EXHIBIT (h)(1)
AMENDED AND RESTATED TRANSFER AGENT CONTRACT
AMENDED AND RESTATED TRANSFER AGENT CONTRACT (this "Contract"), dated
as of January 1, 2003 by and between WM Trust I, WM Trust II and WM Variable
Trust (each a "Trust" and a "Company"), each a Massachusetts business trust, WM
Strategic Asset Management Portfolios, LLC (the "LLC" and a "Company"), a
Massachusetts limited liability company, WM Shareholder Services, Inc. ("WMSS"),
a Washington corporation, and PFPC, Inc. a Massachusetts corporation ("PFPC").
W I T N E S S E T H
WHEREAS, each Company is an investment management company registered
under the Investment Company Act of 1940 (the "1940 Act");
WHEREAS, each Company is authorized to issue shares in separate series
with each series listed on the signature page of the Contract representing a
separate portfolio of securities and other assets (each a "Fund");
WHEREAS, each Fund desires PFPC to perform the services set forth on
Schedule A hereto, and PFPC is willing to perform such services;
WHEREAS, each Fund desires WMSS to oversee the provision by PFPC of the
services set forth in Schedule A hereto, and to perform the services set forth
in Schedule A hereto (to the extent they are not provided by PFPC pursuant to
Section 1 hereof), and WMSS is willing to oversee and perform such services;
WHEREAS, WMSS and PFPC are parties to a certain Service Agreement dated
as of June 17, 1998, as amended through January 1, 2003 (the "Services
Agreement");
NOW THEREFORE, in consideration of the premises and the mutual
agreements set forth herein, all the parties hereto agree as follows:
1. PFPC agrees to perform the services set forth in Schedule A
hereto.
2. WMSS agrees to oversee PFPC in its performance of the services
set forth in Schedule A hereto, and to perform such services as set forth
therein to the extent they are not performed by PFPC pursuant to Section 1
hereof.
3. WMSS's monthly fees under this Contract will be calculated in
accordance Schedule B hereto (together with any other expenses payable by the
Funds to WMSS in accordance with Schedule D, the "WMSS Monthly Fees"), subject
to the provisions of this Section 3 and subject to reduction as set forth in
Exhibit 1 to Schedule B hereto. PFPC's
1
monthly fees under this Contract will be calculated in accordance with Schedule
C hereto (together with any other expenses payable by the Funds to PFPC in
accordance with Schedule D, the "PFPC Monthly Fees"), subject to the provisions
of this Section 3 and subject to adjustment as set forth in Exhibit 1 to
Schedule C hereto.
(a) The Funds agree to pay directly to PFPC the lesser of
(i) the WMSS Monthly Fees and (ii) the PFPC Monthly Fees.
(b) If, for a given month, WMSS Monthly Fees exceed PFPC
Monthly Fees, the Funds shall pay to WMSS an amount equal to the excess of (i)
the WMSS Monthly Fees over (ii) the PFPC Monthly Fees.
(c) If, for any given month, the PFPC Monthly Fees exceed
the WMSS Monthly Fees, WMSS shall pay to PFPC an amount equal to the excess of
(i) the PFPC Monthly Fees over (ii) the WMSS Monthly Fees.
(d) For the avoidance of doubt, WMSS acknowledges and
agrees that it shall not be entitled to any portion of the PFPC Monthly Fees.
4. PFPC hereby waives, with respect to any periods during which
this Contract is in effect, any right to receive from WMSS any fees under the
Services Agreement in respect of the services set forth on Schedule A hereto.
5. Each Company acknowledges and agrees that, for so long as PFPC
provides the services set forth in Schedule A hereto in accordance with the
performance standards (the "Performance Standards") set forth in Schedule 1 to
Exhibit C hereto, including performing at least within all Standard Performance
Ranges (as defined therein), WMSS shall have met its obligation to provide or
oversee the provision of the services set forth in Schedule A hereto.
6. WMSS agrees to indemnify and hold the Funds harmless from and
against any and all claims, costs, expenses (including attorneys' fees), losses,
damages, charges, payments and liabilities of any sort or kind which may be
asserted against the Funds or for which the Funds may be held liable (a "Claim")
arising out of or attributable to any actual or alleged failure of PFPC to
provide the services set forth on Schedule A hereto in accordance with the
Performance Standards.
7. WMSS agrees to indemnify and hold PFPC harmless from and
against any and all Claims arising out of or attributable to this Contract to
the extent that PFPC would not have been responsible for such Claims under the
Services Agreement.
8. Each Fund agrees to pay to each of WMSS and PFPC, as
applicable, the other expenses set forth on Schedule D hereto.
9. Each Fund agrees that all computer programs and procedures
developed and/or used by WMSS and PFPC to perform services required under this
Contract are the property of
2
WMSS and PFPC, respectively, and WMSS and PFPC agree that all records and other
data of the Funds maintained by WMSS and PFPC, except computer programs and
procedures, are the property of the Fund. Each of WMSS and PFPC agrees that it
will furnish all such records and other data as may be requested to a Fund
immediately upon termination of this Contract for any reason whatsoever.
10. Each of WMSS and PFPC agrees to treat all records and other
information relative to a Fund with utmost confidence and further agrees that
all records maintained by it for the Fund shall be open to inspection and audit
at reasonable times by the officers, agents or auditors employed by the Fund and
that such records shall be preserved and retained by it so long as this Contract
shall remain in effect.
11. Neither PFPC nor WMSS shall be liable for any damage, loss of
data, delay or any other loss caused by any such power failure or machine
breakdown, except that each shall be liable for actual out-of-pocket costs
caused by any such power failure or machine breakdown, and each shall make all
reasonable efforts to recover the data in process that is assumed lost during
any power failure or machine breakdown.
12. WMSS will maintain in force through the duration of this
Contract a fidelity bond in a face amount not less than $1,000,000 written by a
reputable insurance company, covering theft, embezzlement, forgery and other
acts of malfeasance by WMSS, its employees, or agents in connection with
services performed for a Fund.
13. This Contract may be terminated without the payment of any
penalty by any party upon one hundred eighty (180) days written notice thereof
given by any party hereto to the other parties hereto. For avoidance of doubt,
termination of this Contract shall not terminate the Services Agreement,
provided however, in the event WMSS is entitled to terminate the Services
Agreement pursuant to its terms, either WMSS or the Funds shall be entitled to
terminate this Agreement with such termination dates to be co-extensive. Upon
termination of this Contract, PFPC's right to receive fees under the Services
Agreement shall be reinstated, except to the extent the Services Agreement has
been terminated pursuant to its terms.
14. Any notice shall be officially given to a Fund when sent by
registered or certified mail by a party to the appropriate address listed in the
Fund's current registration statement, provided that each party may notify the
others by regular mail of any changed address to which such notices should be
sent.
15. This Contract constitutes the entire agreement between the
Funds and each of WMSS and PFPC, and shall be governed by, and construed in
accordance with, the laws of the Commonwealth of Massachusetts and shall inure
to the benefit of the parties hereto and their respective successors.
16. Each of WMSS and PFPC shall: (a) establish and implement
written internal policies, procedures and controls reasonably designed to
prevent it, with respect to the WM Group of Funds, from being used to launder
money or finance terrorist activities and to achieve
3
compliance with the Bank Secrecy Act; (b) provide for independent testing, by an
employee who is not responsible for the operation of its AML program or by an
outside party, for compliance with its established policies and procedures; (c)
designate a person or persons responsible for implementing and monitoring the
operation and internal controls of its AML program; and (d) provide ongoing
training of its personnel relating to the prevention of money-laundering
activities. Upon the reasonable request of the Fund, each of WMSS and PFPC shall
provide to the Fund: (x) a copy of its written AML policies and procedures (it
being understood such information is to be considered confidential and treated
as such and afforded all protections provided to confidential information under
this agreement); (y) at the option of WMSS or PFPC, as applicable, a copy of a
written assessment or report prepared by the party performing the independent
testing for compliance, or a summary thereof, or a certification that the
findings of the independent party do not adversely implicate its satisfaction of
its obligations set forth herein; and (z) a summary of the AML training provided
for appropriate personnel. Each of WMSS and PFPC agrees to permit inspections
relating to its AML program by U.S. Federal departments or regulatory agencies
with appropriate jurisdiction and to make available to examiners from such
departments or regulatory agencies such information and records relating to its
AML program as such examiners shall reasonably request.
17. (a) A copy of the Declaration of Trust of each Trust is on
file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this Contract is executed by an officer of each Trust on
behalf of each Fund, and that the obligations of this Contract shall be binding
upon the assets and properties of the Fund only and shall not be binding upon
the assets and properties of any other series of any Trust or upon any of the
trustees, officers, employees, agents or shareholders of the Fund or the Trust
individually.
(b) A copy of the LLC Certificate of Formation of the LLC is
on file with the Secretary of the Commonwealth of Massachusetts, and notice is
hereby given that this Agreement is executed by an officer of the LLC on behalf
of its trustees, as trustees and not individually, on further behalf of each
Fund, and that the obligations of this Contract as they relate to each Fund
shall be binding upon the assets and properties of that Fund only and shall not
be binding upon the assets and properties of any other Fund or series of the LLC
or upon any of the trustees, officers, employees, agents or shareholders of a
Fund or the LLC individually.
4
IN WITNESS WHEREOF, the parties hereto cause this Contract to
be executed by their officers designated below as of the date first
above-written.
WM TRUST I, on behalf of its series: WM STRATEGIC ASSET MANAGEMENT
Money Market Fund PORTFOLIOS, LLC, on behalf of its series:
Tax-Exempt Money Market Fund Strategic Growth Portfolio
U.S. Government Securities Fund Conservative Growth Portfolio
Income Fund Balanced Portfolio
High Yield Fund Flexible Income Portfolio
Tax-Exempt Bond Fund Conservative Balanced Portfolio
Equity Income Fund
Growth & Income Fund
West Coast Equity Fund WM VARIABLE TRUST, on behalf of its
Mid Cap Stock Fund series:
REIT Fund
Small Cap Value Fund Money Market Fund
U.S. Government Securities Fund
WM TRUST II, on behalf of its series: Income Fund
Short Term Income Fund Equity Income Fund
California Money Fund Growth & Income Fund
International Growth Fund West Coast Equity
California Municipal Fund Mid Cap Stock Fund
California Insured Intermediate Growth Fund
Municipal Fund Small Cap Growth Fund
Growth Fund Small Cap Value Fund
Small Cap Growth Fund International Growth Fund
REIT Fund
Strategic Growth Portfolio
Conservative Growth Portfolio
Balanced Portfolio
Flexible Income Portfolio
Conservative Balanced Portfolio
Each by:
_________________________________________
Xxxxxxx X. Xxxxxx
President
PFPC, INC. WM SHAREHOLDER SERVICES, INC.
By: ______________________________ _________________________________________
Its: ______________________________ Xxxxx X. Xxxxxx
First Vice President
5
SCHEDULE A
SERVICES PROVIDED BY PFPC AND OVERSEEN BY WMSS*
1. Shareholder Information. PFPC shall maintain on electronic
data processing equipment, as applicable, all Shareholder records, including the
number of Shares held by each Shareholder of record, name, address, taxpayer
identification, whether Shares are held in certificates or uncertificated form,
account transaction histories, distribution records, transfer records and
over-all control records (including controls associated with computer programs
and manual systems necessary to determine a Fund's total Shares outstanding).
PFPC shall produce transcripts of Shareholder account activity as required. PFPC
shall, on Shareholder request, process all changes and corrections of
Shareholder addresses and registrations. PFPC shall, at the request of Fund
officers, develop special reports regarding statistical and accounting data
pertaining to the Fund
2. Shareholder Services. PFPC shall receive mail, maintain a
voice response unit, provide NSCC support and perform other administrative
functions relating to transfer agent work. PFPC shall respond as appropriate to
all inquiries and communications from Shareholders relating to Shareholder
accounts, and shall refer any correspondence regarding investment matters to the
Fund with sufficient account data to permit the Fund to respond. PFPC shall
contact shareholders directly to settle problems and answer questions.
3. Mailing Communications to Shareholders; Proxy Materials. PFPC
will address and mail to Shareholders of the Funds, all reports to Shareholders,
dividend and distribution notices and proxy material for the Funds' meetings of
Shareholders. In connection with meetings of Shareholders, PFPC will prepare
Shareholder lists, mail and certify as to the mailing of proxy materials,
process and tabulate returned proxy cards, report on proxies voted prior to
meetings, act as inspector of election at meetings and certify Shares voted at
meetings.
4. Sales of Shares.
PFPC shall deposit all monies received in connection with a
purchase of Shares into a Fund custody account maintained by the Fund's
custodian, set up accounts according to Shareholders' instructions (for new
investors only), and issue and mail shareholder confirmations.
PFPC shall not be required to record as sold any Shares of a
Fund where it has received a Written Instruction from WMSS or official notice
from any appropriate authority that the sale of the Shares of such Fund has been
suspended or discontinued. The existence of such Written Instructions or such
official notice shall be conclusive evidence of the right of PFPC to rely on
such Written Instructions or official notice.
In the event that any check or other order for the payment of
money is returned unpaid for any reason, PFPC will endeavor to: (i) give prompt
notice of such return to WMSS or its designee; (ii) place a stop transfer order
against all Shares recorded as sold in reliance on such check or order; and
(iii) take such other actions as PFPC may from time to time deem appropriate.
-----------
* Note: Capitalized terms used in this Schedule A without definition have
the meanings given them in the Services Agreement.
A-1
5. Transfer and Repurchase.
(a) PFPC shall process all requests to transfer or redeem
Shares, and make payments of redemption proceeds, in accordance with the
transfer or repurchase procedures set forth in the Funds' Prospectus. PFPC shall
obtain all necessary papers and documents to satisfy transfer requirements. PFPC
shall issue and mail Shareholder communications in connection with all such
transactions.
(b) PFPC will transfer or repurchase Shares upon receipt of
Oral or Written Instructions or otherwise pursuant to the Prospectus and Share
certificates, if any, properly endorsed for transfer or redemption, accompanied
by such documents as PFPC reasonably may deem necessary.
PFPC reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the endorsement on the instructions is valid
and genuine. PFPC also reserves the right to refuse to transfer or repurchase
Shares until it is satisfied that the requested transfer or repurchase is
legally authorized, and it shall incur no liability for the refusal, in good
faith, to make transfers or repurchases which PFPC, in its good judgment, deems
improper or unauthorized, or until it is reasonably satisfied that there is no
basis to any claims adverse to such transfer or repurchase.
When Shares are redeemed, PFPC shall, upon receipt of the
instructions and documents in proper form, deliver to the Custodian and the
respective Fund or its designee a notification setting forth the number of
Shares to be repurchased. Such repurchased shares shall be reflected on
appropriate accounts maintained by PFPC reflecting outstanding Shares of such
Fund and Shares attributed to individual accounts.
PFPC shall, upon receipt of the monies provided to it by the
Custodian for the repurchase of Shares, pay such monies as are received from the
Custodian, all in accordance with the procedures described in the written
instruction received by PFPC from WMSS
PFPC shall not process or effect any repurchase with respect
to Shares of any Fund after receipt by PFPC or its agent of notification of the
suspension of the determination of the net asset value of such Fund.
6. Dividends.
(a) Upon the declaration of each dividend and each capital
gains distribution by the Board of Directors of the Funds with respect to Shares
of such Fund, WMSS shall furnish or cause to be furnished to PFPC Written
Instructions setting forth the date of the declaration of such dividend or
distribution, the ex-dividend date, the date of payment thereof, the record date
as of which Shareholders entitled to payment shall be determined, the amount
payable per Share to the Shareholders of record as of that date, the total
amount payable on the payment date and whether such dividend or distribution is
to be paid in Shares at net asset value. Except as set forth below, PFPC shall
on the date of payment for each dividend or distribution, make payment or
reinvest in additional shares at net asset value such dividend or distribution,
as directed by Shareholders according to the provisions of the Fund's
then-current prospectus. PFPC shall advise each Shareholder of the amount of
dividends received and the tax status thereof annually.
A-2
On or before the payment date specified in such resolution of
the Board of Directors, the Fund will provide PFPC with sufficient cash to make
payment to the Shareholders of record as of such payment date.
If PFPC does not receive sufficient cash from the Fund to
make total dividend and/or distribution payments to all Shareholders of the Fund
as of the record date, PFPC will, upon notifying WMSS, withhold payment to all
Shareholders of record as of the record date until sufficient cash is provided
to PFPC.
7. In addition to and neither in lieu nor in contravention of the
services set forth above, PFPC shall perform all the customary services of a
transfer agent, registrar, dividend disbursing agent and agent of the dividend
reinvestment and cash purchase plan as described herein consistent with those
requirements in effect as at the date of the Services Agreement. The detailed
definition, frequency, limitations and associated costs (if any) set out in
Schedule C to the Contract, include but are not limited to: maintaining all
Shareholder accounts, preparing Shareholder meeting lists, mailing proxies,
tabulating proxies, mailing Shareholder reports to current Shareholders,
withholding taxes on U.S. resident and non-resident alien accounts where
applicable, preparing and filing U.S. Treasury Department Forms 1099 and other
appropriate forms required with respect to dividends and distributions by
federal authorities for all Shareholders.
A-3
SCHEDULE B
WMSS MONTHLY FEES
Effective from January 1, 2003 to December 1, 2003
Fee Per Account Per Month*
--------------------------
Open Closed
---- ------
Equity Funds $19.68/12 $2.03/12
Fixed Income Funds $20.21/12 $2.03/12
Money Market Funds $25.01/12 $2.03/12
Fees Include:
- Shareholder and Broker Servicing
- Transaction Processing, Correspondence, and Research
- Settlement and Reconciliation
- Corporate Actions
- Tax Reporting and Compliance
- NSCC Support (excluding any fees paid to NSCC)
- Management Company and Broker/Dealer Support
- Asset Allocation Processing for all distribution channels
- 50% of NQR fees
Additional charges will be made for out-of-pocket expenses according to Schedule
D.
This amount shall be reduced by a $200,000 one-time credit for previous DAZL
usage to be applied on the January 2003 invoice for services rendered
* No fee is paid by WM Variable Trust.
B-1
Effective on and after December 1, 2003
Fee Per Account Per Month*
--------------------------
Open Closed**
---- --------
Equity Funds $20.40/12 $2.03/12
Fixed Income Funds $21.15/12 $2.03/12
Money Market Funds $24.19/12 $2.03/12
Fees Include:
- Shareholder and Broker Servicing
- Transaction Processing, Correspondence, and Research
- Settlement and Reconciliation
- Corporate Actions
- Tax Reporting and Compliance
- NSCC Support (excluding any fees paid to NSCC)
- Management Company and Broker/Dealer Support
- Asset Allocation Processing for all distribution channels
- 50% of NQR fees
In addition, WMSS will be paid an annual anti-money laundering services fee,
calculated and paid monthly as follows:
Number of open accounts Annual Fee
----------------------- ----------
1,000,000+ $ 50,000
500,000-1,000,000 $ 35,000
100,000-499,999 $ 26,000
50,000-99,999 $ 13,000
10,000-49,999 $ 6,000
fewer than 10,000 $ 3,000
Additional charges will be made for out-of-pocket expenses according to Schedule
D. The foregoing fees shall be reduced by an amount equal to any Networking Fees
(fees paid to reimburse broker-dealers for the out-of-pocket expenses they incur
to place Fund information on their client statements, confirmations and tax
forms) paid by the Funds.
* No fee is paid by WM Variable Trust.
** Each year, effective on January 1, the closed account fee will increase by a
dollar amount per account equal to any corresponding increase in the closed
account fees charged by PFPC. This provides WMSS an opportunity to pass through
any inflationary increases in PFPC's closed account fees.
B-2
SCHEDULE C
PFPC MONTHLY FEES*
EFFECTIVE AS OF JANUARY 1, 2003
I. TRANSFER AGENCY FEES:
PER ACCOUNT FEES:
Open Accounts $ 15.28 per account, per annum
Closed Accounts $ 2.03 per account, per annum
NSCC Level III Accounts $ 8.15 per account, per annum
Each year, effective on the anniversary date of the Services Agreement,
the per account fee will increase by a percentage equal to an amount
one percent greater than the Consumer Price Index as reported monthly
by Bloomberg Financial Markets and Commodity News in the month
preceding the effective date of the increase. This provides PFPC with
an opportunity to manage uncontrollable expenses due to inflationary
increases.
RETIREMENT ACCOUNT FEES:
Simple XXX Accounts $10.00 per account, per annum(1)
403(b) Accounts $10.00 per account, per annum(1)
Medical Savings Accounts $10.00 per account, year account is established only
(1) Fee will be waived in the event the value of the Global Account (single
account number and same registration across all Fund positions) exceeds $10,000
at the time the fee is to be assessed.
SYSTEMS DEVELOPMENT:
Dedicated Team: $275,000 per annum
The current WMSS Dedicated Team consists of 1.5 programmers, .5 system
manager and .5 BSA for a fee of $275,000.00 annually. WMSS may reduce
the staffing of the Dedicated Team by 1 programmer upon 90 days prior
written notice. In the event WMSS so reduces the staffing of the
Dedicated Team the annual rate shall be reduced to $175,000 per annum.
Following such reduction in staffing, WMSS may increase the staffing
level to the original deployment stated above upon 120 days written
notice to PFPC at which point the per annum fee shall revert to the
original fee described above.
WMSS may discontinue deployment of a Dedicated Team at any time upon 90
days written notice to PFPC. In the event of such termination, WMSS
shall be responsible for the pro rata share of the stated annual
dedicated System Development Team fee.
---------------
* Note: Capitalized terms used in this Schedule C without definition have
the meanings given them in the Services Agreement.
C-1
The number of hours worked, projects and status will be reported
monthly.
Non-Dedicated Team: $100.00 per hour.
TRANSFER AGENCY FEES INCLUDE:
- Shareholder and Broker Servicing
- Transaction Processing, Correspondence, and Research
- Settlement and Reconciliation
- Corporate Actions
- Tax Reporting and Compliance
- NSCC Support
- Management Company and Broker/Dealer Support
- Asset Allocation Processing for all distribution channels
NOTE: THE PENALTY OR REWARD INCENTIVE FOR NQR STANDARDS REGARDING
CALL CENTER AND TRANSACTION PROCESSING PERFORMANCE WILL REMAIN
IN EFFECT.
TRANSFER AGENT DATA WAREHOUSE:
One Time Server and Software Set Up Fee: $33,000
One Time Start Up Fee: $10,000
II. ADVANCED OUTPUT SOLUTIONS (PRINT/MAIL)
SAMP AND NON-SAMP CONSOLIDATED AND DUPLEX STATEMENTS: Estimate $400,000 (waived)
To be completed by Q3 2003
MODIFICATION TO ACCOMMODATE E-NOTIFICATION AND SHAREHOLDER STATEMENT
SUPPRESSION:
Estimate $38,400 (waived)
Exhibit 1 of Schedule C
Performance Standards
Effective Date: April 1, 2002 through March 31, 2003
C-2
PFPC's obligation to meet the "Standard Performance Range" for each of the
following Performance Standards shall be measured in the aggregate with respect
to all Funds.
1. TRANSACTION PROCESSING
TRANSACTION PERFORMANCE STANDARDS
Performance will be measured quarterly by National Quality Review ("NQR") based
on its then-current standard sampling methodology. Currently, that methodology
involves approximately 800 account transactions each quarter. NQR reviews
transactions for accuracy, timeliness and completeness. Beginning with the 2001
fourth quarter NQR report, if, for the current quarter, the percentage of the
transactions sampled by NQR represented by transactions for which no
"exceptions" were noted falls within the "Penalty Range" or "Award Range" (as
defined below), the PFPC Monthly Fees next invoiced by PFPC following receipt of
the NQR quarterly data shall be reduced by the applicable penalty, or increased
by the applicable award, as shown in Section 4 of this Exhibit 1. The WMSS
Monthly Fees for the same period will also be reduced by any applicable penalty,
but shall not be increased by any applicable award.
The PFPC Monthly Fees next invoiced by PFPC following receipt of the NQR
quarterly data will be increased by an additional award, as shown in Section 4
of this Exhibit 1 under the heading "NQR Best in Class" if the quarterly Overall
Accuracy rating matches the highest overall NQR rating earned by any firm
evaluated by NQR for the quarter to which such data relates.
Penalties or rewards will be assessed quarterly based on quarterly performance
scores, excluding reclassified items, as provided by NQR.
The "Penalty Range" is any percentage below the standard performance range most
recently determined by NQR for the previous calendar year (the "Standard
Performance Range"). The "Award Range" is any percentage above the Standard
Performance Range. At present, the Penalty Range, the Standard Performance Range
and Award Range are as follows:
Unacceptable - Standard Performance
Transaction Type Penalty Range Range Award Range
--------------------------------------------------------------------------------------------
Financial Accuracy <96.6% 96.6% - 98.6% >98.6%
Non-Financial
Accuracy <88.1% 88.1% - 95.1% >95.1%
Overall Accuracy <92.6% 92.6% - 96.3% >96.3%
OTHER TRANSACTION PROCESSING OBLIGATIONS
The following factors will not be part of the award or penalty structure;
however, they are obligations of PFPC.
- Financial Processing Timeliness, as determined quarterly by NQR, will
be at least the NQR average. Timeliness is defined as the percent of
financial transactions processed the same day that they are received in
good order.
C-3
- Non-Financial Adjustments and legal transfers will be completed within
three days of receipt.
- Maintenance (including address changes, account option changes,
ROA/LOI) will be completed within 5 days of receipt.
- Financial Items will receive 100% Quality Control the same day they are
processed.
2. TELEPHONE SERVICE QUALITY
Performance will be measured quarterly by NQR based on its then-current standard
sampling methodology. Currently, that methodology is a review of 120 calls per
quarter using NQR's 27-point evaluation process. NQR reviews transactions for
accuracy, timeliness and completeness. Beginning with the 2001 fourth quarter
NQR report, if, for the current quarter, the percentage of the transactions
sampled by NQR represented by transactions for which no "exceptions" were noted
falls within the "Penalty Range" or "Award Range" (as defined below), the PFPC
Monthly Fees next invoiced by PFPC following receipt of the NQR quarterly data
shall be reduced by the applicable penalty, or increased by the applicable
award, as shown in Section 4 of this Exhibit 1. The WMSS Monthly Fees for the
same period will also be reduced by any applicable penalty, but shall not be
increased by any applicable award.
The PFPC Monthly Fees next invoiced by PFPC following receipt of the NQR
quarterly data will be increased by an additional award, as shown in Section 4
of this Exhibit 1 under the heading "NQR Best in Class" if the quarterly Overall
Call Center rating matches the highest overall NQR rating earned by any firm
evaluated by NQR for the quarter to which such data relates.
The "Penalty Range" is any percentage below the standard performance range
most recently determined by NQR for the previous calendar year (the "Standard
Performance Range"). The "Award Range" is any percentage above the Standard
Performance Range. At present, the Penalty Range, the Standard Performance Range
and Award Range are as follows:
Unacceptable - Penalty Standard Performance
Transaction Type Range Range Award Range
--------------------------------------------------------------------------------------------------
Telephone Service
Quality <2.33 2.33 - 2.71 >2.71
OTHER SERVICE QUALITY OBLIGATIONS:
These factors will not be part of the award or penalty structure; however, they
are obligations of PFPC that PFPC shall not fail to meet for any two months of
any rolling four-month period:
- Call Answer Rate as measured by the PFPC's Call Monitoring System will
maintain a monthly standard of at least 98%.
- Average Speed of Answer as measured by PFPC's Call Monitoring System
will be no greater than 20 seconds for each month.
C-4
- Financial Correspondence will be mailed within two days of receipt.
- Non-Financial Correspondence will be mailed within four days of
receipt.
- Correspondence rating, as measured by NQR, will be at least a 3.5.
3. PRINT MAIL SERVICE STANDARDS
These performance standards are in effect only for those mailings where services
are provided by PFPC.
- Shareholder redemption checks mailed on day of receipt.
- Confirmations mailed within one business day of receipt.
- Statements mailed within five business days following the end of the
reporting period.
- Commission checks mailed within five business days following the end of
the reporting period.
- Statements available to WMSS on CD ROM 15 business days after each
quarter-end.
- All IRS tax forms mailed within the regulatory requirements.
4. PENALTY AND AWARD
Transaction Processing Quarterly Payments
---------------------- ------------------
Financial
Unacceptable - Penalty $25,000
Standard $ 0
Award $25,000
Non Financial
Unacceptable - Penalty $25,000
Standard $ 0
Award $25,000
Overall
UNACCEPTABLE - PENALTY $25,000
Standard $ 0
Award $25,000
NQR Best-In-Class* $25,000
Call Center Quarterly Payments
----------- ------------------
Overall
Unacceptable - Penalty $25,000
Standard $ 0
Award $25,000
NQR Best-In-Class* $25,000
C-5
* NQR Best-In-Class is WMGF scores matching the highest NQR rating of all
firms evaluated during the quarter.
TOTAL POTENTIAL ANNUAL PENALTIES - $400,000
TOTAL POTENTIAL ANNUAL AWARDS - $400,000 + $200,000 for NQR Best-In-Class
The parties agree to review all NQR standards annually and update such standards
effective as of the beginning of the 2nd quarter of each year to accurately
reflect the then current NQR quality ratings.
C-6
Exhibit 1 of Schedule C
Performance Standards
Effective Date: April 1, 2003 through March 31, 2004
PFPC's obligation to meet the "Standard Performance Range" for each of the
following Performance Standards shall be measured in the aggregate with respect
to all Funds.
1. TRANSACTION PROCESSING
TRANSACTION PERFORMANCE STANDARDS
Performance will be measured quarterly by National Quality Review ("NQR") based
on its then-current standard sampling methodology. Currently, that methodology
involves approximately 800 account transactions each quarter. NQR reviews
transactions for accuracy, timeliness and completeness. Beginning with the 2001
fourth quarter NQR report, if, for the current quarter, the percentage of the
transactions sampled by NQR represented by transactions for which no
"exceptions" were noted falls within the "Penalty Range" or "Award Range" (as
defined below), the PFPC Monthly Fees next invoiced by PFPC following receipt of
the NQR quarterly data shall be reduced by the applicable penalty, or increased
by the applicable award, as shown in Section 4 of this Exhibit 1. The WMSS
Monthly Fees for the same period will also be reduced by any applicable penalty,
but shall not be increased by any applicable award.
The PFPC Monthly Fees next invoiced by PFPC following receipt of the NQR
quarterly data will be increased by an additional award, as shown in Section 4
of this Exhibit 1 under the heading "NQR Best in Class" if the quarterly Overall
Accuracy rating matches the highest overall NQR rating earned by any firm
evaluated by NQR for the quarter to which such data relates.
Penalties or rewards will be assessed quarterly based on quarterly performance
scores, excluding reclassified items, as provided by NQR.
The "Penalty Range" is any percentage below the standard performance range most
recently determined by NQR for the previous calendar year (the "Standard
Performance Range"). The "Award Range" is any percentage above the Standard
Performance Range. The "Award Range" is further divided in half with a midpoint
that falls between the top of the "Standard Performance Range" and the "Best in
Class score" as determined each quarter. At present, the Penalty Range, the
Standard Performance Range and Award Range are as follows:
C-7
Standard
Unacceptable - Performance Award Range - Award Range -
Transaction Type Penalty Range Range Lower Half Upper Half
---------------- ------------- ----- ---------- ----------
Financial Accuracy <97.0% 97.0% - 98.6% >98.6% - 94.6% - 97.1% - 2.84 -
