SHAREHOLDER SERVICING
AGREEMENT
DAILY TAX FREE INCOME FUND, INC.
(the "Fund")
First Southwest Tax Free Income Fund Shares
("First Southwest Shares")
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, 2002
▇▇▇▇▇ & ▇▇▇▇ Distributors, Inc. ("Distributor")
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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 Fund. 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. 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 Fund, 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 Fund'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 April 30, 2003, and thereafter for successive
twelve-month periods (computed from each May 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 Fund'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
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,
DAILY TAX FREE INCOME FUND, INC.
First Southwest Tax Free Income Fund Shares
By: ________________________________
Name:
Title:
ACCEPTED: , 2002
▇▇▇▇▇ & ▇▇▇▇ DISTRIBUTORS, INC.
By:
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Name:
Title: