Exhibit (h)(85)
Agreement dated as of October 16, 2002 between One Group Mutual Funds, One Group
Administrative Services, Inc and the New York Mercantile Exchange.
AGREEMENT
THIS AGREEMENT is made and entered into as of October 16, 2002 by and
between One Group Mutual Funds, a business trust organized and existing under
the laws of the State of Massachusetts, having its principal office at 0000
Xxxxxxx Xxxxxxx, Xxxxxxxx, Xxxx 00000-0000 ("One Group"), One Group
Administrative Services, Inc., a corporation organized and existing under the
laws of the State of Delaware, having its principal office at 0000 Xxxxxxx
Xxxxxxx, Xxxxxxxx, Xxxx 00000-0000 ("OGA"), (collectively, One Group and OGA are
referred to herein as the "Fund"), and the New York Mercantile Exchange, Inc., a
Delaware corporation having its principal place of business at Xxx Xxxxx Xxx
Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 ("NYMEX").
RECITALS
A. NYMEX acts as a clearing organization for certain futures
contracts and options on futures contracts traded on exchanges designated by the
Commodity Futures Trading Commission pursuant to the Commodity Exchange Act as
contract markets.
B. The rules of NYMEX provide that its clearing members may
substitute such shares of money market mutual funds ("Money Fund Shares" or
"Shares") for other assets on deposit as margin, and NYMEX desires to have the
Fund perform certain services with respect to such Money Fund Shares, as set
forth in this Agreement.
AGREEMENT
The Fund agrees to act for NYMEX with respect to Shares deposited with
it by or for NYMEX as margin, and to take such actions with respect to the
Shares, and any dividends payable with respect thereto and the proceeds of any
redemptions thereof, as directed by NYMEX, either herein, or by notice as
provided for herein, subject to the following terms and conditions:
1. The terms and conditions contained in this Agreement shall apply
to all Shares, all dividends declared and paid with respect to such Shares
including additional Money Fund Shares purchased with such dividends, and all
proceeds of any redemptions of such Shares, which may be deposited in any of the
accounts referred to below. The Fund will not provide supervision,
recommendations or advice to NYMEX with respect to the investment, purchase,
sale, retention or other disposition of the Shares held under this Agreement.
2. The Fund shall establish and maintain, at no cost to NYMEX, such
accounts on the books and records of the Money Market Fund as NYMEX shall
direct, which accounts shall be identified on the records of the Money Market
Fund as NYMEX margin accounts, together with such additional information as
NYMEX shall specify (the "Accounts"). Each such Account shall have as many
sub-accounts as NYMEX shall direct, which shall be identified on the records of
the Fund as NYMEX shall specify. The record of each sub-account shall contain a
description (including CUSIP number) of, and the aggregate net asset value and
share quantity of, the Money Fund Shares deposited therein.
3. (a) The Fund shall cause (i) all dividends declared on Shares in
the Accounts to be paid to or for the account of the clearing member identified
for such sub-account
and (ii) all proceeds from redemptions under 3(b) hereof, to be transferred as
instructed by NYMEX.
(b) The Fund shall redeem Shares on any given Business Day upon
receipt of written authenticated instructions from NYMEX by 4:00 p.m. Eastern
time on that Business Day and pay any proceeds received in accordance with
subparagraph 3(a).
(c) Shares that are deposited in the Accounts shall be held in
the sub-accounts thereof subject to the exclusive control of NYMEX. The Fund
shall transfer, deposit, distribute or otherwise dispose of Shares held in any
sub-account in accordance with written authenticated instructions from NYMEX,
and shall comply with such instructions notwithstanding any pending proceeding
under the Federal Bankruptcy Code with respect to the clearing member identified
for such sub-account, except only to the extent that there is an effective
written order issued otherwise than at the request of the Fund by a court of
competent jurisdiction, which order is legally binding on the Fund in its
capacity under this Agreement and specifically orders the Fund not to transfer
or otherwise dispose of Shares or funds held in a Account or sub-account
thereof. The Fund agrees that it will not take any action to cause the issuance
of an order described in the preceding sentence. No Shares or proceeds from the
redemption thereof shall be released from the Accounts except upon written
authenticated instructions from NYMEX or as provided in subparagraph 3(a).
(d) If the Fund, in accepting Shares for deposit in an Account,
makes any error in recording the deposit of such Shares on its books, or, in
making the credits or transfers required with respect to dividends and proceeds
from Shares in accordance with paragraph 3(a), credits or transfers an incorrect
amount to any account, or credits or transfers an incorrect account, or fails to
make a required credit or transfer, then (i) if the Fund detects its error on
the same Business Day, it shall correct such error forthwith and if it has
delivered to NYMEX or a clearing member any notice, statement or report
("Report") that reflects such error, it shall promptly deliver to the parties
receiving such Report a correction thereto, or (ii) if the Fund fails to detect
its error in time to correct it on the same Business Day, it shall advise NYMEX
before taking corrective action. If the error resulted in an overpayment in any
Account and the correction would result in a negative balance in such account,
NYMEX, upon notice from the Fund, shall promptly return sufficient funds to the
Account to permit correction of the error, regardless of any claim that NYMEX
may have against a particular clearing member.
(e) the Fund shall execute on behalf of NYMEX such certificates
as may be required to obtain payment with respect to, or to effect the sale,
transfer or other disposition of, any Shares. Notwithstanding the foregoing,
NYMEX acknowledges that certificates for Money Fund Shares are not issued and
nothing in the preceding sentence shall be construed so as to obligate the Fund
to begin issuing Certificates of beneficial interest or other certificates
evidencing Share ownership.
4. (a) The Fund is authorized to accept and rely on all written
instructions reasonably believed by the Fund to be genuine, which are or appear
to have been executed and authenticated by NYMEX with respect to the Shares, or
the dividends declared thereon and/or proceeds from the redemption thereof,
whether given by hand delivery, U.S. mail, courier, messenger, or facsimile
transmission (the "Written Instructions"). Written Instructions provided by hand
delivery, U.S. mail, courier or messenger must be provided to the address
specified in Section 11 hereof. Written Instructions provided by facsimile must
be addressed to Manager, Fund Operations at (000) 000-0000.
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(b) NYMEX assumes responsibility for any loss, claim or expense
the Fund incurs in following the Instructions except in the event of the Fund's
failure to act in accordance with the reasonable commercial standards of the
money market mutual fund business. The Fund shall not be liable for delays or
failure to carry out such Instructions due to circumstances beyond the Fund's
control. Notice of all claims against the Fund for failure to properly carry out
such Instructions must be given to the Fund within 45 days from the date on
which such Instructions are executed.
(c) The Fund undertakes to perform such duties and only such
duties as are specifically set forth in this Agreement, it being expressly
understood that there are no implied duties hereunder. The Fund shall not be
liable to NYMEX, directly or indirectly, for any damages or expenses arising out
of the services provided hereunder other than damages which result from the
Fund's failure to act in accordance with the reasonable commercial standards of
the money market mutual fund business; and the Fund shall not be liable for
special or consequential damages (whether or not foreseen). The Fund has no duty
to make investment decisions or to pay dividends on Shares except such dividends
on Shares as is received by the Fund.
(i) NYMEX agrees to indemnify the Fund, its officers and employees
and hold them harmless for and from all claims, losses, liabilities
and expenses, including, without limitation, reasonable legal fees and
expenses and amounts paid or payable in settlement of any action
proceeding or investigation, arising from any claim of any person or
entity resulting from actions the Fund takes in accordance with
provisions of this Agreement (including, without limitation, the
disposition of Shares at the direction of NYMEX), except claims,
losses, liabilities or expenses arising from the Fund's failure to act
in accordance with the reasonable commercial standards of the money
market mutual fund business. The Fund may elect to be represented by
its in-house legal department with respect to any matter to which the
indemnification set forth in this paragraph is applicable, in which
case "reasonable legal fees and expenses" shall not exceed the fully
allocated cost to the Fund for the services of its legal department in
connection with the matter.
(ii) Within five Business Days after an indemnified party receives
notice of the commencement of any action, that indemnified party
shall, if it intends to make a claim against NYMEX under this
paragraph 4(d), notify NYMEX of its commencement and provide it with a
copy of the summons and complaint. NYMEX shall be entitled to assume
the defense of such action with counsel of its choice, reasonably
acceptable to the Fund; provided, however, that if NYMEX is a party to
the action, the indemnified party may retain the defense if advised by
counsel that there are legal defenses available to the indemnified
party which are different from or additional to those available to
NYMEX.
(iii) If NYMEX assumes the defense of any action pursuant to the
foregoing sentence, the following additional provisions shall apply:
(A) NYMEX shall provide the Fund, upon its reasonable request, with
copies of all documents received by it or its counsel with respect to
the
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indemnified matter promptly upon receipt thereof and with copies of
all documents proposed to be delivered by it or its counsel with
respect to the indemnified matter, and shall use its best efforts to
provide such documents sufficiently in advance of any deadline for
delivery of such documents to allow the Fund to review and comment
thereon prior to such deadline and prior to actual delivery; (B) NYMEX
shall consult with the Fund in good faith as to the conduct of such
defense and shall give due regard to any comments or suggestions made
by the Fund; and (C) in the event the Fund disagrees with NYMEX about
the conduct of the defense, the Fund may assume such defense, and upon
such assumption by the Fund, NYMEX shall be released from its
obligation to indemnify the Fund with respect to such action.
(iv) NYMEX shall not be required to indemnify or reimburse any
indemnified party for any amount paid or payable by such indemnified
party in the settlement of any action, proceeding or investigation
unless NYMEX gives its written consent to such settlement, which
consent shall not be unreasonably withheld.
5. (a) The Fund shall be responsible for the protection of the
records it prepares in connection with its duties with respect to the Shares,
the Accounts and the sub-accounts hereunder, excepting only loss or destruction
caused by an act of God, the public enemy, any government, governmental agency
or military body, by any riot or civil commotion or by any other cause or
condition beyond the control of the Fund.
(b) The Fund will maintain records of deposits to each
subaccount of each Account so as to enable the individual deposits to be
identified with specificity.
(c) The Fund will not accept for deposit to any subaccount of a
Account hereunder any Shares of which the Fund has actual knowledge are not free
and clear of all liens, security interests, charges, encumbrances and rights of
third parties of whatever kind or nature, except only the rights of NYMEX.
Notwithstanding the foregoing, the Fund shall have no obligation to make any
independent investigation as to, or to search for, the existence of any third
party rights referred to in the preceding sentence.
(d) The Fund shall not assert any lien on or security interest
in, or exercise any right of set-off against, any Shares in its custody
hereunder.
6. The Fund acknowledges and agrees that:
(a) The Shares deposited into any Account hereunder, and any
proceeds thereof, are held for the account of NYMEX as margin.
(b) The Shares deposited in any Account that NYMEX has
identified to the Fund as being subject to CFTC segregation requirements are
required to be segregated in accordance with the provisions of the Commodity
Exchange Act and the regulations promulgated thereunder, and the Fund shall have
executed an acknowledgment as required therein, substantially in the form
attached as Exhibit A.
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(c) The Fund's records with respect to the Accounts and the
Shares may be examined, during regular business hours on any Business Day, by
NYMEX or its agents or representatives, and by authorized representatives of the
Commodity Futures Trading Commission, upon reasonable prior written notice by
NYMEX to the Fund.
(d) The Shares deposited in any Account hereunder are maintained
exclusively for the benefit of NYMEX and do not constitute general assets of the
Fund.
(e) (i) The Fund shall treat NYMEX as entitled to exercise the
rights that comprise the Shares credited to the Accounts; (ii) the Shares
credited to the Accounts shall be deemed to be "financial assets" (as defined in
Section 8-102(a)(9) of the Uniform Commercial Code ("UCC")); and (iii) the Fund
shall identify NYMEX in the Fund's records as the "entitlement holder" (as
defined in Section 8-102(a)(8) of the UCC) with respect to the Shares credited
to the Accounts.
7. The Fund and NYMEX shall observe the procedures identified in
Exhibit B to this Agreement with respect to the Accounts on each Business Day.
8. No later than 12:00 noon on the first Business Day of each week,
the Fund shall deliver to NYMEX a current list, by subaccount, of the Shares
held in each Account, showing as to each sub-account (i) the CUSIP number, (ii)
the net asset value and Share quantity and (iii) a description.
9. NYMEX is authorized to, and the Fund acknowledges that NYMEX may,
rely on the confirmations, notices and reports given by the Fund pursuant to
this Agreement.
10. Any delay or failure of either party hereto at any time to
require performance by the other party of any provision of this Agreement shall
in no way affect the right of such party to require future performance of that
or any other provision of this Agreement and shall not be construed as a waiver
of any subsequent breach of any provision, a waiver of this provision itself or
a waiver of any other right under this Agreement.
11. (a) Except as provided in subparagraph 4(a) or any other
provision of this Agreement setting forth the means by which certain notices,
instructions or other communications are required or permitted to be given, any
written notice, instruction or other communication required or permitted under
this Agreement shall be given by hand delivery, United States mail, or facsimile
and shall be deemed delivered upon delivery by hand to, or on the second day
(disregarding Saturdays, Sundays and holidays) after deposit in the United
States mail, postage prepaid, return receipt requested, addressed to, the
following address or, in the instance of facsimiles, upon receipt of a
confirmation that the facsimile has been transmitted to the facsimile number
listed below:
If to the Fund:
One Group Administrative Services, Inc.
Suite J/K/L
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxx Xxxxxxxx
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With a copy to:
One Group Administrative Services, Inc.
Suite J/K/L
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000-0000
Attention: Xxxxxx X. Xxxxx
If to NYMEX:
New York Mercantile Exchange, Inc.
Xxx Xxxxx Xxx Xxxxxx
World Financial Center
New York, New York 10282-1101
Attention: Senior Vice President and General Counsel
Facsimile: (000) 000-0000
or such other address or facsimile number as the party to be so addressed may
hereafter designate by written notice to the other.
(b) The term "authenticated" as used herein, means verified by
use of a pre-authorized signature or facsimile signature on a writing, or by the
use of one or more other means as from time to time agreed to in writing between
NYMEX and the Fund to be proof of the authorization of such communication by the
sender.
(c) The term "Business Day" means (i) any day on which both
NYMEX and the Fund are open for business on a calendar day and (ii) such other
days and times as may be agreed upon from time to time in writing by NYMEX and
the Fund.
12. If any of the provisions of this Agreement are invalid under any
applicable statute or rule of law, they are, to that extent, to be deemed
omitted.
13. This Agreement, and all amendments and supplements hereto, if
any, constitute the entire agreement between the parties relating to the subject
matter hereof and supersede all proposals and agreements, oral or written, and
all other communications, oral or written, between the parties relating to the
subject matter hereof, and may not be modified except in a writing signed by the
party against whom the modification is to be enforced.
14. This Agreement may be terminated at any time by the mutual
agreement of the parties. Additionally, either party may terminate this
Agreement upon sixty (60) days prior written notice delivered to the other party
as provided for herein.
15. In all matters set forth in this Agreement controlled by state
law, the internal laws of the State of New York shall govern. In any litigation,
suit, controversy or proceeding (an "Action"), if any, arising out of or
relating to this Agreement, the Fund and NYMEX agree that such Action will be
commenced, litigated and resolved in, and subject to the jurisdiction of, the
courts of the State of New York.
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16. Times specified herein refer to, in the absence of a contrary
specification, Eastern Standard or Eastern Daylight Time as in effect in New
York, New York on the date involved.
IN WITNESS WHEREOF, the parties have executed this Agreement on the
date first above written.
ONE GROUP MUTUAL FUNDS
By /s/ Xxxx X. Xxxxxx
-------------------------------
Name (Typed): Xxxx X. Xxxxxx
--------------------
Title: President
---------------------------
ONE GROUP ADMINISTRATIVE SERVICES, INC.
By /s/ Xxxxxx X. Xxxxx
-------------------------------
Name (Typed): Xxxxxx X. Xxxxx
--------------------
Title: Chief Operating Officer
---------------------------
NEW YORK MERCANTILE EXCHANGE, INC.
By: /s/ Xxxxxx XxXxx
------------------------------
Name (Typed): Xxxxxx XxXxx
--------------------
Title Vice President
----------------------------
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Exhibit A
January __,2001
One Group Mutual Funds
Suite J/K/L
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000-0000
Re: NEW YORK MERCANTILE EXCHANGE, INC. CUSTOMER
SEGREGATED MARGIN ACCOUNT, ACCOUNT NO. _______________
Ladies and Gentlemen:
The New York Mercantile Exchange, Inc. ("NYMEX") has or may have certain sums of
money or securities (hereinafter referred to as "funds") credited to NYMEX's
Customer Segregated Margin Account, Account No. _______________ (the "Account")
established and maintained with you.
You are hereby informed that funds deposited in the Account, and subsequent
additions thereto and accruals therein, represent and include funds belonging to
customers of the clearing members ("Clearing Members") of NYMEX.
Such funds have been transferred to the Account as initial margin by the
customers of Clearing Members, who are trading in commodity futures and option
contracts listed on the NYMEX and its affiliates (collectively the "Exchange"),
which funds are regulated by Section 4d(2) of the Commodity Exchange Act and
Regulations of the Commodity Futures Trading Commission ("CFTC"). Such funds are
held, and are required to be held, in accordance with the provisions of the
Commodity Exchange Act and CFTC Regulations.
Section 4d(2) of the Commodity Exchange Act and CFTC Regulations 1.20(b) and
1.26(b) provide that such commodity customers' funds shall be segregated and
treated as belonging to the Clearing Members' commodity customers, rather than
as belonging to the Exchange or Clearing Members.
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Accordingly, funds held in the Account shall be separately accounted for and
segregated as belonging to the commodity customers of Clearing Members; no
portion of the funds in the Account may be obligated to any person (including
you), except to purchase, margin, guarantee, secure, transfer, adjust or settle
trades, or contracts of commodity customers; and no person (including you) may
hold, dispose of, or use any funds in the Account as belonging to any person
other than commodity customers. Without limiting the generality of the
foregoing, the funds in the Account will not be subject to any lien or offset or
liability which may now or hereafter be owing to you by NYMEX, the Exchange or
any other person other than customers, and such funds shall not be applied by
you upon any such indebtedness or liability.
Please acknowledge the foregoing and your agreement thereto by signing in the
space provided below.
Very truly yours,
NEW YORK MERCANTILE EXCHANGE, INC.
By: _________________________
Its: ________________________
Accepted and Agreed to as of
______________________, 2001
One Group Mutual Funds
By_________________________________
Its:_______________________________
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Exhibit B
1. The Fund will only accept for investment to any sub-account of a Custody
Account shares of a money market mutual fund approved in writing in advance
by NYMEX ("MMF Shares") that are fully and finally paid for and, to the
Fund's actual knowledge, are free and clear of liens, security interests,
charges, encumbrances and rights of third parties.
2. The Fund shall not assert any lien on or security interest in, or exercise
any right of set-off against, any MMMF Shares in its custody.
3. Dividend reinvestments and income accruals related to, and income earned
from, MMMF Shares shall not be credited to NYMEX's Custody Accounts or to a
specific member sub-account. All such income will only be credited to the
account of the clearing member firm, except in the event NYMEX notifies the
Fund that the clearing member firm is in default, in which case the Fund
shall credit all such dividend reinvestments and income accruals related
to, and income earned from, MMMF Shares that accrue after receipt of such
notice form NYMEX to NYMEX's Custody Accounts.
4. Individual clearing member firms shall retain any voting rights associated
with MMMF Shares and the Fund shall send all proxy and similar materials
directly to the clearing members; provided, however, if NYMEX notifies the
Fund that a clearing member firm is in default, then all voting rights
associated with MMMF Shares shall belong to NYMEX and the Fund shall send
all proxy and similar materials directly to NYMEX.
5. Between 9:00 a.m. - 3:45 p.m. each day Eastern time the Fund shall promptly
send written confirmation, via facsimile transmission, of each deposit or
withdrawal activity of MMMF Shares in a NYMEX Custody Account.
6. The Fund shall produce and make available to NYMEX sub-accounted daily
transaction statements or advices indicating all deposits and withdrawals
of MMMF Shares from any Custody Account at 10:30 a.m. Eastern time on the
immediately preceding day.
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