Exhibit (e)(17)
Mutual Fund Sales and Service Agreement dated as of January 2, 2003 between
Xxxxxx Financial Services LL, One Group Dealer Services, Inc. and
One Group Administrative Services, Inc.
ONE GROUP DEALER SERVICES, INC.
MUTUAL FUND SALES AND SERVICE AGREEMENT
This Agreement is entered into among the financial institution executing this
Agreement ("Financial Institution"), One Group Dealer Services, Inc. ("OGDS")
and One Group Administrative Services, Inc. ("OGA"), with respect to those
series of One Group Mutual Funds ("One Group") listed in Exhibit A hereto (each
series referred to individually as a "Fund" and collectively as the "Funds") 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"); 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; and
(ii) 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 of any Fund 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 of the Funds;
(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 of the Funds 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 One
Group.
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 deferred sales charges (contingent or
otherwise), redemption fee, or similar charge or fee will be deducted
by One Group prior to the transmission of the redemption proceeds to
Financial Institution or its customer. OGDS and One Group 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 each Fund and OGDS' written instructions to
Financial Institution from time to time. Specifically,
(i) orders to purchase and redeem shares received by Financial
Institution prior to the close of trading on the New York Stock
Exchange (generally, 4:00 p.m., Eastern Time ("ET")) ("Market
Close") on any day that a Fund is open for business ("Day 1")
will be electronically transmitted to One Group by 9:30 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 after the Market Close on Day 1, but prior to the
Market Close on Day 2 ("Day 2 Trades") will be electronically
transmitted to One Group on the second day that a Fund is open
for business following Day 1.
(iii) If the Financial Institution cannot electronically transmit Day
1 Trades by 9:30 a.m., ET on Day 2, Financial Institution will
transmit such orders by facsimile within one hour after 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. One Group agrees that, consistent
with the foregoing, Day 1 Trades will have been received by One Group
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, One Group'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, with notice, to cancel the
sale and to hold the transmitting party responsible for any loss
sustained as a result thereof, including loss of profit.
C. Distribution Services.
1. Agreement to Provide Distribution Services.
(a) With regard to those Funds noted on Exhibit A which pay asset-based
sales charges under Distribution and Shareholder Services Plans
adopted pursuant to Rule 12b-1 under The Investment Company Act of
1940, as
amended ("Rule 12b-1 Fees"), OGDS hereby appoints Financial
Institution to render or cause to be rendered distribution and sales
services to the Funds and their 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 Funds 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 Funds or their transfer agent;
(iii) Providing periodic information to customers about their
holdings in the Funds;
(iv) Arranging for bank wires and federal funds wires to and from
customers' accounts;
(v) Responding to questions about the Funds 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 Funds; and
(x) Providing other similar services as OGDS may reasonably
request to the extent permitted under applicable laws or
regulations.
(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 Shareholder
Services Plans under which the fees are paid are materially amended or
terminated either by the Board of Trustees of One Group or by vote of
a majority of the outstanding shares of a Fund.
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 each 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 Funds' 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 a Fund or in
any promotional materials or sales literature furnished to Financial
Institution by OGDS or One Group.
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 of the Funds have been qualified for sale under, or are exempt
from the requirements of the respective securities laws of the states
and jurisdictions listed on Exhibit A. OGDS will promptly notify
Financial Institution in the event shares of the Funds cease to be
qualified for sale under, or cease to qualify for an exemption from
the requirements of the respective securities laws of the states and
jurisdictions listed on Exhibit A to this Agreement.
(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 Funds 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, OGA,
each Fund, the transfer agent of the Funds, 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, OGA, any Fund, the transfer
agent of the Funds, 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 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 any
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 under this Agreement,
or any reckless disregard of its obligations under this
Agreement
(c) OGA 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 any breach by OGA of any provision of this Agreement.
(d) 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.
(e) 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 Funds
and Financial Institution are and shall remain the sole property of
the Funds and the Financial Institution and shall not be disclosed to
or used by the Funds, the Financial Institution, OGDS, OGA, 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 Funds or as
permitted by Rule 15 of Regulation S-P. Notwithstanding the foregoing,
this Section 5 shall not prohibit the Financial Institution, the
Funds, OGDS, OGA, or any of their affiliates from
utilizing the names of customers of Financial Institution, the Funds,
OGDS, OGA, 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 One Group'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 Funds' Recordkeeping Systems.
Financial Institution agrees to proved such security as is necessary to
prevent any unauthorized use of the Funds' recordkeeping system, accessed
via (a) xxx.xxxxxxxx.xxx or any other URL maintained by One Group, (b) a
networking/data access arrangement or (c) computer hardware or software
provided to Financial Institution by OGDS or OGA.
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 any or all of the Funds in opposition to proxies solicited
by management of the Fund or Funds, 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 or Funds 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 or OGA shall
be given or sent to OGDS or OGA at their 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 One Group, will promptly make such records available to One Group.
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.
(b) With respect to Rule 12b-1 Fees payable by each Fund, this Agreement
shall continue in effect for one year from the date of its execution,
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
One Group, including a majority of the members of the Board of
Trustees of One Group who are not interested persons of the Funds and
have no direct or indirect financial interest in the operation of the
Funds' Distribution and Shareholder Services Plans or in any related
documents to such Plans ("Independent Trustees") cast in person at a
meeting called for that purpose.
(c) This Agreement, including Exhibit A hereto, 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 Agreement" between One Group
and OGDS, upon termination of the "Management and Administration
Agreement" between One Group and OGA, or upon the termination of
the applicable Distribution and Shareholder Services Plan(s);
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.
(e) The termination of this Agreement with respect to any one Fund will
not cause the Agreement's termination with respect to any other Fund.
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 One Group and/or ODGS with any requested
information about investors and accounts in the event that One Group
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 One Group 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.
ONE GROUP DEALER SERVICES, INC.
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000-0000
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
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Title: President
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Date: 1/2/03
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ONE GROUP ADMINISTRATIVE SERVICES, INC.
0000 Xxxxxxx Xxxxxxx
Xxxxxxxx, Xxxx 00000-0000
By: /s/ Xxxxxx X. Xxxxx
---------------------------------
Name: Xxxxxx X. Xxxxx
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Title: Chief Operating Officer
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Date: 1/2/03
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Xxxxxx Financial Services LLC
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Financial Institution Name
(Please Print or Type)
Address 100 Half Day Road
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City: Lincolnshire State IL Zip Code 60069
--------------------------------- ---------- -------------
By: /s/ X. X. Xxxxxxxx, III
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Authorized Signature
Secretary
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Title
C. Xxxxxxxx Xxxxxxxx, III
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Print Name or Type Name
November 21, 2002
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Date
Exhibit A
List of Funds
State
FUND Class A* Class I Qualification **
---- -------- ------- ----------------
1. Small Cap Growth X X All
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2. Small Cap Value X X All
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3. Mid Cap Growth X X All
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4. Mid Cap Value X X All
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5. Diversified Mid Cap X X All
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6. Large Cap Growth X X All
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7. Large Cap Value X X All
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8. Equity Income X X All
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9. Diversified Equity X X All
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10. Balanced X X All
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11. Equity Index X X All
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12. Market Expansion Index X X All
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13. International Equity Index X X All
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14. Diversified International X X All
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15. Health Sciences X X All
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16 Ultra Short-Term Bond X X All
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17. Short-Term Bond X X All
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18. Intermediate Bond X X All
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19. Bond X X All
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20. Income Bond X X All
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21. Government Bond X X All
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22. Treasury & Agency X X All
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23. High Yield Bond X X All
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34. Investor Growth X X All
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35. Investor Growth & Income X X All
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36. Investor Balanced X X All
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37. Investor Conservative Growth X X All
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38. Prime Money Market X X All
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39. U.S. Treasury Securities Money Market X X All
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43. U.S. Government Securities Money Market X X All
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44. Institutional Prime Money Market X All
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45. Treasury Only Money Market X All
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46. Government Money Market X All
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47. Technology X X All
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48. Mortgage-Backed Securities X X Note 1
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*Sales load waived.
**All = All 50 states plus Washington, D.C. and Puerto Rico
** State Qualification Note
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Class A Class I
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Note 1 Mortgage-Backed Securities All except DC & PR AK, AL, AR, CA, CO, CT,
DE, FL, GA, GU, HI, ID,
IL, IN, KS, KY, MA, MI,
MN, MS, NC, NE, NJ, NY, NV,
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Class A Class I
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OH, OR, PA, RI, SC,
UT, VA, VI, WI, WY
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