 1 Trades will be effected at the NAV calculated as of the
Market Close on Day 1and Day 2 Trades will be effected at the
NAV calculated as of the Market Close on Day 2. The Fund agrees
that, consistent with the foregoing, Day 1 Trades will have been
received by the Fund prior to the Market Close on Day 1 for all
purposes, including, without limitation, effecting
distributions.
(c) Payments for Shares shall be made as specified in the applicable
Fund prospectus, (i.e., by wire directly to State Street Bank
and Trust Company, the Fund's transfer agent). If payment for
any purchase order is not received in accordance with the terms
of the applicable Fund prospectus, OGDS reserves the right,
without notice, to cancel the sale and to hold Financial
Institution responsible for any loss sustained as a result
thereof, including loss of profit.
(d) Financial Institution confirms that it will be considered the
Fund's agent for purposes of Rule 22c-1 under the Investment
Company Act of 1940, as amended (the "Investment Company Act").
Financial Institution may authorize such intermediaries as it
deems appropriate ("Correspondents") to receive orders on the
Fund's behalf for purposes of Rule 22c-1 under the Investment
Company Act. Financial Institution shall be liable to the Fund
for each Correspondent's compliance with this Section B.1.(d) to
the same extent as if Financial
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Institution itself had acted or failed to act instead of the
Correspondent. Financial Institution acknowledges that it has:
(i) adopted and implemented procedures reasonably designed
to prevent orders received after the Market Close on any
day that a Fund is open for business from being
improperly aggregated with orders received prior to the
Market Close; and
(ii) determined that each Correspondent has adopted and
implemented its own internal procedures reasonably
designed to prevent orders received after the Market
Close on any day that a Fund is open for business from
being improperly aggregated with orders received prior
to the Market Close.
C. Distribution and Shareholder Services.
1. AGREEMENT TO PROVIDE DISTRIBUTION AND SHAREHOLDER SERVICES.
(a) With regard to those classes of the Fund which pay a
distribution and service fee charge under a Distribution and
Service Plan adopted pursuant to Rule 12b-1 under the Investment
Company Act, as amended ("Rule 12b-1 Fees"), OGDS hereby
appoints Financial Institution to render or cause to be rendered
distribution and shareholder services to the Fund and its
shareholders.
(b) The services to be provided under sub-section (a) may include,
but are not limited to, the following:
(i) Assisting OGDS in marketing shares of the Fund to
Financial Institution's prospective and existing
customers;
(ii) Aggregating and processing purchase and redemption
requests for Shares from customers and placing net
purchase and redemption orders with the Fund or its
transfer agent;
(iii) Providing periodic information to customers about their
holdings in the Fund;
(iv) Arranging for bank wires and federal funds wires to and
from customers' accounts;
(v) Responding to questions about the Fund from customers
and potential customers;
(vi) Processing dividend payments;
(vii) Assisting customers in changing dividend options,
account designations, and addresses;
(viii) Where required by law, forwarding Fund shareholder
communications (such as proxies, shareholder reports,
annual and semi-annual financial statements, and
dividend, distribution and tax notices) to Customers;
(ix) Advertising the availability of the Fund; and
(x) Providing other similar services as OGDS may reasonably
request to the extent permitted under applicable laws or
regulations.
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(c) OGDS may, in its sole discretion, reduce the amount of, or
terminate entirely, Rule 12b-1 Fee payments. In addition, Rule
12b-1 Fees may be reduced or eliminated at any time if the
Distribution and Service Plan under which the fees are paid are
materially amended or terminated either by the Board of Trustees
of the Fund or by vote of a majority of the outstanding Shares.
2. ASSET-BASED SALES LOADS PAYABLE TO FINANCIAL INSTITUTION.
During the term of this Agreement, OGDS will pay Financial Institution Rule
12b-1 Fees for the Fund as set forth in the Fund's current prospectus. For the
payment period in which this Agreement becomes effective or terminates, there
shall be an appropriate pro-ration of the fee on the basis of the number of days
that this Agreement is in effect during the period.
D. Miscellaneous.
1. DELIVERY OF PROSPECTUSES AND REPORTS TO CUSTOMERS.
Financial Institution will deliver or cause to be delivered to each customer, at
or prior to the time of any purchase of Shares, a copy of the current prospectus
of the Fund and, upon request by a customer or shareholder, a copy of the Fund's
current Statement of Additional Information. Financial Institution agrees to
deliver to Shareholder, upon the request of OGDS, copies of amended prospectuses
and to deliver or cause to be delivered to shareholders proxy solicitation
materials and copies of the Fund's annual and semi-annual reports. Financial
Institution shall not make any representations concerning any Shares other than
those contained in the prospectus or Statement of Additional Information of the
Fund or in any promotional materials or sales literature furnished to Financial
Institution by OGDS or the Fund.
2. ERISA ASSETS.
(a) Financial Institution understands that the Department of Labor
views ERISA as prohibiting fiduciaries of discretionary ERISA
assets from receiving administrative service fees or other
compensation from funds in which the fiduciary's discretionary
ERISA assets are invested. To date, the Department of Labor has
not issued any exemptive order or advisory opinion that would
exempt fiduciaries from this interpretation. Without specific
authorization from the Department of Labor, fiduciaries should
carefully avoid investing discretionary assets in any fund
pursuant to an arrangement where the fiduciary is to be
compensated by the fund for such investment. Receipt of such
compensation could violate ERISA provisions against fiduciary
self-dealing and conflict of interest and could subject the
fiduciary to substantial penalties.
(b) Financial Institution will not perform or provide any duties or
services that would cause it to be a fiduciary under Section
4975 of the Internal Revenue Code, as amended. For purposes of
that Section, Financial Institution understands that any person
who exercises any discretionary authority or discretionary
control with respect to any individual retirement account or its
assets, or who renders investment advice for a fee, or has any
authority or responsibility to do so, or has any discretionary
authority or discretionary responsibility in the administration
of such an account, is a fiduciary.
3. BLUE SKY.
(a) Shares have been qualified for sale under, or are exempt from
the requirements of the respective securities laws of all 00
Xxxxxx Xxxxxx and the territory of Puerto Rico. OGDS will
promptly notify Financial Institution in the event Shares cease
to be qualified for sale under, or cease to
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qualify for an exemption from the requirements of the respective
securities laws of the states and jurisdictions listed above.
(b) Financial Institution agrees and certifies that:
(i) It is licensed to offer and sell securities of open-end
investment companies in all jurisdictions in which it
plans to offer and sell such securities;
(ii) It will comply with all applicable state and federal
laws and the rules and regulations of authorized
regulatory agencies; and
(iii) It will not sell or offer for sale Shares of the Fund in
any state or jurisdiction where the Shares have not been
qualified for sale.
4. INDEMNIFICATION.
(a) Financial Institution shall indemnify and hold harmless OGDS,
the Fund, the transfer agent of the Fund, and their respective
subsidiaries, affiliates, officers, directors, agents and
employees from all direct or indirect liabilities, losses or
costs (including attorneys fees) arising from, related to or
otherwise connected with:
(i) any material breach by Financial Institution of any
representations, covenants or warranties of this
Agreement;
(ii) any actions or omissions of OGDS, the Fund, the transfer
agent of the Fund, and their subsidiaries, affiliates,
officers, directors, agents and employees in reliance
upon any oral, written or computer or electronically
transmitted instructions, documents or materials
believed to be genuine and to have been given by or on
behalf of Financial Institution; or
(iii) any willful misconduct or negligence (as measured by
industry standards) of Financial Institution, its agents
and employees, in the performance of, or failure to
perform, its obligations under this Agreement, or any
reckless disregard of its obligations under this
Agreement.
(b) OGDS shall indemnify and hold harmless Financial Institution and
its subsidiaries, affiliates, officers, directors, agents and
employees from and against any and all direct or indirect
liabilities, losses or costs (including attorneys fees) arising
from, related to or otherwise connected with:
(i) any material breach by OGDS of any representations,
covenants or warranties of this Agreement or any
provision of this Agreement;
(ii) any alleged untrue statement of a material fact
contained in the Fund's Registration Statement or
Prospectus, or as a result of or based upon any alleged
omission to state a material fact required to be stated
therein or necessary to make the statements contained
therein not misleading; and
(iii) any willful misconduct or negligence (as measured by
industry standards) of OGDS, its agents and employees,
in the performance of, or failure to perform, its
obligations
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under this Agreement, or any reckless disregard of its
obligations under this Agreement
(c) The agreement of the parties in this Section 4 to indemnify each
other is conditioned upon the party entitled to indemnification
(Indemnified Party) giving notice to the party required to
provide indemnification (Indemnifying Party) promptly after the
summons or other first legal process for any claim as to which
indemnity may be sought is served on the Indemnified Party. Such
notice will be given by a means of prompt delivery that provides
confirmation of receipt to the address provided below in
Paragraph 9. The Indemnified Party shall permit the Indemnifying
Party to assume the defense of any such claim or any litigation
resulting from it, provided that counsel for the Indemnifying
Party who shall conduct the defense of such claim or litigation
shall be approved by the Indemnified Party (which approval shall
not unreasonably be withheld), and that the Indemnified Party
may participate in such defense at its expense. If the
Indemnifying party does not elect to assume the defense, the
Indemnifying Party will reimburse the Indemnified Party for the
reasonable fees and expenses of any counsel retained by it. The
failure of the Indemnified Party to give notice as provided in
this Sub-section (d) shall not relieve the Indemnifying Party
from any liability other than its indemnity obligation under
this Section. No Indemnifying Party, in the defense of any such
claim or litigation, shall, without the written consent of the
Indemnified Party, consent to entry of any judgment or enter
into any settlement that does not include as an unconditional
term the giving by the claimant or plaintiff to the Indemnified
Party of a release from all liability in respect to such claim
or litigation.
(d) The provisions of this Section 4 shall survive the termination
of this Agreement.
5. CUSTOMER NAMES PROPRIETARY TO FINANCIAL INSTITUTION.
(a) All information, including "nonpublic personal information" as
that term in defined in Regulation S-P, relating to customers of
the Fund and Financial Institution are and shall remain the sole
property of the Fund and the Financial Institution and shall not
be disclosed to or used by the Fund, the Financial Institution,
OGDS, or their affiliates for any purpose except in the
performance of their respective duties and responsibilities
under this Agreement and except for servicing and informational
mailings relating to the Fund or as permitted by Rule 15 of
Regulation S-P. Notwithstanding the foregoing, this Section 5
shall not prohibit the Financial Institution, the Fund, OGDS, or
any of their affiliates from utilizing the names of customers of
Financial Institution, the Fund, OGDS, or any of their
affiliates for any purpose if the names are obtained in any
manner other than from Financial Institution pursuant to this
Agreement.
(b) If applicable, Financial Institution will deliver the Fund's
privacy policy as required by Regulation S-P.
(c) Neither party shall use the name of the other party in any
manner without the other party's written consent, except as
required by any applicable federal or state law, rule or
regulation, and except pursuant to any mutually agreed upon
promotional programs.
(d) The provisions of this Section 5 shall survive the termination
of this Agreement.
6. SECURITY AGAINST UNAUTHORIZED USE OF FUND'S RECORDKEEPING SYSTEMS.
Financial Institution agrees to provide such security as is necessary to
prevent any unauthorized use of the Fund's recordkeeping system,
accessed via (a) the world wide web or any URL maintained by the Fund,
(b) a networking/data access arrangement or (c) computer hardware or
software provided to Financial Institution by OGDS.
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7. SOLICITATION OF PROXIES.
Financial Institution agrees not to solicit or cause to be solicited
directly, or indirectly, at any time in the future, any proxies from the
shareholders of the Fund in opposition to proxies solicited by
management of the Fund, unless a court of competent jurisdiction shall
have determined that the conduct of a majority of the Board of Directors
or Trustees of the Fund constitutes willful misfeasance, bad faith,
gross negligence or reckless disregard of their duties. This Section 7
will survive the termination of this Agreement.
8. CERTIFICATION OF CUSTOMERS' TAXPAYER IDENTIFICATION NUMBERS.
Financial Institution agrees to obtain any taxpayer identification
number certification from its customers required under the Internal
Revenue Code of 1986, as amended, and any applicable Treasury
regulations, and to provide OGDS, or its designee with timely written
notice of any failure to obtain such taxpayer identification number
certification in order to enable the implementation of any required
backup withholding.
9. NOTICES.
(a) Except as otherwise specifically provided in this Agreement, all
notices required or permitted to be given pursuant to this
Agreement shall be given in writing and delivered by:
(i) personal delivery;
(ii) postage prepaid, registered or certified United States
first class mail, return receipt requested;
(iii) overnight courier services; or
(iv) facsimile or similar electronic means of delivery (with
a confirming copy by mail as provided herein).
(b) Unless otherwise notified in writing, all notices to OGDS shall
be given or sent to OGDS at its offices located at 0000 Xxxxxxx
Xxxxxxx, Xxxxxxxx, Xxxx, 00000-0000, Attn: President, and all
notices to Financial Institution shall be given or sent to it at
its address shown below.
10. RECORDS.
Financial Institution will maintain all records required to be kept by
state and federal law relating to transactions in Shares and, upon
request by the Fund, will promptly make such records available to the
Fund or its designee.
11. TERMINATION AND AMENDMENT.
(a) This Agreement shall become effective in this form as of the
date executed by OGDS or as of the first date thereafter upon
which Financial Institution executes any transaction, performs
any service, or receives any payment pursuant hereto. This
Agreement supersedes any prior sales, distribution, shareholder
service, or administrative service agreements between the
parties.
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(b) With respect to Rule 12b-1 Fees payable by the Fund, this
Agreement shall continue in effect until April 30, 2005, and
thereafter for successive periods of one year if the form of
this Agreement is approved at least annually by the Board of
Trustees of the Fund, including a majority of the members of the
Board of Trustees of the Fund who are not interested persons of
the Fund and have no direct or indirect financial interest in
the operation of the Fund's Distribution and Service Plan or in
any related documents to such Plan ("Independent Trustees") cast
in person at a meeting called for that purpose.
(c) This Agreement may be amended by OGDS from time to time by the
following procedure. OGDS will mail a copy of the amendment to
Financial Institution's address, as shown below. If Financial
Institution does not object to the amendment within thirty (30)
days after its receipt, the amendment will become part of the
Agreement. Financial Institution's objection must be in writing
and be received by OGDS within such thirty days.
(d) Notwithstanding the foregoing, this Agreement may be terminated
as follows:
(i) At any time, without the payment of any penalty, by the
vote of a majority of the Independent Trustees or by a
vote of a majority of the outstanding voting securities
of the Fund as defined in the Investment Company Act of
1940 on not more than sixty (60) days' written notice to
the parties to this Agreement;
(ii) automatically in the event of the Agreement's assignment
as defined in the Investment Company Act of 1940, upon
the termination of the "Distribution and Servicing
Agreement" between Security Capital Real Estate Mutual
Funds Incorporated and OGDS or upon the termination of
the Distribution and Service Plan; and
(iii) by any party to this Agreement without cause by giving
the other party at least sixty (60) days' written notice
of its intention to terminate.
12. ANTI-MONEY LAUNDERING PROCEDURES.
(a) Financial Institution will comply with all applicable laws and
regulations aimed at preventing, detecting, and reporting money
laundering and suspicious transactions and will take all
necessary and appropriate steps, consistent with applicable
regulations and generally accepted industry practices, to (i)
obtain, verify, and retain information with regard to investor
identification and source of investor funds, and (ii) to
maintain records of all investor transactions. Financial
Institution will (but only to the extent consistent with
applicable law) take all steps necessary and appropriate to
provide the Fund and/or ODGS with any requested information
about investors and accounts in the event that the Fund and/or
ODGS shall request such information due to an inquiry or
investigation by any law enforcement, regulatory, or
administrative authority.
(b) Financial Institution will, to the extent permitted by
applicable law and regulations, notify the Fund and/or OGDS of
any concerns that Financial Institution may have in connection
with any investor in the context of relevant anti-money
laundering legislation/regulations.
13. GOVERNING LAW.
This Agreement shall be construed in accordance with the laws of the State of
Delaware.
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ONE GROUP DEALER SERVICES, INC.
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000-0000
By:
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Name:__________________________________
Title:__________________________________
Date:__________________________________
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Financial Institution Name NASD CRD Number
(Please Print or Type)
Address ________________________________________________________________________
City: _________________________ State _________________ Zip Code _____________
By:
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Authorized Signature
_______________________________________
Title
_______________________________________
Print Name or Type Name
_______________________________________
Dated
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