ORDER PLACEMENT PROCEDURES AMENDMENT
TO THE OPERATING AGREEMENT
This Order Placement Procedures Amendment ("Amendment") is made as of
December 1, 1997, by and between Xxxxxxx Xxxxxx & Co., Inc. ("Schwab"), a
California corporation; and each registered investment company ("Fund Company")
executing this Amendment on its own behalf and on behalf of each of the series
or classes of shares ("Fund(s)"), which are parties to an Operating Agreement
with Schwab, made as of November 27, 1995, as amended thereafter ("Operating
Agreement"). This Amendment amends the Operating Agreement. In the event that
there are no Funds, then the term "Fund(s)" shall mean "Fund Company."
Capitalized terms used, but not defined, in this Amendment shall have the
respective meanings given to them in the Operating Agreement.
WHEREAS, Schwab and Fund Company, on its own behalf and on behalf of
the Funds, have entered into the Operating Agreement pursuant to which shares of
the Funds are made available for purchase and redemption by Xxxxxx'x brokerage
customers through Xxxxxx'x Mutual Fund Marketplace-Registered Trademark-
("MFMP"); and
WHEREAS, Schwab and Fund Company desire to amend the Operating
Agreement to authorize Schwab to receive customer orders for purchase and
redemption of Fund shares on each business day up until the time at which the
Fund prices its shares, and to transmit those orders to the Fund or its transfer
agent or another Fund-designated agent (each of the three is individually
referred to herein as the "Order Accepter"), as appropriate, after the time at
which the Fund prices its shares, subject to the terms and conditions of this
Amendment.
NOW THEREFORE, in consideration of the foregoing and the mutual
promises set forth below, the parties hereto agree as follows:
1. AUTHORIZATION TO RECEIVE ORDERS. Fund Company hereby designates
and authorizes Schwab to receive purchase and redemption orders in proper form
("Orders") from Schwab customers on the Fund's behalf for purposes of Rule
22c-1, so that any such Schwab customer will receive the share price next
computed by the Fund after the time at which such customer places its order with
Schwab, as more specifically provided in this Amendment.
2. SUB-DESIGNEES OF SCHWAB. Fund Company further agrees that Schwab
may designate and authorize such intermediaries as it deems necessary,
appropriate or desirable, pursuant to such terms as are consistent with this
Amendment ("Sub-Designees"), to receive orders from their customers on the
Fund's behalf for purposes of Rule 22c-1, so that any such customer will receive
the share price next computed by the Fund after the time at which such customer
places its order with the intermediary, as more specifically provided in this
Amendment. Schwab shall be liable to Fund Company and the Funds for the
observance of the terms of this Amendment by the Sub-Designee.
3. RECEIPT AND TRANSMISSION OF ORDERS. Schwab agrees
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that, except as set forth in Section 4b below, (a) 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 will be transmitted
by Schwab to the Order Accepter by 8:00 p.m. Eastern Time on the same Business
Day ("Day 1 Trades"); and (b) Orders received by Schwab or Sub-Designees after
Market Close on any Business Day will be transmitted by Schwab to the Order
Accepter by 8:00 p.m. Eastern Time on the next Business Day ("Day 2 Trades").
4. FUND'S PRICING OF ORDERS.
a. Fund Company agrees that, except as set forth in Section 4b
below, Day 1 Trades will be effected at the net asset value of each Fund's
shares ("Net Asset Value") calculated as of Market Close on Day 1, provided such
trades are received by the Order Accepter by 8:00 p.m. Eastern Time on Day 1;
and Day 2 Trades will be effected at the Net Asset Value calculated as of Market
Close on Day 2, provided such trades are received by the Order Accepter by 8:00
p.m. Eastern Time 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,
effecting distributions.
b. Notwithstanding Sections 3 and 4a above, Fund Company agrees
that, if Schwab is prevented from transmitting Day 1 Trades to the Order
Accepter by 8:00 p.m. Eastern Time on Day 1
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due to unforeseen circumstances, such as computer system failures, natural
catastrophes, or other emergencies or human error, then Schwab may transmit such
Day 1 Trades by 9:30 a.m. Eastern Time on Day 2, and such Day 1 Trades will be
effected at the Net Asset Value calculated as of Market Close on Day 1, provided
that Schwab notifies the Order Accepter of such contingency prior to 8:00 p.m.
Eastern Time on Day 1.
5. SETTLEMENT. In accordance with the Operating Agreement, Schwab
and Fund Company will settle Day 1 Trades on Day 2 and will settle Day 2 Trades
on Day 3.
6. REPRESENTATIONS AND WARRANTIES.
a. Fund Company represents and warrants that each Fund's board
of directors or board of trustees has authorized the Fund Company and each Fund
to enter into this Amendment, or will ratify the action of the Fund Company and
each Fund of entering into this Amendment within four months after the date of
this Amendment.
b. Fund Company represents and warrants that it will cause each
Fund's board of directors or board of trustees thereafter periodically to review
the terms of this Amendment.
c. Fund Company represents and warrants that the person signing
this Amendment on its behalf and on behalf of each Fund is an officer so
authorized to execute this Amendment.
x. Xxxxxx represents and warrants that Xxxxxx'x internal control
structure over the processing and transmission of Orders for Fund transactions
is suitably designed to prevent
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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 under Section 4b above.
x. Xxxxxx represents and warrants that it will cause an
independent public accountant or other qualified independent party annually to
review Xxxxxx'x internal controls and prepare a written report to Schwab
concerning their adequacy for the obligations undertaken by Schwab under this
Amendment.
x. Xxxxxx represents and warrants that it will also require each
Sub-Designee to retain an independent public accountant or other qualified
independent party annually to review Sub-Designee's internal controls and
prepare a written report to Schwab and the Sub-Designee concerning their
adequacy for the obligations undertaken by Sub-Designee as set forth in this
Amendment.
x. Xxxxxx represents and warrants that, upon its receipt of its
internal control report and those of any Sub-Designee, described in Sections 6d
and 6e respectively, it will make them available to Fund Company or any Fund
upon request.
7. PROSPECTUS DISCLOSURE. Fund Company shall ensure that the
prospectus of each Fund adequately discloses that (i) the Fund has authorized
one or more brokers to accept on its behalf purchase and redemption orders; (ii)
that such brokers are authorized to designate other intermediaries to accept
purchase and redemption orders on the Fund's behalf; (iii) that the Fund
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will be deemed to have received a purchase or redemption order when an
authorized broker or, if applicable, a broker's authorized designee, accepts the
order; and (iv) that customer orders will be priced at the Fund's Net Asset
Value next computed after they are accepted by an authorized broker or the
broker's authorized designee. This disclosure may be contained in the statement
of additional information of the Fund ("SAI") if the SAI is incorporated into
the prospectus. If adequate disclosure is not currently contained in the
prospectus (including any incorporated SAI), then it may be added at the next
regular printing of the prospectus, provided such printing occurs within a
reasonable time after the date of this Amendment.
8. EFFECTIVENESS. This Amendment shall become effective 10 days
after written notice by Schwab to Fund Company.
9. EFFECT OF AMENDMENT. This Amendment is intended to amend and
supplement the provisions of the Operating Agreement. In the event of a
conflict between the provisions of this Amendment and the provisions of the
Operating Agreement, the provisions of this Amendment shall control. All other
provisions of the Operating Agreement shall remain in full force and effect.
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IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized representative of the parties hereto.
XXXXXXX XXXXXX & CO., INC. WESTCORE TRUST, on its own behalf and on
behalf of each Fund
By: /s/ Xxxx Xxxxx
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Xxxx Xxxxx
Vice President/Mutual Funds By: /s/ Xxxxxxx X. Xxxxxxx
--------------------------
Operations Administration
Name: Xxxxxxx X. Xxxxxxx
Date: 1/6/98 Title: President
Date: 12/19/97
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