EXHIBIT (e)
Underwriting and Distribution Agreement
SIT MUTUAL FUNDS, INC.
DISTRIBUTION PLAN
(RULE 12b-1 PLAN)
This Distribution Plan (the "Plan") is adopted pursuant to Rule 12b-1 under the
Investment Company Act of 1940, as amended (the "Act"), by Sit Mutual Funds,
Inc. a Minnesota corporation and the issuer of the series of shares of common
stock representing the open-end management investment companies set forth in the
Exhibit A hereto (each a "Fund", collectively the "Funds"), on behalf of each
Fund's Class S shares. The Plan has been approved by a majority of the Company's
Board of Directors, including a majority of the directors who are not
"interested persons" of the Funds as defined in the Act and who have no direct
or indirect financial interest in the operation of the Plan or in any agreement
regarding the distribution of the Funds (the "Disinterested Directors"), cast in
person at a meeting called for the purpose of voting on such Plan.
In approving the Plan, the Board of Directors determined that adoption of the
Plan would be prudent and in the best interests of each Fund and its
shareholders. Such approval by the Board of Directors included a determination,
in the exercise of its reasonable business judgment and in light of its
fiduciary duties, that there is a reasonable likelihood that the Plan will
benefit each Fund and its shareholders.
In addition, in reviewing the Plan, the Board of Directors considered the
proposed range and nature of payments and terms of the investment advisory
agreements between each Fund and Sit Investment Associates, Inc. (the
"Adviser"), the range and nature of payments pursuant to the Plan, and the
nature and amount of other payments, fees and commissions that may be paid to
the Adviser, its affiliates and other agents of the Funds. The Board of
Directors, including the Disinterested Directors, concluded that the proposed
overall compensation of the Adviser and its affiliates was fair and not
excessive.
In its considerations, the Board of Directors also recognized that uncertainty
may exist from time to time with respect to whether payments to be made by the
Funds to the Distributor, or other firms under agreements with respect to a Fund
may be deemed to constitute impermissible distribution expenses. As a general
rule, an investment company may not finance any activity primarily intended to
result in the sale of its shares, except pursuant to Rule 12b-1. Accordingly,
the Board of Directors determined that the Plan also should provide that
payments by the Funds and expenditures made by others out of monies received
from the Funds that are later deemed to be for the financing of any activity
primarily intended to result in the sale of Fund shares shall be deemed to have
been made pursuant to the Plan.
The provisions of the Plan are as follows:
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1. PAYMENTS BY A FUND TO PROMOTE THE SALE OF FUND SHARES
Each Fund will pay the Distributor a distribution fee of 0.25% of the average
daily net assets of each Fund's Class S Shares in connection with the promotion
and distribution of Fund shares, including, but not necessarily limited to,
advertising, compensation to underwriters, dealers, selling personnel, financial
advisers and other financial intermediaries such as retirement plan record
keepers and discount brokerage firms engaged in the distribution of Fund shares
or assisting Fund investors before and after the investment in Fund shares, the
printing and mailing of prospectuses, statements of additional information and
reports to other than current Fund shareholders, the printing and mailing of
sales literature pertaining to the Funds, and obtaining whatever information,
analyses and reports with respect to marketing and promotional activities that a
Fund may, from time to time, deem advisable. Such services and activities shall
be deemed to be covered by this Plan whether performed directly by the
Distributor or by any registered securities dealer, financial institution or
intermediary or any other person (the "Recipient") and may pay a portion of
these fees to any such Recipient that renders assistance in distributing or
promoting the sale of shares, or who provides certain shareholder services with
respect to a Fund. The distribution fee is not tied exclusively to actual
distribution expenses, and the fee may exceed the expenses actually incurred;
however, the payments of this fee shall be subject to any limitation set forth
in applicable regulations of the National Association of Securities Dealers
("NASD").
2. RULE 12B-1 DISTRIBUTION AGREEMENT
The Distributor will execute a Distribution Agreement (the "Agreement") with the
Funds for the provision of distribution related services and implementation of
the Plan. However, no agreement relating to the implementation of the Plan shall
be entered into with respect to the Funds and no payments shall be made pursuant
to any such agreement, unless such agreement is in writing and the form of which
has first been delivered to and approved by a vote of a majority of the Board of
Directors, and of the Disinterested Directors, cast in person at a meeting
called for the purpose of voting on such agreement. The form of the Agreement
relating to the Funds attached hereto as Appendix A has been approved by the
Funds' Board of Directors as specified above.
No agreement relating to the implementation of the Plan may be entered into
unless it provides (i) that it may be terminated with respect to a Fund at any
time, without the payment of any penalty, by vote of a majority of the
shareholders of such Fund, or by vote of a majority of the Disinterested
Directors, on not more than 60 days' written notice to the other party to the
agreement, and (ii) that it shall automatically terminate in the event of its
assignment.
Any agreement relating to the implementation of the Plan shall continue in
effect for a period of more than one year from the date of its execution only if
such continuance is specifically approved at least annually by a vote of a
majority of the Board of Directors, and of the Disinterested Directors, cast in
person at a meeting called for the purpose of voting on such agreement.
3. QUARTERLY REPORTS
The Distributor (or other party on behalf of the Distributor) shall provide to
the Board of Directors, and the Directors shall review at least quarterly, a
written report of all amounts
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expended pursuant to the Plan. This report shall include the identity of the
Recipient of each payment and the purpose for which the amounts were expended
and such other information as the Board of Directors may reasonably request.
4. EFFECTIVE DATE AND DURATION OF THE PLAN
The Plan shall become effective with respect to a Fund immediately upon approval
by the vote of a majority of the Board of Directors, and of the Disinterested
Directors, of such Fund cast in person at a meeting called for the purpose of
voting on the approval of the Plan. The Plan shall continue in effect with
respect to a Fund for a period of one year from its effective date unless
terminated pursuant to its terms. Thereafter, the Plan shall continue with
respect to a Fund from year to year, provided that such continuance is approved
at least annually by a vote of a majority of the Board of Directors, and of the
Disinterested Directors, of such Fund cast in person at a meeting called for the
purpose of voting on such continuance. The Plan, or any Agreement, may be
terminated with respect to a Fund at any time, without penalty, on not more than
sixty (60) days' written notice by a majority vote of shareholders of such Fund,
or by vote of a majority of the Disinterested Directors.
5. BOARD OF DIRECTORS
During the period in which the Plan is effective the Company's Board of
Directors shall satisfy the fund governance standards as defined in Rule
0-1(a)(7) under the Act.
6. AMENDMENTS
The Plan and the Distribution Agreement may be amended with the approval of the
Board of Directors provided that neither the Plan nor the Distribution Agreement
may be amended to increase materially the amount to be spent for distribution of
shares without approval by a majority of the outstanding Fund shares. All
material amendments to the Plan and the Distribution Agreement shall also be
approved by the Disinterested Directors cast in person at a meeting called for
the purpose of voting on any such amendment.
7. RECORDKEEPING
The Funds shall preserve copies of the Plan, any Agreement, any amendments
thereto, and all reports made pursuant to Section 3 for a period of not less
than six years from the date of this Plan, any such Agreement or such reports,
as the case may be, the first two years in an easily accessible place.
8. SEVERABILITY
The provisions of the Plan are severable for each series or class of shares.
9. BROKERAGE PROHIBITIONS
The Funds shall not: a.) compensate a broker or dealer for any promotion or sale
of shares issued by the Funds by directing to the broker or dealer the Fund's
portfolio securities transactions or any remuneration received or to be received
from the Fund's portfolio transactions effected through any other broker or
dealer; and b.) direct its portfolio securities transactions to a broker or
dealer that promotes or sells the Fund's shares, unless the Fund or the
Distributor has implemented, and the Board of Directors and the Disinterested
Directors have approved policies
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and procedures reasonably designed to prevent the consideration of the promotion
or sale of the Fund's shares as a factor in selecting brokers and dealers to
effect the Fund's portfolio securities transactions; and enter any agreement
(oral or written) under which the company directs portfolio securities
transactions or any remuneration to a broker or dealer in consideration for the
promotion or sale of the Fund's shares.
10. COMPLIANCE WITH STATUTES, RULES AND REGULATIONS
The sale of Fund shares must comply with federal securities laws, disclosure
provided to customers (including the Fund's then current prospectus) and any
applicable dealer agreement.
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SIT MUTUAL FUNDS, INC.
DISTRIBUTION PLAN
EXHIBIT A
Fund Name
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Sit Dividend Growth Fund (series G)
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SIT MUTUAL FUNDS, INC.
DISTRIBUTION AGREEMENT
APPENDIX A
[Date __]
Xx. Xxxxxx X. Sit
SIA Securities Corp.
3300 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Dear Mr. Sit:
This Distribution Agreement ("Agreement") has been adopted pursuant to Rule
12b-1 under the Investment Company Act of 1940 (the "Company Act") by Sit Mutual
Funds, Inc. a Minnesota corporation and the issuer of the series of shares of
common stock representing the open-end management investment companies set forth
in the Exhibit A to the Distribution Plan (each a "Fund", collectively the
"Funds"), on behalf of each Fund's Class S shares, and is governed by the terms
of the Funds' Distribution Plan pursuant to Rule 12b-1 (the "Plan").
The Plan has been approved by a majority of the Directors who are not interested
persons of the Funds and who have no direct or indirect financial interest in
the operation of the Plan (the "Disinterested Directors"), cast in person at a
meeting called for the purpose of voting on such Plan. Such approval included a
determination that in the exercise of the reasonable business judgment of the
Board of Directors and in light of their fiduciary duties, there is a reasonable
likelihood that the Plan will benefit the Funds and their shareholders.
I. To the extent you, in your capacity as the Distributor pursuant to this
Agreement, provide eligible shareholder services of the type identified in the
Plan to the Funds, we shall pay you a monthly fee based on the average net asset
value of each Fund's Class S Shares.
II. In no event may the aggregate annual fee paid to you pursuant to the
Plan with respect to a Fund exceed .25% of the value of the net assets of the
Class S Shares of such Fund (determined in the same manner as the Fund uses to
compute its net assets as set forth in its then-effective Prospectus), without
approval by a majority of the outstanding shares of the applicable Class.
III. You shall furnish to the Board of Directors, for its review, on a
quarterly basis, a written report of the amounts expended under the Plan by you
with respect to each Fund and the purposes for which such expenditures were
made.
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IV. All communications to the Funds shall be sent to you, as Distributor for
the Funds, at the following address:
Sit Mutual Funds, Inc.
3300 IDS Center
00 Xxxxx Xxxxxx Xxxxxx
Xxxxxxxxxxx, XX 00000-0000
Any notice to you shall be duly given if mailed or delivered to you at your
address as indicated in this Agreement.
V. This Agreement may be terminated with respect to a Fund by us or by you,
by the vote of a majority of the Directors who are Disinterested Directors of a
Fund, or by a vote of a majority of the outstanding shares of a Fund, on sixty
(60) days' written notice, all without payment of any penalty. This Agreement
shall also be terminated automatically in the event of its assignment by you or
by any act that terminates the Plan. If this Agreement is terminated your
ability to receive fees under the Plan shall be limited as provided for in the
Plan.
VI. The provisions of the Plan insofar as they relate to you are
incorporated herein by reference.
This Agreement shall take effect on the date indicated below, and the terms and
provisions thereof are hereby accepted and agreed to by us as evidenced by our
execution hereof.
SIT MUTUAL FUNDS, INC.
By:
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Its:
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Dated: February 7, 2005
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Agreed and Accepted:
SIA SECURITIES CORP.
By:
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Its:
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