Exhibit (e)(19)
Mutual Fund Services Agreement
* * *
This Mutual Fund Services Agreement ("Agreement") is entered into by and
among Prudential Investment Management Services LLC ("PIMS"), Prudential
Investments LLC ("PI"), (PIMS and PI collectively referred to as "Service
Provider"), and Fund Affiliate (defined below) on behalf of each of its
registered investment companies (collectively, the "Fund Company") and each of
its series or classes of shares ("Funds").
Whereas, Fund Affiliate is either (i) an investment adviser or
administrator to or transfer agent or other service provider for the Funds
and/or (ii) the principal underwriter or distributor for the Funds;
Whereas, Service Provider makes its wrap fee platform ("Platform")
available to correspondents ("Correspondents") that offer various investment
programs ("Programs"), pursuant to which Program clients ("Clients") purchase
shares of mutual funds included in the Programs at net asset value without the
imposition of initial or contingent deferred sales charges;
Whereas, Fund Affiliate desires that its Funds be included on the Platform
and available for purchase by Clients through the Programs; and
Whereas, Fund Affiliate desires to have Service Provider perform certain
record maintenance, shareholder communications, administrative, and other
related services on behalf of each Fund with respect to beneficial owners of
Fund shares (including certain retirement and employee benefit plans and their
participants), and Service Provider is willing to perform such services on the
terms and conditions set forth herein and in each prospectus and statement of
additional information relating to the Funds.
Now, Therefore, in consideration of the foregoing and the mutual promises
set forth below, the parties agree as follows:
1. The Programs
a. Under the Programs, Clients will be provided with mutual fund investment
choices presented to them by financial professionals associated with
Correspondents that clear through Service Provider or another affiliated or
non-affiliated clearing firm. Clients will select mutual funds from a menu of
funds Correspondents select from a complete list of mutual funds assembled by
Service Provider. Shares of the mutual funds made available by Correspondents in
the Programs will be sold to Clients without the imposition of initial or
contingent deferred sales charges.
b. In addition to information otherwise required to be provided to Service
Provider under this Agreement, Fund Affiliate agrees to provide Service Provider
on a quarterly basis with information relating to Fund performance and portfolio
holdings, a current Fund portfolio commentary and such other information as the
parties may agree to from time to time. In addition to their obligations under
this Agreement to notify Service Provider of Fund developments in the normal
course, Fund Affiliate agrees to notify Service Provider within a reasonable
time frame of any material change in the composition of a Fund's portfolio
management team.
2. Services
During the term of this Agreement, Service Provider shall perform, or cause
to be performed, the
record maintenance, administrative, shareholder communications, and other
related services as set forth on Exhibit A hereto (the "Services"). For Services
rendered, Service Provider shall receive the fee described below.
3. Operating Procedures
Service Provider will open, or cause to be opened, an omnibus account (the
"Account") with each Fund through which Service Provider or a designee will,
among other things, purchase and redeem shares, settle transactions, reconcile
transactions, obtain pricing, reinvest distributions, and maintain related
records in accordance with the Operating Procedures set forth in Exhibit B
hereto.
4. Fees
a. Fund Affiliate and/or Fund Company agrees to pay a fee ("Fee") to
Service Provider that shall be calculated and paid in accordance with Exhibit C
attached hereto. Fund Affiliate and/or Fund Company acknowledges that Fund
Affiliate and/or Fund Company will pay such Fee to Service Provider to
compensate Service Provider and its affiliates for rendering Services.
b. Fund Affiliate and/or Fund Company will pay fees to Service Provider out
of its own resources. Service Provider will provide such information to Fund
Affiliate as may be necessary for Fund Affiliate and/or Fund Company to comply
with its obligations to make disclosures to the board(s) of directors or
trustees of the Funds.
5. Fund Qualification Requirements
a. Fund shares may be purchased through the Programs in all states or other
U.S. jurisdictions unless Fund Affiliate advises Service Provider in writing
that such Fund shares are not qualified for sale under applicable law. Fund
Affiliate shall advise Service Provider immediately in writing if any such
qualification is terminated or if it wishes that purchase orders not be placed
for a Fund on behalf of Clients whose account addresses are in a particular
state or other jurisdiction.
b. Service Provider will, upon request, (i) furnish Fund Affiliate with
monthly written statements of the number of shares of each Fund purchased on
behalf of Clients whose account addresses are in one or more qualified states or
other jurisdictions indicated by Fund Affiliate or (ii) on a daily basis,
transmit to an electronic database provider with whom Service Provider has
established effective systems interfaces information regarding the number of
shares of each Fund purchased on behalf of Clients whose account addresses are
in each qualified state for retrieval by the Fund Affiliate. The Fund Affiliate
shall be responsible for all reasonable fees and other reasonable charges of
such database provider in connection with the transmission of such information
by Service Provider to and the Fund Affiliates retrieval of such information
from such database provider.
c. Fund Affiliate agrees to provide Service Provider prior to the effective
date of this Agreement, or as soon thereafter as practicable, with two (2)
copies of the then-current prospectus and statement of additional information of
each Fund. Fund Affiliate also agrees to provide Service Provider with written
copies of any amendments, supplements, or stickers to or changes in or
reprinting or reproductions of the Fund's prospectus or statement of additional
information immediately upon their effective date.
d. Fund Affiliate agrees that any rescission offer that is made to
shareholders who own shares directly with a Fund will also be made to Clients
who would be entitled to such rescission offer if they owned shares directly
with the Fund. Fund Affiliate will provide Service Provider with a letter on
Fund Affiliate letterhead containing the terms of any such rescission offer, and
Service Provider may send, or have sent, this writing or any derivation thereof,
to the affected Clients. To assist Fund Affiliate in effecting any such
rescission offer, Service Provider agrees to provide Fund Affiliate with
relevant information regarding any affected Client, including the account
number, the number of shares purchased
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and redeemed, if any, the dates of the purchase(s) and redemption(s), if any,
and the dollar amount of such transactions.
6. Compliance Responsibilities
a. Fund Affiliate is responsible for (i) the compliance of each prospectus,
registration statement, annual or other periodic report, proxy statement and
item of advertising or marketing material of or relating to each Fund with all
applicable laws, rules and regulations (except for advertising or marketing
materials prepared by Service Provider to the extent any information therein is
not provided to Service Provider by Fund Affiliate or any Affiliate (defined
below) thereof or accurately derived from information published or provided by
them), (ii) the distribution and tabulation of proxies in accordance with all
applicable laws, rules and regulations (except for such proxy related services
provided by Service Provider or its mailing agent), (iii) the registration or
qualification of the shares of each Fund under all applicable laws, rules and
regulations, and (iv) the compliance by Fund Affiliate and each "affiliated
person" of Fund Affiliate as that term is defined in the Investment Company Act
of 1940, as amended (the "1940 Act"), herein referred to as "Affiliate," with
all applicable laws, rules and regulations (including the 1940 Act and the
Investment Advisers Act of 1940, as amended ("Advisors Act")), and the rules and
regulations of each self-regulatory organization with jurisdiction over Fund
Company or Affiliate. Fund Affiliate's responsibilities under this subsection
include, but are not limited to, compliance of information published,
distributed, or otherwise made available, and activities conducted through the
Internet and any other electronic medium
b. Service Provider is responsible for Service Provider's compliance with
all applicable laws, rules and regulations governing Service Provider's
performance under this Agreement.
c. Except as set forth in this Agreement or as otherwise agreed upon in
writing by the parties, any communication or instruction made pursuant to this
Agreement may be made orally, provided that such oral communication is promptly
confirmed in writing by facsimile or electronic transmission. Service Provider
is entitled to rely on any communications or instructions that it reasonably
believes were provided to it by Fund Affiliate, any Affiliate or their agents
authorized to provide such communications or instructions to Service Provider,
and on communications or instructions provided to it by Clients. Fund Affiliate
is entitled to rely on any communications or instructions it reasonably believes
were provided to it by Service Provider, or its agents authorized to provide
such communications or instructions to Fund Affiliate.
7. Representations and Warranties
a. Fund Affiliate represents and warrants to Service Provider that:
(i) it has the requisite authority to enter into this Agreement on its
own behalf and on behalf of the Fund Company and the Funds.
(ii) the payment to Service Provider of any fees pursuant hereto (1) has
been duly authorized by the Fund(s), the Board of Directors/Trustees of the
Fund(s), or any other persons to the extent such authorization is required to
properly make such payment, (2) is properly disclosed in the relevant Fund
prospectus to the extent such disclosure may be required, and (3) is in material
conformity with all federal, state and industry laws or regulations to which the
Fund or its agents are subject; and
(iii) it and Fund Company and any relevant Affiliates are in compliance
with the conditions and qualifications set forth in Rule 2830 of the Conduct
Rules of the National Association of Securities
3
Dealers, Inc. ("NASD"), as amended from time to time ("Rule 2830"), which enable
a member of the NASD to offer or sell shares of the Fund Company;
(iv) each Fund is a "no sales charge," "load waived," or "no-load" Fund as
defined in Rule 2830;
(v) if a Fund has a distribution or shareholder servicing plan maintained
or adopted pursuant to Rule 12b-1 under the 1940 Act ("Rule 12b-1 Plan"), such
Fund's Rule 12b-1 Plan does not pay fees in excess of 25 basis points per annum;
(vi) either the Fund, Fund Company, Fund Affiliate, or its agent is a Fund
Member of the National Securities Clearing Corporation ("NSCC") and has access
to the NSCC's Fund/Serv system ("Fund/Serv") and the NSCC's Networking system
("Networking"); and
b. PIMS represents and warrants that:
(i) it is a member in good standing of the NASD;
(ii) it or a relevant designee is an NSCC Member and has access to
Fund/Serv and Networking; and
(iii) it is authorized to execute this Agreement.
c. PI represents and warrants that:
(i) it is registered as an investment adviser under the Advisers Act; and
(ii) it is authorized to execute this Agreement.
d. If the foregoing representations and warranties made by the Fund
Affiliate and Service Provider become no longer accurate, the affected party
will promptly notify the other parties, as appropriate, thereof in writing.
8. Use of Parties' Names
a. Without Service Provider's prior written consent, which shall not be
unreasonably withheld, Fund Affiliate will not cause or permit the use,
description, or reference to Service Provider, or to the relationship
contemplated by this Agreement, in any advertisement, sales literature, or other
promotional materials or activities, including, without limitation, any
advertisement or promotional materials published, distributed, or made
available, or any activity conducted through, the Internet or any other
electronic medium.
b. Service Provider shall not make any representations regarding Fund
Company or Fund Affiliate without the prior written consent of Fund Affiliate,
which shall not be unreasonably withheld, except as follows:
(i) Service Provider may refer to any Fund as part of a list of mutual
funds available through any Program; and
(ii) Service Provider may disclose any fact or make any reference to any
information concerning any Fund that is contained in and accurately derived from
the Fund's current prospectus or statement of additional information, or
advertising, sales literature, or other promotional materials generated or
approved by Fund Affiliate. Fund Affiliate may, in its reasonable discretion,
request that Service Provider modify any reference to any Fund in subsequent
advertisements or sales literature.
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9. Proprietary Information
Each party hereto acknowledges that the identities of the other party's
customers (including, with respect to Service Provider, for purposes of this
section, Clients), information maintained by such other party regarding those
customers ("Customer Information"), and all computer programs and procedures
developed by such other party or such other party's Affiliates or agents in
connection with such other party's performance of its duties hereunder
constitute the valuable property of such other party. Each party agrees that
should it come into possession of any Customer Information, or any other
property of such party, pursuant to this Agreement or any other agreement
related to services under this Agreement, the party who acquired such
information or property shall use its best efforts to hold such information in
confidence and refrain from using, disclosing, or distributing any of such
information or other property, except (i) as required or necessary to carry out
the obligations imposed by this Agreement, (ii) with the other party's prior
written consent, or (iii) as required by law or judicial process. Each party
agrees to comply, at a minimum, with all applicable privacy laws, including
those promulgated pursuant to Title V of the Gramm Xxxxx Xxxxxx Act of 1999.
Each party agrees to maintain physical, electronic and procedural safeguards
designed to protect the security, confidentiality, and integrity of, and to
prevent unauthorized access to or use of, Customer Information. Each party
acknowledges that any breach of the foregoing agreements as to the other party
would result in immediate and irreparable harm to such other party for which
there would be no adequate remedy at law and agrees that in the event of such a
breach such other party will be entitled to equitable relief by way of temporary
and permanent injunctions, as well as such other relief as any court of
competent jurisdiction shall deem appropriate. Notwithstanding the foregoing,
this paragraph shall not prohibit either party from utilizing for any purpose
the names, addresses or other information concerning the other party's
customers, for any purpose whatsoever, if such names, addresses or other
information are obtained in any lawful manner other than from such other party
pursuant to this Agreement.
10. Indemnification
a. Service Provider shall indemnify and hold harmless Fund Affiliate,
Funds, and their directors, officers, employees and agents (Indemnified Parties)
from and against any and all losses, claims, liabilities and expenses (including
reasonable attorney's fees) ("Losses") incurred by any of them arising out of
(i) Service Provider's dissemination of information regarding Fund Affiliates or
a Fund that is materially incorrect and that was not provided to Service
Provider, or approved, by Fund Affiliate, its Affiliates, or agents, (ii)
Service Provider's willful misconduct or gross negligence in the performance of,
or failure to perform, its obligations under this Agreement, except to the
extent such Losses result from the negligence, willful misconduct or breach of
this Agreement by an Indemnified Party, or (iii) any breach by Service Provider
of any representation, warranty or agreement contained in this Agreement.
b. Fund Affiliate shall indemnify and hold harmless Service Provider and
each director, officer, employee and agent of Service Provider and each
Affiliate of Service Provider from and against any and all losses, claims,
liabilities and expenses (including reasonable attorney's fees) ("Losses")
incurred by any of them arising out of (i) any inaccuracy or omission in any
prospectus, registration statement, annual or other periodic report or proxy
statement of the Fund or any advertising, marketing, shareholder communication,
or promotional material generated, provided, or approved by Fund Affiliate, (ii)
any violation of any law, rule or regulation relating to the registration or
qualification of shares of the Fund, (iii) any breach by Fund Affiliate of any
representation, warranty or agreement contained in this Agreement or (iv) the
willful misconduct or gross negligence by Fund Affiliate in the performance of,
or failure to perform, its obligations under this Agreement, except to the
extent such Losses result from the negligence, willful misconduct or breach of
this Agreement by Service Provider.
c. Except to the extent otherwise expressly provided in this Agreement, no
party assumes any
5
responsibility hereunder, or will be liable to the other, for any damage, loss
of data, delay or any other loss whatsoever caused by events beyond its
reasonable control.
d. In any event, no party shall be liable for any special, consequential or
incidental damages.
e. This section shall survive the termination of this Agreement.
11. Role and Relationship of Service Provider
(a) The parties acknowledge and agree that the Services under this
Agreement are record maintenance, shareholder communication, and related
administrative services only and are not the services of an underwriter,
principal underwriter, sub-distributor, or dealer of any Fund within the meaning
of the Securities Act of 1933, as amended, or the 1940 Act. This Agreement does
not grant Service Provider or a Correspondent any right to purchase shares of
any Fund (although it does not preclude Service Provider or a Correspondent from
purchasing any such shares), nor does it constitute Service Provider or a
Correspondent an agent of Fund Affiliate or any Fund for purposes of selling
shares of any Fund to any dealer or the public, except as expressly stated in
this Agreement as to the receipt of Orders. To the extent Service Provider or a
Correspondent is involved directly or indirectly in the purchase of shares of
any Fund under this Agreement, such involvement will be as agent of Clients
only. The parties further acknowledge and agree that Service Provider is not:
(1) a "Sponsor" of a Program, as that term is defined under Rule 204-3(f) under
the Advisers Act, or (2) responsible for Correspondents' compliance with
applicable securities, privacy, anti-money laundering, and other laws, rules,
and regulations relating to advising, soliciting, selling, and transacting in
Funds through the Programs.
(b) Service Provider agrees to provide Fund Affiliate with the name and CRD
number of any new Correspondent no less than 10 business days prior to allowing
such new Correspondent to place orders for Fund shares. If Fund Affiliate
determines that there is not an appropriate agreement in force with
Correspondent (Non-Complying Correspondent), Fund Affiliate will inform Service
Provider that no trades can be accepted from the Non-Complying Correspondent
until an appropriate agreement is in full force and effect, at which time Fund
Affiliate will notify Service Provider that trades may be accepted. Service
Provider agrees not to accept trades from a Non-Complying Correspondent until so
notified by Fund Affiliate.
12. Information to be Provided
a. At present and at all times during the term of this Agreement, all
information supplemental to the Prospectuses and Statements of Additional
Information provided to Service Provider for distribution to Clients, including
but not limited to sales literature, advertisements and inter-dealer sales
materials, will be prepared in accordance with all applicable federal and state
securities laws and regulations. The Registration Statement (including the
Prospectuses and Statement of Additional Information) and any sales materials
relating to the Funds provided to Service Provider for distribution to Clients
shall not contain any untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances in which they were made, not misleading.
Fund Affiliate hereby agrees to forward copies of all marketing materials that
it prepares with respect to its Funds that participate in the Programs to
Service Provider (which includes inter-dealer materials (for internal use or
broker use only) as well as sales, marketing and promotional materials intended
for public distribution).
b. Service Provider agrees that it and its employees or agents are not
authorized to make any representation concerning shares of any Fund, except
those contained in or accurately derived from the then current Prospectus or
other materials provided to Service Provider by Fund Affiliate relating to such
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Fund.
13. Notices and Other Communications
All notices and other communications required by this Agreement shall be in
writing and delivered personally, sent by first class mail, or delivered by a
nationally recognized courier service. Such notices will be deemed to have been
received (1) in the case of first class mail, as of the earlier of actual
physical receipt or three (3) days after deposit, first class postage prepaid,
in the United States mail or (2) in the case of delivery via a recognized
courier service, as of the earlier of actual physical receipt or three (3) days
after delivery to such service. All such notices shall be made:
(a) if to PIMS or PI (Service Provider):
Legal Counsel President
Prudential Investments LLC Prudential Investments LLC
Prudential Investment Management Prudential Investment Management
Services LLC Services LLC
Gateway Center Three, 4/th/ Floor C/o Investment Management Services
Xxxxxx, XX 00000 Gateway Center Three, 00/xx/ Xxxxx
Xxxxxx, XX 00000
(b) if to Fund Affiliate or Fund Company:
One Group Dealer Services, Inc.
Attention: Chief Operating Officer
(post office delivery)
X.X. Xxx 000000 Xxxxxxxx, XX
00000-0000
(courier delivery)
0000 Xxxxxxx Xxxxxxx, Mail Stop OH1-1235
Xxxxxxxx, XX 00000
14. Non-exclusivity
Each party acknowledges that the other may enter into agreements similar to
this Agreement with other parties for the performance of services similar to
those to be provided under this Agreement, unless otherwise agreed to in writing
by the parties.
15. Assignability
This Agreement is not assignable by any party without the other parties'
prior written consent and any assignment in contravention hereof shall be null
and void. A change in control of either party shall not constitute an assignment
of this Agreement.
16. Exhibits and Schedules
All Exhibits and Schedules attached to this Agreement, as they may be
amended from time to time, are by this reference incorporated into and made a
part of this Agreement.
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17. Entire Agreement; Amendment
This Agreement (including any Exhibits and Schedules hereto) constitutes
the entire agreement between the parties as to the subject matter hereof and
supersedes any and all agreements, representations and warranties, written or
oral, regarding such subject matter made prior to the time at which this
Agreement has been executed and delivered by Service Provider and Fund
Affiliate. This Agreement may be amended only by a writing executed by each
party hereto that is to be bound by such amendment, except that all Exhibits and
Schedules to this Agreement may be amended by Service Provider upon thirty (30)
days' written notice to Fund Affiliate or such earlier time as shall be agreed
to by the parties. If Fund Affiliate does not object to the amendment within
thirty (30) days after its receipt, the amendment will become part of the
Agreement.
18. Governing Law
This Agreement will be governed by and interpreted under the laws of the
State of New York as applied to contracts entered into and to be performed
entirely within the state.
19. Arbitration
If a dispute arises between Service Provider and Fund Affiliate with
respect to this Agreement that the parties are unable to resolve themselves, it
shall be settled by arbitration in accordance with the then-existing NASD Code
of Arbitration Procedures (NASD Code), except if the NASD is unwilling to accept
jurisdiction of the matter, such arbitration will be held in accordance with the
rules and regulations of the American Arbitration Association ("AAA"). The
parties agree that to the extent permitted by the NASD Code and AAA's rules and
regulations, the arbitrator(s) shall be selected from the securities industry.
20. Effectiveness of Agreement; Termination
a. This Agreement will become effective as to a Fund as of the later of (i)
the date set forth below or (ii) such later date as Service Provider may, in its
discretion, designate.
b. This Agreement may be terminated as to a Fund by any party (i) upon
sixty (60) days' written notice to the other party or (ii) upon such shorter
notice as is required by law, order, or instruction by a court of competent
jurisdiction or a regulatory body or self-regulatory organization with
jurisdiction over the terminating party.
c. Upon the termination date for any Fund, Service Provider will no longer
make the Fund shares available for purchase by Clients through the Programs.
Service Provider reserves the right to transfer the Fund shares of the Clients
out of the Account.
d. Notwithstanding any termination, Fund Affiliate will remain obligated to
pay Service Provider the Fee as to each share of the Fund that was considered in
the calculation of the Fee as of the date of termination, and as to each share
of the Fund that results from reinvesting the dividends or capital gains
distributed on such shares (each a "Pre-Termination Share"), for so long as such
Pre-Termination Share is held through the Programs, and Service Provider
continues to perform substantially all of the Services as to such
Pre-Termination Share. Further, for so long as Service Provider continues to
perform the Services as to any Pre-Termination Shares, this Agreement will
otherwise remain in full force and effect as to such Pre-Termination Shares.
e. In the event a Fund merges or is subject to some other form of business
reorganization such
8
that shareholders of the Fund receive shares of an entity not covered by this
Agreement (each share a "Reorganized Share"), each such Reorganized Share shall
be deemed to be a Pre-Termination Share, and Fund Affiliate shall remain
obligated to pay Service Provider the Fee as to each Reorganized Share for so
long as such Reorganized Share is held in the Account, unless such Reorganized
Share is subject to a services agreement with Service Provider other than
pursuant to this Agreement.
21. Counterparts
This Agreement may be executed in one or more counterparts, each of which will
be deemed an original, but all of which together shall constitute one and the
same instrument.
22. Limitation of Liability of the Trustees and Shareholders.
The names `One Group Mutual Funds' and `Trustees of One Group Mutual Funds'
refer respectively to the Trust created and the Declaration of Trust dated May
23, 1985, as amended and restated February 18, 1999, to which reference is
hereby made and a copy of which is on file at the office of the Secretary of the
Commonwealth of Massachusetts and elsewhere as required by law, and to any and
all amendments thereto so filed or hereafter filed. The obligations of `One
Group Mutual Funds' entered into in the name or on behalf thereof by any of the
Trustees, representatives or agents are made not individually, but in such
capacities, and are not binding upon any of the Trustees, shareholders or
representatives of the Trust personally, but bind only the assets of the Trust,
and all persons dealing with any series of shares of the Trust must look solely
to the assets of the Trust belonging to such series for the enforcement of any
claims against the Trust.
In Witness Whereof, this Agreement has been executed by a duly authorized
representative of the parties hereto.
Prudential Investment Management Services LLC
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
-------------------------------------
Title: Vice President
-------------------------------------
Date: 7/3/03
-------------------------------------
Prudential Investments LLC
By: /s/ Xxxxxx Xxxx
-------------------------------------
Name: Xxxxxx Xxxx
-------------------------------------
Title: Vice President
-------------------------------------
Date: 7/3/03
-------------------------------------
Fund Affiliate:
One Group Dealer Services, Inc.
0000 Xxxxxxx Xxxxxxx, XX0-0000
Xxxxxxxx, XX 00000-0000
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By: /s/ Xxxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxxx X. Xxxxx
---------------------------------------
Title: Secretary
---------------------------------------
Date: 6/30/03
---------------------------------------
Fund Affiliate:
Banc One Investment Advisors Corporation
0000 Xxxxxxx Xxxxxxx, XX0-0000
Xxxxxxxx, XX 00000-0000
By: /s/ Xxxx X. Xxxxxx
---------------------------------------
Name: Xxxx X. Xxxxxx
---------------------------------------
Title: Senior Managing Director
---------------------------------------
Date: 7/2/03
---------------------------------------
Fund Company:
One Group Mutual Funds
0000 Xxxxxxx Xxxxxxx, XX0-0000
Xxxxxxxx, XX 00000-0000
By: /s/ Xxxxxx X. Xxxxx
--------------------------------------
Name: Xxxxxx X. Xxxxx
--------------------------------------
Title: Vice President
--------------------------------------
Date: 6/30/03
--------------------------------------
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Exhibit A
Services
* * *
1. Record Maintenance
Service Provider shall maintain, or cause to be maintained, the following
records with respect to a Fund for each Client who holds Fund shares in the
Programs:
a. Number of shares;
b. Date, price and amount of purchases and redemptions (including
dividend reinvestments) and dates and amounts of dividends paid for at least the
current year to date;
c. Name and address of the Client, including zip codes and social
security numbers or taxpayer identification numbers;
d. Records of distributions and dividend payments;
e. Any transfers of shares; and
f. Overall control records.
2. Shareholder Communications
Service Provider shall perform, or cause to be performed, the following
shareholder communications services:
a. Provide to a shareholder mailing agent for the purpose of mailing
certain Fund-related materials the names and addresses of all Clients who hold
shares of such Fund in their Program brokerage accounts. The shareholder mailing
agent shall be a person or entity with whom the Fund has arranged for the
distribution of certain Fund-related material in accordance with the Operating
Procedures and to which the Fund pays any compensation related thereto. The
Fund-related materials shall consist of updated prospectuses and any supplements
and amendments thereto, annual and other periodic reports, proxy or information
statements and other appropriate shareholder communications. In the alternative,
in accordance with the Operating Procedures, Service Provider may distribute the
Fund-related materials to Clients;
b. Mail current Fund prospectuses and statements of additional
information and annual and other periodic reports upon a Client's request and,
as applicable, with confirmation statements;
c. Mail statements to Clients on a monthly basis (or, as to accounts in
which there has been no activity in a particular month, no less frequently than
quarterly) showing, among other things, the number of shares of each Fund owned
by such Clients and the net asset value of such Fund as of a recent date;
d. Produce and mail to Clients confirmation statements reflecting
purchases and redemptions of shares of each Fund in Program brokerage accounts;
e. Respond to Client inquiries regarding, among other things, share
prices, account balances, dividend amounts and dividend payment dates; and
f. If Service Provider clears transactions in Fund shares for any
Correspondents in an omnibus relationship, it will cause such Correspondent to
provide shareholder communications services set forth in this section.
4. Other Administrative Services
Service Provider will provide the following other administrative services
to Fund Affiliate and its relevant Affiliates:
a. Coordinate relationships between Fund Affiliate (and their relevant
Affiliates) and Correspondents that sell Funds to Clients pursuant to the
Programs;
b. Respond to Fund Affiliate's inquiries regarding the Programs;
c. Perform due diligence with respect to the Funds and information
generated by Fund Affiliate (or an Affiliate) regarding the Funds and otherwise
monitor the Funds selected for the Programs;
d. Provide Fund sales and asset information to Fund Affiliate and their
relevant Affiliates as the parties may from time to time agree; and
e. Make personnel reasonably available to attend in-person meetings, to
participate in video and telephone conference calls, and to assist in organizing
and co-sponsoring the same, with Fund Affiliate and its relevant Affiliates to
discuss investment strategies, portfolio holdings, and management philosophy
regarding the Funds.
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Exhibit B
Operating Procedures
* * *
1. The Account
a. Service Provider or its designated clearing broker-dealer ("Clearing
Firm") (for purposes of these Operating Procedures, Service Provider and
Clearing Firm shall be collectively referred to as "Service Provider") will open
or cause to be opened an Account (as defined in the Agreement) with each Fund.
The Account default will be reinvestment of dividend and capital gain
distributions.
b. Fund Affiliate shall designate the Account with account numbers.
Account numbers will be the means of identification when the parties place
transactions in the Account.
c. The parties acknowledge that the Account is an omnibus account in
Service Provider's name with Fund shares held by multiple beneficial owners. The
parties agree that all Fund shares held by Service Provider on behalf of Clients
shall be carried in a custody account for the exclusive benefit of Clients and
shall not be subject to any right, charge, security interest, lien, or other
claim against Service Provider in favor of any Funds or any Fund Company.
d. The Account shall be kept open on the Fund's books regardless of a
lack of activity or small position size, except to the extent that Service
Provider takes specific action to close the Account, or to the extent the Fund's
prospectus reserves the right to charge a sub-minimum fee or close inactive
accounts. In the latter case, Fund Affiliate will give forty-five (45) days'
prior notice to Service Provider before closing any Account.
e. Service Provider has the right to open additional accounts from time
to time to accommodate other investment options and features and to consolidate
existing accounts if and when appropriate to meet the needs of the Programs. If
it is necessary for Service Provider to open an account with a Fund for the
payment of distributions in cash, the term "Account" shall mean both the account
for the reinvestment of dividend and capital-gain distributions and the account
for the payment of distributions in cash.
f. Service Provider reserves the right to issue instructions to each Fund
to move shares between the Account and any other account Service Provider may
open or maintain.
2. Authorization to Receive Orders on a Fund's Behalf
a. Fund Affiliate hereby designates and authorizes Service Provider to
receive purchase and redemption orders in proper form ("Orders") from Clients on
the Fund's behalf for purposes of Rule 22c-1 under the 1940 Act, so that any
such Clients will receive the share price next computed by the Fund after the
time at which Service Provider has received the order from such Clients.
b. Fund Affiliate further agrees that Service Provider may designate and
authorize such intermediaries as it deems necessary, appropriate, or desirable
("Sub-Designees"), to receive Orders from Clients on the Fund's behalf for
purposes of Rule 22c-1 under the 1940 Act, so that any such Client will receive
the share price next computed by the Fund after the time at which such customer
places its Order with the Sub-Designee (in connection with receiving Orders
under Sections 2, 3, and 4 of these Operating Procedures, Service Provider and
Sub-Designees shall be collectively referred to as "Service Provider").
c. In connection with this Section 2, Fund Affiliate represents,
warrants, and covenants to Service Provider that all necessary legal and other
actions have been taken by each Fund's board of directors or trustees, as the
case may be, to authorize Service Provider to receive purchase and redemption
Orders from Clients on behalf of the Funds for purposes of Rule 22c-1 under the
1940 Act and that it will
cause each Fund's board of directors or board of trustees to take such necessary
legal and other actions regarding the annual review of such authorization.
3. NSCC Processing
a. In General. Unless otherwise agreed to by the parties, each Account
maintained at the Fund will be maintained in accordance with NSCC Matrix Level 3
(full broker control) established processing rules and standards. This Section 3
applies to transmissions of Fund transaction and registration data and the
settlement of those Fund transactions through Fund/Serv and transmissions of
Account data and the processing of dividend and capital-gain distributions
through the Networking system on an omnibus basis pursuant to Matrix Xxxxx 0
(xxxx xxxxxx xxxxxxx).
x. XXXX Xxxxxxxxx. Service Provider and Fund Affiliate agree (1) to
perform any and all duties, functions, procedures and responsibilities assigned
to them by NSCC rules, procedures or other requirements relating to Fund/Serv
("NSCC Fund/Serv Rules") and Networking ("NSCC Networking Rules"), as
applicable, in a competent manner; (ii) to maintain facilities, equipment and
skilled personnel sufficient to perform the foregoing activities; (iii) that any
information provided to the other party through Fund/Serv or Networking will be
accurate, complete, and in the format prescribed by the NSCC; and (iv) to adopt,
implement and maintain procedures reasonably designed to ensure the accuracy of
all transmissions through Fund/Serv or Networking and to limit the access to,
and the inputting of data into, Fund/Serv or Networking to persons specifically
authorized by the party.
c. Fund/Serv.
(i) Transactions Subject to Fund/Serv. On each Business Day, Fund
Affiliate agrees (A) to accept and effect changes in its records upon receipt of
purchase, redemption, and registration instructions from Service Provider
electronically through Fund/Serv; (B) to process any instructions received from
Service Provider through Fund/Serv in a timely manner; and (C) to confirm or
reject any Fund purchase or redemption Order received from Service Provider
through Fund/Serv prior to the next opening of regular trading on the New York
Stock Exchange or to notify Service Provider prior to the next opening of
regular trading on the New York Stock Exchange of any event, such as a systems
failure of the Fund Affiliate, Fund Company or the NSCC, that would prohibit
Fund Affiliate from confirming or rejecting such an Order.
(ii) Transmission of Orders Through Fund/Serv. For any purchase or
redemption of Fund shares processed through Fund/Serv, Service Provider agrees
that, except as set forth in Section 3(c)(iv) below, (A) Orders received by
Service Provider prior to the close of regular trading on the New York Stock
Exchange (generally, 4:00 p.m. Eastern time) ("Market Close") on any Business
Day ("Day 1") (such Orders are referred to herein as "Day 1 Trades") will be
transmitted by Service Provider to Fund Affiliate through Fund/Serv in the
manner and within the time frame permitted by NSCC Fund/Serv Rules (currently
prior to 8:00 p.m. Eastern Time, or, 11:00 p.m. Eastern Time in the case of
certain permitted "late pass transmissions") on Day 1; and (B) Orders received
by Service Provider at or after Market Close on Day 1 (such Orders are referred
to herein as "Day 2 Trades") will be transmitted by Service Provider to Fund
Affiliate through Fund/Serv in the manner and within the time frame permitted by
NSCC Fund/Serv Rules (currently prior to 8:00 p.m. Eastern Time) on the next
Business Day ("Day 2").
(iii) Fund's Pricing of Orders. For any purchase or redemption of Fund
shares processed through Fund/Serv, Fund Affiliate agrees that, except as set
forth in Section 3(c)(iv) below, (A) Day 1 Trades will be effected at the net
asset value of each Fund's shares ("Net Asset Value") calculated as of Market
Close on Day 1, provided such trades are transmitted to the NSCC through
Fund/Serv in the manner and within the time frame permitted by NSCC Fund/Serv
Rules as set forth in subsection 3(c)(ii) above; and (B) Day 2 Trades will be
effected at the Net Asset Value calculated as of Market Close on Day 2, provided
such trades are transmitted to the NSCC through Fund/Serv in the manner and
within the time frame required by NSCC Fund/Serv Rules as set forth in
subsection 3(c)(ii) above. Fund Affiliate
2
agrees that, consistent with the foregoing, Day 1 Trades will have been received
by the Fund prior to Market Close on Day 1, and Day 2 Trades will have been
received by the Fund prior to Market Close on Day 2, for all purposes,
including, without limitation, effecting distributions.
(iv) Exceptions. Notwithstanding subsections 3(c)(ii) and 3(c)(iii)
above, Fund Affiliate agrees that,
(A) if Service Provider is prevented from transmitting Day 1 Trades to
Fund Affiliate through Fund/Serv on Day 1 due to unforeseen circumstances (such
as computer system failures experienced by Service Provider or the NSCC, natural
catastrophes, or other emergencies or human error), provided that Service
Provider notifies Fund Affiliate of such contingency prior to 8:00 p.m. Eastern
Time on Day 1, Service Provider may:
(I) transmit such Day 1 Trades to the Fund through Fund/Serv prior to
8:00 p.m. Eastern Time on Day 2, and such Day 1 Trades will be effected at the
Net Asset Value calculated as of Market Close on Day 1, provided further that
Service Provider notifies Fund Affiliate of the Day 1 Trade information prior to
9:30 a.m. Eastern Time on Day 2; or
(II) transmit the Day 1 Trades through means other than Fund/Serv prior
to 9:30 a.m. Eastern Time on Day 2, and such Day 1 Trades will be effected at
the Net Asset Value calculated as of Market Close on Day 1, and settle and
reconcile pursuant to the provisions of Section 4(d) below;
(B) in the event that Fund Affiliate rejects a Day 1 Trade (or notifies
Service Provider pursuant to Section 3(c)(i) above that it would have rejected
the Day 1 Trade had there not been systems error), and the parties agree that
such rejection can be remediated by Service Provider, Service Provider may
follow the procedures for transmitting trades set forth in subsections 3(c) (iv)
(A) (I) or 3(c) (iv) (A) (II) above, and such Day 1 Trades will be effected at
the Net Asset Value calculated as of Market Close on Day 1.
(v) Settlement of Transactions. For any purchase or redemption of Fund
shares processed through Fund/Serv, Service Provider and Fund Affiliate will
settle Day 1 Trades on Day 2 and Day 2 Trades on Day 3 (each, respectively, a
"Settlement Date") in the manner provided by NSCC Fund/Serv Rules. Should Fund
Affiliate need to extend settlement on a trade, Fund Affiliate must contact
Service Provider by 7:00 p.m. Eastern Time on trade date to discuss the
extension. For purposes of determining the length of settlement, Fund Affiliate
agrees to treat shareholders that hold Fund shares through the Account the same
as it treats shareholders that hold Fund shares directly with the Fund. Each
party shall be responsible for the interest cost associated with such party's
failure to settle trades in a timely fashion, which interest will be charged at
the Federal Funds rate or, if applicable, as set forth in subsection 3(c)(v)(A)
below for Fund Affiliate. If Fund Affiliate does not settle redemption orders on
Settlement Date and has not contacted Service Provider by 7:00 p.m. Eastern time
on trade date to discuss such extension of settlement (even if such extension is
due to a systems problem unknown on trade date), then Service Provider may, at
its option, take any or all of the actions set forth below.
(A) Charge interest on the amount of the redemption proceeds due to it,
as follows:
(I) For the first day, (1) Service Provider may charge Fund Affiliate
interest at the Federal Funds "offered" rate for such day as published in The
Wall Street Journal if the amount does not exceed $1 million, or (2) Service
Provider may charge Fund Affiliate interest at the Prime Rate for such day as
published in The Wall Street Journal if the amount exceeds $1 million; and
(II) For each day following the first day, Service Provider may charge
Fund Affiliate interest at the Prime Rate for each such day as published in The
Wall Street Journal, plus 2% per annum; and
(B) Upon notice to Fund Affiliate, on any subsequent Settlement Date and
for so long as such redemption proceeds are due to it:
3
(I) Service Provider may settle purchase orders and redemption orders
net of each other for such Fund; and/or
(II) Service Provider may net any redemption proceeds still due to it
against any net or gross purchase amount due from it for such Fund.
d. Distributions
(i) For each Account, Fund Affiliate shall provide all dividend and
capital-gain distribution information to Service Provider in a timely manner to
enable Service Provider to pay distributions to Clients on or as close to
payable date as practicable. As to each Fund, Fund Affiliate or such Fund shall
provide Service Provider with (A) the record date, ex-dividend date, and payable
date with respect to a Fund as soon as practicable after it is announced, but no
later than three (3) Business Days prior to record date, (B) the record date
share balance in the Omnibus Account and the distribution rate per share on the
first Business Day after record date, and (C) the reinvest price per share as
soon as it is available. Other distribution information required by Service
Provider from time to time for payment of distributions to Clients shall be
provided by Fund Affiliate on such dates as are agreed upon between Service
Provider and Fund Affiliate, but no later than the payable date. All daily
accrual rates should be communicated to Service Provider via the NSCC CUSIP
profile price and rate facility.
(ii) For each Account designated for the reinvestment of dividend and
capital-gain distributions, and for purposes of effecting cash dividend and
capital-gain distributions through such Account for Clients who have elected
through Service Provider to receive their dividend and/or capital-gain
distributions in cash, Service Provider may, at its option, follow the
procedures set forth in this subsection 3(d)(ii) or in Section 4(f) below. On
the next Business Day following reinvestment (R+1), Service Provider shall send
Fund Affiliate redemption trades "as of" the reinvestment date via the NSCC CNS
process by 7 a.m. Eastern Time. These trades should result in same day
confirmations and settlement in the 12:00 a.m. Eastern Time NSCC CNS cycle. In
the event such NSCC CNS cycle is not available, Service Provider shall give
notification to Fund Affiliate in a manner agreed to by the parties of the
aggregate number of Fund shares necessary to make an adjusting reconciling
transaction to void the purchase of such number of shares. Service Provider
shall include such adjusting reconciling transaction in its Fund/Serv
transmission on R+1, and Fund Affiliate or such Fund shall pay the proceeds from
such adjusting reconciling transaction. On the next Business Day following
receipt of the reinvest price per share (R+1), Service Provider shall give
notification to Fund Affiliate in a manner agreed to by the parties of the
aggregate number of Fund shares necessary to make an adjusting reconciling
transaction to void the purchase of such number of shares. Service Provider
shall include such adjusting reconciling transaction in its Fund/Serv
transmission on R+1, and Fund Affiliate or such Fund shall pay the proceeds from
such adjusting reconciling transaction through the NSCC's money settlement
process on the next Business Day (R+2). Service Provider shall use such proceeds
to pay the dividend and capital gain distribution in cash to Clients who have
elected to receive such dividends or distributions in cash. If Fund Affiliate
does not pay the cash proceeds to Service Provider through the NSCC's money
settlement process on R+2 (a "Due Date"), then Service Provider may, at its
option, charge interest on the amount of such cash proceeds outstanding on or
after the Due Date as set forth in subsections 3(d)(ii)(A) and (B) below
notwithstanding whether Fund Affiliate has contacted Service Provider to discuss
an extension as contemplated by subsection 3(c)(v) above.
(A) For the Due Date, (1) Service Provider may charge Fund Affiliate
interest at the Federal Funds "offered" rate for such day as published in The
Wall Street Journal if the amount does not exceed $1 million, or (2) Service
Provider may charge Fund Affiliate interest at the Prime Rate for such day as
published in The Wall Street Journal if the amount exceeds $1 million.
(B) For each day following the Due Date, Service Provider may charge
Fund Affiliate interest at the Prime Rate for each such day as published in The
Wall Street Journal, plus 2% per annum.
(iii) For each Account designated for the payment of dividend and
capital-gain distributions in
4
cash, Fund Affiliate shall, on the next Business Day following payable date, pay
to Service Provider through the NSCC's money settlement process the full amount
of such capital-gain distributions and/or dividends. If Fund Affiliate does not
pay the cash proceeds to Service Provider through the NSCC's money settlement
process on the next Business Day following payable date for such dividend or
distribution (also a "Due Date"), then Service Provider may, at its option,
charge interest on the amount of such cash dividend or distribution outstanding
on or after the Due Date as set forth in subsection 3(d)(ii)(A) and (B) above.
(iv) For each Fund that pays daily dividends, Fund Affiliate shall
provide on a daily basis, the following record date information: daily rate,
account share balance, account accrual dividend amount (for that day), account
accrual dividend amount (for period to date), and account transfers and
period-to-date accrual amounts.
(v) For each Fund that pays daily dividends, (A) Fund Affiliate shall
notify Service Provider how the Fund determines eligible dividend shares and
whether it pays dividends "on entry" or "on exit" and (B) Fund Affiliate shall
accrue dividends, commencing on the settlement date for the purchase of Fund
shares and terminating on the trade date for the redemption of Fund shares.
e. Account Reconciliation Requirements
(i) Service Provider shall verify, on a next day basis, Orders placed
for the Account with each Fund. All activity in the Account must be reflected.
Therefore, any "as of' activity must be shown with its corresponding "as of'
dates.
(ii) With respect to other than non-broker-controlled Accounts, Service
Provider must receive statements on or before the eighth Business Day of each
month, even if there has been no activity in the Account during the period,
unless Service Provider can verify transactions by electronic transmission.
(iii) The parties agree to notify each other and correct any error in the
Account with any Fund upon discovery. If an error is not corrected by the day
following discovery, each party agrees to make best efforts to avoid this from
hindering any routine daily operational activity.
(iv) Fund Affiliate shall provide a daily position file and online
access to Accounts to Service Provider.
(v) This section, except for subsection (ii), also applies to "Outside
of NSCC" transactions delineated in Section 4 below.
f. Networking. For each Account established and/or maintained pursuant
to Networking, Fund Affiliate shall accept and effect changes in its records
upon receipt of instructions, communications, and actions from Service Provider
electronically through Networking without supporting documentation from Service
Provider or the beneficial owners of Fund shares. Fund Affiliate shall be
responsible for processing any such instructions, communications, or actions
from Service Provider and for executing the instructions of Service Provider in
a timely manner. Each Account will be maintained in accordance with Matrix Level
3 (full broker control) as designated by the NSCC.
4. Processing Outside of NSCC
This Section 4 applies to transmission of Fund transaction and
registration data and the settlement of those Fund transactions outside of
Fund/Serv and Networking.
a. Purchase and Redemption Orders. For each day on which any Client
places a purchase or redemption order for shares of a Fund under a Program,
Service Provider shall aggregate all such purchase orders and aggregate all such
redemption orders and communicate to the Fund an aggregate
5
purchase order and an aggregate redemption order.
b. Transmission of Orders. Service Provider agrees that, except as set
forth in subsection 4(c)(ii) below: (i) Orders received by Service Provider
prior to Market Close on Day 1 will be transmitted by Service Provider to the
Fund by 8:00 p.m. Eastern time on Day 1; and (ii) Orders received by Service
Provider at or after Market Close on Day 1 will be transmitted by Service
Provider to the Fund by 8:00 p.m. Eastern time on Day 2.
c. Fund Affiliate Pricing of Orders
(i) Fund Affiliate agrees that, except as set forth in subsection
4(c)(ii) below, Day 1 Trades will be effected at the net asset value of each
Funds shares ("Net Asset Value") calculated as of Market Close on Day 1,
provided such trades are received by the Fund by 8:00 p.m. Eastern time on Day
1; and Day 2 Trades will be effected at the Net Asset Value calculated as of
Market Close on Day 2, provided such trades are received by the Fund by 8:00
p.m. Eastern time on Day 2. Fund Affiliate agrees that, consistent with the
foregoing, Day 1 Trades will have been received by the Fund prior to Market
Close on Day 1, and Day 2 Trades will have been received by the Fund prior to
Market Close on Day 2, for all purposes, including, without limitation,
effecting distributions.
(ii) Notwithstanding Sections 4(b) and 4(c)(i) above, Fund Affiliate
agrees that, if Service Provider is prevented from transmitting Day 1 Trades to
the Fund by 8:00 p.m. Eastern time on Day 1 due to unforeseen circumstances,
such as computer system failures, natural catastrophes, or other emergencies or
human error, then Service Provider may transmit such Day 1 Trades by 9:30 a.m.
Eastern time on Day 2, and such Day 1 Trades will be effected at the Net Asset
Value calculated as of Market Close on Day 1, provided that Service Provider
notifies the Fund of such contingency prior to 8:00 p.m. Eastern time on Day 1.
d. Settlement of Transactions
(i) Service Provider and Fund Affiliate will settle Day 1 Trades on Day
2 and will settle Day 2 Trades on Day 3.
(ii) Service Provider will transmit the aggregate purchase price of all
the purchase Orders for a given trade date to the Fund by wire transfer on the
appropriate Settlement Date. If the Fund does not receive the wire transfer on
the appropriate Settlement Date, Service Provider will be liable to the Fund for
any reasonable losses the Fund suffers due to the late wire transfer.
(iii) Fund Affiliate will cause the Fund(s) to send to Service Provider
the aggregate proceeds of all redemption Orders for the Fund(s) placed by
Service Provider on a given trade date on the appropriate Settlement Date. Such
redemption proceeds will be sent by wire transfer on the Settlement Date for the
redemption Orders; provided that Fund Affiliate may, in its discretion, send
such proceeds by check if the aggregate amount is less than $250. Wire transfers
of redemption proceeds shall be separate from wire transfers for other purposes.
(iv) Each wire transfer of redemption proceeds shall indicate, on the
Fed Funds wire system, the amount thereof attributable to each Fund; provided,
however, that if the number of entries would be too great to be transmitted
through the Fed Funds wire system, Fund Affiliate shall, on the day the wire is
sent, notify Service Provider of such entries. The cost of the wire transfer is
the responsibility of the party sending the wire. The interest cost associated
with any delayed wire is the responsibility of the party sending the wire and
will be charged at the Federal Funds rate, or if applicable, as set forth in
Section 4(c)(v)(A) above for Fund Affiliate.
(v) Should a Fund need to extend settlement on a trade, including
without limitation Orders under any amendment to these Operating Procedures to
implement retirement plan order processing, Fund Affiliate must contact Service
Provider by 7:00 p.m. Eastern time on trade date to discuss the extension.
6
For purposes of determining the length of settlement, Fund Affiliate agrees to
treat shareholders that hold Fund shares through the Account the same as it
treats shareholders that hold Fund shares directly with the Fund.
(vi) If Fund Affiliate does not settle redemption orders on Settlement
Date and has not contacted Service Provider by 7:00 p.m. Eastern time on trade
date to discuss such extension of settlement (even if such extension is due to a
systems problem unknown on trade date), then Service Provider may, at its
option, take any or all of the actions set forth in subsections 3(c)(v)(A) and
(B) above.
(vii) In the event that a Fund cannot verify redemption proceeds, Fund
Affiliate will settle trades and forward redemption proceeds in accordance with
these Operating Procedures based on the information provided by Service
Provider. Service Provider will be responsible for the accuracy of all trade
information provided by it.
e. Account Reconciliation Requirements
See Section 3(e) above.
f. Distributions
(i) Fund Affiliate shall provide dividend and capital-gain distribution
information to Service Provider in the manner and within the time frames set
forth in subsection 3(d)(i) above.
(ii) As set forth in Section 1(a) above, the Account will be set up for
the reinvestment of dividend and capital-gain distributions. For purposes of
effecting cash distributions through the Account for Clients who have elected to
receive their dividend and/or capital-gain distribution in cash, prior to 10:00
a.m., Eastern time, on the next Business Day following receipt of the reinvest
price per share (R+ 1) as provided in subsection 3(d)(i)(C) above, Service
Provider shall notify Fund Affiliate of the aggregate number of Fund shares
necessary to make an adjusting reconciling transaction to void the purchase of
such number of shares. Fund Affiliate or such Fund shall wire the proceeds from
said adjusting reconciling transaction from the Fund to the designated Service
Provider account on the same Business Day (R+1). Service Provider shall use such
proceeds to pay the dividend and/or capital-gain distribution in cash to Clients
who have elected to receive such distributions in cash.
(iii) If Service Provider maintains an Account with a Fund for the
payment of distributions in cash, Fund Affiliate shall wire, on payable date,
any cash distribution from the Fund to Service Provider.
(iv) (A) With respect to the Account set up for the reinvestment of
dividend and capital-gain distributions, and for purposes of effecting cash
distributions through the Account for Clients who have elected to receive their
dividend and/or capital-gains distributions in cash, if Fund Affiliate does not
wire the cash proceeds to Service Provider on the next Business Day after the
ex-dividend date for such distribution (a "Due Date"), then Service Provider
may, at its option, charge interest on the amount of such cash proceeds
outstanding on or after the Due Date as set forth in subsections 3(d)(ii)(A) and
(B) above.
(B) With respect to a cash distribution Account, if Fund Affiliate does
not wire the cash distribution to Service Provider on the payable date for such
distribution (also a "Due Date"), then Service Provider may, at its option,
charge interest on the amount of such cash distribution outstanding on or after
the Due Date as set forth in subsections 3(d)(ii)(A) and (B) above.
(v) For each Fund that pays daily dividends, Fund Affiliate shall
provide on a daily basis, the following record date information: daily rate,
account share balance, account accrual dividend amount (for that day), account
accrual dividend amount (for period to date), and account transfers and
period-to-date accrual amounts.
7
(vi) For each Fund that pays daily dividends, each Fund shall accrue
dividends, commencing on the settlement date for the purchase of Fund shares and
terminating on the trade date for the redemption of Fund shares.
g. Transfer of Accounts
(i) Fund Affiliate agrees to transfer shares between accounts for
Clients or other street name brokers held directly with a Fund and the Account
on the Fund's records. For the purpose of expediting transfers from such
accounts that must be processed, Fund Company will accept transfer instructions
through the Networking Mass Broker to Broker facility or outside of NSCC's
Networking service, Fund Affiliate will accept by facsimile transmission a
summary sheet of information indicating the Clients' names, account numbers, the
Fund affected, and the number of shares to be re-registered or liquidated
("Summary Sheet"). The Service Provider will retain copies of the transfer
authorization for the period required by any applicable law, rule or regulation.
All transfer requests into or out of the Account from parties other than Service
Provider's authorized persons must be forwarded to Service Provider for approval
prior to processing. Service Provider will forward a list of authorized persons
to Fund Affiliate with this Agreement.
(ii) Fund Affiliate shall process all transfer and liquidation requests
into the appropriate Account. At no time shall any Fund establish separate
accounts registered to Service Provider for the benefit of individual
shareholders. In the event any such account is mistakenly opened, Service
Provider reserves the right to instruct such Fund to move Fund shares to the
Account.
(iii) Fund Affiliate must confirm to Service Provider the completion of
each transfer on the day it occurs. The confirming information shall include the
number of shares, date ("as of" date if unavoidable delay), transaction date,
account number of the Client and the Account, registration, accrued dividends
and account type (e.g., retail single customer, etc.).
(iv) Transfer processing after record date but prior to payable date
will include all accrued dividends. Fund Affiliate is responsible for monitoring
all completed full transfers for "trailing" dividends. Should a "trailing"
dividend appear in an account, Fund Affiliate shall send such dividend to
Service Provider within five (5) Business Days, along with a specific written
notification thereof. Notification shall include details of the dividend and
Client, including the Client's social security number or taxpayer identification
number, and/or the account number for the Account to which the transfer was
made.
5. General
a. Record Maintenance
Service Provider shall maintain, or cause to be maintained, records as
described in Exhibit A hereto.
b. Shareholder Communications
(i) Service Provider shall provide, or cause to be provided, the
shareholder communication services described in Exhibit A hereto.
(ii) Fund Affiliate shall be responsible for providing certain
Fund-related materials, including, but not limited to, updated prospectuses and
any supplements and amendments thereto, annual and other periodic reports, proxy
or information statements and other appropriate shareholder communications and
for Service Provider's or the mailing agent's fees in connection with this
service as well as for timely distribution. Fund Affiliate agrees to have
Service Provider or the mailing agent consolidate mailings of
8
material to shareholders of more than one Fund if the mailing is identical for
all Funds in Fund Company family. Fund Affiliate is obligated to supply these
materials (at no expense to Service Provider) in amounts reasonably requested by
Service Provider for distribution to Clients and in a timely manner so as to
allow Service Provider to send such materials on a timely basis to Clients and
prospective Clients requesting them if Service Provider is handling the
mailings. To the extent practicable, Fund Affiliate shall notify Service
Provider immediately of any change to a Fund's prospectus.
(iii) Fund Affiliate shall ensure that the prospectus of each of its
Funds discloses that a broker may charge transaction fees on the purchase and/or
sale of Fund shares. Fund Affiliate shall also ensure that either the
prospectus, or the statement of additional information ("XXx") if the XXx is
incorporated in the prospectus, of each of its Funds discloses that:
(A) the Fund has authorized one or more brokers to receive on its
behalf purchase and redemption Orders;
(B) such brokers are authorized to designate other intermediaries to
receive purchase and redemption Orders on the Fund's behalf;
(C) the Fund will be deemed to have received a purchase or redemption
Order when an authorized broker or, if applicable, a broker's authorized
designee, receives the Order;
(D) Client Orders will be priced at the Fund's Net Asset Value next
computed after they are received by an authorized broker or the broker's
authorized designee;
(E) the performance of the Fund may be compared in publications to the
performance of various indices and investments for which reliable performance
data is available and to averages, performance rankings, or other information
prepared by recognized mutual fund statistical services; and
(F) the annual report contains additional performance information and
will be made available to investors upon request and without charge.
c. Dividend and Distribution Reporting
For annual tax reporting purposes, Fund Affiliate shall inform Service
Provider by January 15 of the portion of each Fund's distributions for the
previous calendar year that include dividends, capital gains, and tax
reclassifications; and by February 15, the portion of each Fund's distributions
for the previous calendar year that include foreign source income, tax exempt
income by state of origin or return of capital, U.S. government obligation
interest, creditable and non-creditable foreign tax, dividends eligible for the
corporate dividends received deductions, any redemption proceeds, and
spillback/throwback dividends.
d. Mergers, Splits, Liquidations, CUSIP Changes, and Reorganization
Activities. Fund Affiliate shall provide to Service Provider thirty (30) days'
prior written notice of any mergers, splits, liquidations, CUSIP changes, and
other reorganization activities of or material changes to a Fund.
e. Pricing Information. On every Business Day, Fund Affiliate, through
an appropriate electronic pricing service, will provide to Service Provider
prior to 7:00 p.m., Eastern time, each Fund's closing Net Asset Value and public
offering price (if applicable) for that day and/or notification of no price for
that day. Fund Affiliate, or the applicable electronic service provider, shall
provide such information on a best efforts basis taking into consideration any
extraordinary circumstances arising at the Fund (e.g., natural disasters, etc.).
f. Price, Distribution Rate and Other Errors
(i) If adjustments are required to correct any error in the computation
of the Net Asset Value or
9
public offering price of a Fund's shares, in the distribution rate for a Fund's
shares, or otherwise, Fund Affiliate shall notify Service Provider upon
discovering the need for such adjustments. Notification may be made orally, but
must be confirmed that same day by facsimile or otherwise in writing.
(ii) Service Provider and Fund Affiliate shall agree promptly and in
good faith to a resolution of the error, and no adjustment for the error shall
be taken in the Account until such agreement is reached. Following resolution,
upon request by Service Provider, Fund Affiliate shall provide Service Provider
with written notification of the resolution. The letter shall be written on Fund
Affiliate letterhead and shall state for each day on which an error occurred the
incorrect price or rate, the correct price or rate, and the reason for the price
or rate change. Fund Affiliate agrees that Service Provider may send this
writing, or a derivation thereof, to Clients whose accounts are affected by the
price or rate change.
(iii) If the Client has received cash in excess of what he or she is
entitled, Service Provider will, when requested by Fund Affiliate, and to the
extent practicable and permitted by law, debit or cause to be debited from the
Client's brokerage account the amount of such excess, but only to the extent of
any cash in the account, and repay it to the Fund. In no event, however, shall
Service Provider be liable to Fund Affiliate or the Fund for any such amounts,
unless the error was caused by Service Provider's breach of this Agreement or
Service Provider's willful misconduct or negligence in the performance of, or
failure to perform, its obligations under this Agreement. Upon the request of
Fund Affiliate, and to the extent practicable, Service Provider shall provide
Fund Affiliate with the name of Clients and other relevant information
concerning the Clients' brokerage accounts to assist Fund Affiliate in the
collection from Clients of any such excess amount not repaid to the Fund.
(iv) If an adjustment is necessary to correct an error that has caused
Clients to receive dollars or shares less than that to which they are entitled,
the Fund Affiliate shall, as appropriate and as mutually agreed by the parties
pursuant to subsection 5(f)(ii) above, make all necessary adjustments to the
number of shares owned in the Account and/or distribute to Service Provider any
and all amounts of the underpayment and any related reasonable cost. Service
Provider will credit, or cause to be credited, the appropriate amount of such
shares or payment to each affected the Clients.
(v) For purposes of making adjustments, including the collection of
overpayments, Fund Affiliate agrees to treat Clients that hold Fund shares
through the Account the same as it treats shareholders that hold Fund shares
directly with the Fund. When making adjustments for an error, a Fund shall not
net transactions for that day in the Account.
h. Suspension of Purchases. Service Provider may suspend purchases of
Fund shares through the Programs for any period of time upon notice to Fund
Affiliate.
i. New Processing Systems. Fund Affiliate agrees to cooperate to the
extent possible with Service Provider as Service Provider develops and seeks to
implement new processing systems for the Programs.
10
Exhibit C
Fees
* * *
Fees payable under this Agreement shall be calculated in accordance with
the following:
1. The following terms shall have the meanings defined below:
a. "Daily Value" shall mean the Net Asset Value ("NAV") reported by Fund
Affiliate to Service Provider through the NSCC's Mutual Fund Profile Service
(the "Profile Service") or, if the NAV is not available through the Profile
Service, through the NASD Automated Quotation System or other mutually agreeable
means.
b. "Qualifying Shares" shall mean all shares of a Fund held by Clients in
Programs.
c. "Qualifying Shares Fee Rate" shall mean 30 basis points per annum. No
fees shall be due from Fund Affiliate or Fund Company to Correspondents or any
party other than Service Provider under this or any other agreement covering any
aspects of the sales or servicing of, or accounting for, Qualifying Shares.
2. The Fee shall be calculated each quarter by multiplying the average
Daily Value of Qualifying Shares for the quarter multiplied by the
Qualifying Shares Fee Rate. The Fee shall be billed quarterly and is
due and payable by Fund Affiliate upon receipt of such xxxx.
Service Provider shall make available to Fund Affiliate in a manner
and frequency to be agreed upon between the parties the number of
Client accounts and assets by Fund.
3. The Fee shall be payable in the following manner:
a. the first 25 basis points shall be paid from a Fund's Rule
12-1 Plan;
b. the next 5 basis points (but in no event more than the
annual equivalent of $15.00 per Client account) shall be
paid by a Fund as a sub-accounting fee; and
c. any excess shall be paid by a Fund Affiliate from its bona
fide profits.
