DISTRIBUTION AGREEMENT
Agreement made as of the 1st day of October, 1999, by and between Strategist
Tax-Free Income Fund, Inc. (the Fund), a Minnesota corporation, on behalf of
each class of its underlying series fund, and American Express Financial
Advisors Inc. (AEFA), a Delaware corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Fund covenants and agrees that, during the term of this agreement and
any renewal or extension, AEFA shall have the exclusive right to act as
principal underwriter for the Fund and to offer for sale and to distribute
either directly or through any affiliated or unaffiliated entity any and all
shares of each class of capital stock issued or to be issued by the Fund.
(2) AEFA hereby covenants and agrees to act as the principal underwriter of each
class of capital shares issued and to be issued by the Fund during the period of
this agreement and agrees during such period to offer for sale such shares as
long as such shares remain available for sale, unless AEFA is unable or
unwilling to make such offer for sale or sales or solicitations therefor legally
because of any federal, state, provincial or governmental law, rule or agency or
for any financial reason.
(3) With respect to the offering for sale and sale of shares of each class to be
issued by the Fund, it is mutually understood and agreed that such shares are to
be sold on the following terms:
(a) All sales shall be made by means of an application, and every
application shall be subject to acceptance or rejection by the Fund at its
principal place of business. Shares are to be sold for cash, payable at the time
the application and payment for such shares are received at the principal place
of business of the Fund.
(b) No shares shall be sold at less than the net asset value (computed
in the manner provided by the currently effective prospectus or Statement of
Additional Information and the Investment Company Act of 1940, and rules
thereunder). The number of shares or fractional shares to be acquired by each
applicant shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the capital stock of
the appropriate class as of the close of business on the day when the
application, together with payment, is received by the Fund at its principal
place of business. The computation as to the number of shares and fractional
shares shall be carried to three decimal points of one share with the
computation being carried to the nearest 1/1000th of a share. If the day of
receipt of the application and payment is not a full business day, then the
asset value of the share for use in such computation shall be determined as of
the close of business on the next succeeding full business day. In the event of
a period of emergency, the computation of the asset value for the purpose of
determining the number of shares or fractional shares to be acquired by the
applicant may be deferred until the close of business on the first full business
day following the termination of the period of emergency. A period of emergency
shall have the definition given thereto in the Investment Company Act of 1940,
and rules thereunder.
(4) The Fund agrees to make prompt and reasonable effort to do any and all
things necessary, in the opinion of AEFA to have and to keep the Fund and the
shares properly registered or qualified in all appropriate jurisdictions and, as
to shares, in such amounts as AEFA may from time to time designate in order that
the Fund's shares may be offered or sold in such jurisdictions.
(5) The Fund agrees that it will furnish AEFA with information with respect to
the affairs and accounts of the Fund, and in such form, as AEFA may from time to
time reasonably require and further agrees that AEFA, at all reasonable times,
shall be permitted to inspect the books and records of the Fund.
(6) AEFA or its agents may prepare or cause to be prepared from time to time
circulars, sales literature, broadcast material, publicity data and other
advertising material to be used in the sales of shares issued by the Fund,
including material which may be deemed to be a prospectus under rules
promulgated by the Securities and Exchange Commission (each separate promotional
piece is referred to as an "Item of Soliciting Material"). At its option, AEFA
may submit any Item of Soliciting Material to the Fund for its prior approval.
Unless a particular Item of Soliciting Material is approved in writing by the
Fund prior to its use, AEFA agrees to indemnify the Fund and its directors and
officers against any and all claims, demands, liabilities and expenses which the
Fund or such persons may incur arising out of or based upon the use of any Item
of Soliciting Material. The term "expenses" includes amounts paid in
satisfaction of judgments or in settlements. The foregoing right of
indemnification shall be in addition to any other rights to which the Fund or
any director or officer may be entitled as a matter of law. Notwithstanding the
foregoing, such indemnification shall not be deemed to abrogate or diminish in
any way any right or claim AEFA may have against the Fund or its officers or
directors in connection with the Fund's registration statement, prospectus,
Statement of Additional Information or other information furnished by or caused
to be furnished by the Fund.
(7) AEFA agrees to submit to the Fund each application for shares immediately
after the receipt of such application and payment therefor by AEFA at its
principal place of business.
(8) AEFA agrees to cause to be delivered to each person submitting an
application a prospectus to be furnished by the Fund in the form required by the
applicable federal laws or by the acts or statutes of any applicable state,
province or country.
(9) The Fund shall have the right to extend to shareholders of each class the
right to use the proceeds of any cash dividend paid by the Fund to that
shareholder to purchase shares of the same class at the net asset value at the
close of business upon the day of purchase, to the extent set forth in the
currently effective prospectus or Statement of Additional Information.
(10) Shares of each class issued by the Fund may be offered and sold at their
net asset value to the shareholders of the same class of other companies in the
Strategist Fund Group who wish to exchange their investments in shares of the
other funds in the Strategist Fund Group to investments in shares of the Fund,
to the extent set forth in the currently effective prospectus or Statement of
Additional Information, such net asset value to be computed as of the close of
business on the day of sale of such shares of the Fund.
(11) AEFA and the Fund agree to use their best efforts to conform with all
applicable state and federal laws and regulations relating to any rights or
obligations under the term of this agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties, AEFA covenants
and agrees that during the period of this agreement it will pay or cause to be
paid all expenses incurred by AEFA or any of its affiliates, in the offering for
sale or sale of each class of the Fund's shares.
Part Three: COMPENSATION
(1) It is covenanted and agreed that AEFA shall be paid:
(i) for a class of shares imposing a front-end sales charge, by the
purchasers of Fund shares in an amount equal to the difference between the total
amount received upon each sale of shares issued by the Fund and the net asset
value of such shares at the time of such sale; and
(ii) for a class of shares imposing a deferred sales charge, by owners
of Fund shares at the time the sales charge is imposed in an amount equal to any
deferred sales charge, as described in the Fund's prospectus.
Such sums as are received by the Fund shall be received as Agent for AEFA and
shall be remitted to AEFA daily as soon as practicable after receipt.
(2) The net asset value of any share of each class of the Fund shall be
determined in the manner provided by the classes' currently effective prospectus
and Statement of Additional Information and the Investment Company Act of 1940,
and rules thereunder.
Part Four: MISCELLANEOUS
(1) AEFA shall be deemed to be an independent contractor and, except as
expressly provided or authorized in this agreement, shall have no authority to
act for or represent the Fund.
(2) AEFA shall be free to render to others services similar to those rendered
under this agreement.
(3) Neither this agreement nor any transaction had pursuant hereto shall be
invalidated or in any way affected by the fact that directors, officers, agents
and/or shareholders of the Fund are or may be interested in AEFA as directors,
officers, shareholders or otherwise; that directors, officers, shareholders or
agents of AEFA are or may be interested in the Fund as directors, officers,
shareholders or otherwise; or that AEFA is or may be interested in the Fund as
shareholder or otherwise; provided, however, that neither AEFA nor any officer
or director of AEFA or any officers or directors of the Fund shall sell to or
buy from the Fund any property or security other than a security issued by the
Fund, except in accordance with a rule, regulation or order of the federal
Securities and Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall have the same
meaning as is given to the term in the By-laws of the Fund.
(5) Any notice under this agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the parties to this agreement at each
company's principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to the other.
(6) AEFA agrees that no officer, director or employee of AEFA will deal for or
on behalf of the Fund with himself as principal or agent, or with any
corporation or partnership in which he may have a financial interest, except
that this shall not prohibit:
(a) Officers, directors and employees of AEFA from having a financial
interest in the Fund or in AEFA.
(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of whose
partners, officers, directors or employees is an officer, director or employee
of AEFA provided such transactions are handled in the capacity of broker only
and provided commissions charged do not exceed customary brokerage charges for
such services.
(c) Transactions with the Fund by a broker-dealer affiliate of AEFA if
allowed by rule or order of the Securities and Exchange Commission and if made
pursuant to procedures adopted by the Fund's Board of Directors (the "Board").
(7) AEFA agrees that, except as otherwise provided in this agreement, or as may
be permitted consistent with the use of a broker-dealer affiliate of AEFA under
applicable provisions of the federal securities laws, neither it nor any of its
officers, directors or employees shall at any time during the period of this
agreement make, accept or receive, directly or indirectly, any fees, profits or
emoluments of any character in connection with the purchase or sale of
securities (except securities issued by the Fund) or other assets by or for the
Fund.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and until terminated
by AEFA or the Fund, except that such continuance shall be specifically approved
at least annually by a vote of a majority of the Board who are not parties to
this agreement or interested persons of any such party, cast in person at a
meeting called for the purpose of voting on such approval, and by a majority of
the Board or by vote of a majority of the outstanding voting securities of the
Fund. As used in this paragraph, the term "interested person" shall have the
meaning as set forth in the Investment Company Act of 1940, as amended.
(2) This agreement may be terminated by AEFA or the Fund at any time by giving
the other party sixty (60) days written notice of such intention to terminate.
(3) This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing agreement on
the date and year first above written.
STRATEGIST TAX-FREE INCOME FUND, INC.
Strategist Tax-Free High Yield Fund
By /s/ Xxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
