EX-99.23(e)(7)
LOAD FUND OPERATING AGREEMENT
This Load Fund Operating Agreement is made as of August 15, 2008, by and
between Xxxxxxx National Life Distributors LLC ("Distributor"); 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." Fund Company and
Distributor are referred to collectively herein as "Fund Parties."
WHEREAS, Fund Parties wish to have shares of its series or classes of
shares listed on Schedule 1 hereto (the Fund(s)) available to investors for
purchase and redemption 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.
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.
c. All orders for Fund Shares are subject to acceptance or rejection by the
Fund Parties in their sole discretion, except to the extent that any such order
has already been confirmed by Fund Company or its agent in accordance with the
Operating Procedures. Fund Parties may, in their discretion and without notice,
suspend or withdraw the sale of Fund Shares of any Fund, including the sale of
such Fund Shares to Schwab for the account of any MFMP investor. Schwab
acknowledges that orders accepted by it in violation of the Fund's stated
policies may be subsequently revoked or cancelled by Distributor, provided that
any such order has not already been confirmed by Fund Company or its agent in
accordance with the Operating Procedures, and that Distributor shall not be
responsible for any losses incurred by Schwab or any MFMP investor as a result
of such cancellation.
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 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.
b. With respect to shares of Funds held in Omnibus Accounts, Schwab will,
upon request, (i) furnish Fund Company 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 Company 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
Company. Fund Company shall be responsible for all reasonable fees and other
reasonable charges of such database provider in connection with Fund Company's
retrieval of such information from such database provider.
3. COMPLIANCE RESPONSIBILITIES.
a. Fund Parties are responsible for (i) the material 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, Distributor, 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), (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) (except that the obligations of Fund Parties under this
subparagraph (ii) do not apply to Fund Company), (iii) the registration or
qualification of the shares of each Fund under all applicable laws, rules, and
regulations, and (iv) the material compliance by Fund Company, Distributor, 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 Company,
Distributor, or any Affiliate of Fund Company, except to the extent that the
failure to so comply by Fund Company, Distributor 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, "interested" directors (within the meaning of the 1940
Act), partner, co-partner, 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 Schwab. 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 the terms and
conditions of each Fund's prospectus, and all applicable laws, rules and
regulations governing Xxxxxx'x performance under this Agreement, except to the
extent that Xxxxxx'x failure to comply with the terms and conditions of each
Fund's prospectus or any law, rule, or regulation is caused by Fund Company or
Distributor's breach of this Agreement, or the Fund Company's or Distributor's
willful misconduct or gross 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 Agreement 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 and seek amendment of this Agreement 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. Fund Parties
agree further that if the parties cannot reach agreement on amendment, then
coincident with such change, Schwab may take either one of the following
actions, in its sole discretion: (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.
4. PAYMENTS.
a. In consideration of services provided by Schwab in connection with
networking the Sub-Accounts, Distributor, 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
Networking Fee is due by Distributor 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.
b. In consideration of services provided by Schwab in connection with
maintaining the Omnibus Account(s), Distributor, as agent for a Fund and on its
behalf, shall pay a quarterly fee calculated on the basis of the annual per
position maintenance fee set forth for the Fund on Schedule I ("PPMF"). At the
end of each calendar quarter, Schwab will calculate the PPMF for any such Fund
for such quarter by multiplying the number of individual shareholder positions
in the Omnibus Account(s) for such Fund on the last Business Day of such
calendar quarter by one quarter of the PPMF for such Fund, and shall xxxx it in
arrears. The PPMF is due by Distributor 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"), if and as in effect from time to time, 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 Fund Parties
according to the rules and on the schedule the Fund Parties 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.
(iv) Schwab agrees that an amount equal to the compensation received
by Schwab from Fund Parties under this Section 4.c. with respect to Fund
shares that are purchased and held by MFMP investors who are customers of
unaffiliated broker-dealers, banks and other financial intermediaries
("Correspondents") shall be paid by Schwab to the appropriate Correspondent
in consideration for the services the Correspondent provides to its
customers. The parties acknowledge that the Correspondent, and not Schwab,
has sole responsibility for disbursing any brokerage
commissions/concessions or service fees payable to the Correspondent's
representatives or to any of financial intermediaries clearing trades
through the Correspondent.
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.
Schwab agrees that any fees it receives pursuant to this Agreement are paid
solely to provide the services set forth in this Agreement, and such payments do
not entitle the Funds to any preferred status as compared to any other mutual
funds offered on Xxxxxx'x platform that are offered pursuant to a substantially
similar agreement.
5. REPRESENTATIONS AND WARRANTIES.
a. Fund Parties represent and warrant that each Fund is in compliance with
the conditions and qualifications set forth in Rule 2830(d) and 2830(l)(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. Fund Parties represent and warrant that either Distributor, Funds, Fund
Company, or an agent of Fund Company are Fund Members of the National Securities
Clearing Corporation ("NSCC") and 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 has adopted and implemented an
internal control structure over the processing and transmission of orders for
Fund transactions that is designed to prevent or detect on a timely basis
purchase and redemption orders received after the Funds calculate their net
asset values (the "Fund Pricing Time), from being aggregated with orders
received before the Fund's Pricing Time and to minimize errors that could result
from late transmission of orders to the Fund. If failure to implement and
maintain such adequate controls causes a Fund to incur costs, expenses or
losses, Schwab shall reimburse the Fund for any such costs, losses or expenses
incurred by the Fund as a result of such failure.
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.
f. 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.
g. 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. h. If the foregoing
representations and warranties made by Fund Parties and Schwab are no longer
accurate then Fund Parties 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.
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 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 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 Fund Company's
withdrawal of such authorization, continue to use materials prepared or printed
prior to the withdrawal of the authorization or in the process of being prepared
and printed at the time of the 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 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 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.
8. INDEMNIFICATION.
a. Fund Parties severally but not jointly shall 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
the Fund or in any advertising or promotional material published or provided to
Schwab by or on behalf of Fund Company, Distributor, or any Affiliate of Fund
Company, or accurately derived from information published or provided by or on
behalf of Fund Company, Distributor, or any Affiliate of Fund Company; (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 Parties of any
representation, warranty or agreement contained in this Agreement; or (iv) any
willful misconduct or negligence by Fund Parties in the performance of, or
failure to perform, their obligations under this Agreement, except 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,
its obligations under this Agreement; notwithstanding the foregoing, however,
Fund Company shall bear no liability or responsibility under this paragraph for
any Losses caused by another Fund Party.
x. Xxxxxx shall indemnify and hold harmless Fund Parties, 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 information published or provided by or on behalf of Fund Company,
Distributor, or any Affiliate of Fund Company, (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 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,
its obligations under this Agreement.
c. 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.
d. 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.
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 of
Distributor, Fund Company, 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 Distributor, Fund Company, 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.
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.
e. Schedule I may be amended unilaterally by Schwab immediately upon notice
to Fund Parties, provided however that any new or changed Networking Fee or PPMF
to be paid to Schwab pursuant to Section 4 of this Agreement ("Fee Term") shall
have been previously approved by Fund Parties. Fund Parties shall have ten (10)
Business Days from the date of receipt of Xxxxxx'x notice to object in writing
to any new or changed Fee Term under such amended Schedule I as not previously
approved. If Fund Parties object to a Fee Term, then such Fee Term shall not
become part of this Agreement, but Schedule I shall remain amended otherwise as
provided in Xxxxxx'x notice and the parties shall proceed to resolve such
disputed Fee Term in good faith. The parties agree that if Fund Parties do not
object to a new or changed Fee Term in Xxxxxx'x notice as provided herein, then
Schedule I shall be deemed amended thereafter in every respect as provided in
Xxxxxx'x written notice.
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. 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.
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.
21. Expenses. Except as otherwise provided in this Agreement, each party
shall bear all expenses incidental to the performance of its obligations under
this Agreement.
22. ASSIGNABILITY. This Agreement is not assignable by any party without
the other parties' prior written consent, not to be unreasonably withheld, and
any assignment in contravention hereof shall be null and void.
23. NON-EXCLUSIVITY. Each party acknowledges that the other may enter into
agreements similar to this Agreement with other parties for the performance of
services similar to those to be provided under this Agreement, unless otherwise
agreed to in writing by the parties.
IN WITNESS WHEREOF, this Agreement has been executed by a duly authorized
representative of the parties hereto.
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SCHWAB FUND COMPANY
REQUIRED SIGNATURE REQUIRED SIGNATURES
-------------------------------------------------------------- ----------------------------------------------------------
-------------------------------------------------------------- ----------------------------------------------------------
XXXXXXX XXXXXX & CO., INC.
By: _______________________________________
Xxxxx Xxxxxxxx By: _______________________________________
Vice President
Asset Management Platforms & Support Name: _______________________________________
Date: ___________________________________ as ____________________________________
(Title)
of each Fund Company, on behalf of each
Fund Company and on behalf of each Fund
Date: _______________________________________
----------------------------------------------------------
----------------------------------------------------------
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DISTRIBUTOR
REQUIRED SIGNATURES
----------------------------------------------------------
----------------------------------------------------------
XXXXXXX NATIONAL LIFE DISTRIBUTORS LLC
By: _______________________________________
Name: _______________________________________
Title: _______________________________________
Date: _______________________________________
----------------------------------------------------------
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SCHEDULE I TO THE LOAD FUND OPERATING AGREEMENT
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
Fund Company Fund Share Class Purchase PPMF Networking Effective
Availability Fee date
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective 5 Fund Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective 5 Fund Class C MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective Index 5 Fund Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective Index 5 Fund Class C MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective 10x10 Fund Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective 10x10 Fund Class C MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective Optimized 5 Fund Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective Optimized 5 Fund Class C MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective VIP Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective VIP Class C MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective VIP Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective VIP Class C MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
JNL Investors Series Trust Xxxxxxx Perspective Money Market Fund Class A MFMP $20 $6 8/15/08
-------------------------- -------------------------------------- --------------- ---------------- ------- ----------- ------------
MFMP Indicates that Fund can be made available for purchase to all MFMP
investors.
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 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 shall arrange with its
transfer agent for Schwab to have electronic access 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 Company 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.
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) Schwab 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 these Operating Procedures) for each such
Fund's Omnibus Account(s), and (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).
(iv) 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.
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.
(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 securities issued by the Fund including, without
limitation, policies concerning roundtrips and other forms of market timing
and excessive (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 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 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 and in accordance with NSCC rules; (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.
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 use reasonable efforts to confirm or reject any Fund
purchase or redemption Order on the same day such Order is received from Schwab
through Fund/SERV but in any event no later than the next opening of the New
York Stock Exchange ("Market Open"), or to notify Schwab prior to Market Open 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 Market Open. If Fund Company does not confirm
or reject an Order prior to Market Open or notify Schwab as provided in this
Section prior to Market Open, such Order will be deemed confirmed and accepted
by Fund Company immediately after Market Open.
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 as
follows:
(i) PRICE AND RATE INFORMATION. Fund Company shall provide Schwab with
daily pricing and daily and periodic distribution rate information via the
NSCC Daily Price and Rate File ("MF Profile I"), and such other information
as in the future may be communicated through MF Profile I.
(ii) OTHER FUND INFORMATION. Fund Company shall provide Schwab such
other mutual fund information via the NSCC Data Repository File ("MF
Profile II") as prescribed by NSCC, which 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; minimum and maximum investment requirements, Blue Sky
qualification information; and merger and Fund closing information.
(1) In the event MF Profile II is not sufficient to communicate
all of the prescribed mutual fund information, Fund Company agrees to
provide the information on a timely basis via email or other mutually
agreed upon means.
(2) To the extent Fund Company lacks functionality sufficient to
deliver mutual fund information via MF Profile II, Fund Company will
work diligently to implement such functionality as soon as reasonably
possible, to operate more efficiently with Schwab hereunder. In the
interim, Fund Company agrees to provide the information on a timely
basis via email or other mutually agreed upon means.
(iii) Schwab may rely on any mutual fund information provided pursuant
to this Section 4.e., even if such mutual fund information conflicts with
any verbal or other written information provided by Fund Parties under this
Agreement, including information previously provided on a Fund Information
Sheet.
(iv) In the case of any inconsistency between the information provided
in MFPS and the information provided on a Fund Information Sheet or in a
Fund's prospectus. the parties agree to work together in good faith to
resolve the inconsistency and any error resulting from Xxxxxx'x reliance on
the information provided by Fund Company through MFPS; provided, however,
that (1) Schwab will not be liable for any losses or errors in connection
with its reliance on the information provided in MFPS by Fund Company; and
(2) no party to this Agreement shall be liable for any losses or errors in
connection with a party's use of or reliance upon MFPS that are caused by
the NSCC.
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 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 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 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 ("Share Price") and/or
notification of no Share 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.).
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 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.f, 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.
(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 Parties 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 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, (iii)
the distribution rate and distribution type by 3:00 p.m. on ex-dividend date;
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 p.m.
Eastern Time on the ex-dividend 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
receipt of the reinvest price per share ("R+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 the reinvest price per share
("R+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, prior to 10:00 a.m.,
Eastern Time, on R+1, Schwab shall 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 R+1, Fund Company or Fund shall pay the proceeds from
such adjusting reconciling transaction no later than the next Business
Day (R+2)
(2) If Schwab submits such adjusting reconciling transaction on
R+1 by means other than through Fund/SERV, Fund Company or Fund shall
wire the proceeds resulting from such adjusting reconciling
transaction to the designated Schwab bank account on R+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 R+2 or, for
Accounts processed outside of the NSCC, by wire transfer on R+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 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 Xxxxxx 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.
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 Company 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 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 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
withholding if paid to non-United States persons.
(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 (i) dividends and other distributions made, (ii)
amounts withheld on dividends and other distributions and payments, and
(iii) 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 Fund Company fails to notify Schwab of a Fund Closure or return the Fund
Closure Form pursuant to this Section, Fund Company agrees that such Fund
will continue to accept those purchase Orders which Schwab received from
MFMP investors prior to notification of the Fund Closure for a period of up
to five (5) Business Days after the effective date of 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 in writing prior to or
immediately upon such closure 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 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 Company or the 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 Company 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 XXXXXXXXXXX.Xx 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. 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 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 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 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.
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.
