EXHIBIT (h).3
FORM OF
FULFILLMENT SERVICING AGREEMENT
THIS AGREEMENT is entered into as of 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 "FMFS").
WHEREAS, IAI is a registered investment adviser under the Investment
Advisers Act of 1940, as amended;
WHEREAS, IAI serves as investment adviser to various registered
investment IAI under the Investment Company Act of 1940, as amended, (the "IAI
Mutual Funds");
WHEREAS, the IAI Mutual Funds are authorized to create separate series,
each with its own investment portfolio (each a "Fund");
WHEREAS, FMFS provides fulfillment services to mutual funds;
WHEREAS, IAI desires to retain FMFS to provide fulfillment services for
the Funds listed on Exhibit A attached hereto, as may be amended from time to
time.
NOW, THEREFORE, the parties agree as follows:
1. DUTIES AND RESPONSIBILITIES OF FMFS
1. Answer all prospective shareholder calls concerning the Fund.
2. Send all available Fund material requested by the prospect
within 24 hours from time of call.
3. Receive and update all Fund fulfillment literature so that the
most current information is sent and quoted.
4. Provide 24 hour answering service to record prospect calls
made after hours (7 p.m. to 8 a.m. CT).
5. Maintain and store Fund fulfillment inventory.
6. Send periodic fulfillment reports to IAI as agreed upon
between the parties.
2. DUTIES AND RESPONSIBILITIES OF IAI
1. Provide Fund fulfillment literature updates to FMFS as
necessary.
2. File with the NASD, SEC and State Regulatory Agencies, as
appropriate, all fulfillment literature that the Fund requests
FMFS send to prospective shareholders.
3. Supply FMFS with sufficient inventory of fulfillment materials
as requested from time to time by FMFS.
4. Provide FMFS with any sundry information about the Fund in
order to answer prospect questions.
3. INDEMNIFICATION
IAI agrees to indemnify FMFS from any liability arising out of the distribution
of fulfillment literatureAgencies but not to the extent that such liability
arises out of or is in any way related to FMFS's own bad faith, negligence,
willful misconduct or breach of this Agreement. FMFS agrees to indemnify IAI
from any liability arising from the improper use of fulfillment literature
during the performance of duties and responsibilities identified in this
agreement.
4. COMPENSATION
IAI agrees to compensate FMFS for the services performed under this Agreement in
accordance with the attached Exhibit A. All invoices shall be paid within ten
days of receipt.
5. 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 the Fund and prior, present, or potential shareholders
of the Fund (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, when requested to divulge such information by duly constituted
authorities, or when so requested by IAI.
6. TERMINATION
This Agreement may be terminated by either party upon 30 days' written notice.
7. NO AGENCY RELATIONSHIP
Nothing herein contained shall be deemed to authorize or empower FMFS to act as
agent for the other party to this Agreement, or to conduct business in the name
of, or for the account of the other party to this Agreement.
8. DATA NECESSARY TO PERFORM SERVICES
IAI or its agent, which may be 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 also acting in another capacity for the Fund, nothing
herein shall be deemed to relieve FMFS of any of its obligations in such
capacity.
9. NOTIFICATION OF ERROR
IAI will notify FMFS of any error caused by FMFS the later of: within three (3)
business days after receipt of any reports rendered by FMFS to IAI; 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.
10. REPRESENTATIONS AND WARRANTIES OF FMFS
A. FMFS represents and warrants to the 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 10 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 and warranty was
a significant inducement for IAI to enter into this Agreement.
B. 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 under this
Agreement. FMFS will provide IAI at least 90 days' prior written notice of any
such material changes.
C. 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.
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.
INVESTMENT ADVISERS, INC. FIRSTAR MUTUAL FUND SERVICES, LLC
By:__________________________________ By:____________________________________
Attest:______________________________ Attest:________________________________
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 N/A
IAI Reserve Portfolio N/A
IAI Balanced Portfolio N/A
Base Service $100 per month
Customer Service
State registration compliance edits
Literature database
Record prospect request and profile
Prospect servicing 8:00 am to 7:00 pm CT
Recording and transcription of requests received off-hours
Periodic reporting of leads to client
Service Fee: $.99 / minute
Assembly and Distribution of Literature Requests
Generate customized prospect letters
Assembly and insertion of literature items
Inventory tracking
Inventory storage, reporting
Periodic reporting of leads by state, items requested, market source
Service Fee: $.45 / lead - insertion of up to 4 items/lead
$.15 / additional inserts
Fees and out-of-pocket expenses are billed to IAI monthly
