EXHIBIT (h).4
TRANSFER AGENT SERVICING AGREEMENT
THIS AGREEMENT is entered into as April 26, 1999, by and between
Investment Advisers, Inc., a Delaware corporation (hereinafter referred to as
"IAI") and Firstar Mutual Fund Services, LLC, a corporation organized under the
laws of the State of Wisconsin (hereinafter referred to as the "FMFS").
WHEREAS, IAI is a registered investment adviser under the Investment
Advisers Act of 1940, as amended, and serves as the transfer agent for certain
open-end investment management companies (the "IAI Mutual Funds") registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the IAI Mutual Funds are authorized to create separate series,
each with its own separate investment portfolio (each a "Fund");
WHEREAS, FMFS is in the business of providing, among other things,
transfer agent and dividend disbursing agent services to investment companies;
and
WHEREAS, IAI desires to retain FMFS to provide transfer agent services
to each of the Funds listed on Exhibit A attached hereto, as it may be amended
from time to time.
NOW, THEREFORE, in consideration of the mutual agreements herein made,
IAI and FMFS agree as follows:
1. APPOINTMENT OF TRANSFER AGENT
IAI hereby appoints FMFS as transfer agent of IAI on the terms and
conditions set forth in this Agreement, and FMFS hereby accepts such appointment
and agrees to perform the services and duties set forth in this Agreement in
consideration of the compensation provided for herein.
2. DUTIES AND RESPONSIBILITIES OF FMFS
FMFS shall perform all of the customary services of a transfer agent
and dividend disbursing agent, and as relevant, agent in connection with
accumulation, open account or similar plans (including without limitation any
periodic investment plan or periodic withdrawal program), including but not
limited to:
A. Receive orders for the purchase of shares;
B. Process purchase orders with prompt delivery, where
appropriate, of payment and supporting documentation to IAI's
FMFS, and issue the appropriate number of uncertificated
shares with such uncertificated shares being held in the
appropriate shareholder account;
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C. Arrange for issuance of shares obtained through transfers of
funds from Shareholders' accounts at financial institutions
and arrange for the exchange of shares for shares of other
eligible investment companies, when permitted by a Fund's
prospectus.
D. Process redemption requests received in good order and, where
relevant, deliver appropriate documentation to IAI's FMFS;
E. Pay monies upon receipt from IAI's FMFS, where relevant, in
accordance with the instructions of redeeming shareholders;
F. Process transfers of shares in accordance with the
shareholder's instructions;
G. Process exchanges between funds and/or classes of shares of
funds.
H. Prepare and transmit payments for dividends and distributions
declared by IAI with respect to a Fund, after deducting any
amount required to be withheld by any applicable laws, rules
and regulations and in accordance with shareholder
instructions;
I. Make changes to shareholder records, including, but not
limited to, address changes in plans (i.e., systematic
withdrawal, automatic investment, dividend reinvestment,
etc.);
J. Record the issuance of shares of a Fund and maintain, pursuant
to Rule 17ad-10(e) promulgated under the Securities Exchange
Act of 1934, as amended (the "Exchange Act"), a record of the
total number of shares of a Fund which are authorized, issued
and outstanding;
K. Prepare shareholder meeting lists and, if applicable, mail,
receive and tabulate proxies;
L. Mail shareholder reports and prospectuses to current
shareholders;
M. Prepare and file U.S. Treasury Department Forms 1099 and other
appropriate information returns required with respect to
dividends and distributions for all shareholders;
N. Provide shareholder account information upon request and
prepare and mail confirmations and statements of account to
shareholders for all purchases, redemption's and other
confirmable transactions as agreed upon with a Fund;
O. Mail requests for shareholders' certifications under penalties
of perjury and pay on a timely basis to the appropriate
Federal authorities any taxes to be withheld on dividends and
distributions paid by a Fund, all as required by applicable
Federal tax laws and regulations;
P. Provide a Blue Sky System, which will enable a Fund to monitor
the total number of shares of the Fund sold in each state. In
addition, IAI or its agent, including FMFS, shall identify to
FMFS in writing those transactions and assets to be treated as
exempt from the Blue Sky reporting for each state. The
responsibility of FMFS for a Fund's Blue Sky
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state registration status is solely limited to the initial
compliance by a Fund and the reporting of such transactions to
a Fund or its agent;
Q. Answer correspondence from shareholders, securities brokers
and others relating to FMFS's duties hereunder and such other
correspondence as may from time to time be mutually agreed
upon between FMFS and IAI.
R. Perform such other tasks as routinely performed by transfer
agents consistent with generally accepted industry standards
as is mutually agreed upon by the parties.
3. COMPENSATION
FMFS shall be compensated for providing the services set forth in this
Agreement in accordance with the Fee Schedule attached hereto as Exhibit A and
as mutually agreed upon and amended from time to time. IAI agrees to pay all
fees and reimbursable expenses within ten (10) business days following the
receipt of the billing notice.
4. REPRESENTATIONS OF FMFS
FMFS represents and warrants to IAI that:
A. It is a corporation duly organized, existing and in good
standing under the laws of Wisconsin;
B. It is a registered transfer agent under the Exchange Act.
C. It is duly qualified to carry on its business in the State of
Wisconsin;
D. It is empowered under applicable laws and by its charter and
bylaws to enter into and perform this Agreement;
E. All requisite corporate proceedings have been taken to
authorize it to enter and perform this Agreement;
F. It has and will continue to have access to the necessary
facilities, equipment and personnel to perform its duties and
obligations under this Agreement; and
G. It will comply with all applicable requirements of the
Securities Act of 1933, as amended, and the Exchange Act, the
1940 Act, and any laws, rules, and regulations of governmental
authorities having jurisdiction.
5. REPRESENTATIONS OF IAI
IAI represents and warrants to FMFS that:
A. Each Fund is an open-end investment company under the 1940
Act;
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B. Each Fund is organized, existing, and in good standing under
the laws of Minnesota;
C. IAI is empowered under applicable laws and contracts to enter
into and perform this Agreement;
E. Each Fund will comply with all applicable requirements of the
Securities Act, the Exchange Act, the 1940 Act, and any laws,
rules and regulations of governmental authorities having
jurisdiction; and
F. A registration statement under the Securities Act will be made
effective and will remain effective, and appropriate state
securities law filings have been made and will continue to be
made, with respect to all shares of a Fund being offered for
sale.
6. COVENANTS OF IAI AND FMFS
FMFS shall keep records relating to the services to be performed
hereunder, in the form and manner as it may deem advisable. To the extent
required by Section 31 of the 1940 Act, and the rules thereunder, FMFS agrees
that all such records prepared or maintained by FMFS relating to the services to
be performed by FMFS hereunder are the property of a Fund and will be preserved,
maintained and made available in accordance with such section and rules and will
be surrendered to a Fund on and in accordance with its request. Such records
shall also be made available for review by the U.S. Securities and Exchange
Commission.
7. PERFORMANCE OF SERVICE; LIMITATION OF LIABILITY
A. FMFS shall exercise reasonable care in the performance of its duties
under this Agreement. FMFS shall not be liable for any error of judgment or
mistake of law or for any loss suffered by a Fund in connection with matters to
which this Agreement relates, including losses resulting from mechanical
breakdowns or the failure of communication or power supplies beyond FMFS's
control, except for such an error, mistake or loss arising out of or relating to
FMFS's refusal or failure to comply with the terms of this Agreement or from bad
faith, negligence, or willful misconduct on its part in the performance of its
duties under this Agreement.
Notwithstanding any other provision of this Agreement (other than
Section 3 above), if FMFS has exercised reasonable care in the performance of
its duties under this Agreement, IAI shall indemnify and hold harmless FMFS from
and against any and all claims, demands, losses, expenses, and liabilities
(whether with or without basis in fact or law) of any and every nature
(including reasonable attorneys' fees) which FMFS may sustain or incur or which
may be asserted against FMFS by any person arising out of any action taken or
omitted to be taken by it in performing the services hereunder (i) in accordance
with the foregoing standards, or (ii) in reliance upon any written or oral
instruction provided to FMFS by any duly authorized officer of the Fund or IAI,
such duly authorized officer to be included in a list of authorized officers
furnished to FMFS. This indemnification and hold harmless obligation shall not
extend to any and all claims, demands, losses, expenses, and liabilities arising
out of or relating to FMFS's refusal or failure to comply with the terms of this
Agreement or from bad faith, negligence or from willful misconduct on its part
in performance of its duties under this Agreement.
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FMFS shall indemnify and hold the Company harmless from and against any
and all claims, demands, losses, expenses, and liabilities (whether with or
without basis in fact or law) of any and every nature (including reasonable
attorneys' fees) which the Company may sustain or incur or which may be asserted
against the Company by any person arising out of any action taken or omitted to
be taken by FMFS as a result of FMFS's refusal or failure to comply with the
terms of this Agreement, its bad faith, negligence, or willful misconduct.
In the event of a mechanical breakdown or failure of communication or
power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond FMFS's control. FMFS will restore any lost or damaged data and correct
any errors resulting from such a breakdown at the expense of FMFS. FMFS agrees
that it shall, at all times, have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use of electrical data
processing equipment. Representatives of IAI shall be entitled to inspect FMFS's
premises and operating capabilities at any time during regular business hours of
FMFS, upon reasonable notice to FMFS.
Regardless of the above, FMFS reserves the right to reprocess and
correct administrative errors at its own expense.
B. In order that the indemnification provisions contained in this
section shall apply, it is understood that if in any case the indemnitor may be
asked to indemnify or hold the indemnitee harmless, the indemnitor shall be
fully and promptly advised of all pertinent facts concerning the situation in
question, and it is further understood that the indemnitee will use all
reasonable care to notify the indemnitor promptly concerning any situation which
presents or appears likely to present the probability of a claim for
indemnification. The indemnitor shall have the option to defend the indemnitee
against any claim, which may be the subject of this indemnification. In the
event that the indemnitor so elects, it will so notify the indemnitee and
thereupon the indemnitor shall take over complete defense of the claim, and the
indemnitee shall in such situation initiate no further legal or other expenses
for which it shall seek indemnification under this section. Indemnitee shall in
no case confess any claim or make any compromise in any case in which the
indemnitor will be asked to indemnify the indemnitee except with the
indemnitor's prior written consent.
8. PROPRIETARY AND CONFIDENTIAL INFORMATION
FMFS agrees on behalf of itself and its directors, officers, and
employees to treat confidentially and as proprietary information of IAI all
records and other information relative to IAI and prior, present, or potential
shareholders (and clients of said shareholders) and not to use such records and
information for any purpose other than the performance of its responsibilities
and duties hereunder, except after prior notification to and approval in writing
by IAI, which approval shall not be unreasonably withheld and may not be
withheld where FMFS may be exposed to civil or criminal contempt proceedings for
failure to comply after being requested to divulge such information by duly
constituted authorities, or when so requested by IAI.
9. DATA NECESSARY TO PERFORM SERVICES
Each Fund or its agent, which may be IAI or FMFS, shall furnish to FMFS
the data necessary to perform the services described herein at such times and in
such form as mutually agreed upon. If FMFS is
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also acting in another capacity for a Fund, nothing herein shall be deemed to
relieve FMFS of any of its obligations in such capacity.
10. TERM OF AGREEMENT
A. This Agreement shall become effective as of the date hereof and will
continue in effect for a period of three years. If IAI terminates the services
before the end of the third year of this Agreement, IAI agrees to reimburse FMFS
for its costs incurred in the conversion of services to FMFS as follows: $2917
per month remaining in the three year term. Subsequent to the initial three year
term, this Agreement may be terminated by either part upon giving ninety (90)
days prior written notice to the other party or such shorter period as is
mutually agreed upon by the parties. However, this Agreement may be amended by
mutual written consent of the parties.
B. Notwithstanding the foregoing, if the IAI Mutual Funds terminate
their agreements with IAI pursuant to which IAI has retained FMFS under this
Agreement, such termination shall also effectively terminate FMFS and IAI will
have no responsibility to compensate FMFS for such early termination.
11. NOTIFICATION OF ERROR
A. IAI or a Fund will notify FMFS of any balancing or control error
caused by FMFS the later of: within three (3) business days after receipt of any
reports rendered by FMFS to the Fund; within three (3) business days after
discovery of any error or omission not covered in the balancing or control
procedure, or within three (3) business days of receiving notice from any
shareholder.
B. FMFS will notify IAI of any balancing, control or other error caused
by FMFS within one (1) business day of FMFS discovering the error.
C. Notwithstanding anything to the contrary in Section 7 above, as more
fully provided in this paragraph C, FMFS shall reimburse each Fund and its
shareholders for losses due to NAV Differences (as defined below) arising out of
or relating to the FMFS's refusal or failure to comply with the terms of this
Agreement or from its bad faith, negligence or willful misconduct in the
performance of its duties under this Agreement. FMFS shall reimburse each
applicable Fund for any net losses to the Fund during each NAV Error Period (as
defined below) resulting from an NAV Difference that is at least $.010 per Fund
share but that, as a percentage of Recalculated NAV (as defined below) of such
Fund, is less than 1/2 of 1%. In providing reimbursement to the applicable Fund
and any Fund shareholder FMFS shall, at its option, either make direct payment
limited to the amount of the NAV Differences for the applicable Fund and any
Fund shareholder, or will reprocess the shareholder transactions affected by the
NAV Differences. FMFS shall reimburse the Fund and each Fund shareholder for any
net losses experienced by the Fund or any Fund shareholder, as applicable,
during each NAV Error Period resulting from an NAV Difference that is at least
$.010 per Fund share and that, as a percentage of Recalculated NAV of such Fund,
is at least 1/2 of 1%; provided, however, that FMFS shall not be responsible for
reimbursing any Fund shareholder experiencing a loss during any such NAV Error
Period of less than $25. NAV Differences and any liability of FMFS therefrom are
to be calculated each time a Fund's net asset value per share is calculated. For
purposes of calculating FMFS's liability hereunder, gains shall offset losses
within each NAV Error Period and future
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losses; however, net gains shall not be carried back to offset losses in prior
NAV Error Periods. For purposes of this paragraph C:
(i) "NAV Error Period" means any month during which an NAV
Difference exists.
(ii) "NAV Difference" means the difference between the
Recalculated NAV and the net asset value per share at which a given purchase or
redemption is effected, divided by the Recalculated NAV with respect to such
purchase or redemption.
(iii) "Recalculated NAV" means the net asset value per share
at which a shareholder purchase or redemption should have been effected.
12. NOTICES
Notices of any kind to be given by either party to the other party
shall be in writing and shall be duly given if mailed or delivered as follows:
Notice to FMFS shall be sent to:
Firstar Mutual Fund Services, LLC
000 Xxxx Xxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
and notice to IAI shall be sent to:
IAI Mutual Funds
Attn: Director, Fund Administration
000 Xxxxxx Xxxxxx Xxxxx, Xxxxx 0000
Xxxxxxxxxxx, XX 00000
13. DUTIES IN THE EVENT OF TERMINATION
In the event that, in connection with termination, a successor to any
of FMFS's duties or responsibilities hereunder is designated by IAI by written
notice to FMFS, FMFS will promptly, upon such termination and at the expense of
IAI, transfer to such successor all relevant books, records, correspondence, and
other data established or maintained by FMFS under this Agreement in a form
reasonably acceptable to IAI (if such form differs from the form in which FMFS
has maintained, IAI shall pay any expenses associated with transferring the data
to such form), and will cooperate in the transfer of such duties and
responsibilities, including provision for assistance from FMFS's personnel in
the establishment of books, records, and other data by such successor.
14. GOVERNING LAW
This Agreement shall be construed and the provisions thereof
interpreted under and in accordance with the laws of the State of Wisconsin.
However, nothing herein shall be construed in a manner inconsistent with the
1940 Act or any rule or regulation promulgated by the Securities and Exchange
Commission thereunder.
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15. FURTHER REPRESENTATIONS AND WARRANTIES OF FMFS
A. FMFS represents to IAI that the computer software, computer
firmware, computer hardware (whether general or special purpose) and other
similar related items of automated, computerized and/or software systems that
are owned or licensed by FMFS and will be utilized by FMFS or its agents in
connection with the provision of services described in this Agreement are "Year
2000 Compliant" (as defined below). As used in this Section 15 of this
Agreement, the term "Year 2000 Compliant" shall mean the ability of the relevant
system to provide all of the following functions:
(1) Process date information before, during and after January 1, 2000,
including but not limited to accepting date specific input data, providing date
specific output data, and performing calculations on dates or portions of dates;
(2) Function accurately and without interruption or malfunction before,
during and after January 1, 2000, without any change in operations associated
with the advent of the new millennium and assuming no other defects, bugs,
viruses or other problems unrelated to Year 2000 compliance issues which disrupt
functionality;
(3) Respond to two-digit, year-date input in a way that resolves the
ambiguity as to century and in a disclosed, defined and predetermined manner;
and
(4) Store and provide output data of date specific information in ways
that are unambiguous as to century.
The parties recognize and acknowledge that this representation was a significant
inducement for IAI to enter into this Agreement.
B. FMFS represents and warrants that it satisfies all rules and
requirements under the 1940 Act for the purpose of providing the services set
forth in this Agreement.
C. To the extent FMFS make changes relating to its services, systems,
programs, rules, operating schedules and equipment, it represents and warrants
that any such changes will not adversely affect the services provided to a Fund
under this Agreement. FMFS will provide IAI at least 90 days' prior written
notice of any such material changes.
D. In the event of a mechanical breakdown or failure of communication
or power supplies beyond its control, FMFS shall take all reasonable steps to
minimize service interruptions for any period that such interruption continues
beyond FMFS's control. FMFS will restore any lost or damaged data and correct
any errors resulting from such a breakdown at the expense of FMFS. FMFS agrees
that it shall, at all times, have reasonable contingency plans with appropriate
parties, making reasonable provision for emergency use of systems needed to
perform services under this Agreement. FMFS shall provide IAI with copies of
such contingencies plans and any changes thereto. Representatives of IAI shall
be entitled to inspect FMFS's premises and operating capabilities at any time
during regular business hours of FMFS, upon reasonable notice to FMFS.
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16. STOCK CERTIFICATES
If at any time a Fund issues stock certificates, the following
provisions will apply:
(i) In the case of the loss or destruction of any certificate
representing shares, no new certificate shall be issued in
lieu thereof, unless there shall first have been furnished an
appropriate bond of indemnity issued by the surety company
approved by FMFS.
(ii) Upon receipt of signed stock certificates, which shall be in
proper form for transfer, and upon cancellation or destruction
thereof, FMFS shall countersign, register and issue new
certificates for the same number of shares and shall deliver
them pursuant to instructions received from the transferor,
the rules and regulations of the SEC, and the laws of the
state of Minnesota relating to the transfer of shares of
beneficial interest.
(iii) Upon receipt of the stock certificates, which shall be in
proper form for transfer, together with the shareholder's
instructions to hold such stock certificates for safekeeping,
FMFS shall reduce such shares to uncertificated status, while
retaining the appropriate registration in the name of the
shareholder upon the transfer books.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by a duly authorized officer or one or more counterparts as of the day
and year first written above.
IAI INVESTMENT ADVISERS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By: /s/ Xxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxx
-------------------------------- --------------------------------
Attest: /s/ Xxxxxx Xxxxx Attest: /s/ Xxxxxx XxXxx
---------------------------- ----------------------------
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EXHIBIT A- LIST OF IAI MUTUAL FUNDS AND FEE SCHEDULE
Name of Fund Effective Date
------------ --------------
IAI INVESTMENT FUNDS I, INC.
IAI Bond Fund April 26, 1999
IAI Institutional Bond Fund April 26, 1999
IAI INVESTMENT FUNDS II, INC.
IAI Growth Fund April 26, 1999
IAI INVESTMENT FUNDS III, INC.
IAI International Fund April 26, 1999
IAI INVESTMENT FUNDS IV, INC.
IAI Regional Fund April 26, 1999
IAI INVESTMENT FUNDS VI, INC.
IAI Emerging Growth Fund April 26, 1999
IAI Midcap Growth Fund April 26, 1999
IAI Balanced Fund April 26, 1999
IAI Money Market Fund April 26, 1999
IAI Capital Appreciation Fund April 26, 1999
IAI INVESTMENT FUNDS VII, INC.
IAI Growth & Income Fund April 26, 1999
IAI INVESTMENT FUNDS VIII, INC.
IAI Value Fund April 26, 1999
IAI RETIREMENT FUNDS, INC.
IAI Regional Portfolio April 26, 1999
IAI Reserve Portfolio April 26, 1999
IAI Balanced Portfolio April 26, 1999
Annual Fee
$14.00 per shareholder account - no-load fund
Minimum annual fees of $25,000 for the first fund, $10,000 for each
additional fund or class Minimum annual fees of $5,000 per annuity fund
Extraordinary services quoted separately.
Plus Out-of-Pocket Expenses, including but not limited to:
Telephone - toll free lines Proxies
Postage Retention of records
Programming - enhancements Microfilm/fiche of records
Programming for select data requests - $150.00/hr Special reports
Stationery/envelopes ACH fees
Mailing NSCC charges
Programming to add funds/classes - $150.00 per hr Insurance
Check books Services to locate lost shareholders
File transfers - $160.00 per month and $.01 per record
ACH Shareholder Services
$125.00 per month per fund group
$ .50 per account setup and/or change
$ .50 per ACH item
$3.50 per correction, reversal, return item
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Qualified Plan Fees (Billed to Investors)*
Annual maintenance fee per account $12.50 / acct. (Cap at $25.00 per SSN)
Education XXX $ 5.00 / acct. (Cap at $25.00 / per SSN)
Transfer to successor trustee $15.00 / trans.
Distribution to participant $15.00 / trans. (Exclusive of SWP)
Refund of excess contribution $15.00 / trans.
*No maintenance fees will be charged to accounts in 1999. Firstar will charge
$1.00 per qualified plan account per month in 1999 on the transfer agent
invoices. Prior to June 1, 1999 all other qualified plan fees will be paid by
IAI. After that all other qualified plan fees apply immediately. XXX maintenance
fees will be charged to accounts in the year 2000.
Additional Shareholder Fees (Billed to Investors)
Any outgoing wire transfer $12.00 / wire
Telephone Exchange $ 5.00 / exchange transaction
Return check fee $20.00 / item
Stop payment $20.00 / stop
(Liquidation, dividend, draft check)
Research fee $ 5.00 / item
(For requested items of the second calendar year [or previous] to the
request) (Cap at $25.00)
NSCC Interfaces
Setup
Fund/SERV, Networking ACATS, Exchanges $5,000 setup (one time)
Commissions $5,000 setup (one time)
Processing
Fund/SERV $ 50.00 / month
Networking $250.00 / month
CPU Access $ 40.00 / month
Fund/SERV Transactions $ .35 / trade
Networking - per item $ .025 / monthly dividend fund
Networking - per item $ .015 / non-mo. dividend fund
First Data $ .10 / next-day Fund/SERV trade
First Data $ .15 / same-day Fund?SERV trade
NSCC Implementation
8 to 10 weeks lead time
DAZL (Direct Access Zip Link - Electronic mail interface to financial advisor
network)
Setup $5,000 / fund group
Monthly Usage $1,000 / month
Transmission $ .015 / price record
$ .025 / other record
Enhancement $ 125 / hour
Fees and out-of-pocket expenses are billed to IAI monthly.
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