New Class B Shares
FLAG INVESTORS EMERGING GROWTH FUND, INC.
FLAG INVESTORS CLASS B SHARES
DISTRIBUTION AGREEMENT
AGREEMENT, made as of the ____ day of ___________,
19___, by and between FLAG INVESTORS EMERGING GROWTH 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 herein
and of other good and valuable consideration the receipt whereof is hereby
acknowledged, the parties hereto agree as follows:
1. Appointment. The Fund appoints Alex. Xxxxx as
Distributor for the Shares for the period and on the terms set forth in this
Agreement. The Fund may from time to time issue separate series or classes of
its shares of common stock, or classify and reclassify shares of such series
as classes, and the appointment effected hereby shall constitute appointment
for the distribution of such additional series and classes unless the parties
shall otherwise agree in writing. 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:
(a) The Fund's Articles of Incorporation, filed
with the Secretary of State of Maryland on July 2, 1987 and all amendments
thereto (the "Articles of Incorporation");
(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
and shareholders 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 8(a) of the 1940 Act on Form N-8A under the 1940
Act, as filed with the Securities and Exchange Commission (the "SEC") on April
7, 1988;
(e) The Fund's Registration Statement on Form
N-1A under the Securities Act of 1933, as amended (the "1933 Act") (File No.
33-21119) and under the 1940 Act as filed with the SEC on April 7, 1988
relating to the Shares of 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 shall give the
Fund the benefit of its best judgment, efforts and facilities in rendering its
services as Distributor of the Shares. Alex. Xxxxx shall:
(a) respond to inquiries from the Fund's
shareholders concerning the status of their accounts with the Fund;
(b) take, on behalf of the Fund, all actions
deemed necessary to carry into effect the distribution of the Shares;
(c) provide the Board of Directors of the Fund
with quarterly reports as required by Rule 12b-1 under the 1940 Act.
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 specific portion 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 the Fund must obtain
prior approval of the shareholders of the Fund to any amendment which would
result in a material increase in the amount expended by the Fund.
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 and any amendments and
supplements thereto;
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(c) the provisions of the Articles of
Incorporation of the Fund and any amendments thereto;
(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 Federal
and State 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
and all legal expenses in connection with the foregoing;
(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, 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 the
Shares with the SEC and various states and other jurisdictions (including
filing fees and legal fees and disbursements of counsel) except as provided in
subparagraph (a) above, 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 who are not "interested
persons" of the Fund (as defined in the 0000 Xxx) or members of any advisory
board or committee; 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 Shares; charges
and expenses of legal counsel, including counsel to the Directors who are not
"interested persons" of the Fund (as defined in the 1940 Act), and of
independent accountants, in connection with any matter relating to the Fund;
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 Fund's Board of
Directors. Such services will be performed on behalf of the Fund and Alex.
Xxxxx'x charge 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.
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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 .75% 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 that part of the month this Agreement is in effect
shall be prorated in a manner consistent with the calculations of the fees as
set forth above. Payment of Alex. Xxxxx'x compensation for the preceding month
shall be made as promptly as possible.
10. Service Fee. The Fund shall pay Alex. Xxxxx a
service fee (as such term is defined in the NASD Rules of Fair Practice) equal
to .25% of the average daily net assets of the Shares of the Fund. Such fee
shall be calculated and accrued daily and the amounts of the daily accruals
shall be paid monthly in the manner described in paragraph 9 above.
11. 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.
12. 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 Exchange 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 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.
13. 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
directors, officers or employees of Alex. Xxxxx may serve as directors or
officers of the Fund, and that directors or officers of the Fund may serve as
directors, officers and employees of Alex. Xxxxx to the extent permitted by
law; and that directors, officers and employees 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, directors or
officers of any other firm or corporation, including other investment
companies.
14. 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 (ii)
by the vote of a majority of the outstanding voting securities (as defined in
the 1940 Act), and
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(b) by the affirmative vote of a majority of the
Directors who are not "interested persons" of the Fund (as defined in the 0000
Xxx) and 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.
15. 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 the 0000 Xxx) and 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 the 1940 Act) or (iv) by Alex.
Xxxxx. The notice provided for herein may be waived by each party. This
Agreement shall automatically terminate in the event of its assignment (as the
term is defined in the 1940 Act).
16. 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.
17. Notices. Any notices under this Agreement shall be
in writing, addressed and delivered or mailed postage paid to the other party
at such address as such other party may designate for the receipt of such
notice. Until further notice to the other parties, it is agreed that the
address of both Alex. Xxxxx and the Fund for this purpose shall be 000 Xxxx
Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxx 00000.
18. 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 rule, 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.
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 EMERGING GROWTH
FUND, INC.
Attest: /s/ Xxxxx X. Xxxxxx By /s/ Xxxxxx X. Xxxxxxxx
[SEAL] ALEX. XXXXX & SONS INCORPORATED
Attest: /s/ Xxxxx X. Xxxxxx By /s/ Xxxxxxx X. Xxxx
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FLAG INVESTORS FAMILY OF FUNDS
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxx 00000
SUB-DISTRIBUTION AGREEMENT
_____________________, 19__
Gentlemen:
Alex. Xxxxx & Sons Incorporated ("Alex. Xxxxx"), a
Maryland corporation, serves as distributor (the "Distributor") of the Flag
Investors Funds (collectively, the "Funds", individually a "Fund"). The Funds
are open-end investment companies registered under the Investment Company Act
of 1940, as amended (the "Investment Company Act"). The Funds offer their
shares ("Shares") to the public in accordance with the terms and conditions
contained in the Prospectus of each Fund. The term "Prospectus" used herein
refers to the prospectus on file with the Securities and Exchange Commission
which is part of the registration statement of each Fund under the Securities
Act of 1933 (the "Securities Act"). In connection with the foregoing you may
serve as a participating dealer (and, therefore, accept orders for the
purchase or redemption of Shares, respond to shareholder inquiries and perform
other related functions) on the following terms and conditions:
1. Participating Dealer. You are hereby designated a
Participating Dealer and as such are authorized (i) to accept orders for the
purchase of Shares and to transmit to the Funds such orders and the payment
made therefore, (ii) to accept orders for the redemption of Shares and to
transmit to the Funds such orders and all additional material, including any
certificates for Shares, as may be required to complete the redemption and
(iii) to assist shareholders with the foregoing and other matters relating to
their investments in each Fund, in each case subject to the terms and
conditions set forth in the Prospectus of each Fund. You are to review each
Share purchase or redemption order submitted through you or with your
assistance for completeness and accuracy. You further agree to undertake from
time to time certain shareholder servicing activities for customers of yours
who have purchased Shares and who use your facilities to communicate with the
Funds or to effect redemptions or additional purchases of Shares.
2. Limitation of Authority. No person is authorized to
make any representations concerning the Funds or the Shares except those
contained in the Prospectus of each Fund and in such printed information as
the Distributor may subsequently prepare. No person is authorized to
distribute any sales material relating to any Fund without the prior written
approval of the Distributor.
3. Compensation. As compensation for such services, you
will look solely to the Distributor, and you acknowledge that the Funds shall
have no direct responsibility for any compensation. In addition to any sales
charge payable to you by your customer pursuant to a Prospectus, the
Distributor will pay you no less often than annually a shareholder processing
and service fee (as we may determine from time to time in writing) computed as
a percentage of the average daily net assets maintained with each Fund during
the preceding period by shareholders who purchase their shares through you or
with your assistance, provided that said assets are at least $250,000 for each
Fund for which you are to be compensated, and provided that in all cases your
name is transmitted with each shareholder's purchase order.
4. Prospectus and Reports. You agree to comply with the
provisions contained in the Securities Act governing the distribution of
prospectuses to persons to whom you offer Shares. You further agree to
deliver, upon our request, copies of any amended Prospectus of the relevant
Fund to purchasers whose Shares you are holding as record owner and to deliver
to such persons copies of the annual and interim reports and proxy
solicitation materials of the Funds. We agree to furnish to you as many copies
of each Prospectus, annual and interim reports and proxy solicitation
materials as you may reasonably request.
5. Qualification to Act. You represent that you are a
member in good standing of the National Association of Securities Dealers,
Inc. (the "NASD"). Your expulsion or suspension from the NASD will
automatically terminate this Agreement on the effective date of such expulsion
or suspension. You agree that you will not offer Shares to persons in any
jurisdiction in which you may not lawfully make such offer due to the fact
that you have not registered under, or are not exempt from, the applicable
registration or licensing requirements of such jurisdiction. You agree that in
performing the services under this Agreement, you at all times will comply
with the Rules of Fair Practice of the NASD, including, without limitation,
the provisions of Section 26 of such Rules. You agree that you will not
combine customer orders to reach breakpoints in commissions for any purposes
whatsoever unless authorized by the then current Prospectus in respect of
Shares of a particular class or by us in writing. You also agree that you will
place orders immediately upon their receipt and will not withhold any order so
as to profit therefrom. In determining the amount payable to you hereunder, we
reserve the right to exclude any sales which we reasonably determine are not
made in accordance with the terms of the Prospectus and provisions of the
Agreement.
6. Blue Sky. The Funds have registered an indefinite
number of Shares under the Securities Act. The Funds intend to register or
qualify in certain states where registration or qualification is required. We
will inform you as to the states or other jurisdictions in which we believe
the Shares have been qualified for sale under, or are exempt from the
requirements of, the respective securities laws of such states. You agree that
you will offer Shares to your customers only in those states where such Shares
have been registered, qualified, or an exemption is available. We assume no
responsibility or obligation as to your right to sell Shares in any
jurisdiction. We will file with the Department of State in New York a State
Notice and a Further State Notice with respect to the Shares, if necessary.
7. Authority of Fund. Each of the Funds shall have full
authority to take such action as it deems advisable in respect of all matters
pertaining to the offering of its Shares, including the right not to accept
any order for the purchase of Shares.
8. Record Keeping. You will (i) maintain all records
required by law to be kept by you relating to transactions in Shares and, upon
request by any Fund, promptly make such of these records available to the Fund
as the Fund may reasonably request in connection with its operations and (ii)
promptly notify the Fund if you experience any difficulty in maintaining the
records described in the foregoing clauses in an accurate and complete manner.
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9. Liability. The Distributor shall be under no
liability to you except for lack of good faith and for obligations expressly
assumed by it hereunder. In carrying out your obligations, you agree to act in
good faith and without negligence. Nothing contained in this Agreement is
intended to operate as a waiver by the Distributor or you of compliance with
any provision of the Investment Company Act, the Securities Act, the
Securities Exchange Act of 1934, as amended, or the rules and regulations
promulgated by the Securities and Exchange Commission thereunder.
10. Termination. This Agreement may be terminated by
either party, without penalty, upon ten days' notice to the other party and
shall automatically terminate in the event of its assignment (as defined in
the Investment Company Act). This Agreement may also be terminated at any time
for any particular Fund without penalty by the vote of a majority of the
members of the Board of Directors or Trustees of such Fund who are not
"interested persons" (as defined in the Investment Company Act) and who have
no direct or indirect financial interest in the operation of the Distribution
Agreement between such Fund and the Distributor or by the vote of a majority
of the outstanding voting securities of the Fund.
11. Communications. All communications to us should be
sent to the above address. Any notice to you shall be duly given if mailed or
telegraphed to you at the address specified by you below.
If the foregoing is in accordance with your
understanding of our agreement, please sign and return to us one copy of this
agreement.
ALEX. XXXXX & SONS INCORPORATED
------------------------------------------
(Authorized Signature)
Confirmed and accepted:
Firm Name: ________________________
By: _______________________________
Address: __________________________
Date:______________________________
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