EXHIBIT NO. (H) (38)
NO TRANSACTION FEE FUND SERVICING AGREEMENT
This Agreement is made as of June , 1998, among National Investor
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Services Corp. ("NISC"), located at 00 Xxxxx Xxxxxx, Xxx Xxxx, XX, Firstar
Funds. Inc., (the "Fund"), located at 000 Xxxx Xxxxxxxx Xxxxxx, Xxxxxxxxx, XX;
and Firstar Investment Research & Management Company, LLC ("FIRMCO"), located at
000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX.
WHEREAS, NISC functions as a clearing agent for introducing broker-
dealer/correspondents ("participating correspondents") and in such capacity
performs traditional operational functions, including execution and clearance of
trades and custody of Client-shareholders' funds and securities;
WHEREAS, NISC or participating correspondents will execute orders for new
shares free of transaction charges to the Client-shareholders, provided certain
minimum purchase amount criteria are met, as same may be modified from time to
time ("Program shares");
WHEREAS, the Fund and FIRMCO desires to have NISC perform certain
recordkeeping, shareholder communication, and other services;
NOW THEREFORE, in consideration of the foregoing and the mutual promises
set forth below, the parties agree as follows:
1. Services
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a. NISC agrees to perform certain services for the Client-
shareholders as more particularly set forth below. "Client-
shareholders" shall mean those participating correspondent clients who
maintain an interest in an omnibus account with the Fund registered in
NISC's name for their exclusive benefit and who receive services from
NISC under this Agreement.
b. NISC represents and warrants that it has and will continue at all
times to maintain necessary facilities, equipment and personnel to
perform its services hereunder and to comply with applicable laws,
rules and regulations including the maintenance and preservation of
all required records and registrations.
c. NISC represents and warrants that all Client-shareholders are
aware that they are transacting business with NISC and not the Fund,
and that they will look only to NISC and not to the Fund for
resolution of problems or discrepancies in their accounts.
d. NISC agrees that it will establish with the Fund one or more
omnibus accounts registered in NISC's name for the exclusive benefit
of its customers who are Client-shareholders in the Fund, and will
perform various services for the Client-shareholders in those
accounts, including without limitation: mailing the Fund's
prospectuses and statements of additional information upon customer
request and, as applicable, upon confirmation of customer purchases to
the extent required by law, and mailing any supplements; establishing
and maintaining records of Client-shareholders' accounts; processing
purchase and redemption transactions; confirming Client-shareholder
transactions; answering routine client inquiries regarding the Fund;
producing and mailing statements to Client-shareholders on a monthly
basis (or, as to accounted 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 Client-
shareholders and the net asset values of such shares as of a recent
date: providing assistance to Client-shareholders in effecting
changes to their dividend options, account designations and addresses;
[withholding taxes on non-resident alien accounts;] [?] disbursing
income dividends and capital gains distributions; reinvesting
dividends and distributions; preparing and delivering to Client-
shareholders, and state and federal authorities including the United
States Internal Revenue Service, such information respecting dividends
and distributions paid by the Fund as may be required by law, rule or
regulation; withholding on dividends and distributions as may be
required by state or Federal authorities from time to time; and such
other services as the Fund or FIRMCO may reasonably request. NISC
shall not make any statement or representation concerning the Fund
that is not contained in the Fund's registration statement, annual
report or proxy statement or any advertising or promotional materials
generated by or on behalf of the Fund.
e. NISC shall maintain all historical Client-shareholder records
consistent with requirements of all applicable laws, rules and
regulations. Upon request of the Fund or FIRMCO, NISC shall provide
copies of written communications regarding the Fund to or from such
Client-shareholders. NISC shall upon request make available to the
Fund and FIRMCO such records or communications as may be necessary to
determine the number of Client-shareholders in each NISC omnibus
account. If, at any time, the Fund or FIRMCO determines NISC's
practices, procedures or controls to be inadequate, written notice of
such inadequacy shall be given to NISC, and NISC shall have fifteen
(15) days plus any additional time as provided by the Fund and FIRMCO
to correct such inadequacy. In the event such inadequacy is not
corrected by NISC, the Fund or FIRMCO shall have the right to
immediately terminate this Agreement. Nothing in this Agreement shall
impose upon the Fund or FIRMCO the obligation to review NISC's
practices, procedures and controls. NISC will wish the Fund or its
designee with such information as it or they may reasonably request in
connection with the preparation of reports to the Fund's Board of
Directors concerning this Agreement, the Fund's annual audit, and any
other reports or filings that may be required by law.
f. The official records of transactions of NISC's omnibus accounts
and the number of shares in such accounts shall be as determined by
the Fund, FIRMCO, or the Fund's designee. NISC shall bear
responsibility for any discrepancies between its omnibus accounts and
the Client-shareholder accounts and for the maintenance of all records
regarding the Client-shareholders, the Client-shareholders'
transactions, and the Client-shareholders' interest in omnibus
accounts.
g. NISC assumes sole responsibility for reconciliation of customer
accounts with its omnibus account at the Fund. The Fund and FIRMCO
agrees to assist NISC with such reconciliation where necessary.
h. The Fund or its designee shall have sole authority and
responsibility under this Agreement for countersigning securities of
the Fund, monitoring the issuance of securities of the Fund with a
view to preventing unauthorized issuance, registering the transfer of
securities of the Fund, exchanging or converting securities of the
Fund or transferring record ownership of securities of the Fund by
bookkeeping entry without physical issuance of securities certificates
of the Fund.
2. Fees
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a. For performance of the services described herein, NISC shall
receive a fee (the "Fee") from FIRMCO which will be paid at the end of
each month at the annual rate applicable to the average aggregate
daily net asset value of shares of the Fund in the accounts for which
NISC provides services. Fees are solely for shareholder servicing and
other administrative services provided by NISC and do not constitute
payment in any manner for investment advisory, distribution, trustee,
or custodial services. The terms, conditions and amounts of such
payments are set forth in Schedule A to this Agreement.
b. In computing NISC's fee, one-twelfth of the applicable fee rate
set forth in Schedule A shall be applied to the average aggregate
daily net asset value of shares of the Fund in accounts for which NISC
provides services during the month in question. For the month in
which this Agreement becomes effective or terminates, there shall be
an appropriate proration based on the number of days that the
Agreement is in effect during the month.
c. Except as otherwise agreed in writing with the Fund and FIRMCO
with respect to specific expenditures by NISC, NISC shall bear sole
responsibility for all costs and expenses of providing services under
this Agreement.
3. Transaction Charges
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NISC shall not, during the term of this Agreement, assess against, or
collect from, Client-shareholders, any transaction fee upon the purchase or
redemption of any of the Fund's shares that meet the minimum purchase
criteria set forth in this Agreement, except as noted in Section 4 below.
Client-shareholder purchases not meeting the criteria as set forth herein
may be charged a transaction fee and any such fee shall not be included in
service fee invoices presented for payment.
4. Short Term Redemptions and Transfers
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a. It is hereby agreed that NISC may apply a redemption fee for any
short-term redemption of shares purchased within specified time
frames.
b. NISC reserves the right to apply a fee for the transfer of any
fund position purchased within specified time frames.
c. Any such charges shall be imposed in such manner as to make it
clear to the redeeming Client-shareholder that the fee is not being
charged by the fund or FIRMCO.
5. Relationship of Parties
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a. The relationship among NISC, the Fund and FIRMCO shall be that of
independent contractors and no party shall be or represent itself to
be an agent, employee, partner or joint venturer of the other, nor
shall any party have or represent itself to have any power or
authority to act for, bind or commit the other. Notwithstanding the
foregoing, FIRMCO is the investment adviser to the Fund and has the
powers and authority as agreed to between FIRMCO and the Fund.
b. The parties acknowledge and agree that the services under this
Agreement are recordkeeping, shareholder communication, and related
services only and are not the services of an underwriter or a
principal underwriter within the meaning of the Securities Act of
1933, as amended, or the Investment Company Act of 1940, as amended
(the "1940 Act"). This Agreement does not grant NISC any right to
purchase shares as a principal from the Fund, nor does it constitute
NISC an agent of the Fund for purposes of selling shares of the Fund
to any dealer or to the public. To the extent NISC is involved in the
purchase of shares of any fund by Client-shareholders, such
involvement will be as agent of such Client-shareholders only.
6. Indemnification
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a. NISC shall indemnify and hold harmless FIRMCO, the Fund, and
their directors, managers, officers, employees, and agents
(hereinafter "Indemnified Parties") from and against any and all
losses, claims, liabilities and expenses (including, but not limited
to, reasonable attorney's fees) incurred by any of them and arising as
a result of: (i) NISC's dissemination of information regarding the
Fund that is materially incorrect and that was not provided to NISC by
the Fund or FIRMCO, or approved by the Fund, its affiliated persons
(as defined in the 1940 Act), or agents; or (ii) NISC's willful
misconduct or gross negligence in the performance of, or failure to
perform, its obligations under this Agreement, or its breach of this
Agreement, except to the extent the losses are a result of the gross
negligence, willful misconduct, or breach of this Agreement by an
Indemnified Party. This section 6(a) will survive the termination of
this Agreement.
b. The Fund hereby agrees to indemnify NISC against any and all
losses, claims, damages and liabilities to which NISC may become
subject as a result of any untrue statement of a material fact
contained in the Fund's prospectus or statement of additional
information, as amended or supplemented from time to time, or the
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading.
c. In any event, neither party shall be liable for any special,
consequential or incidental damages.
7. Information to be Provided
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The Fund or its designee shall provide to NISC, prior to the
effectiveness of Agreement, or as soon thereafter as possible, a copy
of the current prospectus and statement of additional information.
The Fund or its designee shall provide NISC with written copies of any
amendments to, or changes in such documents as soon as possible after
such amendments or changes become available. The Fund or its designee
shall additionally provide NISC with reasonable supplies of
prospectuses upon request.
8. Notices
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All notices required under this Agreement must be in writing and
delivered either personally or via first class mail. Such notices will be
deemed to be received as of the date of actual receipt, or three (3) days
after deposit -in the United States mail, whichever is earlier.
All such notices shall be made, if to NISC, to: Xxxxxx X. Xxxxxxx,
Senior Vice President, 00 Xxxxx Xxxxxx, Xxx Xxxx, XX 00000; if to Fund, to:
_________________, ________________, 000 Xxxx Xxxxxxxx Xxxxxx, X.X. Xxx
0000, Xxxxxxxxx, XX 00000-0000; and if to FIRMCO to: ________________,
_________________ 000 Xxxx Xxxxxxxxx Xxxxxx. Xxxxx 000, Xxxxxxxxx, XX
00000.
9. Nonexclusivity
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Each party acknowledges that the others may enter into agreements,
similar to this one, 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.
10. Severability
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If any provision of this Agreement should be invalid, illegal or in
conflict with any applicable state or federal law or regulation, such law
or regulation shall control, to the extent of such conflict, without
affecting the remaining provisions of this Agreement.
11. Licenses
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NISC represents and warrants that it is a corporation duly organized
under the laws of the State of New York and is duly licensed and/or
qualified as a broker/dealer with the SEC, the NASD and in every state or
territory of the United States of America (including the District of
Columbia) where such licensing or qualification is required and has the
requisite authority to enter into this Agreement and to carry out the
services contemplated herein. NISC will not make any offer or sale of fund
shares (a) in any state or jurisdiction in which such shares are not
qualified for sale or exempt from the requirements of the relevant
securities laws at any time after it has been provided with written notice
that such fund is not so qualified or exempt in such state or jurisdiction,
(b) in any state or jurisdiction in which it is not properly licensed or
authorized to make offers or sales, or (c) at any time after it has been
provided with written notice that a fund is not then currently offering
shares to the public.
12. Entire Agreements; Amendment
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This Agreement, including any exhibits attached hereto, constitute the
entire agreement between the parties with regard to the subject matter
herein. Additionally, these materials supersede any and all agreements,
representations and warranties, whether written or oral, made prior to the
execution of this Agreement. This Agreement and the exhibits attached
hereto may be amended only by a writing signed by all parties.
13. Term and Termination
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This Agreement shall become effective as of the date it is accepted by
NISC and will continue in effect until terminated in writing upon sixty
(60) days prior notification by any party to the others; provided, that
NISC shall be entitled to receive all Fees it has earned up to and
including the effective date of the termination.
14. Assignability
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This Agreement is not assignable by any party without the other
parties' prior written consent. Any attempted assignment in contravention
hereof shall be null and void; provided, however, that NISC may assign its
rights and obligations under this Agreement to any affiliate of NISC.
15. Governing Law
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This Agreement shall be governed by, and interpreted in accordance
with the laws of the State of New York, without reference to conflicts of
law provisions thereof.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
the day and year first above written.
NATIONAL INVESTOR SERVICES CORP.
By: /s/Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
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Title: Senior Vice President
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FIRSTAR FUNDS INC.
By: /s/Xxxx Xxxxx Xxxxxx
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Name: Xxxx Xxxxx Xxxxxx
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Title: Vice President
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FIRSTAR INVESTMENT RESEARCH &
MANAGEMENT COMPANY, LLC
By: /s/J. Xxxxx Xxxxxxxx
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Name: J. Xxxxx Xxxxxxxx
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Title: Chairman
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