Exhibit (m)(8)
Services Agreement dated as of April 1, 2002 between Fidelity Brokerage
Services LLC, National Financial Services LLC, One Group Mutual Funds and One
Group Dealer Services, Inc.
SERVICES AGREEMENT
This Agreement is made as of the 1st day of April, 2002 between: (1) the
Fidelity Brokerage Services LLC ("FBS") and National Financial Services LLC
("NFS") (together "Fidelity"), and (2) One Group Mutual Funds (the "Trust") and
One Group Dealer Services, Inc.
RECITALS
A. Fund/Agent is either (i) an open-end investment company with one or more
series or classes of shares (each such series or class of shares a "Fund"), (ii)
an investment adviser to or administrator for the Funds, (iii) the principal
underwriter or distributor for the Funds, or (iv) the transfer agent for the
Funds.
B. Fund/Agent wishes to have Fidelity provide to Fund/Agent or on its behalf
certain administrative services with respect to beneficial owners of shares
("Shareholder(s)") of such Funds which Fidelity makes available to Shareholders
through securities brokerage accounts carried by NFS on behalf of FBS or
Correspondents of NFS ("Correspondents").
C. Fidelity agrees to provide such services on the terms and conditions set
forth herein.
AGREEMENT
THEREFORE, in consideration of the mutual promises set forth herein, the parties
agree as follows:
1. Shareholder Services
A. Shareholder Account Set-Up and Maintenance - Fidelity shall maintain and
------------------------------------------
provide to FBS and Correspondents adequate facilities and procedures to: (1)
establish and maintain Fund investments on behalf of Shareholders within a
consolidated brokerage account(s) on the Fidelity transaction processing and
recordkeeping system, and (2) access Shareholders' current Fund information
including, but not limited to, share balances, dividend information and
transaction history.
B. Shareholder Assistance - Fidelity shall make available to FBS and
----------------------
Correspondents any information maintained by Fidelity as may be necessary for
Correspondents to support and resolve Shareholder servicing inquiries. Fidelity
personnel will assist FBS in the investigation of Shareholder inquiries when
necessary. FBS will support Shareholder service inquiries from Shareholders who
maintain brokerage accounts with FBS.
C. Transaction Processing and Settlement - The Fidelity transaction processing
-------------------------------------
system shall enable Shareholders to purchase, redeem and exchange shares of
Funds available through Fidelity. NFS shall facilitate settlement with each Fund
of Shareholder transactions in such Fund insofar as such transactions are
transmitted to NFS by FBS or Correspondents on behalf of Shareholders.
Fund/Agent agrees that it shall either: (1) make arrangements for all
transactions processed pursuant to this Agreement to be processed through the
National Securities Clearing Corporation Fund/SERV system, or (2) obtain proper
authority for NFS to transmit to the Fund or its Agent daily manual trades until
5:00 p.m. Eastern Time, or such other times as set forth on Exhibit B, which
trades shall remain eligible for that day's public offering price provided
Fidelity received the order by the close of trading that day.
1
D. Shareholder Account Statement Preparation and Distribution - With respect to
----------------------------------------------------------
each Shareholder holding Fund investments through Fidelity, Fidelity shall
deliver or cause to be delivered to such Shareholder monthly statements when
there has been activity in such Shareholder's brokerage account during such
month, or quarterly statements during periods when there has been no monthly
account activity. Statements will include transaction detail for the statement
period for each Fund in which shares were purchased, redeemed or exchanged, and
a summary of the number of Fund shares owned and share value thereof as of the
statement date to the extent such value is provided by the Fund.
E. Confirmation Preparation and Distribution - Fidelity shall generate a
-----------------------------------------
written confirmation for each purchase, redemption and exchange transaction
affecting each Shareholder's Fund investments held through Fidelity to the
extent such confirmation is required, and such confirmation shall be distributed
to Shareholders through or on behalf of FBS or Correspondents.
F. Payment of Fund Distributions - NFS shall distribute to Shareholders all
-----------------------------
dividend, capital gain or other payments authorized by the Fund and distributed
to and received by NFS, and such distributions shall be credited to Shareholders
in accordance with the instructions provided by each Shareholder, including but
not limited to dividend reinvestment into the Fund, or cash payments of
distributions.
G. Prospectus Fulfillment - Subsequent to any Shareholder's acquisition of
----------------------
shares of a Fund by purchase or exchange, Fidelity shall provide to such
Shareholder a confirming prospectus for such Fund to the extent such prospectus
is required with respect to such acquisition and is provided by the Fund to
Fidelity or its designee.
The Trust acknowledges and agrees that Fidelity is not responsible for (i) the
compliance of any prospectus or supplement thereto, annual report, proxy
statement or item of advertising or marketing material of or relating to any
Fund, with any applicable laws, rules or regulations, (ii) the registration or
qualification of any shares of any Fund under any federal or applicable state
laws or (iii) the compliance by any Fund or Fund/Agent or any "affiliated
person" (as that term is defined in the rules under the Investment Company Act
of 1940, as amended), with any applicable federal or state law, rule, or
regulation or the rules and regulations of any self-regulatory organization with
jurisdiction over such Fund, Fund/Agent or affiliated person.
Fidelity will not make any offer or sale of fund shares (a) in any state or
jurisdiction in which such shares are not qualified for sale or exempt from the
requirements of the relevant securities laws at any time after it has been
provided with written notice from the Trust that such fund is not so qualified
or exempt in such state or jurisdiction, (b) in any state or jurisdiction in
which it is not properly licensed or authorized to make offers or sales, or (c)
at any time after it has been provided with written notice from the Trust that
such fund is not then currently offering shares to the public.
H. Account Level Tax Reporting - NFS shall provide to Shareholders through FBS
---------------------------
or Correspondents such reports and information as may be required by the
then-prevailing laws and regulations under the Internal Revenue Code for
non-retirement accounts and qualified and non-qualified retirement plan
accounts.
II. Representations and Warranties
A. The Trust and the One Group Dealer Services, Inc represents and warrants
that:
(1) it has the requisite authority to enter into this agreement on its own
behalf and on behalf of the Fund(s), and
2
(2) that the payment to NFS of any fees pursuant hereto:
(a) has been duly authorized by the Fund(s), the Board of Trustees
of the Fund(s), or any other persons to the extent such
authorization is required to properly make such payment;
(b) is properly disclosed in the relevant Fund prospectus to the
extent such disclosure may be required, and
(c) is in conformity with all federal, state and industry laws or
regulations to which the Fund or its agents are subject.
B. FBS and NFS each represent and warrant that:
(1) it is a corporation duly organized under the laws of the Commonwealth of
Massachusetts and is duly registered and/or qualified as a broker/dealer with
the SEC, NASD and in every state or territory of the United States of America
(including the District of Columbia) where such registration or qualification is
required and has the requisite authority to enter into this Agreement and to
carry out the services contemplated herein;
(2) the execution and delivery of this Agreement and the performance of the
services contemplated herein have been duly authorized by all necessary
corporate action in its part, and this Agreement constitutes the valid and
binding obligations of FBS and NFS; and
(3) it is in material conformity with all federal, state and industry laws or
regulations to which it is subject.
C. Each party hereto represents and warrants that it shall provide to the others
such information or documentation necessary for such party to fulfill its
obligations hereunder, such other information or documentation as any party may
reasonably request, and that it shall comply with such operating policies and
procedures as the parties may adopt from time to time.
III. Fees
A. Start Up Fee (not applicable-existing fund family on the system)
The Trust or the One Group Dealer Services, Inc shall pay to NFS a one-time
start up fee ("Start Up Fee") for Fidelity's initial set up and preparation to
support a new group or family of Funds. The amount of the Start Up Fee is set
forth on Exhibit A and shall be due and payable to NFS the earlier of 30 days
from the execution of this Agreement or the availability of any such Fund to
Fidelity customers. The identity and description of each Fund which is subject
to this Agreement shall be set forth on Exhibit B, as amended from time to time.
B. CUSIP Fee
The Trust or the One Group Dealer Services, Inc shall pay to NFS a fee ("CUSIP
Fee") to add any Fund to Fidelity's computer system in order to make such Fund
available to Fidelity's customers. The amount of the CUSIP Fee is set forth on
Exhibit A, and shall be due and payable to NFS upon the earlier of the addition
of the Fund to Exhibit B, or the availability of such Fund to Fidelity's
customers.
C. Asset Based Fee
For the services provided by Fidelity hereunder, The Trust or the One Group
Dealer Services, Inc shall pay to NFS a fee with respect to each Fund, which fee
shall be based upon a percentage per annum of the
3
daily value of the aggregate number of shares of the Fund held by NFS for the
accounts of customers of FBS and Correspondents. Such fee shall be calculated
and paid in accordance with Exhibit A hereto.
D. Maintenance Fee
The Trust or the One Group Dealer Services, Inc shall pay to NFS an annual
maintenance fee ("Maintenance Fee") with respect to certain Funds as set forth
on Exhibit A.
In the event the parties agree to material changes to the scope of services
provided hereunder, the parties agree to negotiate in good faith as to the
appropriate amendment to the fees due NFS.
IV. Indemnification
The Trust or One Group Dealer Services, Inc shall indemnify and hold harmless
Fidelity and each officer, employee and agent of Fidelity from and against any
and all claims, demands, actions, losses, damages, liabilities, or costs,
charges, counsel fees, and expenses of any nature ("Losses") arising out of (i)
any inaccuracy or omission in any prospectus or supplement thereto, registration
statement, annual report or proxy statement, of any Fund or Fund/Agent or any
advertising or promotional material generated by any Fund or Fund/Agent, (ii)
any breach by Fund/Agent of any representation, warranty, covenant, or agreement
contained in this Agreement and (iii ) any action taken or omitted to be taken
by Fidelity pursuant to this Agreement, except to the extent such Losses result
from Fidelity's breach of this Agreement, willful misconduct, or gross
negligence.
Fidelity shall indemnify and hold harmless Fund/Agent and each director,
officer, employee and agent of Fund/Agent from and against any and all claims,
demands, actions, losses, damages, liabilities, or costs, charges, counsel fees,
and expenses of any nature ("Losses") arising out of (i) Fidelity's
dissemination of information regarding Fund/Agent or any Fund that contains any
inaccuracy or omission unless such information was provided or approved by
Fund/Agent or any Fund, (ii) any breach by Fidelity of any representation,
warranty, covenant, or agreement contained in this Agreement and (iii ) any
Losses resulting from Fidelity's willful misconduct or negligence.
V. Confidentiality
Each party acknowledges and understands that any and all technical, trade
secret, or business information, including, without limitation, financial
information, business or marketing strategies or plans, product development or
customer information, which is disclosed to the other or is otherwise obtained
by the other, its affiliates, agent or representatives during the term of this
Agreement (the "Proprietary Information") is confidential and proprietary,
constitutes trade secrets of the owner, and is of great value and importance to
the success of the owner's business. Each party agrees to use its best efforts
(the same being not less than that employed to protect his own proprietary
information) to safeguard the Proprietary Information and to prevent the
unauthorized, negligent or inadvertent use or disclosure thereof. Neither party
shall, without the prior written approval of any officer of the other, directly
or indirectly, disclose the Proprietary Information to any person or business
entity except for a limited number of employees, attorneys, accountants and
other advisors of the other on a need-to-know basis or as may be required by law
or regulation. Each party shall promptly notify the other in writing of any
unauthorized, negligent or inadvertent use or disclosure of Proprietary
Information. Each party shall be liable under this Agreement to the other for
any use or disclosure in violation of this Agreement by its employees,
attorneys, accountants, or other advisors or agents. This Section V shall
continue in full force and effect notwithstanding the termination of this
Agreement.
VI. Duration and Termination of Agreement
4
With respect to any Fund, this Agreement shall become effective upon
the date such Fund is identified on Exhibit B, and this Agreement is approved by
the Fund or its Board of Trustees if such approval is required, and shall
continue in force for one year, and shall thereafter continue automatically for
successive annual periods unless earlier terminated and subject to any periodic
approval required by the Fund or its Board of Trustees. This Agreement is
terminable as to any Fund by any party upon 90 days written notice thereof to
the other parties or upon default hereof provided that such default shall not
terminate this Agreement to the extent the defaulting party has been notified of
such default by the non-defaulting party and the defaulting party cures such
default within 10 business days of notice of such default.
After the date of termination as to any Fund, no fee will be due with respect to
any shares of such Fund that are first placed or purchased in FBS or
Correspondents customer accounts after the date of such termination. However,
notwithstanding any such termination, Fund/Agent will remain obligated to pay
NFS the fee as to each share of such Fund that was considered in the calculation
of the fee as of the date of such termination, for so long as such share is held
in the FBS or Correspondents account. This Agreement, or any provision hereof,
shall survive termination to the extent necessary for each party to perform its
obligations with respect to shares for which a fee continues to be due
subsequent to such termination.
Notwithstanding anything to the contrary contained in this section VI, this
Agreement will terminate automatically with respect to One Group Dealer
Services, Inc. in the event that One Group Dealer Services, Inc. ceases to serve
as principal underwriter or distributor for the Funds pursuant to a termination
of its Distribution Agreement with the Fund; or, with respect to the Trust in
the event that the Funds' plan of distribution, adopted pursuant to Rule 12b-1
under the 1940 Act, or any other plan for the financing of shareholder servicing
activities (the `Plan') which finances such payment obligation is terminated for
whatever reason by the Funds' Board of Directors. In that connection the Trust's
and One Group Dealer Services, Inc.'s payment obligations with respect to fees
will cease as of the effective date of (i) the termination of One Group Dealer
Services, Inc.'s Distribution Agreement Fund or (ii) the termination of the
plan, as the case may be. This paragraph does not relieve the Trust or One Group
Dealer Services, Inc. of the obligation for payment of past fees due under this
agreement. In the event such payment obligation shall cease in accordance with
clause (i) above, Fidelity may seek to receive such payments from any successor
distributor that is appointed by the Funds. In the event such payment obligation
shall cease in accordance with Clause (ii) above, the Trust and Fidelity agree
to negotiate in good faith with respect to whether and to what extent the trust
will continue to make such payments either from a related party's resources or
in reliance upon financing that is provided by a successor plan.
VII. Miscellaneous
A. Custody - Fund/Agent acknowledges that Fund shares maintained by the Fund
-------
for Shareholders hereunder are held in custody for the exclusive benefit of
customers of NFS and shall be held free of any right, charge, security interest,
lien or claim against NFS in favor of the Trust or its agents acting on behalf
of the Trust.
B. Transaction Charges - During the term of this Agreement, FBS shall not
-------------------
assess against or collect from its brokerage customers any transaction fee upon
the purchase or redemption of any Fund's shares that are considered in
calculating the fee due pursuant to Section III hereof. The parties acknowledge
and agree that FBS reserves the right to collect such transaction fees from
certain customers (including "Short-Term Traders," as FBS may define that term)
for certain special trading services and from other customers upon such other
customers' redemption of certain shares.
C. Use of Fidelity Investments Name - The Trust will not, nor will the Trust
--------------------------------
cause or permit any Fund to, describe or refer to the name "Fidelity
Investments" or any derivation thereof, or to FMR Corp. or any
5
thereof, or to the services or relationship contemplated by this Agreement in
any advertisement or promotional materials or activities without the prior
written consent of an authorized officer of Fidelity.
D. Nonexclusivity - The Trust acknowledges that Fidelity may perform services
--------------
similar to those to be provided under this Agreement to other investment
companies, investment company sponsors, or service providers to investment
companies.
E. Force Majeure - Neither Fidelity nor its affiliates shall be liable to
-------------
Fund/Agent or any Fund for any damage, claim or other loss whatsoever caused by
circumstances or events beyond its reasonable control.
6
F. Notices - All notices and communications required or permitted by this
-------
Agreement shall be in writing and delivered personally or sent by first class
mail unless otherwise agreed. All such notices and other communications shall be
made:
if to Fidelity, to: Fidelity Investments
00 Xxxxxxxxxx Xxxxxx, X0X
Xxxxxx, XX 00000
Attn: Xxxxx Xxxxxxxx
if to Fund/Agent, to:
Xxxxxx X. Xxxxx
0000 Xxxxxxx Xxxxxxx
Xxxxx0-X/X/X XXx-0000
Xxxxxxxx, XX 00000
G. This Agreement and any Exhibits hereto may be amended only upon the
written agreement of the parties.
H. This Agreement shall inure to the parties' successors (whether by merger,
consolidation or otherwise) and may not be transferred or assigned by either the
Trust, the One Group Dealer Services, Inc or Fidelity, provided however, that
either party may assign the Agreement to an affiliate without the consent of the
other party. This Agreement shall be construed in accordance with the laws of
the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
One Group Mutual Fund Fidelity Brokerage Services LLC
/s/ Xxxxxx X. Xxxxx /s/ Xxxxx Xxxxx
-------------------------------------- -------------------------------------
(By) (By)
Xxxxxx X. Xxxxx Xxxxx Xxxxx
-------------------------------------- -------------------------------------
(Name) (Name)
Treasurer VP Fundsnetwork
-------------------------------------- -------------------------------------
(Title) (Title)
One Group Mutual Funds
--------------------------------------
(Fund or Company)
One Group Dealer Services, Inc National Financial Services LLC
(By) /s/ Xxxx X. Xxxxxx /s/ Xxxx X. Xxxxxxx
--------------------------------- -------------------------------------
(By)
(Name) Xxxx X. Xxxxxx Xxxx X. Xxxxxxx
------------------------------ -------------------------------------
(Title) President & CEO Vice President
------------------------------ -------------------------------------
(Title)
7
EXHIBIT A
FEE SCHEDULE
1. Start Up Fee = $15,000 (does not apply-existing fund family)
2. CUSIP Addition Fee = $1,000/cusip
3. Asset Based Fee
(a). For the services provided by Fidelity hereunder, the Trust or One Group
Dealer Services, Inc shall pay to NFS a fee with respect to each Fund,
calculated daily and paid monthly in arrears, equal to .35 percent per annum of
the daily market value of the total number of shares of such Fund held in
accounts at NFS (determined by multiplying the number of such shares times the
publicly-reported net asset value of each share), excluding the value of (i)
shares held in a brokerage account prior to the effective date of the Agreement
as to the Fund issuing such shares ("Pre-Participating Assets"), and (ii) shares
first placed or purchased in a brokerage account after the termination of the
Agreement as to the Fund/Agent issuing such shares. The total number of shares
of all Funds with respect to which a fee will be due to Fidelity hereunder shall
be referred to in this Exhibit A as "Participating Assets".
(b). Subsequent to each month-end, NFS shall send to One Group Dealer Services,
Inc a statement of the market value of shares of the Fund for which the fee is
calculated for the preceding month, together with a statement of the amount of
such fee. In the calculation of such fee, NFS records shall govern unless
Fund/Agent can demonstrate that the number of shares or Fund price(s) used in
such calculation is inaccurate.
(c). The Trust or One Group Dealer Services, Inc shall pay to NFS such fee
within 30 days after Fund/Agent's receipt of such statement. Such payment shall
be by wire transfer or other form acceptable to INIFS and shall be separate from
payments related to redemption proceeds and distributions.
4. Maintenance Fees:
(a). For each Fund which participates in the NSCC Fund/SERV networking level 3
------------
system Fund/Agent shall pay to NFS an annual fee of $3.00 for each separate Fund
position held in any Fidelity customer account which fee shall be payable
quarterly in arrears at a rate of $.75 per Fund position.
or
(b). Each Fund which does not participate in the NSCC Fund/SERV networking level
--------------------
3 system will be subject to a per Fund annual fee based on December brokerage
month-end assets in accordance with the following schedule:
8
Fund Assets Annual Fee
----------- ----------
less than $2.5 million $4,500.00
$2.5 million - $5.0 million $3,000.00
greater than $5.0 million -0-
The annual Maintenance Fee for a Fund not participating in the NSCC
Fund/SERV networking level 3 shall be waived if such Fund has been included on
Exhibit A and subject to the terms of this Agreement for less than 12 months
prior to the fee calculation date. NFS will not charge Fund/Agent an annual
Maintenance Fee for any Fund not participating in the NSCC Fund/SERV networking
level 3 if the average assets per Fund exceeds $5 million (as measured by
dividing the total market value of all Fund shares subject to this Agreement as
of December month-end by the total number of Funds subject to this Agreement).
9
EXHIBIT B
FUNDS PARTICIPATING IN SERVICES AGREEMENT
Fund Name CUSIP Trading Symbol
--------- ----- --------------
One Group Balanced CL A 681937470 OGASX
One Group Xxxx XX A 00000X000 PGBOX
One Group Xxxx XX I 00000X000 WOBDX
One Group Diversified Equity CL A 681939815 PAVGX
One Group Diversified Intl CL A 00000X000 PGIEX
One Group Diversified Mid Cap CL A 00000X000 PECAX
One Group Equity Income CL A 681937785 OIEIX
One Group Equity Index CL A 681937827 OGEAX
One Group Government Xxxx XX A 681937330 OGGAX
One Group High Yield Xxxx XX A 00000X000 OHYAX
One Group Income Xxxx XX A 681937652 ONIAX
One Group Interm Tax Free Xxxx XX A 681937587 ONTAX
One Group Intermediate Xxxx XX A 681937264 OGBAX
One Group Intl Equity Index CL A 681937561 OEIAX
One Group Investor Balanced CL A 681939575 OGIAX
One Group Investor Conserv Gro CL A 681939641 OICAX
One Group Investor Growth & Income CL A 681939617 ONGIX
One Group Investor Growth CL A 681939674 ONGAX
One Group Large-Cap Growth CL A 681937249 OLGAX
One Group Large-Cap Growth CL 1 681937256 SEEGX
One Group Large-Cap Value CL A 681937876 OLVAX
One Group Large-Cap Value CL 1 681937884 HLQVX
One Group Market Expan Indx CL A 00000X000 OMEAX
One Group Mid-Cap Growth CL A 681937728 OSGIX
One Group Mid-Cap Growth CL 1 681937736 HLGEX
One Group Mid-Cap Value CL A 681937751 OGDIX
One Group Mid-Cap Value CL 1 681937769 HLDEX
One Group Municipal Bond AZ CL A 681939740 OAMAX
One Group Municipal Bond KY CL A 681937371 OKYAX
One Group Municipal Bond LA CL A 681939773 PGLAX
One Group Municipal Bond MI CL A 00000X000 PEIAX
One Group Municipal Bond OH CL A 681937843 ONOHX
One Group Municipal Bond WV CL A 681939716 OGWAX
One Group Municipal Income CL A 681937421 OTBAX
One Group Short Term Muni Xxxx XX A 00000X000 OSTAX
One Group Short-Term Xxxx XX A 681937629 OGLVX
One Group Small-Cap Growth CL A 681939849 PGSGX
One Group Small-Cap Value CL A 00000X000 PSOAX
One Group Small-Cap Value CL I 00000X000 PSOPX
One Group Tax-Free Xxxx XX A 00000X000 PMBAX
One Group Treasury & Agency CL A 681939526 OTABX
One Group Ultra Short-Term Xxxx XX A 681937314 ONUAX
Fidelity Services Agreement(m)(8).doc
10
