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EXHIBIT (9)(m)
FORM OF OPERATING AGREEMENT BETWEEN
XXXXXXX XXXXXX & COMPANY AND XXXXXXXXXX
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OPERATING AGREEMENT
This Agreement is made as of June 6, 1997, between Xxxxxxx Xxxxxx &
Co., Inc. ("Schwab"), a California corporation, and each registered investment
company executing this Agreement ("Fund Company"), on its own behalf and on
behalf of each of its series or classes of shares listed on Schedule I, as
amended from time to time (such series or classes being referred to as
"Fund(s)"). In the event there are no series or classes of shares listed on
Schedule I, then the term "Fund(s)" shall mean "Fund Company."
WHEREAS Fund Company wishes to have shares of the Fund(s) available for
purchase and redemption by Xxxxxx'x brokerage customers through Xxxxxx'x Mutual
Fund Marketplace(R) "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
Schwab will open an omnibus account (the "Account") with each Fund
through which it will purchase and redeem shares, settle transactions, reconcile
transactions, obtain pricing, reinvest distributions and maintain records in
accordance with the Operating Procedures set forth in Exhibit A hereto. In
addition, the parties agree to transfer accounts, communicate with Fund
shareholders and perform other obligations in accordance with the Operating
Procedures.
2. Qualification Requirements
x. Xxxxxx will only place purchase orders for shares of a Fund on
behalf of a customer whose account address recorded on Xxxxxx'x books is in a
state or other jurisdiction in which Fund Company has advised Schwab that such
Fund has qualified its shares for sale under applicable law. Fund Company shall
advise Schwab immediately if any such qualification is terminated or if it
wishes Schwab not to place purchase orders for a Fund on behalf of its customers
who reside in a particular state or other jurisdiction.
x. Xxxxxx will, upon request, (i) furnish Fund Company with monthly
written statements of the number of shares of each Fund purchased on behalf of
Schwab customers resident in one or more states or other jurisdictions indicated
by Fund Company or (ii) on a daily basis,
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transmit to an electronic database provider with whom Schwab has established
effective systems interfaces information regarding the number of shares of each
Fund sold in each state for retrieval by Fund Company. Fund Company 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.
c. Fund Company agrees that any rescission offer that is made to
shareholders who own shares directly with a Fund will also be made to Schwab
customers who would be entitled to such rescission offer if they owned shares
directly with the Fund. Fund Company will provide Schwab with a letter on Fund
Company letterhead containing the terms of any such rescission offer, and Schwab
may send this writing, or any derivation thereof, to the affected Schwab
customers. To assist Fund Company in effecting any such rescission offer, Schwab
agrees to provide Fund Company with relevant information regarding any affected
Schwab customer, including the account number, the number of shares purchased
and redeemed, if any, the dates of the purchasers) and redemption(s), if any,
and the dollar amount of such transactions.
3. Compliance Responsibilities
a. Fund Company is responsible for (i) the compliance of each
prospectus, registration statement, annual or other periodic report, proxy
statement and item of advertising or marketing material of or relating to each
Fund with all applicable laws, rules and regulations (except for advertising or
marketing material prepared by Schwab that was not published or provided to
Schwab by or on behalf of Fund Company or any Affiliate (defined below) or
accurately derived from information published or provided by or on behalf of
Fund Company or any Affiliate), (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 Company and each
Affiliate of Fund Company, as that term is defined below, 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 Company or Affiliate, except to the extent that the
failure to so comply by Fund Company or any Affiliate is caused by Xxxxxx'x
breach 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 the 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
Schwab customer 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.
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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 extent that Xxxxxx'x failure to comply with any law,
rule or regulation is caused by Fund Company's breach of this Agreement, or its
willful misconduct or negligence in the performance or failure to perform its
obligations under this Agreement.
d. Except as set forth in this Agreement or as otherwise agreed
upon in writing by the parties, any communication, instruction or notice made
pursuant to this Agreement shall be made orally, provided that such oral
communication is on a recorded telephone line or is promptly confirmed in
writing by facsimile transmission. Schwab is entitled to rely on any
communications, instructions or notices which it reasonably believes were
provided to it by Fund Company, any Affiliate or their agents authorized to
provide such communications, instructions or notices to Schwab, and on
communications, instructions or notices provided to it by its customers. Fund
Company is entitled to rely on any communications, instructions or notices it
reasonably believes were provided to it by Schwab, or its agents authorized to
provide such communications, instructions or notices to Fund Company.
e. Except to the extent otherwise expressly provided in this
Agreement, neither 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. Fund Company and each Fund shall indemnify and hold harmless
Schwab and each director, officer, employee and agent of Schwab 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 the Fund or in any advertising or
promotional material published or provided to Schwab by or on behalf of Fund
Company or any Affiliate or accurately derived from information published or
provided by or on behalf of Fund Company or any Affiliate, (ii) any violation of
any law, rule or regulation relating to the registration or qualification of
shares of the Fund, (iii) any breach by Fund Company of any representation,
warranty or agreement contained in this Agreement, or (iv) any willful
misconduct or negligence by Fund Company or a Fund in the performance of, or
failure to perform its obligations under this Agreement, except to the extent
such Losses are caused by Xxxxxx'x breach of this Agreement or its willful
misconduct or negligence in the performance, or failure to perform, its
obligations under this Agreement. This Section 3(f) shall survive termination of
this Agreement.
4. Account Establishment and Maintenance Fees
Fund Company shall pay to Schwab such fees as are set forth on
Schedule H hereto to reimburse Schwab for its costs in establishing and
maintaining Account(s) for each Fund. Fees attributable to establishment of the
Account(s) for a Fund shall be paid prior to establishment of the
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Account(s) for the Fund. Fees attributable to maintaining the Account(s) for
each Fund shall be billed on an annual basis on December 31 and paid promptly,
in no event later than thirty (30) days after billing. Such payment shall be by
wire transfer. Such wire transfers shall be separate from wire transfers of
redemption proceeds or distributions under this Agreement.
5. Representations and Warranties
a. Fund Company represents and warrants to Schwab that each Fund is
in compliance with the conditions and qualifications set forth in Rule 2830 of
the Conduct Rules of the National Association of Securities Dealers, Inc.
("NASD"), as amended from time to time ("Rule 2830"), which enable an NASD
member to offer or sell shares in the Fund. Fund Company represents and warrants
that each Fund marked with an asterisk on Schedule I is a C6 no load" or "no
sales charge" Fund as defined in Rule 2830. If a Fund, for any reason, fails to
satisfy the terms and conditions of Rule 2830, Fund Company will notify Schwab
immediately of the Fund's disqualification and the reason therefor.
x. Xxxxxx represents and warrants that Schwab is a member of the
NASD.
6. Use of Parties' Names
a. Without Xxxxxx'x prior written consent, Fund Company will not
cause or permit the use, description, or reference to Schwab, or to the
relationship contemplated by this Agreement in any advertisement or promotional
materials or activities.
b. 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 discretion, 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. Proprietary Information
Each party hereto acknowledges that the identities of the other
party's customers, information maintained by such other party regarding those
customers, and all computer programs and procedures developed by such other
party or such other party's affiliates or agents in connection with such other
party's performance of its duties hereunder constitute the valuable property of
such other party. Each party agrees that should it come into possession of any
list or compilation of the identities of or other information about the other
party's customers, or any other property of such party, pursuant to this
Agreement or any other agreement related to services under this Agreement, the
party who acquired such information or property shall use its best efforts to
hold such information
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or property in confidence and refrain from using, disclosing, or distributing
any of such information or other property, except (i) with the other party's
prior written consent, or (ii) as required by law or judicial process. Each
party acknowledges that any breach of the foregoing agreements as to another
party would result in immediate and irreparable harm to such other party for
which there would be no adequate remedy at law and agrees that in the event of
such a breach such other party will be entitled to equitable relief by way of
temporary and permanent injunctions, as well as such other relief as any court
of competent jurisdiction deems appropriate.
8. Assignability
This Agreement is not assignable by either party without the other
party's prior written consent, and any attempted assignment in contravention
hereof shall be null and void and not merely voidable; provided, however, that
Schwab may, without the consent of Fund Company, assign its rights and
obligations under this Agreement to any Affiliate.
9. Exhibits and Schedules; Entire Agreement
All Exhibits and Schedules to this Agreement, as they may be
amended from time to time, are by this reference incorporated into and made a
part of this Agreement. This Agreement (including the Exhibits and Schedule
hereto) constitutes the entire agreement between the parties as to the subject
matter hereof and supersedes any and all agreements, representations and
warranties, written or oral, regarding such subject matter made prior to the
date on which this Agreement has been executed and delivered by Schwab and Fund
Company.
10. Amendment
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 10. Exhibit A and Schedule II may each be amended by Schwab on forty
(40) days' written notice to Fund Company or such earlier time as shall be
agreed to by the parties. Exhibits B and C shall be amended by Fund Company in
the event of any change to the information contained therein.
11. 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.
12. Counterparts
This Agreement may be executed in one or more counterparts, each of
which will be deemed an original, but all of which together shall constitute one
and the same instrument.
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13. Effectiveness and Termination
a. Upon Xxxxxx'x acceptance of Schedule I, as amended from time to
time, 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. Upon the termination date for any Fund, Schwab will no longer
make the Fund shares available for purchase by Xxxxxx'x customers through the
MFMP. Schwab reserves the right to transfer the Fund shares of its customers out
of the Account. If Schwab continues to hold the Fund shares on behalf of its
customers 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.
IN WITNESS WHEREOF, this Agreement has been executed by a duly
authorized representative of the parties hereto.
XXXXXXX XXXXXX & CO., INC. THE ONE GROUP, on its own behalf and on
behalf of each Fund listed on Schedule I
hereto, as amended from time to time
By:___________________________ By:___________________________
Xxxx Xxxxx
Vice President/Mutual Funds
Operations Administration Name:_________________________
Date: Title:________________________
Date:_________________________
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SCHEDULE I
TO THE OPERATING AGREEMENT
Fund Company(ies)/Fund(s) Effective Date
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The One Group
Large Company Growth Fund-Class A SI 6/6/97
Income Equity Fund-Class A SI 6/6/97
Ultra Short Term Income Fund-Class A SI 6/6/97
Municipal Income Fund-Class A SI 6/6/97
International Equity Index Fund-Class A SI 6/6/97
Ohio Municipal Bond Fund-Class A SI 6/6/97
Arizona Municipal Bond Fund-Class A SI 6/6/97
Intermediate Bond Fund-Class A SI 6/6/97
* Indicates that Fund is a "no-load" or "no sales charge" Fund as defined
in Rule 2830 of the Conduct Rules of National Association of Securities
Dealers, Inc.
SI Indicates that Fund is available only to Schwab Institutional customers.
THE ONE GROUP, on its own behalf and on
Accepted by: behalf of each Fund listed on this
Schedule I, as amended from time to time
XXXXXXX XXXXXX & CO., INC.
By:__________________________ By:____________________________
Xxxx Xxxxx Name:__________________________
Vice President/Mutual Funds
Operations Administration Title:_________________________
Date:________________________ Date:__________________________
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SCHEDULE II
TO THE OPERATING AGREEMENT
Fees to Establish and Maintain Account(s) for a Fund
Establishment Fees
The Establishment Fee shall be $12,000 for the Account(s) for the
initial Fund established on Xxxxxx'x system, and $4,500 for the Account(s) for
each additional Fund, whether added at the same time or subsequent to the
initial Fund.
Maintenance Fee
a. The Maintenance Fee as to the Account(s) for each Fund shall be
charged in advance, annually, on December 31 ("Assessment Date") commencing on
the first Assessment Date after the establishment of the Account(s) for the Fund
on the Schwab system. The Maintenance Fee as to the Account(s) of a Fund shall
not be prorated in the event of termination of this Agreement as to such Fund
prior to the end of a calendar year for which such Maintenance Fee has been
charged.
b. The Maintenance Fees as to the Account(s) for each Fund shall be
determined based on the aggregate value of all shares of a Fund contained in all
Account(s) at the Fund on the Assessment Date. The Maintenance Fees are as
follows:
Aggregate Value of All Shares Maintenance Fee
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Up to and including $2.5 million $ 4,500
Over $2.5 million and up to and
including $5 million $ 3,000
Over $5 million $ 0
c. For purposes of this calculation, the value of the shares of each
Fund will be the net asset value reported by such Fund to the National
Association of Securities Dealers, Inc. Automated Quotation System. No
adjustments will be made to the net asset values to correct errors in the net
asset values so reported for any Assessment Date unless such error is corrected
and the corrected net asset value per share is reported to Schwab before 5
o'clock, p.m., San Francisco time, on the next business day after the Assessment
Date to which the error relates.
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EXHIBIT A
Operating Procedures
1 The Account
x. Xxxxxx will open an Account with each Fund. The Account shall
be registered:
Xxxxxxx Xxxxxx & Co., Inc.
Special Custody Account for the Exclusive Benefit of Customers
Attention: Mutual Funds
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
The Account will be set up for the reinvestment of capital gains and dividend
distributions.
b. The Fund shall designate the Account with account numbers.
Account numbers will be the means of identification when the parties are
transacting in the Account.
c. The parties acknowledge that the Account is an omnibus account
in Xxxxxx'x name with shares held by any number of beneficial owners. Schwab
represents that the shares in the Account are customer securities and are
segregated from Xxxxxx'x own assets. Fund Company represents that the shares in
the Account are carried free of any charge, lien or payment of any kind in favor
of the Fund or any person claiming through the Fund.
d. The Account shall be kept open on the Fund's books regardless
of a lack of activity or small position size, except to the extent that Schwab
takes specific action to close the Account, or to the extent the Fund's
prospectus reserves the right to close accounts that are inactive. In the latter
case, Fund Company will give prior notice to Schwab before closing any Account.
x. Xxxxxx 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. In the
event that it is necessary for Schwab to open an account with a Fund for the
payment of distributions in cash, the term "Account" shall mean both the account
for the reinvestment of capital gains and dividend distributions and the account
for the payment of distributions in cash.
x. Xxxxxx reserves the right to issue instructions to each Fund
to move shares between the Account and any other account Schwab may open.
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2. Purchase and Redemption Orders
For each day on which any Schwab customer places with Schwab a
purchase or redemption order for shares of a Fund, Schwab shall aggregate all
such purchase orders and aggregate all such redemption orders and communicate to
the Fund an aggregate purchase order and an aggregate redemption order. Schwab
will accept orders to purchase and redeem Fund shares from its customers no
later than 4:00 p.m. Eastern Time (market close). Schwab will communicate the
order to the Fund prior to a mutually agreed upon time.
3. Settlement of Transactions
x. Xxxxxx will transmit the purchase price of the aggregate
purchase order to the Fund by wire transfer on the next business day after the
trade date. For purposes of this Agreement, a "business day" is any day the New
York Stock Exchange is open for trading.
b. For each business day on which Schwab places a redemption order
for a Fund within the time designated by the Fund, Fund Company will cause the
Fund(s) to send to Schwab the aggregate proceeds of all redemption orders for
the Fund(s) placed by Schwab on that day. Such redemption proceeds will be sent
by wire transfer on the next business day following the trade date for the
redemption orders; provided that Fund Company may, in its discretion, send such
proceeds by check if the aggregate amount is less than $250. Wire transfers of
redemption proceeds shall be separate from wire transfers for other purposes.
c. 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. The interest cost associated with
any delayed wire is the responsibility of the party sending the wire.
d. Should a Fund need to extend settlement on a trade, Fund Company
must contact Schwab on trade date to discuss the extension. For purposes of
determining the length of settlement, Fund Company agrees to treat shareholders
that hold Fund shares through the Account the same as it treats shareholders
that hold Fund shares directly with the Fund.
e. In the event that a Fund cannot verify redemption proceeds, Fund
Company will settle trades and forward redemption proceeds in accordance with
this Agreement based on the information provided by Schwab. Schwab will be
responsible for the accuracy of all trade information provided by it.
f. Fund Company represents that each Fund that has reserved the
right to redeem in kind has filed Form N-18F-1 with the Securities and Exchange
Commission. For purposes of complying with the Fund's election on Form N-18F-1,
Fund Company agrees that it
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will treat as a "shareholder" each shareholder that holds Fund shares through
the 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 the Account for purposes of applying the limits in Rule
18f-1 under the 1940 Act would be inconsistent with the intent of Rule 18f-1 and
the Fund's election on Form N-18F-1 and could unfairly prejudice shareholders
that hold Fund shares through the Account.
4. Account Reconciliation Requirements
x. Xxxxxx shall verify, on a next day basis, orders placed for the
Account with each Fund. All activity in the Account must be reflected.
Therefore, any "as of" activity must be shown with its corresponding "as of"
dates.
x. Xxxxxx must receive statements on or before the eighth business
day of each month, even if there has been no activity in the Account during the
period, unless Schwab can verify transactions by direct or indirect systems
access.
c. The parties agree to notify each other and correct any error in
the Account with any Fund upon discovery. If an error is not corrected by the
day following discovery, each party agrees to make best efforts to avoid this
from hindering any routine daily operational activity.
5. Pricing
Every business day on which there is a transaction in the Account
and for each month-end business day, Fund Company will provide 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 and/or notification of no price for
that day. 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.).
6. Distributions
a. Fund Company shall provide distribution information to Schwab in
a timely manner to enable Schwab to pay distributions to its customers on or as
close, to payable date as practicable. As to each Fund, Fund Company or such
Fund shall provide Schwab with (i) the record date, ex-dividend date, and
payable date with respect to a Fund as soon as practicable after it is
announced, but no later than three (3) business days prior to record date, (ii)
the record date share balance in the Account and the distribution rate per share
on the first business day after record date, and (iii) the reinvest price per
share as soon as it is available. Other distribution information required by
Schwab from time to time for payment of distributions to its customers shall be
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provided by Fund Company on such dates as are agreed upon between Schwab and
Fund Company, but no later than payable date.
b. For purposes of effecting cash distributions for customers who
have elected to receive their capital gains distributions and/or dividends in
cash, prior to 10:00 a.m., Eastern Time, on the next business day following
receipt of the reinvest price per share as provided in paragraph 6(a)(iii)
above, Schwab shall notify Fund Company of the aggregate number of Fund shares
with respect to which the purchase is required to be voided. Fund Company agrees
that the purchase of such aggregate number of Fund shares may be voided. Fund
Company or such Fund shall wire the proceeds of such voided transaction from the
Fund to Schwab on the same business day. Schwab shall use such voided
transaction proceeds to pay the distribution in cash to Schwab customers who
have elected to receive such distributions in cash.
c. For each Fund that pays daily dividends, Fund Company shall
provide on a daily basis, the following record date information: daily rate,
account share balance, account accrual dividend amount (for that day), account
accrual dividend amount (for period to date), and account transfers and
period-to-date accrual amounts.
d. In the event that Schwab maintains an Account with a Fund for
the payment of distributions in cash, Fund Company shall wire, on payable date,
any cash distribution from the Fund to Schwab.
e. For each Fund that pays daily dividends, each Fund shall accrue
dividends, commencing on the settlement date for the purchase of Fund shares and
terminating on the trade date for the redemption of Fund shares.
f. For annual tax reporting purposes, Fund Company shall inform
Schwab of the portion of each Fund's distributions that include any of the
following: foreign source income, tax exempt income by state of origin or return
of capital.
g. 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 for reporting (i) dividends and other distributions
made, (ii) amounts withheld on dividends and other distributions and payments
under applicable federal and state laws, rules and regulations and (iii) gross
proceeds of sales transactions as required.
h. Upon notice from Fund Company, Schwab shall effect mergers,
splits and other reorganization activities of a Fund for its customers.
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7. Price and Distribution Rate Errors
a. 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 or in the distribution rate for a Fund's shares, Fund Company shall
notify Schwab upon discovering the need for such adjustments. Notification can
be made orally, but must be confirmed in writing.
x. Xxxxxx 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 Account until such agreement is reached. Following resolution, 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 must
state for each day on which an error occurred the incorrect price or rate, the
correct price or rate, and the reason for the price or rate change. Fund Company
agrees that Schwab may send this writing, or derivation thereof, to Xxxxxx'x
customers whose accounts are affected by the price or rate change.
c. If a Schwab customer has received cash in excess of what he is
entitled, Schwab will, when requested by Fund Company, and to the extent
practicable and permitted by law, debit the customer'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
Company or the Fund for any such amounts. Upon the request of Fund Company,
Schwab shall provide Fund Company with the name of Xxxxxx'x customer and other
relevant information concerning the customer's brokerage account to assist Fund
Company in the collection from Xxxxxx'x customer of any such excess amount not
repaid to the Fund.
d. If adjustment is necessary to correct an error which has caused
Xxxxxx'x customers to receive dollars or shares less than that to which they are
entitled, the Fund shall, as appropriate and as mutually agreed by the parties
pursuant to 7(b) 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 Schwab customer.
e. For purposes of making adjustments, including the collection of
overpayments, Fund Company agrees to treat shareholders that hold Fund shares
through the Account the same as it treats shareholders that hold Fund shares
directly with the Fund. When making adjustments for an error, a Fund shall not
net transactions for that day in the Account.
8. Record Maintenance
x. Xxxxxx shall maintain records for each of its customers who
holds Fund shares through the Account, which records shall include:
i. Number of shares;
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ii. 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;
iii. Name and address of each of its customers, including zip codes
and social security numbers or taxpayer identification numbers;
iv. Records of distributions and dividend payments;
v. Any transfers of shares; and
vi. Overall control records.
x. Xxxxxx will be responsible for accurately posting transactions
in Fund shares to its customers' brokerage accounts.
9. Transfer of Accounts
a. Fund Company agrees to transfer shares between accounts for
Schwab customers or other street name brokers held directly with a Fund and the
Account on the Fund's records. For the purpose of expediting direct transfers
from accounts for Schwab customers, Fund Company will accept by facsimile
transmission a summary sheet of information ("Summary Sheet") indicating the
customers' names, account numbers, the Fund affected and the number of shares to
be re-registered. For record keeping purposes, actual copies of transfer forms
will be forwarded to a Fund upon its request for such forms.
x. Xxxxxx represents and warrants that for each transfer
indicated in the Summary Sheet, it holds each underlying instruction for
re-registration signed by its customer, and that its customer's signature on
such instruction is signature guaranteed by Schwab pursuant to the New York
Stock Exchange's Medallion Signature Program. Schwab will retain these documents
for the period required by any applicable law rule or regulation.
x. Xxxxxx 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 effected by the Fund in
reliance on the Summary Sheet to the same extent as provided under the New York
Stock Exchange's Medallion Signature Program, except to the extent such Losses
arise out of the failure of any indemnified person to comply with the
instructions on the summary sheet of information.
d. Fund Company shall process all transfer requests into the
appropriate Account. Schwab as custodian is qualified to accept in the Accounts
shares from Fund XXX, Xxxxx or 401(k) accounts. At no time shall any Fund
establish separate accounts registered to Schwab for the benefit of individual
shareholders. In the event any such account is mistakenly opened, Schwab
reserves the right to instruct such Fund to move Fund shares to the Account.
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e. 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.).
f. 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.
g. If Schwab customers 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.
10. Shareholder Communication
a. 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:
i. All proxy or information statements prepared for circulation
to shareholders of record of such Fund;
ii. Annual reports;
iii. Semi-annual reports;
iv. Quarterly reports (if applicable); and
v. All updated prospectuses, supplements and amendments thereto.
Fund Company shall be responsible for providing the materials and for Schwab or
the mailing, gent's fees in connection with this service as well as for timely
distribution. Fund Company agrees to have Schwab or the mailing agent
consolidate mailings of material to shareholders of more than one Fund if the
mailing is identical for all Funds in the Fund Company family.
b. 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
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effective dates, to customers and prospective customers requesting them through
Schwab. Schwab will also send a current Fund 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.
c. 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 10(a) and 10(b) for
Schwab to give to Correspondent for the distribution of such materials to
Correspondent's customers who hold Fund shares.
d. Fund Company shall ensure that the prospectus of each of its
Funds discloses that a broker may charge transaction fees on the purchase and/or
sale of Fund shares. Fund Company shall also ensure that either the prospectus,
or the statement of additional information if the statement of additional
information is incorporated in the prospectus, of each of its Funds discloses
(i) that the performance of the Fund may be compared in publications to the
performance of various indices and investments for which reliable performance
data is available, (ii) that the performance of the Fund may be compared in
publications to averages, performance rankings, or other information prepared by
recognized mutual fund statistical services, and (iii) that the annual report
contains additional performance information and will be made available' to
investors upon request and without charge.
x. Xxxxxx shall mail 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.
x. Xxxxxx shall respond 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 after the
effective date of this Agreement, Schwab shall provide average cost basis
reporting to assist customers in the preparation of income tax returns.
11. 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.
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