EX-99.B(6)(d)
(Class D Shares)
FLAG INVESTORS TELEPHONE INCOME FUND, INC.
FLAG INVESTORS CLASS B SHARES
DISTRIBUTION AGREEMENT
AGREEMENT made as of the ___ day of __________________,
1993, by and between FLAG INVESTORS TELEPHONE INCOME FUND, INC.,
a Maryland corporation (the "Fund"), and Alex. Xxxxx & Sons
Incorporated, a Maryland corporation ("Alex. Xxxxx").
W I T N E S S E T H
WHEREAS, the Fund is registered as an open-end, diversified,
management investment company under the Investment Company Act of 1940, as
amended (the "1940 Act") and
WHEREAS, the Fund wishes to appoint Alex. Xxxxx as the
exclusive distributor of the class of shares of the Fund known as the Flag
Investors Class B Shares (the "Shares") and Alex. Xxxxx wishes to become the
distributor of the Shares; and
WHEREAS, the compensation to Alex. Xxxxx hereunder and the
payments contemplated by paragraph 9 constitute the financing of activities
intended to result in the sale of Shares, and this Agreement is entered into
pursuant to a "written plan" pursuant to Rule 12b-1 under the Act (the "Plan")
allowing the Fund to make such payments.
NOW, THEREFORE, in consideration of the premises, and of other
good and valuable consideration by each of the parties hereto to the other party
paid, and of the agreements, covenants and obligations herein contained, the
parties hereto agree as follows:
1. Appointment. The Fund appoints Alex. Xxxxx as the exclusive
distributor of the Shares for the period and on the terms set forth in this
Agreement. Alex. Xxxxx accepts such appointment and agrees to render the
services herein set forth for the compensation herein provided.
2. Delivery of Documents. The Fund has furnished Alex. Xxxxx
with copies, properly certified or authenticated, of each of the following:
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(a) The Fund's Articles of Incorporation, filed with
the Secretary of State of Maryland on November 4, 1988 and all amendments
thereto;
(b) The Fund's By-Laws and all amendments thereto
(such By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Fund's Board of Directors
authorizing the appointment of Alex. Xxxxx as the Fund's Distributor of the
Shares and approving this Agreement;
(d) The Fund's Notification of Registration filed
pursuant to Section B(a) of the 1940 Act on Form N-8A under the 1940 Act, as
filed with the Securities and Exchange Commission (the "SEC") on October 21,
1983;
(e) The Fund's Registration Statement on Form N-1A
under the Securities Act of 1933, as amended (the "1933 Act") (File No. 2-87336)
and under the 1940 Act as filed with the Securities and Exchange Commission (the
"SEC") on October 21, 1983 relating to the Fund and all amendments thereto; and
(f) The Fund's most recent prospectus for the Shares
(such prospectus and all amendments and supplements thereto are herein called
"Prospectus").
The Fund will xxxxxxx Xxxx. Xxxxx from time to time with
copies, properly certified or authenticated, of all amendments or supplements to
the foregoing, if any, and all documents, notices and reports filed with the
SEC.
3. Duties as Distributor. Alex. Xxxxx agrees that all
solicitations for subscriptions for Shares shall be made in accordance with
Fund's Articles of Incorporation and By-Laws, and its then current Registration
Statement, Prospectus and Statement of Additional Information, and shall not at
any time or in any manner violate any provisions of the laws of the United
States or of any state or other jurisdiction which solicitations are then being
made. In carrying out its obligations hereunder, Alex. Xxxxx shall undertake the
following actions and responsibilities:
(a) receive orders for purchase of Shares, accept or
reject such orders on behalf of the Fund in accordance with the currently
effective Prospectus for the Shares and the Fund's Statement of Additional
Information and transmit such orders as are so accepted to the Fund's transfer
agent as promptly as possible;
(b) receive requests for redemption from holders of
Shares and transmit such redemption requests to the Fund's transfer agent as
promptly as possible;
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(c) respond to inquiries from the Fund's shareholders
concerning the status of their accounts with the Fund;
(d) provide to the Fund's Treasurer, at least quarterly,
a written report of the amounts expended in connection with all distribution
services rendered pursuant to this Agreement, including an explanation of the
purposes for which such expenditures were made; and
(e) take, on behalf of the Fund, all actions which
appear to the Fund necessary to carry into effect the distribution of the Shares
and perform such other administrative duties with respect to the Shares as the
Fund's Board of Directors may require.
4. Distribution of Shares. Alex. Xxxxx shall be the exclusive
distributor of the Shares. It is mutually understood and agreed that Alex. Xxxxx
does not undertake to sell all or any of the Shares. The Fund shall not sell any
of the Shares except through Alex. Xxxxx and securities dealers who have valid
Sub-Distribution Agreements with Alex. Xxxxx. Notwithstanding the provisions of
the foregoing sentence the Fund may issue its Shares at their net asset value to
any shareholder of the Fund purchasing such Shares with dividends or other cash
distributions received from the Fund pursuant to an offer made to all
shareholders.
5. Control by Board of Directors. Any distribution activities
undertaken by Alex. Xxxxx pursuant to this Agreement, as well as any other
activities undertaken by Alex. Xxxxx on behalf of the Fund pursuant hereto,
shall at all times be subject to any directives of the Board of Directors of the
Fund. The Board of Directors may agree, on behalf of the Fund, to amendments to
this Agreement, provided that any such amendment that would provide for a
material increase in the amount expended by the Fund must be approved by the
shareholders of the Fund before becoming effective.
6. Compliance with Applicable Requirements. In carrying out
its obligations under this Agreement, Alex. Xxxxx shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any
rules and regulations adopted thereunder as amended;
(b) the provisions of the Registration Statement of
the Fund under the 1933 Act and the 1940 Act;
(c) the provisions of the Articles of Incorporation
of the Fund;
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(d) the provisions of the By-Laws of the Fund;
(e) the rules and regulations of the National
Association of Securities Dealers, Inc. ("NASD") and all other self-regulatory
organizations applicable to the sale of investment company shares; and
(f) any other applicable provisions of state and
federal law.
7. Expenses. The expenses connected with the Fund shall be
allocable between the Fund and Alex. Xxxxx as follows:
(a) Alex. Xxxxx shall furnish, at its expense and
without cost to the Fund, the services of personnel to the extent that such
services are required to carry out their obligations under this Agreement;
(b) Alex. Xxxxx shall bear the expenses of any
promotional or sales literature used by Alex. Xxxxx or furnished by Alex. Xxxxx
to purchasers or dealers in connection with the public offering of the Shares,
the expenses of advertising in connection with such public offering;
(c) the Fund assumes and shall pay or cause to be
paid all other expenses of the Fund, including, without limitation: the fees of
the Fund's investment advisor; the charges and expenses of any registrar, any
custodian or depositary appointed by the Fund for the safekeeping of its cash,
portfolio securities and other property, and any stock transfer, dividend or
accounting agent or agents appointed by the Fund; brokers' commissions
chargeable to the Fund in connection with portfolio securities transactions to
which the Fund is a party; all taxes, including securities issuance and transfer
taxes, and corporate fees payable by the Fund to federal, state or other
governmental agencies; the cost and expense of engraving or printing of stock
certificates representing Shares; all costs and expenses in connection with
maintenance of registration of the Fund and its shares with the SEC and various
states and other jurisdictions (including filing fees and legal fees and
disbursements of counsel); the expenses of printing, including typesetting, and
distributing prospectuses of the Fund and supplements thereto to the Fund's
shareholders; all expenses of shareholders' and directors' meetings and of
preparing, printing and mailing of proxy statements and reports to shareholders;
fees and travel expenses of directors or members of any advisory board or
committee other than such directors or member who are "interested persons", of
the Fund (as defined in Section 2(a)(19) of the 1940 Act); all expenses incident
to the payment of any dividend, distribution, withdrawal or redemption, whether
in Shares or in cash; charges and expenses of any outside service used for
pricing of the Fund's Shares; charges and expenses of legal counsel, including
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counsel to the directors of the Fund who are not "interested persons" of the
Fund (as defined in Section 2(a)(19) of the 1940 Act), and of independent
accountants, in connection with any matter relating to the Fund; a portion of
membership dues of industry associations; interest payable on Fund borrowings;
postage; insurance premiums on property or personnel (including officers and
directors) of the Fund which inure to its benefit; extraordinary expenses
(including, but not limited to, legal claims and liabilities and litigation
costs and any indemnification related thereto); and all other charges and costs
of the Fund's operation unless otherwise explicitly provided herein.
8. Delegation of Responsibilities. Alex. Xxxxx may, but shall
be under no duty to, perform services on behalf of the Fund which are not
required by this Agreement upon the request of the Directors. Such services will
be performed on behalf of the Fund and Alex. Xxxxx'x charges in rendering such
services may be billed monthly to the Fund, subject to examination by the Fund's
independent accountants. Payment or assumption by Alex. Xxxxx of any Fund
expense that Alex. Xxxxx is not required to pay or assume under this Agreement
shall not relieve Alex. Xxxxx of any of its obligations to the Fund or obligate
Alex. Xxxxx to pay or assume any similar Fund expense on any subsequent
occasions.
9. Compensation. For the services to be rendered and the
expenses assumed by Alex. Xxxxx, the Fund shall pay to Alex. Xxxxx, compensation
at the annual rate of .60% of the average daily net assets of the Shares of the
Fund. Except as hereinafter set forth, continuing compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly. If this Agreement becomes effective subsequent
to the first day of a month or shall terminate before the last day of a month
compensation for the part of the month during which this Agreement is in effect
shall be prorated in a manner consistent with the calculations of the fees as
set forth above.
10. Compensation for Servicing Shareholder Accounts. The Fund
acknowledges that Alex. Xxxxx may compensate its investment representatives for
opening accounts, processing investor letters of transmittals and applications
and withdrawal and redemption orders, responding to inquiries from Fund
shareholders concerning the status of their accounts and the operations of the
Fund, and communicating with the Fund and its transfer agent on behalf of the
Fund shareholders.
11. Sub-Distribution Agreements. Alex. Xxxxx may enter into
sub-distribution agreements (the "Sub-Distribution Agreements") with any
securities dealer who is registered under the Securities Act of 1934 and a
member in good standing of the NASD, who may wish to act as a Participating
Dealer in connection with the proposed offering. All Sub-Distribution Agreements
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shall be in substantially the form of the agreement attached hereto as Exhibit
"A". For processing Fund shareholders' redemption orders, responding to the
inquiries from Fund shareholders concerning the status of their accounts and the
operations of the Fund and communicating with the Fund, its transfer agent and
Alex. Xxxxx, Xxxx. Xxxxx may pay each such Participating Dealer an amount not to
exceed that portion of the compensation paid to Alex. Xxxxx hereunder that is
attributable to accounts of Fund shareholders who are customers of such
Participating Dealer.
12. Non-Exclusivity. The services of Alex. Xxxxx to the Fund
are not to be deemed exclusive and Alex. Xxxxx shall be free to render
distribution or other services to others (including other investment companies)
and to engage in other activities. It is understood and agreed that officers or
directors of Alex. Xxxxx may serve as officers or directors of the Fund, and
that officers or directors of the Fund may serve as officers or directors of
Alex. Xxxxx to the extent permitted by law; and that officers or directors of
Alex. Xxxxx are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers or directors of any other firm or corporation, including other
investment companies.
13. Term and Approval. This Agreement shall become effective
at the close of business on the date hereof and shall remain in force and effect
for an initial term of two years and from year to year thereafter, provided that
such continuance is specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or by the
vote of a majority of the outstanding voting securities (as defined in Section
2(a)(42) of the 1940 Act), and
(b) by the affirmative vote of a majority of the
directors who are not "interested persons" of the Fund (as defined in Section
2(a)(19) of the 0000 Xxx) and who do not have a financial interest in the
operation of this Agreement, by votes cast in person at a meeting specifically
called for such purpose.
14. Termination. This Agreement may be terminated at any time,
on sixty (60) days' written notice to the other party without the payment of any
penalty, (i) by vote of the Fund's Board of Directors, (ii) by vote of a
majority of the directors who are not "interested persons" of the Fund (as
defined in Section 2(a)(19) of the 0000 Xxx) and who do not have a financial
interest in the operation of this Agreement, (iii) by vote of a majority of the
Fund's outstanding voting securities (as defined in Section 2(a)(42) of the 0000
Xxx) or (iv) by Alex. Xxxxx. The notice provided for herein may be waived by
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each party. This Agreement shall automatically terminate in the event of its
assignment as defined in Section 2(a)(4) of the 1940 Act.
15. Liability. In the performance of its duties hereunder,
Alex. Xxxxx shall be obligated to exercise care and diligence and to act in good
faith and to use its best efforts within reasonable limits in performing all
services provided for under this Agreement, but shall not be liable for any act
or omission which does not constitute willful misfeasance, bad faith or gross
negligence on the part of Alex. Xxxxx or reckless disregard by Alex. Xxxxx of
its duties under this Agreement.
16. Notices. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other parties at
such address as such other party may designate for the receipt of such notice.
Until further notice to the other parties, the addresses of the Fund and Alex.
Xxxxx are as follows:
If to Alex. Xxxxx:
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Alex. Xxxxx & Sons Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
If to the Fund:
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Flag Investors Telephone Income Fund, Inc.
000 X. Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
17. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be
resolved by reference to such term or provision of the 1940 Act and to
interpretations thereof if any, by the United States courts or in the absence of
any controlling decision of any such court, by rules, regulations or orders of
the SEC issued pursuant to the 1940 Act. In addition, where the effect of a
requirement of the 1940 Act reflected in any provision of this Agreement is
revised by rules, regulation or order of the SEC, such provision shall be deemed
to incorporate the effect of such rule, regulation or order. Otherwise the
provisions of this Agreement shall be interpreted in accordance with the laws of
Maryland.
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IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed in duplicate by their respective officers as of the day
and year first above written.
[SEAL] FLAG INVESTORS TELEPHONE INCOME
FUND, INC.
Attest:/s/ Xxxxx X. Xxxxxx By /s/ Xxxxxx X. Xxxxxxxx
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[SEAL] ALEX. XXXXX & SONS INCORPORATED
Attest:/s/ Xxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxx
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