EXHIBIT (H)(20)
AGREEMENT FOR USE OF BROKERAGE COMMISSIONS
This Agreement is made as of January 22, 2002, by and among National
Financial Services LLC ("FCM"), a Delaware limited liability company, on behalf
of its Fidelity Capital Markets division, Xxxxxxxx Xxxxx Funds, Inc. ("TPF"), a
Wisconsin corporation and registered open-end management investment company, on
behalf of its mutual fund series listed on Schedule A ("Funds"), and Xxxxxxxx
Plumb & Associates, Inc. (the "Adviser"), a Wisconsin corporation and federally
registered investment adviser.
WHEREAS, the Adviser is the investment adviser for the Funds and in
that capacity is authorized and directed to manage the Funds' investments,
including the purchase and sale of securities for the Funds;
WHEREAS, TPF and the Adviser desire FCM to provide brokerage services
to the Funds, whereby a portion of the commissions from the Funds' portfolio
transactions would be used to pay a portion of the operating expenses which are
obligations of the Funds, including custodian, transfer agent, legal,
accounting, directors and printing fees and expenses ("Expenses"); and
WHEREAS, FCM desires to provide such brokerage services to the Funds on
the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the mutual promises set forth
herein, FCM and TPF hereby agree as follows:
1. FCM shall open a separate brokerage account ("Account") for
each Fund, through which the Adviser or its agents may place
orders for each Fund's portfolio transactions. FCM shall
maintain a separate record of commissions received from each
Fund for completed transactions designated as subject to this
Agreement. The commissions paid by each Fund from such
portfolio transactions for such Fund shall be payable to FCM
at the rate(s) set forth on Schedule B, and the percentage(s)
set forth on Schedule B of all commissions paid to FCM in
respect of each such Fund shall accumulate in such Fund's
Account (such accumulated amount is referred to as the
"Available Commissions" for such Fund). The Available
Commissions shall be wire transferred by FCM to TPF at the end
of each month (unless TPF or TPA notifies FCM in advance not
to make such transfer or the parties mutually agree on
alternative arrangements), and TPF shall use the Available
Commissions for each Fund to pay a portion of the Expenses of
the Fund that generated such commissions. FCM shall confirm
transactions subject to this Agreement and shall show the full
amount of the commissions agreed to by TPF and FCM for such
transactions. Nothing in this Agreement shall require TPF or
the Adviser to direct the execution of any transaction through
FCM or require FCM to accept any such transaction for
execution.
2. FCM shall provide TPF with a monthly statement setting forth a
current balance of each Fund's Account and Available
Commissions, and for the preceding month, each Fund's
brokerage commissions that were subject to this Agreement.
3. With respect to each Fund, TPF and the Adviser, as applicable,
each represents and warrants as follows:
a. It has the authority to enter into this Agreement on
behalf of each the Funds.
b. It has determined that the disposition or application
of the Available Commissions shall be in accordance
with applicable law, and it shall indemnify FCM
against any claim that the Available Commissions were
not properly applied in accordance therewith.
c. Neither TPF nor the Adviser shall retain any portion
of the Available Commissions, but shall pass all of
them through to the Fund initiating the brokerage
transactions. Neither TPF nor the Adviser shall
benefit in any manner from directed brokerage costs.
d. The Board of Directors of TPF (the "Board"), after
due consideration, has approved the direction of a
portion of the Funds' brokerage transactions,
consistent with best execution, to FCM as being in
the best interests of the Funds, and the Board will
periodically confirm that such direction of brokerage
transactions continues to be in the best interests of
the Funds.
e. No provision of either TPF's or the Adviser's
articles of incorporation, bylaws, registration
statement, and/or other governing documents prohibit
the use of the Funds' brokerage commissions to pay
the Funds' Expenses.
f. It will properly discharge its disclosure and
recordkeeping obligations under the federal
securities laws with respect to the subject matter of
this Agreement.
g. The Adviser is not currently waiving its fees or
reimbursing any expenses of the Funds.
4. The Agreement shall become effective with respect to a Fund
upon TPF's and the Adviser's execution of this Agreement, and
shall continue in force, unless terminated by a party hereto,
upon thirty (30) days written notice to the other party. If
such termination occurs, the amount in each Fund's Account
will be promptly delivered to TPF. TPF may terminate this
agreement immediately upon FCM's breach of the confidentiality
clause in Section 12.
2
5. Neither FCM nor any of its affiliates shall be liable to TPF,
any Fund, the Adviser or any of their agents or affiliates for
any damage, claim or other loss whatsoever caused by
circumstances or events beyond its reasonable control,
including the services rendered or goods provided to the Funds
by any vendor.
6. TPF acknowledges that FCM or its affiliates may perform
services similar to those to be provided under this Agreement
to other investment companies, investment company sponsors,
and/or service providers to investment companies.
7. All notices and communications required or permitted by this
Agreement shall be in writing and delivered personally (by
private messenger, courier service, or otherwise) or sent by
first class mail unless otherwise agreed. All such notices and
other communications shall be effective on the date received
and shall be made:
If to FCM, to: Xx. Xxxxxx Xxxxx
VP/Institutional Sales
Fidelity Capital Markets
000 Xxxxxxxx Xxxxxx, X0X
Xxxxxx, XX 00000
If to TPF, to: Xxxx X. Xxxxxxxx
Vice President
Xxxxxxxx Xxxxx Funds, Inc.
1200 Xxxx X. Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
If to the Adviser, to: Xxxx X. Xxxxxxxx
President
Xxxxxxxx Plumb & Associates, Inc.
1200 Xxxx X. Xxxxxxx Xxxxx
Xxxxxxx, XX 00000
8. This Agreement and any Schedules hereto constitute the
complete agreement among the parties hereto and may be amended
only upon the written agreement of all of the parties. If any
provision of this Agreement is held to be invalid, the
remaining provisions shall continue to be valid and
enforceable.
9. This Agreement may not be transferred or assigned by any party
without the proper written consent of the other parties. This
Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
3
10. Each party represents that, to the best of its knowledge after
due diligence and inquiry, any payment of a Fund's Expenses
through directed brokerage credits pursuant to this Agreement
will not result in a violation by it of any law, rule, or
regulation applicable to it, or in any breach by it of any
fiduciary duty owed by it.
11. This Agreement does not obligate TPF or the Adviser to enter
into a Services Agreement on behalf of any Fund with Fidelity
Brokerage Services LLC or National Financial Services LLC or
to pay any fees ("Fidelity Service Fees") thereunder. If, at
any time TPF or the Adviser were to enter into such Services
Agreement, no Fund will be obligated to pay any portion of the
Fidelity Service Fees using credits from directed brokerage
transactions; the Fidelity Service Fees would accrue at the
same rate whether or not credits from directed brokerage
transactions are used, and the Fidelity Service Fees would
always be paid entirely in cash. Use of credits from directed
brokerage transactions to pay a portion of the Fidelity
Service Fees is not a condition to participation in Fidelity's
fund supermarket program, nor shall such use or lack of such
use affect efforts, if any, Fidelity might make to sell or
distribute the Funds' shares.
12. FCM shall establish and implement procedures to maintain the
confidentiality of trades placed through it on behalf of the
Funds. FCM shall not disclose such trades to any of its
affiliates, the Fidelity Funds, or any other third party, and
shall only disclose such trades to employees of FCM to the
extent necessary to effect the trades and comply with
applicable law.
4
IN WITNESS WHEREOF, the undersigned parties have executed this
Agreement as of the date first written above.
XXXXXXXX PLUMB FUNDS, INC.
By:
------------------------------
Xxxx X. Xxxxxxxx
Vice President
XXXXXXXX PLUMB & ASSOCIATES, INC.
By:
------------------------------
Xxxx X. Xxxxxxxx
President
NATIONAL FINANCIAL SERVICES LLC
By: Fidelity Capital Markets, its division
By:
-----------------------------------
Xxxxxx Xxxxx
Vice President, Institutional Sales
5
SCHEDULE A
Xxxxxxxx Xxxxx Growth Fund
Xxxxxxxx Plumb Balanced Fund
SCHEDULE B
Commission Rates:
$.05 per share for domestic equity securities when transactions are
worked by a salestrader at Fidelity Capital Markets.
$.04 per share for domestic equity securities when transactions are
electronically delivered directly to a marketplace for execution.
Percentage of Commissions Available to Pay Fund Expenses
60% of all commissions paid to Fidelity Capital Markets shall be
available to pay fund expenses.
