SHAREHOLDER SERVICING
AGREEMENT
SHORT TERM INCOME FUND, INC.
(the "Fund")
Money Market Portfolio
(the "Portfolio")
First Southwest Prime Income Fund Shares
("First Southwest Shares")
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
,2002
Xxxxx & Xxxx Distributors, Inc. ("Distributor")
000 Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Gentlemen:
We herewith confirm our agreement with you as follows:
1. We hereby employ you, pursuant to the Distribution and
Service Plan adopted by us in accordance with Rule 12b-1 (the "Plan") under the
Investment Company Act of 1940, as amended (the "Act"), to provide the services
listed below on behalf of the First Southwest Shares of the Portfolio. You will
perform, or arrange for First Southwest Company ("FS") to perform, all personal
shareholder servicing and related maintenance of shareholder account functions
("Shareholder Services") not performed by us or our transfer agent.
2. You will be responsible for the payment of all expenses
incurred by you in rendering the foregoing services, except that the First
Southwest Shares will pay for (i) telecommunications expenses, including the
cost of dedicated lines and CRT terminals, incurred by the Distributor and FS in
rendering such services to the First Southwest Shares shareholders, and (ii)
preparing, printing and delivering our prospectus to existing shareholders and
preparing and printing subscription application forms for shareholder accounts.
3. You may make payments from time to time from your own
resources, including the fees payable hereunder and past profits, to compensate
FS for providing Shareholder Services to the First Southwest Shares
shareholders. Payments to FS to compensate it for providing Shareholder Services
are subject to compliance by FS with the terms of the Private Class
Sub-Distribution and Service Agreement entered into
between you and FS which has been approved by our Board of Directors. The
Distributor will in its sole discretion determine the amount of any payments
made by the Distributor pursuant to this Agreement, provided, however, that no
such payment will increase the amount which the Portfolio, on behalf of the
First Southwest Shares, is required to pay either to the Distributor under this
Agreement or the Distribution Agreement or to the Manager under the Investment
Management Contract, the Administrative Services Agreement, or otherwise.
4. We will expect of you, and you will give us the benefit of,
your best judgment and efforts in rendering these services to us, and we agree
as an inducement to your undertaking these services that you will not be liable
hereunder for any mistake of judgment or for any other cause, provided that
nothing herein shall protect you against any liability to us or to our
shareholders by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
5. In consideration of your performance, the Fund, on behalf of
the First Southwest Shares, will pay you a service fee, as defined by Rule 2830
of the Conduct Rules of the National Association of Securities Dealers, Inc., at
the annual rate of one quarter of one percent (0.25%) of the Portfolio's First
Southwest Shares' average daily net assets. Your fee will be accrued by us
daily, and will be payable on the last day of each calendar month for services
performed hereunder during that month or on such other schedule as you shall
request of us in writing. You may waive your right to any fee to which you are
entitled hereunder, provided such waiver is delivered to us in writing.
6. This Agreement will become effective on the date hereof and
shall continue in effect until August 31, 2002, and thereafter for successive
twelve-month periods (computed from each September 1), provided that such
continuation is specifically approved at least annually by vote of our Board of
Directors and of a majority of those of our directors who are not interested
persons (as defined in the Act) and have no direct or indirect financial
interest in the operation of the Plan or in any agreements related to the Plan,
cast in person at a meeting called for the purpose of voting on this Agreement.
This Agreement may be terminated at any time, without the payment of any
penalty, (a) on sixty days' written notice to you (i) by vote of a majority of
our entire Board of Directors, and by a vote of a majority of our Directors who
are not interested persons (as defined in the Act) and who have no direct or
indirect financial interest in the operation of the Plan or in any agreement
related to the Plan, or (ii) by vote of a majority of the outstanding voting
securities of the Portfolio's First Southwest Shares, as defined in the Act, or
(b) by you on sixty days' written notice to us.
7. This Agreement may not be transferred, assigned, sold or in
any manner hypothecated or pledged by you and this Agreement shall terminate
automatically in the event of any such transfer, assignment, sale, hypothecation
or pledge by you. The terms "transfer", "assignment" and "sale" as used in this
paragraph shall
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have the meanings ascribed thereto by governing law and in applicable rules or
regulations of the Securities and Exchange Commission thereunder.
8. Except to the extent necessary to perform your obligations
hereunder, nothing herein shall be deemed to limit or restrict your right, the
right of any of your employees, officers or directors, who may also be a
director, officer or employee of ours, or of a person affiliated with us, as
defined in the Act, to engage in any other business or to devote time and
attention to the management or other aspects of any other business, whether of a
similar or dissimilar nature, or to render services of any kind to another
corporation, firm, individual or association.
If the foregoing is in accordance with your understanding,
will you kindly so indicate by signing and returning to us the enclosed copy
hereof.
Very truly yours,
SHORT TERM INCOME FUND, INC.
Money Market Portfolio
First Southwest Prime Income Fund Shares
By: ________________________________
Name:
Title:
ACCEPTED: ,2002
XXXXX & XXXX DISTRIBUTORS, INC.
By:
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Name:
Title:
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