LOAD FUND OPERATING AGREEMENT
Exhibit (m)(13)
This Load Fund Operating Agreement is made as of July 24, 2007, by and between Xxxxxxxx Advisors, Inc., a Delaware Corporation (“Distributor”); Xxxxxxxx Data Corp., a New York corporation (“Shareholder Servicing Agent”); each registered investment company executing it (“Fund Company”), on its own behalf and on behalf of each of its series or classes of shares listed on Schedule I hereto, as amended from time to time (“Fund(s)”); and Xxxxxxx Xxxxxx & Co., Inc. (“Schwab”), a California corporation (“Agreement”). In the event there are no Funds, then the term “Fund” shall mean “Fund Company.” For the purposes of this Agreement, Distributor and Shareholder Servicing Agent are collectively referred to as “Xxxxxxxx Parties”. Fund Company and Xxxxxxxx Parties are referred to collectively herein as “Fund Parties.”
WHEREAS, Fund Parties wish to have shares of the Fund(s) available to investors for purchase and redemption through Xxxxxx’x Mutual Fund Marketplace® (“MFMP”);
WHEREAS, certain policies, procedures, and information are necessary to enable the Fund(s) to participate in the MFMP; and
WHEREAS, Schwab is willing to permit the Fund(s) to participate in its MFMP pursuant to the terms and conditions set forth herein.
NOW, THEREFORE, in consideration of the foregoing and the mutual promises set forth below, the parties agree as follows:
1. Operating Procedures.
a. For each Fund, Schwab shall (i) open an account for the benefit of one or more MFMP investors who invest in shares of the Fund (each such account an “Omnibus Account”); and/or (ii) open an account with the Fund for the benefit of each MFMP investor that invests in shares of the Fund (each such account a “Sub-Account”). Sub-Accounts shall be maintained on Xxxxxx’x system in trading symbols separate from trading symbols established for Omnibus Accounts. Sub-Accounts and Omnibus Accounts shall be referred to collectively herein as “Account(s).”
b. Through the Accounts, Schwab shall purchase and redeem shares, settle transactions, reconcile transactions, obtain pricing, reinvest distributions and maintain records solely in accordance with the operating procedures set forth in Exhibit A hereto (“Operating Procedures”). The parties agree to transfer accounts, communicate with Fund shareholders and perform other obligations in accordance with the Operating Procedures, as applicable to each Fund. The parties acknowledge and agree that Fund Company’s obligations under the Operating Procedures may be performed directly or through SDC or Distributor acting as agent for Fund Company and each Fund. Fund reserves the right to reject any order for shares for any reason, provided that such rejection is no later than 11:00 a.m. Eastern Time on the business day immediately following trade date for trades settling on that business day, and 12:00 p.m. Eastern Time for all other trades.
2. Qualification Requirements.
x. Xxxxxx will only place purchase orders for shares of a Fund on behalf of an MFMP investor whose account address is in a state or other jurisdiction in which Fund Company, either directly or through Distributor, has advised Schwab that, under applicable law, such Fund’s shares are either qualified for sale or exempt from such qualification. Fund Company shall advise Schwab immediately (i) if any such qualification of shares is terminated, (ii) if any such exemption is no longer applicable, or (iii) if it wishes Schwab not to place purchase orders for a Fund on behalf of MFMP investors whose account addresses are in a particular state or other jurisdiction.
1
b. With respect to shares of Funds held in Omnibus Accounts, Schwab will, upon request, (i) furnish Fund Company, through Distributor as its agent, with monthly written statements of the number of shares of each Fund purchased on behalf of MFMP investors whose account addresses are in one or more states or other jurisdictions indicated by Fund Parties or (ii) on a daily basis, transmit to an electronic database provider with whom Schwab has established effective systems interfaces information regarding the number of shares of each Fund purchased on behalf of MFMP investors whose account addresses are in each state for retrieval by Fund Parties. Fund Parties shall be responsible for all reasonable fees and other reasonable charges of such database provider in connection with Xxxxxx’x transmission of such information to and Fund Company’s retrieval of such information from such database provider.
3. Compliance Responsibilities.
a. Fund Parties are 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 material prepared by Schwab that was not published or provided to Schwab by or on behalf of Fund Parties or any Affiliate (defined below) of Fund Company or accurately derived from information published or provided by or on behalf of Fund Company or any Affiliate (“Fund Materials”), provided, however, that material shall not be deemed to be accurately derived from Fund Materials unless such material includes all material facts necessary to make the material not misleading and presents such information in a fair and balanced manner), (ii) the distribution and tabulation of proxies in accordance with all applicable laws, rules and regulations (except for such proxy related services provided by Xxxxxx’x 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 Parties and each Affiliate of Fund Company, with all applicable laws, rules, and regulations (including the Investment Company Act of 1940, as amended (the “1940 Act”), and the Investment Advisers Act of 1940, as amended), and the rules and regulations of each self-regulatory organization with jurisdiction over Fund Parties or any Affiliate of Fund Company, except to the extent that the failure to so comply by Fund Parties or any Affiliate of Fund Company is caused by Xxxxxx’x breach of this Agreement or its willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement. Fund Company and Distributor’s responsibilities under Sections 3.a.(i) through 3.a.(iv) include, but are not limited to, compliance of information published, distributed, or made available, and activities conducted through, the Internet and any other electronic medium. For purposes of this Agreement, an “Affiliate” of a person means (i) any person directly or indirectly controlling, controlled by, or under common control with, such person, (ii) any officer, director, partner, corporation, or employee of such person, and (iii) if such person is an investment company, any investment advisor thereof or any member of the advisory board thereof.
b. In the event that an Omnibus Account holds five percent (5%) or more of the outstanding Fund shares, Fund Company, will be responsible for requesting Schwab to confirm its status as shareholder of record and to confirm whether any MFMP investor beneficially owns five percent (5%) or more of the outstanding Fund shares through its Schwab brokerage account. For this purpose, Fund Company, shall indicate in its inquiry the number of Fund shares that equal five percent (5%) of outstanding Fund shares. Schwab shall promptly reply to any such inquiries.
x. Xxxxxx is responsible for Xxxxxx’x compliance with all applicable laws, rules and regulations governing Xxxxxx’x performance under this Agreement, except to the
2
extent that Xxxxxx’x failure to comply with any law, rule, or regulation is caused by Fund Company or a Xxxxxxxx Party’s breach of this Agreement, or its willful misconduct or negligence in the performance of or failure to perform its obligations under this Agreement.
x. Xxxxxx acknowledges and agrees that, as between Fund Parties and Schwab, it is Xxxxxx’x compliance responsibility to (i) make any required suitability determination of any Fund as an investment for an MFMP investor; (ii) accurately and verifiably determine any MFMP investor’s breakpoint eligibility and other Fund provided, publicly disclosed methods of obtaining a reduced or eliminated sales charge (collectively “Discount(s)”) on a Fund’s shares and to notify the Fund contemporaneously with each order it places in an Account of any Discounts on the order; and (iii) assess any applicable sales charge (including both front end sales loads and contingent deferred sales charges) and any applicable short-term redemption fee payable by an MFMP investor on each transaction.
e. Fund Parties acknowledge and agree that (i) as of the effective date of this Amendment as to any Fund, as set forth on Schedule I hereto (the “Effective Date”), no provision in the prospectus or statement of additional information of such Fund conflicts with Xxxxxx’x obligations under this Agreement or imposes any obligation on Schwab not set forth in this Agreement, and (ii) after the Effective Date as to any Fund, Fund Parties shall have the obligation to notify Schwab in the event that any prospective change in the prospectus or statement of additional information of such Fund may cause such conflict or impose such new obligation upon Schwab. In case of any such change, Schwab and Fund Parties shall (1) work together in good faith to amend this Agreement to reflect such changed or new obligation, and (2) if the parties cannot reach agreement on amendment prior to the effective date of that obligation, take one of the following actions, as deemed necessary and as mutually agreed upon by the parties: (A) suspend purchases of shares of such Fund until such time as the parties amend this Agreement, or (B) terminate this Agreement as to such Fund.
x. Xxxxxx will provide a daily activity report to each Fund for each such Fund’s Omnibus Account(s). In addition, (A) with respect to any Fund with a contingent deferred redemption fee (“CDSC”), Schwab shall provide a periodic report on the aging of CDSC share lots in the Omnibus Account(s) and a daily or periodic report on CDSC share lot conversions (pursuant to Section 11.e. of the Operating Procedures) for each such Fund’s Omnibus Account(s), (B) with respect to any Fund with aging rules for Rule 12b-1 Plan payments, Schwab shall provide a periodic report on the aging of Rule 12b-1 Plan share lots for each such Fund’s Omnibus Account(s], and [C] Schwab shall provide fund parties with such information and in an agreed upon format and frequency pursuant to Exhibit D.
4. Payments.
a. In consideration of services provided by Schwab in connection with networking the Sub-Accounts, Shareholder Servicing Agent, as agent for a Fund and on its behalf, shall pay a quarterly fee calculated on the basis of the annual fee per Sub-Account set forth for the Fund on Schedule I (“Networking Fee”). At the end of each calendar quarter, Schwab will calculate the Networking Fee for any such Fund for such quarter by multiplying the number of Sub-Accounts for a Fund on the last day of such quarter on which the New York Stock Exchange is open for trading (“Business Day”) by one quarter of the Networking Fee for such Fund. The Shareholder Servicing Agent may pay the Networking Fee based upon its own calculation, however, if there is a material discrepancy between the payment calculated by the Shareholder Servicing Agent and Xxxxxx’x invoice, the parties will confer with a goal to resolving such discrepancy. The Networking Fee is due by Shareholder Servicing Agent each quarter upon receipt of the invoice from Schwab setting forth such fee. Payment shall be made through NSCC’s Commission Settlement Service or through wire transfer. To the extent payments are made by wire transfer, such wire transfer shall be separate from wire transfers of redemption proceeds or distributions under this Agreement.
3
b. In consideration of services provided by Schwab in connection with maintaining the Omnibus Account(s), Shareholder Servicing Agent, as agent for a Fund and on its behalf, shall pay the quarterly asset based maintenance fee (“ABMF”) set forth for such Fund on Schedule I. At the end of each calendar quarter, Schwab will calculate the ABMF for any such Fund for such quarter by multiplying the average Daily Value (defined below) of shares of such Fund held in the Account(s) by the ABMF rate set forth for such Fund on Schedule I, and shall xxxx it in arrears. “Daily Value” shall mean the net asset value of shares reported by such Fund to Schwab through NSCC’s Mutual Fund Profile Service or other mutually agreed means (“NAV”). For purposes of calculating the ABMF, no adjustments will be made to the Daily Value for an incorrect NAV unless such error is corrected and the corrected NAV is reported to Schwab before 8:00 p.m. Eastern Time on the first Business Day after the day to which the error relates. The ABMF is due by Shareholder Servicing Agent each quarter upon receipt of the invoice from Schwab setting forth such fee. Payment shall be made through NSCC’s Commission Settlement Service or through wire transfer. To the extent payments are made by wire transfer, such wire transfer shall be separate from wire transfers of redemption proceeds or distributions under this Agreement.
c. Payments to Schwab for networking of Sub-Accounts under 4.a. and for maintaining Omnibus Accounts under 4.b. are in addition to the usual and customary broker’s commission or concession and/or fees pursuant to a plan of distribution and/or shareholder servicing adopted under the 1940 Act (“12b-1 Plan”) payable to Schwab for the services it provides in connection with the purchase and holding of a Fund’s shares by MFMP investors. Distributor shall cause such concession, commission, and 12b-1 Plan fee information to be set up accurately, and to be kept current, in the appropriate fields of NSCC’s Mutual Fund Profile Service (“MFPS”), and shall pay them to Schwab as follows:
(i) On each purchase of shares, any applicable broker’s commission or concession due to Schwab shall be paid to Schwab in net settlement of the order. Schwab acknowledges that no broker’s concession or commission will be paid on the reinvestment of dividends or capital gains.
(ii) Any 12b-1 Plan fees due on a Fund’s shares held in Sub-Accounts shall be calculated by the Fund and paid to Schwab through NSCC’s Commission Settlement Service or, upon notification to and consent of Schwab, through wire transfer. If by wire transfer, such wire transfer shall be separate from wire transfers of redemption proceeds or distributions under this Agreement.
(iii) Any 12b-1 Plan fees due on a Fund’s shares held in Omnibus Accounts, shall be calculated by Schwab and invoiced to Distributor according to the rules and on the schedule the Fund or its agents have set up on MFPS for 12b-1 Plan payments for such Fund. Payment is due upon receipt of the invoice setting forth such fee. Payment may be made through NSCC’s Commission Settlement Service or, upon notification to and consent of Schwab, through wire transfer. If by wire transfer, such wire transfer shall be separate from wire transfers of redemption proceeds or distributions under this Agreement. With respect to shares that have transferred into an Omnibus Account after initial purchase directly from the Fund or through another financial intermediary, Schwab will rely on the share lot history(ies), if applicable, as received from the Fund in transferring such shares, as further set forth in Section 10.i. of the Operating Procedures.
d. The parties understand and agree that the receipt of compensation by Schwab under this Agreement is for the services Schwab provides as broker and agent for MFMP investors in connection with the purchase of Fund shares, and for ongoing shareholder and administrative services provided on such shares as set forth herein, and is not conditioned upon the performance of promotional, marketing, or similar distribution-related activities on behalf of the Fund.
4
5. Representations and Warranties.
a. Distributor represents and warrants that each Fund meets the conditions and qualifications set forth in Rule 2830(d) and 2830(l)(1)(4) of the Conduct Rules of the National Association of Securities Dealers Regulation, Inc., (“NASDR”) as amended from time to time, which enable a member of the National Association of Securities Dealers, Inc. (“NASD”) to offer or sell shares of the Fund.
b. Distributor represents and warrants that it is a Member of the National Securities Clearing Corporation (“NSCC”) and that it and each Fund Party or agent acting on its behalf have access to the NSCC’s Fund/Serv system (“Fund/Serv”) and the NSCC’s Networking system (“Networking”).
x. Xxxxxx represents and warrants that it is a Member of the NSCC and has access to Fund/Serv and Networking.
x. Xxxxxx represents and warrants that the person signing this Agreement on its behalf is an officer authorized to execute this Agreement on behalf of Schwab.
e. Anti-Money Laundering Certification. Schwab represents and warrants that it has established an Anti-Money Laundering Program reasonably designed to comply with all applicable anti-money laundering laws and regulations, including applicable provisions of the Bank Secrecy Act and the USA PATRIOT Act of 2001, as well as with the regulations administered by the U.S. Department of the Treasury’s Office of Foreign Assets Control. As part of its Anti-Money Laundering Program, Schwab will take reasonable steps to identify the customers for whom it acts in its dealings with the Funds and will monitor customer transactions in order to detect and, where appropriate, report suspicious activities.
f. Fund Company represents and warrants that the person signing this Agreement on its behalf is an officer of Fund Company authorized to execute this Agreement on behalf of Fund Company, and that any agent of Fund Company completing and delivering Exhibit B or C of this Agreement is authorized by Fund Company to complete and deliver such Exhibit.
g. If the foregoing representations and warranties made by Fund Parties and Schwab are no longer accurate then the applicable Fund Party or Schwab, as appropriate, will promptly notify the other party thereof.
6. Use of Parties’ Names; No Publication of Terms.
a. Neither Schwab nor Fund Company shall make public the terms and conditions of this Agreement, nor any discussions relating thereto, without the consent of the other party, which consent shall not be unreasonably withheld; provided however, if public disclosure of such information is required by law, such consent shall be deemed granted and the party required to disclose such information shall, if practicable, notify the other party prior to such disclosure. Notwithstanding the foregoing, Schwab agrees that Fund Company may file a copy of Xxxxxx’x standard form of Load Fund Operating Agreement, which shall be provided to Fund Company by Schwab, as an exhibit to the Funds’ registration statement, to the extent such filing is deemed necessary by the Fund, in its sole discretion.
b. Without Xxxxxx’x prior written consent, Fund Company shall acquire no right to use, and shall not use, cause or permit use of the names, characters, artwork, designs
5
trade names, copyrighted materials, trademarks, or service marks of Schwab, its related or subsidiary companies, parent, employees, directors, shareholders, assigns, successors, or licensees: (i) in any advertising, promotional materials or activities, publicity, press release, client list, or public or private presentation or promotion; (ii) to express or to imply any endorsement of Fund Company or any of its Affiliates or their respective offerings or services; or (iii) in any manner other than expressly in accordance with this Agreement.
c. Fund Company authorizes Schwab to use the names or other identifying marks of Fund Company and Fund in connection with the operation of the MFMP. Fund Company may withdraw this authorization as to any particular use of any such name or identifying marks at any time (i) upon Fund Company’s reasonable determination that such use would have a material adverse effect on the reputation or marketing efforts of Fund Company or such Fund, or (ii) if any of the Funds cease to be available through the MFMP; provided, however, that Schwab may, in its reasonable discretion and for a reasonable time after the events set forth in (i) or (ii) above in light of all relevant facts and circumstances, continue to use materials prepared or printed prior to the withdrawal of such authorization or in the process of being prepared or printed at the time of such withdrawal.
7. Confidentiality.
a. Definition of Confidential Information. The term confidential information shall mean all information that either party discloses (the “Disclosing Party”), whether in writing, electronically, or orally, to the other party (the “Receiving Party”), whether in tangible or intangible form, including but not limited to: (i) any information concerning a party, its agent, or its licensor’s technology, such as systems, source code, databases, hardware, software, programs, applications, engine protocols, routines, models, displays and manuals, including, without limitation, the selection, coordination, and arrangement of the contents thereof and (ii) any unpublished information concerning research activities and plans, customers, marketing or sales plans, sales forecasts or results of marketing efforts, pricing or pricing strategies, costs, operational techniques, strategic plans, Customer Information (as defined below), and unpublished financial information, including information concerning revenues, profits, and profit margins will be deemed confidential and proprietary to the Disclosing Party, regardless of whether such information was disclosed intentionally or unintentionally or marked as “confidential” or “proprietary” (“Confidential Information”).
b. Treatment of Confidential Information. Each party agrees that: (a) the Receiving Party will hold any and all Confidential Information it obtains in strictest confidence and will use and permit use of Confidential Information solely for the purposes of this Agreement; (b) without limiting the foregoing, the Receiving Party shall use at least the same degree of care, but no less than reasonable care, to avoid disclosure or use of this Confidential Information as the Receiving Party employs with respect to its own Confidential Information; (c) the Receiving Party may disclose or provide access only to its responsible employees or agents who have a need to know and are under confidentiality agreements or otherwise subject to confidentiality provisions at least as restrictive as this Agreement with respect to the Confidential Information, and may make copies of Confidential Information only to the extent reasonably necessary to carry out the obligations hereunder; and (d) the Receiving Party will notify the Disclosing Party immediately of any unauthorized disclosure or use, and will cooperate with the Disclosing Party to protect all proprietary rights in and ownership of its Confidential Information.
c. Exceptions. This Section 7 shall not prohibit or limit the Receiving Party’s use, disclosure, reproduction, or dissemination of the Disclosing Party’s Confidential Information which, (a) is or becomes public domain information or material through no fault or breach on the part of the Receiving Party, (b) was already rightfully known (without restriction
6
on disclosure) to the Receiving Party prior to being disclosed by or obtained from the Disclosing Party, as evidenced by written records kept in the ordinary course of business of, or by proof of actual use by, the Receiving Party, (c) has been or is hereafter rightfully received by the Receiving Party from a third person (other than the Disclosing Party) without restriction on disclosure and without breach of a duty of confidentiality to the Disclosing Party; (d) has been independently developed by the Receiving Party without access to Confidential Information of the Disclosing Party; or (e) is required to be disclosed, but only to the extent required, by court order, or pursuant to applicable law, regulation or self-regulatory organization rules, provided that the Receiving Party notifies the Disclosing Party so that the Disclosing Party may have a reasonable opportunity to obtain a protective order or other form of protection against disclosure. Notwithstanding any such compelled disclosure by the Receiving Party, such compelled disclosure will not otherwise affect the Receiving Party’s obligations hereunder with respect to Confidential Information, including Customer Information, so disclosed.
It shall be presumed that any Confidential Information in the Receiving Party’s possession is not within any of the exceptions above, and the burden is upon the Receiving Party to prove otherwise by records and documentation.
d. Customer Information. As between Schwab and Fund Parties, Customer Information (as defined below) will remain the sole and exclusive property of Schwab. “Customer Information” shall mean all disclosed data information, however collected or received, including without limitation, through “cookies,” Web bugs, or non-electronic means pertaining to or identifiable to Xxxxxx’x customer(s) or prospective customers, to investment advisors, third party administrators, or introducing brokers placing transactions through Schwab, or to the customers of such intermediaries, including, without limitation, name, address, e-mail address, TIN or social security number, passwords, account numbers, personal financial information, personal preferences, demographic data, marketing data, data about securities transactions, credit data, or any other identification data.
e. Treatment of Customer Information. Each Fund Party represents and warrants that at all times during and after the terms of this Agreement, it shall use, handle, collect, maintain and safeguard Customer Information in accordance with: (i) Xxxxxx’x published privacy policy as it is in effect from time to time; (ii) the confidentiality and non-disclosure requirements of this Agreement; (iii) the Xxxxx-Xxxxx-Xxxxxx Act of 1999 (Public law 106-102, 113 stat. 1138) and its implementing regulations (e.g. Securities and Exchange Commission Regulation S-P and Federal Reserve Board Regulation P) as applicable and as they may be amended from time-to-time; and (iv) such other applicable federal and state privacy, confidentiality, consumer protection, advertising, electronic mail, and data security laws and regulations, whether in effect now or in the future. Fund Company specifically agrees, without limitation of the foregoing, that names, addresses and Fund share positions of non-objecting Schwab customers (“NBO information”) furnished to it or its Affiliates or agents pursuant to Rule 14b-1(b)(3) of the Securities Exchange Act of 1934, as amended (the ‘34 Act”), will be used only as permitted by Rule 14a-13(b)(4) under the ‘34 Act. Fund Parties will maintain and enforce safety and physical security procedures with respect to its access and maintenance of Customer Information that are at least equal to industry standards for such types of locations and which provide reasonably appropriate technical and organizational safeguards against accidental or unlawful destruction, loss, alteration, or unauthorized disclosure of or access to Customer Information and any other data owned by Schwab and accessible by Fund Parties under this Agreement. Fund Parties will report to Schwab immediately any and all breaches of security or unauthorized access to Fund Parties’ systems that either Fund Party detects or becomes aware of and which affect the security of Customer Information.
f. Each party acknowledges that any breach of this Section 7 would result in immediate and irreparable harm for which monetary damages would be inadequate. Accordingly, each party will be entitled to equitable relief to remedy any threatened or actual breach of this Section 7 by any other party, as well as such other relief as any court of competent jurisdiction deems appropriate.
7
8. Indemnification.
a. Distributor and each Fund shall severally indemnify and hold harmless Schwab and each director, officer, employee and agent of Schwab and any of its Affiliates 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 untrue statement of material fact or any omission of a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading in any prospectus, registration statement, annual or other periodic report or proxy statement of such Fund or in any advertising or promotional material published or provided to Schwab by or on behalf of such Fund, Distributor, or any Affiliate of such Fund, or accurately derived from information published or provided by or on behalf of such Fund, Distributor, or any Affiliate of such Fund (“Fund Materials”), provided, however, that material shall not be deemed to be accurately derived from Fund Materials unless such material includes all material facts necessary to make the material not misleading and presents such information in a fair and balanced manner; (ii) any violation of any law, rule, or regulation relating to the registration or qualification of shares of the Fund; (iii) any breach of any representation, warranty or agreement contained in this Agreement by Distributor or such Fund; or (iv) any willful misconduct or negligence in the performance of, or failure to perform, their obligations under this Agreement by Distributor or such Fund, except in each case to the extent such Losses are caused by Schwab or its Affiliates’ breach of this Agreement or willful misconduct or negligence in the performance of, or failure to perform, their obligations under this Agreement.
b. Shareholder Servicing Agent shall indemnify and hold harmless Schwab and each director, officer, employee and agent of Schwab and any of its Affiliates from and against Losses incurred by any of them arising out of (i) any breach of any representation, warranty or agreement contained in this Agreement by Shareholder Servicing Agent; or (ii) any willful misconduct or negligence in the performance of, or failure to perform, their obligations under this Agreement by Shareholder Servicing Agent, except in each case to the extent such Losses are caused by Schwab or its Affiliates’ breach of this Agreement or willful misconduct or negligence in the performance of, or failure to perform, their obligations under this Agreement.
x. Xxxxxx shall indemnify and hold harmless Fund Company and Distributor, and their directors, officers, employees, and agents and any of their Affiliates from and against any and all Losses incurred by any of them arising out of (i) Schwab or its Affiliates’ dissemination of information regarding Fund Company or a Fund that contains any untrue statement of material fact or any omission of material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading and that was not published or provided to Schwab or its Affiliates by or on behalf of Fund Company, Distributor, or any Affiliate of Fund Company, or accurately derived from Fund Materials, provided, however, that material shall not be deemed to be accurately derived from Fund Materials unless such material includes all material facts necessary to make the material not misleading and presents such information in a fair and balanced manner, (ii) any breach by Schwab or its Affiliates of any representation, warranty or agreement contained in this Agreement, or (iii) any willful misconduct or negligence by Schwab or its Affiliates in the performance of, or failure to perform, its obligations under this Agreement, except in each case to the extent such Losses are caused by Fund Company, Distributor, or any Affiliate of Fund Company’s breach of this Agreement, or willful misconduct or negligence in the performance of, or failure to perform, their obligations under this Agreement.
8
x. Xxxxxx shall indemnify and hold harmless Shareholder Servicing Agent, and its directors, officers, employees, and agents and any of their Affiliates from and against any and all Losses incurred by any of them arising out of (i) any breach by Schwab or its Affiliates of any representation, warranty or agreement contained in this Agreement, or (ii) any willful misconduct or negligence by Schwab or its Affiliates in the performance of, or failure to perform, its obligations under this Agreement, except in each case to the extent such Losses are caused by Shareholder Servicing Agent, Fund Company, Distributor, or any Affiliate of Fund Company’s breach of this Agreement, or willful misconduct or negligence in the performance of, or failure to perform, their obligations under this Agreement.
e. Except to the extent otherwise expressly provided in this Agreement, no party assumes any 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.
f. These indemnification terms shall survive termination of this Agreement.
9. Governing Law. This Agreement shall be governed by and interpreted under the laws of the State of California applicable to contracts between California residents entered into and to be performed entirely within the State.
10. Arbitration. In the event of a dispute between Fund Parties or either of them and Schwab relating to or arising out of this Agreement or the relationship of the parties hereto, the parties will submit the matter to arbitration in accordance with subsections a., b., and c. below.
a. Arbitration will be held in accordance with the rules and regulations of the NASD, except, (i) in the event that 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, and (ii) in the event that a non-party to this Agreement brings an arbitration against Schwab or Fund Parties relating to or arising out of this Agreement, then the parties agree to arbitrate in whichever arbitration forum such arbitration is brought.
b. If arbitration is brought by one of the parties hereto, the number of arbitrators shall be three (3), and they will be selected in accordance with the rules and regulations of the NASD or American Arbitration Association, as appropriate. The arbitrators shall be attorneys, or retired attorneys, specialized in Securities Law. Any award of the arbitrators will be limited to compensatory damages and will be conclusive and binding upon the parties. The arbitration shall be governed by the Federal Arbitration Act, 9 U.S.C. Sections 1-16 to the exclusion of state laws inconsistent therewith, and judgment upon the award may be entered in any court having jurisdiction.
c. Each party shall bear its own expenses, including legal and accounting fees, if any, with respect to the arbitration. The arbitrator will designate the party to bear the expenses of the arbitration or the respective amounts of such expense to be borne by each party. Any costs, fees or taxes involved in enforcing the award shall be fully assessed against and paid by the party resisting enforcement of the award.
d. Nothing in this Section 10 will prevent any party from resorting to judicial proceedings for injunctive relief to prevent serious and irreparable harm or injury to the party or to others.
9
11. Exhibits. Fund Parties shall deliver or cause to be delivered to Schwab a completed Exhibit B and C to establish a Fund in the MFMP. Schwab shall be entitled to rely on the information contained in the Exhibits B and C, as may be amended by Fund Parties from time to time, in connection with the purchase and redemption of Fund shares and the processing of transactions related to Fund shares. If an Exhibit B or C has been completed and delivered to establish a Fund in the MFMP under an Operating Agreement, then Fund Parties may, upon notice to Schwab, adopt such completed and delivered Exhibit for this Agreement, in which case such Exhibit shall be an Exhibit to both this Agreement and the Operating Agreement; and any amendment to such Exhibit shall amend both Agreements.
12. Reliance on Communications. Any communication, instruction or notice made pursuant to this Agreement may be made orally, provided that such oral communication is on a recorded telephone line or is promptly confirmed in writing by facsimile transmission. Each of Schwab and its Affiliates is entitled to rely on any communications or instructions that it reasonably believes were provided to it by Distributor, Fund Company, or their agents authorized to provide such communications or instructions to Schwab or its Affiliates. Each Fund Party and their agents is entitled to rely on any communications or instructions they reasonably believe were provided to them by Schwab or its Affiliates, or its agents authorized to provide such communications or instructions to Fund Parties or their agents.
13. Incorporation; Entire Agreement. All Exhibits and Schedules furnished pursuant to this Agreement, as it may be amended from time to time, are by this reference incorporated into and made a part of this Agreement. This Agreement 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 the parties.
14. Amendment.
a. This Agreement may be amended only by a writing executed by each party hereto that is to be bound by such amendment, except as provided in this Section 14.
b. Exhibit A may be amended unilaterally by Schwab on forty (40) days’ written notice to Fund Company, unless the parties agree in writing to a shorter notice period for such amendment, provided however, that this Agreement (without regard to Exhibit A) shall control to the extent Exhibit A is inconsistent with the rights and obligations of the parties herein.
c. Exhibit B must be amended unilaterally by Fund Parties in the event of any change to the information contained therein as to a Fund, and amendment must occur in a manner timed to coincide with such change so that Schwab may have opportunity to object to such change as not operationally feasible and either, in its sole discretion: (A) suspend purchases of shares of such Fund until such time as such change is operationally feasible for Schwab and the parties may thus amend this Agreement, or (B) terminate this Agreement as to such Fund. Notwithstanding the foregoing, Schwab may treat the Exhibit B for a Fund as immediately amended by any change to the mutual fund information for a Fund provided by Fund Parties on NSCC’s Mutual Fund Profile Service under Section 4.e. of the Operating Procedures which conflicts with information provided on Exhibit B, and may require Fund Parties to immediately conform Exhibit B accordingly.
d. Exhibit C (Fund Contacts) must be amended unilaterally by Fund Parties in the event of any change to the information contained therein as to a Fund.
10
| 15. | Effectiveness and Termination |
a. The effective date of this Agreement as to any Fund shall be the later of the date on which this Agreement is made or the date set forth opposite the name of the Fund on Schedule I.
b. This Agreement may be terminated as to any Fund by Schwab immediately upon written notice to Fund Company. This Agreement may be terminated as to any Fund by Fund Company upon thirty (30) days’ written notice to Schwab.
c. Notwithstanding anything to the contrary herein, if any portion of the fees is paid directly by a Fund or indirectly by such Fund through Distributor pursuant to a Rule 12b-1 Plan, then this Agreement may be terminated immediately by Fund Parties as to any Fund upon written notice to Schwab if the Agreement’s continuance as to such Fund is not specifically approved at least annually by the Fund’s board of directors in accordance with Rule 12b-1(b)(2). In addition, this Agreement (i) may be terminated at any time, with respect to such Fund, without the payment of any penalty, by vote of a majority of the Independent Board Members or by a vote of a majority of the outstanding voting securities of such Fund on thirty (30) days written notice to the other parties hereto; (ii) shall terminate automatically with respect to such Fund in the event of its assignment, as provided in the 1940 Act; and (iii) may be terminated immediately upon written notice to Schwab with respect to such Fund upon termination of such Fund’s Rule 12b-1 Plan pursuant to which all or a portion of the fees are paid directly or indirectly by such Fund.
d. Upon the termination date for any Fund, Schwab will no longer make the Fund shares available for purchase by investors through the MFMP. Schwab reserves the right to transfer the Fund shares of MFMP investors out of the Account. If Schwab continues to hold the Fund shares on behalf of MFMP investors in the Account, the parties agree to be obligated under, and act in accordance with, the terms and conditions of this Agreement with respect to such shares.
16. Role and Relationship of Schwab. The parties acknowledge and agree that any services provided by Schwab under this Agreement are administrative and related services only and are not the services of an underwriter or a principal underwriter of any Fund within the meaning of the Securities Act of 1933, as amended, or the 1940 Act, as applicable. This Agreement also does not constitute Schwab a transfer agent or an agent of Fund Company, any Fund or any of their Affiliates, and the parties agree that Schwab acts hereunder as an agent of its customers and other MFMP investors only.
17. No Waiver. The failure of either party to insist upon exercising any right under this Agreement in any instance or instances shall not to any extent preclude such party from asserting or relying upon such right in any other instance.
18. Counterparts. This Agreement may be executed in one or more counterparts, each of which will be deemed an original, and all of which together shall constitute one and the same instrument.
19. Headings. The headings of the sections or other subdivisions of this Agreement are for convenience of reference only and shall not affect the meaning, construction, operation, or effect of the terms hereof or otherwise be considered in the interpretation of this Agreement.
11
20. Effect of This Agreement. Any Operating Agreement, and, if applicable, Services Agreement, to which any Fund under this Agreement is also a party are inapplicable to the shares of such Fund under this Agreement (“Load Operating Agreement Shares”); and this Agreement is inapplicable to the shares of such Fund under the Operating Agreement, and, if applicable, Services Agreement (“Operating Agreement Shares”). Load Operating Agreement Shares and Operating Agreement Shares shall be kept segregated by Schwab.
IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized representative of the parties hereto.
| XXXXXXX XXXXXX & CO., INC.
|
||||||||||
| By: |
|
By: |
| |||||||
| Xxxx Xxxxx | Name: |
| ||||||||
| Senior Vice President | as |
|
of | |||||||
| Schwab Financial Products Operations | (Title) | |||||||||
| Date: |
|
each Fund Company, on behalf of each Fund Company and on behalf of each Fund | ||||||||
| Date: |
| |||||||||
| XXXXXXXX ADVISORS, INC. |
XXXXXXXX DATA CORP | |||||||||
| By: |
|
By: |
| |||||||
| Name: |
|
Name: |
| |||||||
| Title: |
|
Title: |
| |||||||
| Date: |
|
Date: |
| |||||||
12
SCHEDULE I TO THE LOAD FUND OPERATING AGREEMENT
| Fund Company |
Fund |
Share Class |
Purchase |
ABMF | Networking Fee |
Effective date | ||||||
| Xxxxxxxx Capital Fund, Inc. | Xxxxxxxx Capital Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Capital Fund, Inc. | Xxxxxxxx Capital Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Capital Fund, Inc. | Xxxxxxxx Capital Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Capital Fund, Inc. | Xxxxxxxx Capital Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Cash Management Fund, Inc. | Xxxxxxxx Cash Management Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Cash Management Fund, Inc. | Xxxxxxxx Cash Management Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Cash Management Fund, Inc. | Xxxxxxxx Cash Management Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Cash Management Fund, Inc. | Xxxxxxxx Cash Management Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Common Stock Fund, Inc. | Xxxxxxxx Common Stock Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Common Stock Fund, Inc. | Xxxxxxxx Common Stock Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Common Stock Fund, Inc. | Xxxxxxxx Common Stock Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Common Stock Fund, Inc. | Xxxxxxxx Common Stock Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Communications & Information Fund | Xxxxxxxx Communications & Information Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Communications & Information Fund | Xxxxxxxx Communications & Information Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Communications & Information Fund | Xxxxxxxx Communications & Information Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Communications & Information Fund | Xxxxxxxx Communications & Information Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Frontier Fund, Inc. | Xxxxxxxx Frontier Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Frontier Fund, Inc. | Xxxxxxxx Frontier Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Frontier Fund, Inc. | Xxxxxxxx Frontier Fund | Class D | MFMP | 7/24/07 |
{Continued on page 14}
13
SCHEDULE I TO THE LOAD FUND OPERATING AGREEMENT
{continued}
| Fund Company |
Fund |
Share Class |
Purchase Availability |
ABMF | Networking Fee |
Effective date | ||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Emerging Markets Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Emerging Markets Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Emerging Markets Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Emerging Markets Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Growth Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Growth Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Growth Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Smaller Companies Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Smaller Companies Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Smaller Companies Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Smaller Companies Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Technology Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Technology Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Technology Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx Global Technology Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx International Growth Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx International Growth Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx International Growth Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Global Fund Series, Inc. | Xxxxxxxx International Growth Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Growth Fund, Inc. | Xxxxxxxx Growth Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Growth Fund, Inc. | Xxxxxxxx Growth Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Growth Fund, Inc. | Xxxxxxxx Growth Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Growth Fund, Inc. | Xxxxxxxx Growth Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx High-Yield Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx High-Yield Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx High-Yield Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx High-Yield Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx U.S. Government Securities Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx U.S. Government Securities Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx High Income Fund Series | Xxxxxxxx U.S. Government Securities Fund | Class C | MFMP | 7/24/07 |
{Continued on page 15}
14
SCHEDULE I TO THE LOAD FUND OPERATING AGREEMENT
{continued}
| Fund Company |
Fund |
Share Class |
Purchase |
ABMF | Networking Fee |
Effective date | ||||||
| Xxxxxxxx Income & Growth Fund, Inc. | Xxxxxxxx Income and Growth Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Income & Growth Fund, Inc. | Xxxxxxxx Income and Growth Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Income & Growth Fund, Inc. | Xxxxxxxx Income and Growth Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Investment Grade Fixed Income Fund | Xxxxxxxx Core Fixed Income Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Investment Grade Fixed Income Fund | Xxxxxxxx Core Fixed Income Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx LaSalle Real Estate Fund Series Inc | Xxxxxxxx LaSalle Monthly Dividend Real Estate Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx LaSalle Real Estate Fund Series Inc | Xxxxxxxx LaSalle Monthly Dividend Real Estate Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx LaSalle Real Estate Fund Series Inc | Xxxxxxxx LaSalle Monthly Dividend Real Estate Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx LaSalle Real Estate Fund Series Inc | Xxxxxxxx LaSalle Monthly Dividend Real Estate Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx LaSalle Real Estate Fund Series Inc | Xxxxxxxx LaSalle Global Real Estate Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx LaSalle Real Estate Fund Series Inc | Xxxxxxxx LaSalle Global Real Estate Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series Inc | Xxxxxxxx Colorado Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Georgia Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Louisiana Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Massachusetts Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Massachusetts Fund | Class C | MFMP | 7/24/07 |
{Continued on page 16}
15
SCHEDULE I TO THE LOAD FUND OPERATING AGREEMENT
{continued}
| Fund Company |
Fund |
Share Class |
Purchase |
ABMF | Networking Fee |
Effective date | ||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Maryland Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Michigan Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Michigan Fund | Class C | MFMP | 7/24/07 | ||||||||
| Seligman Municipal Fund Series, Inc. | Seligman Minnesota Fund | Class A | MFMP | 7/24/07 | ||||||||
| Seligman Municipal Fund Series, Inc. | Seligman Missouri Fund | Class A | MFMP | 7/24/07 | ||||||||
| Seligman Municipal Fund Series, Inc. | Seligman National Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx National Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx National Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx New York Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx New York Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Ohio Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx Oregon Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Fund Series, Inc. | Xxxxxxxx South Carolina Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Series Trust | Xxxxxxxx California High Yield Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Series Trust | Xxxxxxxx California Quality Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Series Trust | Xxxxxxxx Florida Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Series Trust | Xxxxxxxx Florida Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Municipal Series Trust | Xxxxxxxx North Carolina Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx New Jersey Municipal Fund, Inc. | Xxxxxxxx New Jersey Municipal Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx New Jersey Municipal Fund, Inc. | Xxxxxxxx New Jersey Municipal Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Pennsylvania Municipal Fund Series | Xxxxxxxx Pennsylvania Municipal Fund Series | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund 2015 | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund 2015 | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund 2025 | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund 2025 | Class C | MFMP | 7/24/07 |
{Continued on page 17}
16
SCHEDULE I TO THE LOAD FUND OPERATING AGREEMENT
{continued}
| Fund Company |
Fund |
Share Class |
Purchase |
ABMF | Networking Fee |
Effective date | ||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund 2035 | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund Core | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx TargetHorizon ETF Portfolios Inc | Xxxxxxxx TargETFund Core | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Harvester Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 10 Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 10 Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 10 Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 20 Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 20 Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 20 Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 30 Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 30 Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Time Horizon/Harvester Series | Xxxxxxxx Time Horizon 30 Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Large Cap Value Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Large Cap Value Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Large Cap Value Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Large Cap Value Fund | Class D | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Smaller Cap Value Fund | Class A | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Smaller Cap Value Fund | Class B | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Smaller Cap Value Fund | Class C | MFMP | 7/24/07 | ||||||||
| Xxxxxxxx Value Fund Series, Inc. | Xxxxxxxx Smaller Cap Value Fund | Class D | MFMP | 7/24/07 |
| MFMP | Indicates that Fund is available for purchase by all MFMP Investors. |
17
EXHIBIT A
Operating Procedures
1. Accounts.
a. Account Opening. Schwab may open Omnibus Account(s) and Sub-Accounts with each Fund, which shall each be established and maintained pursuant to Networking.
b. Registration of Accounts.
Each Account shall be registered:
Xxxxxxx Xxxxxx & Co., Inc.
Special Custody Account for the Exclusive Benefit of Customer(s)
Attention: Mutual Funds
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Xxxxxx’x TIN on an Account through the NSCC system will identify it as an Omnibus Account. Schwab will note on each Sub-Account through the NSCC system the BIN, SSN/TIN, state and zip code of the account address of the MFMP investor.
c. Account Set Up for Capital Gains and Dividends.
(i) Each Omnibus Account will be set up for the reinvestment of capital gains and dividend distributions, unless otherwise specified in writing by Schwab.
(ii) Schwab will designate whether capital gains and/or dividend distributions for each Sub-Account should be received in cash or reinvested in shares of the applicable Fund.
d. Account Identification. The Fund or its agent shall designate each Omnibus Account and each Sub-Account with an account number. The account number will be the means of identification when the parties are transacting in either an Omnibus Account or a Sub-Account.
e. Electronic Access to Accounts. Fund Company or its agent shall arrange with its transfer agent for Schwab to have electronic access via NSCC Networking to the transfer agent system for account inquiry capability on all information maintained by the transfer agent with respect to each Account.
f. Possession and Control. The parties acknowledge that each Account is in Xxxxxx’x name for the benefit of an MFMP investor or MFMP investors who are the beneficial owners of a Fund’s shares. Fund Parties agrees that all Fund shares held by Schwab on behalf of MFMP investors shall be carried in a custody account for the exclusive benefit of customers and shall not be subject to any right, charge, security interest, lien, or other claim against Schwab in favor of the Fund or Fund Company.
g. No Closure of Omnibus Accounts. The Omnibus Accounts shall be kept open on the Fund’s books regardless of a lack of activity or small position size, except to the extent that Schwab takes specific action to close an Omnibus Account or otherwise provides its written consent to such closure.
18
h. Additional Accounts. Schwab 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 MFMP. Fund Company agrees that it will not establish additional accounts for Schwab without Xxxxxx’x prior written instruction.
i. Reservation of Right to Move Shares. Schwab reserves the right to issue instructions to each Fund to move shares between an Account and any other Account Schwab may open.
j. Conversion between Sub-Accounts and Omnibus Accounts. In the event Sub-Accounts are to be combined into Omnibus Accounts or Omnibus Accounts are to be divided into Sub-Accounts, which Schwab may determine in its sole discretion from time to time, Fund Company shall reasonably cooperate with Schwab to accomplish such planned conversion. Schwab shall discuss with Fund Company, a conversion plan and shall obtain consent from Fund Company, for the timing of such conversion, which consent shall not be unreasonably withheld. The conversion plan shall include procedures for conversion, procedures and reasonable time frames for resolving discrepancies arising from the conversion, procedures for conversion between billing and payment of Networking fees and the PPMF under Sections 4.a. and 4.b. of the Agreement, an approximation of the number of Sub-Accounts in the case of conversion of Omnibus to Sub-Accounts, and such other matters as necessary to effect the conversion.
k. Tax Withholding. Schwab shall comply in all respects with any and all applicable obligations relating to withholding pursuant to the Internal Revenue Code of 1986, as amended (“Code”), and shall promptly advise Fund Company of any matter that may affect the responsibilities of the Fund Company to MFMP investors pursuant to the Code.
l. Account Transfer Agent Records and Reconciliation of Sub-Accounts. The official transfer agent records of each Account shall be as determined by Fund Company, Schwab and Fund Company shall each designate liaison personnel to communicate, control, and execute promptly any required corrections or reconciliations with respect to any Sub-Account, and shall handle such activity with respect to Omnibus Accounts as set forth in 1.m. below.
m. Reconciliation of Omnibus Accounts.
(i) Schwab shall verify, on a next day basis, Orders (as defined below) placed for any Omnibus Account with a Fund. All activity in the Omnibus Account must be reflected. Therefore, any “as of” activity must be shown with its corresponding “as of” dates.
(ii) The Fund will provide to Schwab full daily activity detail and, at a minimum, weekly account positions via NSCC or other electronic transmission, unless otherwise mutually agreed upon by the parties.
(iii) The parties agree to notify each other and correct any error in any Omnibus Account with a Fund upon discovery. If an error is not corrected by the day following discovery, all parties agree to make best efforts to avoid this from hindering any routine daily operational activity in the Omnibus Account.
19
2. Shareholder Information.
a. Agreement to Provide Information. As a financial intermediary to each Fund under Rule 22c-2, promulgated pursuant to the 1940 Act (“Rule 22c-2”), on and after October 16, 2007, or such earlier date as Schwab notifies Fund Parties that MFMP systems are able to accommodate the request (“Compliance Date”), Schwab agrees to provide a Fund, other than a Fund which is an “excepted fund” as defined in Rule 22c-2(b), upon written request in a form reasonably required by Schwab and as otherwise set forth in this Section 2.a., the taxpayer identification number (“TIN”) or, in the case of non-U.S. shareholders for whom a TIN is unavailable, the International Taxpayer Identification Number or other government issued identifier, if known, of any: (A) beneficial owners of Fund shares; (B) retirement plan participants; or (C) holders of interests in a variable annuity or variable life insurance contract (“Shareholder(s)”) that purchased, redeemed, transferred or exchanged shares of the Fund through the Omnibus Account(s) during the period covered by the request, and the amounts and dates of each such purchase, redemption, transfer, or exchange of shares (“Shareholder Information”).
(i) Period Covered by Request. All requests for Shareholder Information must set forth the specific date(s) or period after the Compliance Date for which the information is sought. If a Fund deems it necessary to request Shareholder Information older than ninety (90) days from the date of request, the Fund acknowledges that such request will precipitate a longer response time.
(ii) Form and Timing of Response. Schwab agrees, on and after the Compliance Date and subject to the terms of this Section 2.a., to transmit the Shareholder Information that is on its books and records to the Fund as soon as reasonably practicable after Xxxxxx’x receipt of a request. If the requested information pertains to a Shareholder investing through an account held by an indirect intermediary, as defined in Rule 22c-2 (“Indirect Intermediary”), and is not on Xxxxxx’x books and records, Schwab agrees, upon further request by the Fund, to use reasonable efforts to: (a) promptly obtain the Shareholder Information from the Indirect Intermediary and transmit that information to the Fund; (b) obtain assurances from the Indirect Intermediary that the Shareholder Information will be provided directly and promptly to the Fund; or (c) if the Shareholder Information cannot be provided pursuant to (a) and (b) above, block further purchases and exchanges of Fund shares in the Indirect Intermediary account. Schwab agrees to inform the Fund regarding which of the foregoing options it will follow. The Shareholder Information will be communicated to the Fund in a format consistent with the NSCC Standardized Data Reporting Format, or in such other format as may be mutually agreed upon by the parties.
b. Agreement to Restrict Trading. Schwab agrees, on and after the Compliance Date and subject to the terms of this Section 2.b., to execute written instructions from the Fund to restrict or prohibit further purchases or exchanges of shares by a Shareholder that has been identified by the Fund as having engaged in transactions of the Fund’s shares, either directly or indirectly through Xxxxxx’x Account(s), that violate policies established by the Fund for the purpose of eliminating or reducing dilution of the value of the Fund’s shares (“Restriction Instructions”). If the Restriction Instructions pertain to a Shareholder investing through an account held by an Indirect Intermediary, Schwab will forward the Restriction Instructions to the Indirect Intermediary, and either (A) obtain assurances from the Indirect Intermediary that it will promptly execute the Restriction Instructions, or (B) if the Indirect Intermediary cannot execute the Restriction Instructions, block all further purchases and exchanges of Fund shares in the Indirect Intermediary account.
(i) Form of Instructions. Restriction Instructions must be received by Schwab in writing in a form required by Schwab.
20
(ii) Timing of Response. Schwab agrees to execute, and to obtain assurances that any Indirect Intermediary will execute, the Restriction Instructions according to the terms set forth herein as soon as reasonably practicable, but not later than five (5) Business Days after receipt of the Restriction Instructions by Schwab.
(iii) Confirmation by Schwab. Schwab will provide confirmation to the Fund, in writing or in a manner mutually agreed upon by the parties, that Schwab has, as applicable, either (a) executed the Restriction Instructions, (b) obtained assurances from the Indirect Intermediary that it has executed the Restriction Instructions, or (c) blocked further purchases and exchanges of Fund Shares in the Indirect Intermediary’s account. Schwab agrees to provide such confirmation as soon as reasonably practicable, but not later than ten (10) Business Days after such action has been taken.
c. Anti-Dilution Policy Compliance Pending Rule 22c-2. Until the Compliance Date, Schwab shall provide such information concerning MFMP investors through the Account(s) (“Investor Information”) as Fund Company requests on behalf of each Fund for purposes of each Fund’s compliance with its own policies established for the purpose of eliminating or reducing dilution of the value of outstanding securities issued by the Fund including, without limitation, policies concerning roundtrips and other forms of market timing and excessive trading (collectively, “Anti-Dilution Policy”), but not more than Schwab customarily makes available to funds participating in Xxxxxx’x Mutual Fund Marketplace from time to time, as determined in Xxxxxx’x sole discretion, and as is required by applicable law, rule, or regulation. Fund Company acknowledges and agrees that it has been informed of the parameters of such provision of Investor Information by Schwab and has determined that it is sufficient for each Fund to determine compliance with its own Anti-Dilution Policy. If at any time Fund Company concludes that the Investor Information Schwab provides is no longer sufficient for a Fund to make such determination, Fund Company shall in writing instruct Schwab to suspend further purchases of such Fund’ shares through Xxxxxx’x Mutual Fund Marketplace until such time as the Fund can make such determination with the Investor Information provided by Schwab.
d. Limitations on Use of Information. The Investor Information (and Shareholder Information, on and after the Compliance Date) is provided by Schwab to Fund Company subject to Fund Company’s compliance with the terms and conditions governing Customer Information under this Agreement. Fund Company shall not use the Investor Information (or Shareholder Information, on and after the Compliance Date) received pursuant to this Section for marketing or any other purposes other than for the purpose of eliminating or reducing dilution of the value of Fund shares.
e. Definition of “Purchase”. For purposes of Section 2 of this Exhibit A, the term “purchase” does not include the automatic reinvestment of dividends.
3. Authorization to Receive Orders on Fund’s Behalf.
a. Authorization of Schwab. Fund Company hereby designates and authorizes Schwab to receive purchase and redemption orders in proper form (“Order(s)”) from MFMP investors on the Fund’s behalf for purposes of Rule 22c-1 under the 1940 Act, so that any such MFMP investor will receive the share price next computed by the Fund after the time at which such MFMP investor places its Order with Schwab.
b. Authorization of Sub-Designees. Fund Company further agrees that Schwab may designate and authorize such intermediaries as it deems necessary, appropriate or desirable (“Sub-Designees”), to receive Orders from MFMP investors on the Fund’s behalf for purposes of Rule 22c-1 under the 1940 Act, so that any such MFMP investor will receive the share price next computed by the Fund after the time at which such MFMP investor places its
21
Order with Sub-Designee. Schwab shall be liable to Fund Company and the Funds for compliance with the terms of this Section 3.b. to the same extent as if Schwab itself had acted or failed to act instead of the Sub-Designee.
c. Fund Company Representations and Warranties. In connection with this Section 3, Fund Company represents and warrants to Schwab that all necessary legal and other actions have been taken to authorize Schwab and any Sub-Designee to receive purchase and redemption Orders from MFMP investors on behalf of the Funds for purposes of Rule 22c-1 under the 1940 Act by each Fund’s board of directors or board of trustees, 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.
x. Xxxxxx Representations and Warranties. In connection with this Section 3, Schwab represents and warrants that:
(i) Xxxxxx’x internal control structure over the processing and transmission of Orders for Fund transactions is suitably designed to prevent or detect on a timely basis Orders received after Market Close from being aggregated with Orders received before Market Close and to minimize errors that could result in late transmission of Orders to the Funds (“Internal Control Procedures”).
(ii) Schwab will review annually the adequacy of its Internal Control Procedures and will change and modify them as necessary to maintain their adequacy.
(iii) Each Sub-Designee will be required to adopt and implement written internal controls adequate to prevent or detect on a timely basis Orders received after Market Close from being aggregated with Orders received before Market Close (“Sub-Designee Internal Control Procedures”).
(iv) Each Sub-Designee will be required to review annually the adequacy of its Sub-Designee Internal Control Procedures and to change and modify them as necessary to maintain their adequacy.
(v) Upon request by Fund Company Schwab will provide Fund Company with a description of its Internal Control Procedures and a certification from Schwab that they are adequate as of the most recent annual review as well as a certification that each Sub-Designee has adopted and implemented Sub-Designee Internal Control Procedures that are adequate as of the most recent annual review.
4. NSCC.
a. In General. Unless otherwise agreed to by the parties, each Account maintained at NSCC will be maintained in accordance with Matrix Level 3 (full broker control) as designated by the NSCC.
b. NSCC Covenants. Schwab and Fund Company agree (i) 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”), Defined Contribution Clearance and Settlement (“DCC&S”), Networking (“Networking”), and the NSCC’s Mutual Fund Profile Service (“MFPS”) 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, Networking, DCC&S, and MFPS will be accurate, complete, and in the format prescribed by the NSCC; (iv) to adopt, implement, and maintain procedures reasonably designed to ensure the accuracy of all transmissions through Fund/SERV, Networking, DCC&S, and MFPS, and (v) to limit the access to, and the inputting of data into, Fund/SERV, Networking, DCC&S, and MFPS to persons specifically authorized by the party.
22
c. Fund/SERV Transactions. On each Business Day, Fund Company agrees (i) to accept and effect changes in its records upon receipt of purchase, redemption and registration instructions from Schwab electronically through Fund/SERV; (ii) to process any instructions received from Schwab through Fund/SERV in a timely manner; and (iii) to confirm or reject any Fund purchase or redemption Order on the same day such Order is received, to the extent practicable, but in any event no later than 12:00 p.m. Eastern Time on the next business day for trades settling T+3 and by 11:00 a.m. Eastern Time for trades settling T+1 (the “Trade Rejection Deadline”) or to notify Schwab prior to the applicable Trade Rejection Deadline of any event, such as a systems failure of Fund Company or the NSCC, that would prohibit Fund Company from confirming or rejecting such an Order. Fund Company acknowledges and agrees that its confirmation of any Fund purchase or redemption Order received from Schwab through Fund/SERV will be an acceptance of such Order, and that such acceptance may be revoked only upon Xxxxxx’x receipt of a revocation of acceptance prior to the applicable Trade Rejection Deadline. If Fund Company does not confirm or reject an Order prior to the applicable Trade Rejection Deadline or notify Schwab as provided in this Section prior to the applicable Trade Rejection Deadline, such Order will be deemed confirmed and accepted by Fund Company immediately after the applicable Trade Rejection Deadline.
d. Networking. For each Account established and/or maintained pursuant to Networking, Fund Company shall accept and effect changes in its records upon receipt of instructions, communications and actions from Schwab electronically through Networking without supporting documentation from Schwab or the beneficial owners of Fund shares. Fund Company shall be responsible for processing any such instructions, communications or actions from Schwab and for executing the instructions of Schwab in a timely manner.
e. NSCC’s Mutual Fund Profile Service. Fund Company shall provide Schwab with mutual fund information for each Fund in a timely manner through MFPS. “Mutual fund information” shall be as prescribed by the MFPS and shall include, but not be limited to, as applicable: sales charge, breakpoint qualification, discount linkage, waiver, broker’s commission or concession, 12b-1 Plan fee, and the rules governing each; the daily net asset value and, if applicable, public offering price of Fund shares; Blue Sky qualification information; dividend and distribution information; and merger and Fund closing information. Schwab shall be entitled to rely on any mutual fund information provided through MFPS, even if such mutual fund information conflicts with any verbal or other written information provided by Fund Parties under this Agreement, including that provided on Exhibit B.
5. Trade Processing.
a. Transmission of Orders. Schwab will transmit Orders to Fund Company via NSCC in a Fund/SERV file format, except as provided below.
(i) Orders Transmitted Through NSCC’s Fund/SERV. Except as set forth in Sections 5.a.(ii) and 5.b.(i) below, (1) Orders received by Schwab or a Sub-Designee prior to the close of 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 Schwab to Fund Company through NSCC in a Fund/SERV file format in the manner and within the time frame permitted by NSCC Fund/SERV Rules on Day 1 (Schwab will notify Fund Company of the need for exception processing under Section 5.b. by 8:00 p.m. Eastern Time on Day 1) ; and (2) Orders received by Schwab or a Sub-Designee at or after Market Close on Day 1 (such Orders are referred to herein as “Day 2 Trades”) will be transmitted by Schwab to Fund Company through NSCC in a Fund/SERV file format in the manner and within the time frame permitted by NSCC Fund/SERV Rules on the next Business
23
Day (“Day 2”) (Schwab will notify Fund Company by 8:00 p.m. Eastern Time on Day 2 in the event of the need for exception processing under Section 5.b.(i).
(ii) Orders Transmitted Outside NSCC’s Fund/SERV. If transmittal of Orders through NSCC is not operationally feasible for a Fund in accordance with these Operating Procedures, and except as set forth in Section 5.b.(i) below, (1) Orders received by Schwab or a Sub-Designee prior to Market Close on Day 1 will be transmitted by Schwab to the Fund by other means by 8:00 p.m. Eastern Time on Day 1 (also “Day 1 Trades”); and (2) Orders received by Schwab or Sub-Designees at or after Market Close on Day 1 will be transmitted by Schwab to the Fund by other means by 8:00 p.m. Eastern Time on Day 2 (also “Day 2 Trades”).
b. Transmission Exceptions. Notwithstanding Sections 5.a.(i) and (ii) above,
(i) Fund Company agrees that if Schwab is prevented from transmitting Day 1 Trades to a Fund as provided in Sections 5.a.(i) or 5.a.(ii) above, as applicable, on Day 1 due to unforeseen circumstances (such as computer system failures experienced by Schwab, or the NSCC, natural catastrophes, or other emergencies), provided that Schwab notifies Fund Company of such contingency prior to 8:00 p.m. Eastern Time on Day 1, Schwab may:
(1) transmit such Day 1 Trades for an Omnibus Account to the Fund through NSCC prior to 8:00 p.m. Eastern Time on Day 2, provided further that Schwab notifies Fund Company of the Day 1 Trade information prior to Market Open on Day 2;
(2) transmit such Day 1 Trades for an Omnibus Account through means other than NSCC prior to Market Open on Day 2 or such other mutually agreed upon time; or
(3) transmit such Day 1 Trades for Sub-Accounts through NSCC as soon as operationally feasible, provided further that Schwab notifies Fund Company of the Day 1 Trade information prior to Market Open on Day 2.
(ii) Rejected Trades Remediated. In the event that Fund Company rejects a Day 1 Trade transmitted via NSCC (or the Fund notifies Schwab pursuant to Section 4.c.(iii) 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 Schwab, Schwab may follow the procedures for transmitting Orders set forth in Section 5.b.(i) above for Day 1 Trades.
c. Transmission of Order Information. With respect to any Order placed for an Account, Schwab shall provide electronic or other written notification to Fund Parties, contemporaneously with each such transmission, of the applicable sales charges, Discounts, and short term redemption fees (under Section 7.f. of these Operating Procedures) assessed on the Order (i) for such MFMP investor, as to an Order for a Sub-Account, and (ii) for such MFMP investor or investors, as to an Order for an Omnibus Account (“Order Information”). Fund Parties shall cooperate reasonably to allow Schwab, at Xxxxxx’x request and upon the provision by Schwab of the appropriate registration and linkage information, to allow MFMP investors rights of accumulation based on Fund shares held in accounts directly with the Fund or by other brokers or banks. Schwab represents and warrants that it or an intermediary clearing transactions through it holds documentary validation for each waiver of a contingent deferred sales charge transmitted as Order Information pursuant to this Section; that it will retain such for the period required by any law, rule, or regulation; and that it will make such documents available to Fund Parties in an agreed manner upon reasonable notice.
Fund Parties shall not, in any instance, charge any sales loads or give any Discounts, including breakpoint Discounts, on any Order for an Omnibus Account without Order Information from
24
Schwab directing such action. Fund Parties expressly acknowledge that only Schwab has information concerning the individual order(s) making up the aggregate purchase or redemption Order placed for an Omnibus Account, and that Fund Parties must use Xxxxxx’x Order Information to accurately process such Orders.
6. Fund’s Pricing of Orders.
a. Pricing Information. On every Business Day, Fund Company will make available to Schwab prior to 7:00 p.m., Eastern Time, each Fund’s closing net asset value, and public offering price if applicable, for that day (“Share Price”) and/or notification of no Share Price for that day via NSCC Price & Rate files. Fund Company shall provide such information on a best efforts basis taking into consideration any extraordinary circumstances arising at the Fund (e.g. natural disasters, etc.).
b. Pricing of Orders. If timely transmitted by Schwab in accordance with Section 5.a. above for regular processing, or in accordance with Section 5.b. above for exception processing upon notification, Fund Company agrees that (a) Day 1 Trades will be effected at the Share Price calculated as of Market Close on Day 1, and (b) Day 2 Trades will be effected at the Share Price calculated as of Market Close on Day 2. Fund Company 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, settlement and effecting distributions.
7. Order Settlement and Redemption Fees.
a. Settlement Date. Schwab and Fund Company shall settle Day 1 Trades, including Day 1 Trades rejected and subsequently remediated prior to Market Open on Day 2 pursuant to Section 5.b.(ii) hereof, on Day 2, and shall settle Day 2 Trades, including Day 2 Trades rejected and subsequently remediated prior to Market Open on Day 3 pursuant to Section 5.b.(ii) hereof, on Day 3 (each, respectively, a “Settlement Date”). Notwithstanding the foregoing, the parties may agree to “T+3” settlement in Sub-Accounts as to a Fund, and if so, with respect to the Sub-Accounts for such Fund, Schwab and Fund Company shall settle Day 1 Trades, including Day 1 Trades rejected and subsequently remediated prior to Market Open on Day 2 pursuant to Section 5.b.(ii) hereof, on Day 4, and shall settle Day 2 Trades, including Day 2 Trades rejected and subsequently remediated prior to Market Open on Day 3 pursuant to Section 5.b.(ii) hereof, on Day 5 (each respectively, but only with respect to such agreed Sub-Accounts, also a “Settlement Date”).
b. Method of Settlement.
(i) All Orders transmitted by Schwab outside of NSCC shall be settled by Schwab and Fund Company outside of NSCC on the appropriate Settlement Date.
(ii) All Orders transmitted by Schwab through NSCC to a Sub-Account shall be settled by Schwab and Fund Company through the NSCC’s money settlement process on the appropriate Settlement Date.
(iii) All Orders transmitted by Schwab through NSCC to an Omnibus Account, at Xxxxxx’x sole discretion, shall be settled by Schwab and Fund Company either outside of the NSCC’s money settlement process or through the NSCC’s money settlement process on the appropriate Settlement Date.
(iv) Any commission or concession due Schwab on a purchase Order in an Account shall settle net with the Order. Any CDSC or short term redemption fee under Section 7.f. due a Fund on a redemption Order in a Sub-Account shall settle net with the
25
order. Any CDSC or short term redemption fee under Section 7.f. due to a Fund on a redemption Order in an Omnibus Account shall be remitted by Schwab to the Fund on no less than a monthly basis in a manner mutually agreed upon by the parties.
c. Settlement Outside NSCC. With respect to settlement outside NSCC’s money settlement process,
(i) As to all purchase Orders for a Fund placed by Schwab on a given trade date, whether for an Omnibus Account or for Sub-Account(s), Schwab will transmit the purchase price to the Fund less any concessions or commissions due Schwab, by wire transfer on the appropriate Settlement Date.
(ii) As to all redemption Orders for a Fund placed by Schwab on a given trade date in Sub-Accounts, Fund Company will cause the Fund to send to Schwab the proceeds of the redemption Order less any assessed CDSCs and/or short term redemption fees under Section 7.e, by wire transfer on the appropriate Settlement Date. Wire transfers of redemption proceeds shall be separate from wire transfers for other purposes.
(iii) As to all redemption Orders for a Fund placed by Schwab on a given trade date in an Omnibus Account, Fund Company will cause each such Fund to send to Schwab the aggregate proceeds of the redemption Order by wire transfer on the appropriate Settlement Date. Wire transfers of redemption proceeds shall be separate from wire transfers for other purposes. In the event that a Fund cannot verify redemption proceeds in an Omnibus Account, Fund Company agrees to settle trades and forward redemption proceeds in accordance with these Operating Procedures based on information provided by Schwab. Schwab will be responsible for the accuracy of all trade information provided by it. Any assessed CDSCs and short term redemption fees under Section 7.f. shall be remitted by Schwab to the Fund on a no less than monthly basis in a manner mutually agreed upon by the parties.
(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 Company shall, on the day the wire is sent, notify Schwab of such entries. The cost of the wire transfer is the responsibility of the party sending the wire.
(v) 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 7.e. below for Fund Company.
d. Notification of Extended Settlement. Should a Fund need to extend settlement on an aggregate trade, Fund Company must notify Schwab by 7:00 p.m. Eastern Time on trade date to discuss the extension. For purposes of determining the length of settlement on an aggregate trade, Fund Company agrees to treat shareholders that hold Fund shares through the Account the same as it treats all other shareholders, including those that hold Fund shares directly with the Fund and those that hold indirectly through another financial intermediary. 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 Section 7.e. below for Fund Company.
e. Interest on Late Settlement. 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 actions set forth below.
26
(i) Charge interest on the amount of the redemption proceeds due to it, as follows:
(1) 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) For each day following the first day, 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:
(1) Schwab may settle purchase orders and redemption orders net of each other for such Fund; and/or
(2) Schwab may net any redemption proceeds still due to it against any net or gross purchase amount due from Schwab to such Fund.
f. Short-Term Redemption Fees.
(i) For each Fund that imposes a short term redemption fee, Fund Company shall complete and execute a form provided by Schwab, and as may be revised by Schwab from time to time, which shall instruct Schwab in the operational requirements, consistent with Xxxxxx’x operational capabilities, for imposing such fee (“Redemption Fee Instruction Form”), (A) prior to the Effective Date for such Fund, and (B) at least forty-five (45) Business Days prior to any new short term redemption fee or any change in an existing short term redemption fee. Fund Company acknowledges and agrees that Schwab may rely on the last executed Redemption Fee Instruction Form for any Fund until at least forty-five (45) Business Days after Fund Company has completed and executed a new Redemption Fee Instruction Form.
(ii) Schwab agrees to impose on MFMP investors any short term redemption fee for which Fund Company has provided a Redemption Fee Instruction Form pursuant to Section 7.f.(i) above.
(iii) In the event that Fund Company cannot agree to the terms and conditions set forth in the Redemption Fee Instruction Form as to a new or changed redemption fee pursuant to Section 7.f.(i)(B) above due to operational incompatibility or any other reason, then coincident with such new or changed redemption fee, Schwab will take either one of the following actions in its sole discretion: (A) suspend purchases of shares of such Fund until such time as Fund Company can agree to the terms and conditions set forth in the Redemption Fee Instruction Form, or (B) terminate this Agreement as to such Fund.
8. Distributions and Dividends.
a. Information Required by Schwab. For each Account, Fund Company shall provide all Fund distribution and dividend information as follows: (i) the record date, ex-dividend date, and payable date with respect to the Fund as soon as practicable after it is
27
announced, and will use best efforts to provide that information three (3) days prior to record date, but in any event no later than the record date, (ii) the record date share balance in the Account the distribution rate per share on the first Business Day after record date, (iii) the distribution rate and distribution type by 3:00 p.m. Eastern Time on ex-dividend date or promptly after Fund Company’s receipt of the distribution rate and type if that information is not known or received by Fund Company prior to 3:00 p.m. Eastern Time.; and (iv) the reinvest price per share as soon as reasonably practicable after the Fund determines its Net Asset Value. but in no event later than 7:00 pm Eastern Time on the record date (unless another time is agreed to in writing by the parties). Other distribution information required by Schwab from time to time for payment of distributions to its MFMP investors shall be provided by Fund Parties on such dates as are agreed upon between Schwab and Fund Parties, but no later than payable date.
b. Payment of Distributions and Dividends.
(i) Reinvestment Election Payment. For each Account designated by Schwab for the payment of capital gains distributions and/or dividends in additional shares of a Fund, Fund Company shall, on the payable date, credit to the applicable Account the aggregate number of full and fractional shares of the Fund reinvested as a result of such capital gains distributions and/or dividends.
(ii) Cash Election Payment. For each Account designated by Schwab for the payment of capital gains distributions and/or dividends in cash, Fund Company shall, if the Account is processed through NSCC, at Xxxxxx’x sole discretion, follow the method of settlement set forth in either 8.b.(ii)(1) or 8.b.(ii)(2) below, and shall, if the Account is processed outside of NSCC, follow the method of settlement set forth in 8.b.(ii)(2) below.
(1) Fund Company shall pay to Schwab through the NSCC’s money settlement process, by no later than the second Business Day following payable date (“P+2”), the full amount of such capital gains distributions and/or dividends.
(2) Fund Company shall wire to the designated Schwab bank account the full amount of such capital gains distributions and/or dividends on the first Business Day following payable date (“P+1”).
(iii) Cash Election Payment from Omnibus Reinvestment Account. For each Omnibus Account designated by Schwab for the payment of capital gains distributions and/or dividends in additional shares of a Fund, for purposes of effecting cash distributions and cash dividends through such Omnibus Account for MFMP investors who have elected through Schwab to receive their capital gains distributions and/or dividends in cash, Schwab shall, prior to 10:00 a.m., Eastern Time, on P+1, give notification to Fund Company in a manner agreed to by the parties of the aggregate number of Fund shares which resulted from reinvestment of distributions or dividends for MFMP investors who had elected to receive distributions in cash. Fund Company shall make an adjusting reconciling transaction to void the purchase of such number of shares at the reinvest price per share. Schwab shall use the proceeds from such adjusting reconciling transaction to pay the distribution or dividend in cash to MFMP investors who have elected to receive such distributions or dividends in cash. For each Omnibus Account processed through NSCC, settlement of such adjusting reconciling transaction shall be by either the method set forth in 8.b.(iii)(1) or the method set forth in 8.b.(iii)(2), at Xxxxxx’x sole discretion. For Omnibus Accounts processed outside of NSCC, settlement shall be by the method set forth in 8.b.(iii)(2):
(1) If Schwab submits such adjusting reconciling transaction through NSCC on P+1, Fund Company shall pay the proceeds from such adjusting reconciling transaction no later than the next Business Day (P+2)
28
(2) If Schwab submits such adjusting reconciling transaction on P+1 by means other than through Fund/SERV, Fund Company shall wire the proceeds resulting from such adjusting reconciling transaction to the designated Schwab bank account on P+1.
c. Interest on Late Settlement of Distributions. If Fund Company has not paid to Schwab the cash proceeds of the adjusting reconciling transaction as required in a reinvest Omnibus Account under Section 8.b.(iii) or has not paid to Schwab the cash proceeds as required in a cash Account under Section 8.b.(ii), either through the NSCC’s money settlement process on P+2 or, for Accounts processed outside of the NSCC, by wire transfer on P+1 (each a “Due Date”), then Fund Company, shall pay interest on the amount of any cash proceeds outstanding on or after the Due Date at the Federal Funds rate.
9. Daily Dividend Funds. For each Fund that pays daily dividends, Schwab shall accrue dividends commencing on purchase settlement date and terminating on redemption trade date for any shares held in an Omnibus Account or, in the alternative, shall use a method of accrual mutually agreed upon by the parties. For each such Fund, whether shares are held in an Omnibus Account or Sub-Accounts, Fund Company shall provide to Schwab on a daily basis the following record date information via the NSCC’s Mutual Fund Profile Service, Networking, or other mutually agreed upon means: daily rate, cumulative daily rate for the period, account share balance, account accrual dividend amount (for that day), weekend and holiday accrual methodology, account accrual dividend amount (for period to date), and account transfers and period-to-date accrual amounts.
10. Transfer of Accounts.
a. ACATS-Fund/SERV Service. The parties agree to participate in the NSCC’s Automated Customer Account Transfer Services (“ACATS”)-Fund/SERV service. Fund Company shall process transfers between accounts held by other street name brokers or banks and the Account for a Fund through NSCC’s ACATS-Fund/SERV service immediately upon receipt of instructions from Schwab.
b. Non-ACATS-Fund/SERV Transfers. For the purpose of expediting transfers that must be processed outside of NSCC’s ACAT-Fund/SERV service, Fund Company agrees to transfer shares between accounts held directly with the Fund or by other street name brokers and the Account for a Fund by (i) accepting change of dealer maintenance or transaction instruction through Networking, or (ii) if Networking is not available, by accepting by facsimile transmission a summary sheet of information indicating the customers’ names, account numbers, the Fund affected, and the number of shares to be re-registered or liquidated (“Summary Sheet”).
c. Signature Guarantee. Schwab represents and warrants that for each transfer and liquidation transfer it initiates pursuant to Sections 10.a. and 10.b. above, it or the intermediary for which it clears transactions holds each underlying instruction for re-registration or liquidation signed by its customer, and that its customer’s signature on such instruction is signature guaranteed by Schwab or the intermediary for which Schwab clears transactions, as applicable, pursuant to the Securities Transfer Agents Medallion Program (“STAMP”). Schwab, or, if applicable, the underlying intermediary, will retain these documents for the period required by any applicable law, rule, or regulation.
d. Indemnification. Schwab agrees to indemnify and hold harmless Fund Company, the Fund, and each director, officer, employee and agent of Fund Company (“Indemnified Person”) from and against any and all Losses incurred by any of them arising out of the impropriety of any transfer or liquidation transfer initiated by it and effected by the Fund
29
at Xxxxxx’x instruction in reliance on Section 10.c. to the same extent as provided under STAMP, except to the extent such Losses arise out of the failure of any Indemnified Person to comply with the instructions provided by Schwab as set forth in Sections 10.a. and b. above.
e. Settlement of Liquidation Transfers. Fund Company agrees to settle proceeds resulting from liquidation transfers with Schwab as set forth in Section 7 of these Operating Procedures.
f. No Individual FBO Accounts. Fund Company shall process all transfer and liquidation requests into the appropriate Account. At no time shall any Fund establish any separate account registered to Schwab for the benefit of an individual shareholder. In the event any such account is mistakenly opened, Schwab reserves the right to instruct the Fund to move Fund shares to the Account. Fund Company further agrees that it shall provide notification to Schwab prior to effecting transfers of shares into the Account(s), and shall not effect transfers of shares out of the Account(s) without Xxxxxx’x instruction, as provided in Sections 10.a. and b. above.
g. Qualified Custodian Status. Schwab represents and warrants that it is qualified as a custodian to accept in the Accounts shares from Fund XXX, Xxxxx, or 401(k) accounts.
h. Confirmation of Transfers. Fund Company must confirm to Schwab 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 customer and the Account, registration, accrued dividends and account type (i.e., XXX, Xxxxx, 401(k), etc.).
i. Share Lot Histories, XXXx, and ROAs. Fund Parties agree to supply to Schwab upon transfer of shares into an Account, and Schwab agrees to supply to Fund Parties upon transfer out of an Account, as soon as reasonably practicable, but in no event later than forty-five (45) days after confirmation of transfer under 10.h. hereto, all shareholder history of specific purchases, redemptions (including exchanges) and reinvestments for XXXX, 00x-0, or other age dependent fees, and all letters of intent and all linkages for rights of accumulation for such transferred shares (collectively, “Share History”) in a manner mutually agreed upon by the parties from time to time. Each of Schwab and Fund Parties may treat the Share History received as complete after such period and, in the case of a contingency or holding period for CDSC, 12b-1 Plan, or other age dependent fees for which no Share History has been received, treat such contingency period or holding period as having lapsed and act accordingly, including, by way of example and not limitation, by converting shares of a CDSC Fund under Section 11.e. of these Operating Procedures.
j. Trailing Dividends. Transfer processing after record date but prior to payable date will include all accrued dividends. Each Fund is responsible for monitoring all completed full transfers for “trailing” dividends. Should a “trailing” dividend appear in an account, a Fund shall send such dividend to Schwab within five (5) Business Days, along with a specific written notification thereof. Notification shall include details of the dividend and customer, including the customer’s social security number or taxpayer identification number, and/or the account number for the Account to which the transfer was made.
k. Share Certificates. If MFMP investors submit share certificates for transfer into their Schwab brokerage accounts, Schwab will send such certificates, properly endorsed to the applicable Fund, for transfer into the Account with such Fund. Upon Xxxxxx’x request, Fund Company agrees to provide the status of said certificates and book share balances.
30
11. General.
a. Record Maintenance.
(i) Schwab maintains records (or such records are maintained by an intermediary clearing trades through Schwab) for each MFMP investor who holds Fund shares through an Account, which records include:
(1) Number of shares;
(2) Date, price, and amount of purchases and redemptions (including dividend reinvestments), and date and amounts of dividends paid for at least the current year to date;
(3) Name and address of each of its customers, including zip codes and social security numbers or taxpayer identification numbers;
(4) Records of distributions and dividend payments;
(5) Any CDSC’s applicable to the shares, and documentary verification of the basis for any CDSC waiver;
(6) Any asset based sales charges paid on the shares;
(7) Any letters of intent and rights of accumulation with respect to the shares;
(8) Any transfers of shares; and
(9) Overall control records.
(ii) Schwab posts transactions in Fund shares to its customers’ brokerage accounts.
b. Shareholder Communication.
(i) Fund Company shall arrange with Schwab, or a mailing agent designated or approved by Schwab, for the distribution of the materials listed below to all of Xxxxxx’x customers who hold Fund shares, which distribution shall be so arranged by Fund Company as to occur immediately upon the effective date of the materials:
(1) All proxy or information statements prepared for circulation to shareholders of record of such Fund;
(2) Annual reports;
(3) Semi-annual reports;
(4) Quarterly reports (if applicable); and
(5) All updated prospectuses, supplements, and amendments thereto.
Fund Company shall be responsible for providing the materials and for Schwab or the mailing agent’s fees in connection with this service as well as for timely distribution. Fund Parties agrees to have Schwab or the mailing agent consolidate mailings of material to shareholders of more than one Fund if the material to be mailed is identical for all such Funds.
(ii) In addition to the materials listed above, Fund Company agrees to provide directly to Schwab all prospectuses, statements of additional information and supplements and amendments thereto, and annual and other periodic reports for each Fund in amounts reasonably requested by Schwab for distribution to its customers. Fund Company is obligated to supply these materials to Schwab in a timely manner so as to allow Schwab, at its own expense, to send current prospectuses and statements of additional information and periodic reports, immediately upon their effective dates, to customers and prospective customers requesting them through Schwab. Schwab will also send a current Fund
31
prospectus with purchase trade confirmations for the initial purchase of a Fund. Fund Company shall notify Schwab immediately of any change to a Fund’s prospectus.
(iii) If Schwab acts as clearing broker in an omnibus relationship with a correspondent bank or broker (“Correspondent”), upon the request of Schwab, Fund Company shall also provide to Schwab, in a timely manner, sufficient supplies of Fund materials identified in Sections 11(b)(i) and 11(b)(ii) for Schwab to give to Correspondent for the distribution of such materials to Correspondent’s customers.
(iv) Fund Company shall ensure that the prospectus of each Fund discloses that the purchase or sale of Fund shares through intermediaries may be subject to transaction fees or other different or additional fees, and includes such other disclosures as may be required by applicable laws, rules and regulations. Fund Company shall also ensure that either the prospectus, or the statement of additional information (“SAI”) if the SAI is incorporated in the prospectus, of each of its Funds discloses that:
(1) the Fund has authorized one or more brokers to receive on its behalf purchase and redemption Orders;
(2) such brokers are authorized to designate other intermediaries to receive purchase and redemption Orders on the Fund’s behalf;
(3) 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; and
(4) customer 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 and accepted by the Fund.
(v) Schwab mails statements to its customers 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 customer and the net asset value of each such Fund as of a recent date.
(vi) Schwab responds to customer inquiries regarding, among other things, share prices, account balances, dividend amounts and dividend payment dates. With respect to Fund shares purchased by customers, Schwab provides average cost basis reporting to assist customers in the preparation of income tax returns.
c. Dividend and Distribution Reporting.
(i) For annual tax reporting purposes, Fund Company (other than a Fund Company that invests in one or more pass-through entities for US Federal income tax purposes, including REITs and exchange-traded funds (“Pass-Through Entities”)), either directly or through a Xxxxxxxx Party acting as its agent, shall inform Schwab by January 15 of the portion of each Fund’s distributions that are taxable 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 qualifying dividend income, 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, and redemption proceeds. In addition, Fund Company is responsible for identifying and informing Schwab concerning any portion of any dividends and other distributions and payments attributable to any Fund gains or portfolio interest earned after the close of the Fund Company’s tax year that are not subject to tax
32
withholding if paid to non-United States persons. For a Fund Company that invests in Pass-Through Entities, such Fund Company shall provide Schwab with the information described above as soon as practicable, but in no event later than the date required by law.
(ii) In conformance with its status as a broker/dealer holding its customers securities in street name, Schwab shall prepare and file with the appropriate governmental agencies, such information, returns, and reports as are required to be so filed under applicable federal or state law, rule, or regulation to report (a) dividends and other distributions made, (b) amounts withheld on dividends and other distributions and payments, and (c) gross proceeds of sales transactions.
d. Reorganization Activities.
(i) Fund Closure Notification. If a Fund will be closed to new or subsequent purchases by shareholders (“Fund Closure”), Fund Company must notify Schwab as soon as practicable and shall use commercially reasonable efforts to complete and return a form closure notice provided by Schwab (“Fund Closure Form”) at least (2) Business Days prior to the Fund Closure. If a Fund is closed to business (both purchase and redemption) on any Business Day or any portion of a Business Day due to state or local holiday, inclement weather, operational problems, or any other reason, then Fund Company shall ensure that Schwab is notified as soon as practicable and shall work with Schwab to process any Orders taken by Schwab from MFMP investors during any period during which the Fund was closed but Schwab did not have notification of such closure.
(ii) Mergers, Splits and other Reorganization Activities. Upon notice from Fund Company as set forth in this Section 11.d(ii), Schwab shall effect mergers, splits, reverse splits, and other corporate actions and reorganization activities (except with respect to Fund Closure under paragraph (i) above) of a Fund for its customers (each a “Fund Event”). The notice must state the record date and type of Fund Event, and must be received by Schwab at least seven Business Days prior to the record date of the Fund Event. By 6:00 p.m. Eastern Time on the effective date of such Fund Event, Fund Company shall provide all relevant information related to the Fund Event, including, for example and as applicable, factors, field inputs, the ratio of a split, and factor of merged shares.
e. Share Lot Conversion. As to any share lot of a CDSC Fund held in an Account for which the contingency period has lapsed, the parties agree to cooperate to convert such shares into shares of another Fund of the multi-class, as applicable based on information provided under this Agreement by Fund Parties on Exhibit B and/or MFPS for such conversions.
f. Price, Distribution Rate and Other Fund Errors.
(i) In the event adjustments are required to correct any error in the computation of the Net Asset Value or public offering price of a Fund’s shares, in the distribution rate for a Fund’s shares, or otherwise, Fund Company shall notify Schwab upon discovering the need for such adjustment. Notification may be made orally, but must be confirmed in writing.
(ii) With respect to any Sub-Account, Fund Company, shall notify Schwab upon resolution of the error. With respect to any Omnibus Account, Schwab and Fund Company shall agree promptly and in good faith to a resolution of the error, and no adjustment for the error shall be taken in the Omnibus Account until such agreement is reached. Following resolution of an error in any Account, upon request by Schwab, Fund Company shall provide Schwab with written notification of the resolution. The letter shall be written on Fund Company letterhead and shall state for each day on which an error occurred
33
the incorrect price or rate, the correct price or rate, and the reason for the price or rate change. Fund Company agrees that Schwab may send this writing, or derivation thereof, to MFMP investors whose accounts are affected by the price or rate change.
(iii) If an MFMP investor has received cash in excess of what he or she is entitled, Schwab will, when requested by Fund Company and to the extent practicable and permitted by law, debit the MFMP investor’s brokerage account in 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 Schwab be liable to Fund for any such amounts, unless the error was caused by Xxxxxx’x breach of this Agreement or its willful misconduct or negligence in the performance of, or failure to perform, its obligations under this Agreement. Upon the request of Fund Company Schwab shall provide Fund Company with the name of the MFMP investor and other relevant information concerning the MFMP investor’s brokerage account to assist Fund Company in the collection from Xxxxxx’x customer of any such excess amount not repaid to the Fund.
(iv) If an adjustment is necessary to correct an error which has caused MFMP investors to receive dollars or shares less than that to which they are entitled, the Fund shall, as appropriate for Sub-Accounts and as mutually agreed by the parties for Omnibus Accounts pursuant to Section 11.f.(ii) above, make all necessary adjustments to the number of shares owned in the Account and/or distribute to Schwab any and all amounts of the underpayment. Schwab will credit the appropriate amount of such shares or payment to each MFMP investor.
(v) For purposes of making adjustments, including the collection of overpayments, Fund agrees to treat shareholders that hold Fund shares through an Omnibus Account the same as it treats all other shareholders, including those that hold Fund shares directly with the Fund and those that hold indirectly through another financial intermediary. When making adjustments for an error, a Fund shall not net transactions for that day in an Account.
g. Breakpoint Eligibility Corrections. In the event that Schwab notifies Fund Parties of a failure of conditions on a breakpoint Discount given an MFMP investor on a purchase Order in a Sub-Account, Fund Parties agree to work with Schwab to correct such Sub-Account, recover the applicable sales charge from such MFMP investor for the Fund, and pay to Schwab the broker’s concession due from it.
h. Redemptions in Kind. Distributor represents that with respect to each Fund that reserves the right to redeem any shares issued by the Fund in kind, rather than in cash, the Fund’s current practice is to redeem only in cash, rather than in kind, and that there are no current plans to change that practice. Distributor further agrees to notify Schwab immediately of any change to the Fund’s practice of redeeming exclusively in cash, and further, will contact Schwab by 8:00 p.m. Eastern Time on trade date to discuss any redemptions in kind. With respect to any redemption in kind by a Fund, Fund Company agrees that it will treat as a “shareholder” each shareholder that holds Fund shares through an Omnibus Account, provided that Schwab provides to Fund Company, upon request, the name or account number, number of Fund shares and other relevant information for each such shareholder. Fund Company acknowledges that treatment of Schwab as the sole shareholder of Fund shares held in an Omnibus Account for purposes of applying the limits set forth above would be inconsistent with the intent of such limits and could unfairly prejudice shareholders that hold Fund shares through an Omnibus Account.
i. Suspension of Purchases. Upon notice to Fund Company, Schwab may suspend purchases by any or all segments of MFMP investors of any or all classes of Fund shares made available through the MFMP for any period of time.
34
j. New Processing Systems. Fund Company agrees to cooperate to the extent possible with Schwab as Schwab develops and seeks to implement new processing systems for the MFMP.
35
