1
Exhibit 99(e)(iii)(C)
AMENDMENT TO OPERATING AGREEMENT
This Amendment ("Amendment") by Xxxxxxx Xxxxxx & Co., Inc. ("Schwab"),
effective as of January 1, 1999, amends the Operating Agreement between Schwab
and each Fund Company, made as of October 25, 1996, as amended thereafter
("Operating Agreement"). All capitalized terms used in this Amendment and not
defined herein shall have the meaning ascribed to them in the Operating
Agreement.
WHEREAS, Schwab wishes to amend Exhibit A to the Operating Agreement to
provide for procedures in the event that Fund Company fails to (i) settle
redemption orders on the next business day after trade date ("Settlement Date")
without having notified Schwab on trade date, as required under the terms of the
Operating Agreement, or (ii) pay distributions in a timely manner, as required
under the terms of the Operating Agreement; and
WHEREAS, Schwab may unilaterally amend Exhibit A to the Operating
Agreement upon 40 days' written notice to Fund Company under the terms of the
Operating Agreement and has provided this executed Amendment to Fund Company 40
days prior to its effective date.
NOW, THEREFORE, in consideration of the foregoing and the mutual
promises set forth in the Operating Agreement, Exhibit A to the Operating
Agreement is hereby amended as follows:
1. SETTLEMENT OF TRANSACTIONS
a. In the event that a Fund should need to extend settlement on
redemption orders, including but not limited to redemption orders under the
Retirement Plan Order Processing Amendment if in effect, a Fund Company must
contact Schwab by 7:00 p.m. Eastern Time on trade date to discuss the extension.
b. If Fund Company does not settle redemption orders on
Settlement Date and has not contacted Schwab 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 Schwab may, at its option, take any
or all of the following actions:
i. Charge interest on the amount of the redemption proceeds
due to it, as follows:
(A) For the first day, (a) Schwab may charge Fund Company
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 (b) Schwab may
charge Fund Company interest at the Prime Rate for such day as published in The
Wall Street Journal if the amount exceeds $1 million; and
2
(B) For each day following, Schwab may charge Fund
Company interest at the Prime Rate for each such day as published in The Wall
Street Journal, plus 2% per annum; and
(ii) Upon notice to Fund Company, on any subsequent Settlement
Date and for so long as such redemption proceeds are due to it;
(A) Schwab may settle purchase orders and redemption
orders net of each other for such Fund; and/or
(B) Schwab may net any redemption proceeds still due to
it against any net or gross purchase amount due from it to the Funds.
2. DISTRIBUTIONS
a. With respect to a consolidated omnibus Account, and for purposes of
effecting cash distributions for investors who have elected to receive their
capital gains distributions and/or dividends in cash, if Fund Company does not
wire the cash proceeds to Schwab on the next business day after the ex-dividend
date for such distribution (a "Due Date"), as required under the terms of the
Operating Agreement, then Schwab may, at its option, charge interest on the
amount of such cash proceeds outstanding on or after the Due Date as set forth
in Section 2(c) below.
b. With respect to a cash distribution Account, if Fund Company does
not wire the cash distribution to Schwab on the payable date for such
distribution (a "Due Date"), as required under the terms of the Operating
Agreement, then Schwab may, at its option, charge interest on the amount of such
cash distribution outstanding on or after the Due Date as set forth in Section
2(c) below.
c. For the Due Date, (i) Schwab may charge Fund Company interest at the
Federal Funds "offered" rate for such day as published in The Wall Street if the
amount does not exceed $1 million, and (ii) Schwab may charge Fund Company
interest at the Prime Rate for such day as published in The Wall Street Journal
if the amount exceeds $1 million. For each day following the Due Date, Schwab
may charge Fund Company interest at the Prime Rate for each such day as
published in The Wall Street Journal, plus 2% per annum.
3. Except as specifically set forth herein, all other provisions of the
Operating Agreement shall remain in full force and effect. To the extent of any
conflict between this Amendment and the Operating Agreement, this Amendment
shall control.
-2-
3
IN WITNESS WHEREOF, Schwab has executed this Amendment on the date
written below.
XXXXXXX XXXXXX & CO., INC.
By:
-------------------------------
Xxxx Xxxxx
Vice President/Mutual Funds
Operations Administration
Date:
----------------------------
-3-
