EXHIBIT 99.6A
FORM OF DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT
October 26, 1993
ND Capital Inc.
000 Xxxxx Xxxxxxxx
Xxxxx, XX 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, South Dakota Tax-Free Fund, Inc. (the "Fund"), an
open-end, non-diversified, management investment company organized as a
corporation under the laws of the State of North Dakota, has agreed that ND
Capital, Inc. ("Capital"), shall be, for the period of this Agreement, the
principal underwriter of shares issued by the Fund (the "Shares").
1. Services as Underwriter
1.1 Capital will act as principal underwriter for the
distribution of the Shares covered by the registration statement, prospectus,
and statement of additional information then in effect (the "Registration
Statement") under the Securities Act of 1933, as amended (the "1933 Act"), and
the Investment Company Act of 1940, as amended (the "1940 Act").
1.2 Capital agrees to use its best efforts to solicit orders for
the sale of the Shares at the public offering price, as determined in accordance
with the Registration Statement, and will undertake such advertising and
promotion as it believes is reasonable in connection with such solicitation.
1.3 All activities by Capital as underwriter of the Shares shall
comply with all applicable laws, rules, and regulations, including, without
limitation, all rules and regulations made or adopted by the Securities and
Exchange Commission (the "SEC') or by any securities association registered
under the Securities Exchange Act of 1934.
1.4 Capital will provide one or more persons during normal
business hours to respond to telephone questions concerning the Fund.
1.5 Capital acknowledges that, whenever in the judgment of the Fund's
officers such action is warranted for any reason, including,
without limitation, market, economic, or political conditions,
those officers may decline to accept any orders for, or make any
sales of, the Shares until such time as those officers deem it
advisable to accept such orders and to make such sales.
1.6 Capital shall be deemed to be an independent contractor and,
except as specifically provided or authorized herein, shall have no authority to
act for or represent the Fund. Capital will act only on its own behalf as
principal should it choose to enter into selling agreements with selected
dealers or others.
1.7 In consideration of the services rendered pursuant to this
Agreement, as promptly as is possible after the last day of each month this
Agreement is in effect, the Fund shall pay Capital a fee, calculated daily and
paid monthly, at the annual rate of 0.75% of the average daily net assets of the
Shares for the prior month. The payment by the Fund of fees under this
Agreement is authorized pursuant to the Fund's Distribution Plan adopted in
accordance with Rule 12b-1 under the 1940 Act (the "Plan").
1.8 Capital will bear all expenses in connection with the
performance of its services and the incurring of distribution expenses under
this Agreement. For purposes of this Agreement, "distribution expenses" of
Capital shall mean all expenses borne by Capital or by any other person with
which Capital has an agreement approved by the Fund, which expenses represent
payment for activities primarily intended to result in the sale of Shares,
including, but not limited to, the following:
(a) payments made to, and expenses of, persons who provide
support services in connection with the distribution of Shares, including, but
not limited to, office space and equipment, telephone facilities, answering
routine inquiries regarding the Fund, processing shareholder transactions, and
providing any other shareholder services;
(b) costs relating to the formulation and implementation of
marketing and promotional activities, including, but not limited to, direct mail
promotions and television, radio, newspaper, magazine, and other mass media
advertising;
(c) costs of printing and distributing prospectuses and
reports of the Fund to prospective shareholders of the Fund;
(d) costs involved in preparing, printing, and distributing
sales literature pertaining to the Fund; and
(e) costs involved in obtaining whatever information,
analyses, and reports with respect to marketing and promotional activities that
the Fund may, from time to time, deem advisable;
except that distribution expenses shall not include any expenditures in
connection with services which Capital, any of its affiliates, or any other
person has agreed to bear without reimbursement.
1.9 Capital shall prepare and deliver reports to the Treasurer
of the Fund and to the Investment Adviser on a regular, at least quarterly,
basis, showing the distribution expenses incurred pursuant to this Agreement and
the Plan and the purposes therefor, as well as any
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supplemental reports as the Directors, from time to time, may reasonably
request.
2. -Duties of the Fund
2.1 The Fund agrees at its own expense to execute any and all
documents, to furnish any and all information, and to take any other actions
that may be reasonably necessary in connection with the qualification of the
Shares for sale in those states that Capital may designate.
2.2 The Fund shall furnish from time to time, for use in
connection with the sale of the Shares, such information reports with respect to
the Fund and its Shares as Capital may reasonably request, all of which shall be
signed by one or more of the Fund's duly authorized officers; and the Fund
warrants that the statements contained in any such reports, when so signed by
one or more of the Fund's officers, shall be true and correct. The Fund shall
also furnish Capital upon request with: (a) annual audits of the Fund's books
and accounts made by independent public accountants regularly retained by the
Fund, (b) semi-annual unaudited financial statements pertaining to the Fund, (c)
quarterly earnings statements prepared by the Fund, (d) a monthly itemized list
of the securities in the portfolio of the Fund, (e) monthly balance sheets as
soon as practicable after the end of each month, and (f) from time to time such
additional information regarding the Fund's financial condition as Capital may
reasonably request.
2.3 The Fund shall pay to Capital the proceeds from any
contingent deferred sales charge imposed on the redemption of the Shares as
specified in the Registration Statement.
3. Representations and Warranties
The Fund represents to Capital that all registration statements,
prospectuses, and statements of additional information filed by the Fund with
the SEC under the 1933 Act and .the 1940 Act with respect to the Shares of the
Fund have been carefully prepared in conformity with the requirements of the
1933 Act, the 1940 Act, and the rules and regulations of the SEC thereunder. As
used in this Agreement, the terms "registration statement," "prospectus," and
"statement of additional information' shall mean any registration statement,
prospectus, and statement of additional information filed by the Fund with the
SEC and any amendments and supplements thereto which at any time shall have been
filed with the SEC. The Fund represents and warrants to Capital that any
registration statement, prospectus, and statement of additional information,
when such registration statement becomes effective, will include all statements
required to be contained therein in conformity with the 1933 Act, the 1940 Act,
and the rules and regulations of the SEC; that all statements of fact contained
in any registration statement, prospectus, or statement of additional
information will be true and correct when such registration statement becomes
effective; and that neither any registration statement nor any prospectus or
statement of additional information when such registration statement becomes
effective will include an untrue statement of material fact or omit to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading to a purchaser of Shares. Capital may, but shall not be
obligated to, propose from time to time such
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amendment or amendments to any registration statement and such supplement or
supplements to any prospectus or statement of additional information as, in the
light of future developments, may, in the opinion of Capital's counsel, be
necessary or advisable. If the Fund shall not propose such amendment or
amendments and/or supplement or supplements within fifteen days after receipt by
the Fund of a written request from Capital to do so, Capital may, at its option,
terminate this Agreement. The Fund shall not file any amendment to any
registration statement or supplement to any prospectus or statement of
additional information without giving Capital reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement shall in
any way limit the Fund's right to file at any time such amendments to any
registration statement and/or supplements to any prospectus or statement of
additional information, of whatever character, as the Fund may deem advisable,
such right being in all respects absolute and unconditional.
4. Indemnification
4.1 The Fund authorizes Capital and any dealers with whom
Capital has entered into dealer agreements to use any prospectus or statement of
additional information furnished by the Fund from time to time in connection
with the sale of Shares. The Fund agrees to indemnify, defend, and hold
Capital, its several officers and directors, and any person who controls Capital
within the meaning of Section 15 of the 1933 Act, free and harmless from and
against any and all claims, demands, liabilities, and expenses (including the
cost of investigating or defending such claims, demands, or liabilities and any
counsel fees incurred in connection therewith) which Capital, its officers and
directors, or any such controlling person may incur under the 1933 Act, the 1940
Act, or common law or otherwise, arising out of or based upon any untrue
statement or alleged untrue statement of a material fact contained in any
registration statement, any prospectus, or any statement of additional
information, or arising out of or based upon any omission or alleged omission to
state a material fact required to be stated in any registration statement, any
prospectus, or any statement of additional information, or necessary to make the
statements in any of them not misleading; provided, however, that the Fund's
agreement to indemnify Capital, its officers or directors, and any such
controlling person shall not be deemed to cover any claims, demands,
liabilities, or expenses arising out of or based upon any statements or
representations made by Capital or its representatives or agents other than such
statements and representations as are contained in any registration statement,
prospectus, or statement of additional information and in such financial and
other statements as are furnished to Capital pursuant to paragraph 2.2 hereof-,
and further provided that the Fund's agreement to indemnify Capital and the
Fund's representations and warranties hereinbefore set forth in paragraph 3
shall not be deemed to cover any liability to the Fund or its shareholders to
which Capital would otherwise be subject by reason of willful misfeasance, bad
faith, or gross negligence in the performance of its duties, or by reason of
Capital's reckless disregard of its obligations and duties under this Agreement.
The Fund's agreement to indemnify Capital, its officers and directors, and any
such controlling person, as aforesaid, is expressly conditioned upon the Fund's
being notified of any action brought against Capital, its officers or directors,
or any such controlling person, such notification to be given by letter or by
telegram addressed to the Fund at its principal office in Minot, North Dakota,
and sent to the Fund by the person against whom such action is brought, within
ten days after the summons or other first legal
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process shall have been served. The failure so to notify the Fund of any such
action shall not relieve the Fund from any liability that the Fund may have to
the person against whom such action is brought by reason of any such untrue
statement or omission or alleged omission otherwise than on account of the
Fund's indemnity agreement contained in this paragraph 4.1. The Fund's
indemnification agreement contained in this paragraph 4.1 and the Fund's
representations and warranties in this Agreement shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
Capital, its officers and directors, or any controlling person, and shall
survive the delivery of any Shares. This agreement of indemnity will inure
exclusively to Capital's benefit, to the benefit of its several officers and
directors, and their respective estates, and to the benefit of the controlling
persons and their successors. The Fund agrees to notify Capital promptly of the
commencement of any litigation or proceedings against the Fund or any of its
officers or directors in connection with the issuance and sale of any Shares.
4.2 Capital agrees to indemnify, defend, and hold the Fund, its
several officers and directors, and any person who controls the Fund within the
meaning of Section 15 of the 1933 Act, free and harmless from and against any
and all claims, demands, liabilities, and expenses (including the costs of
investigating or defending such claims, demands, or liabilities and any counsel
fees incurred in connection therewith) that the Fund, its officers or directors,
or any such controlling person may incur under the 1933 Act, the 1940 Act, or
common law or otherwise, but only to the extent that such liability or expense
incurred by the Fund, its officers or directors, or such controlling person
resulting from such claims or demands shall arise out of or be based upon (a)
any unauthorized sales literature, advertisements, information, statements, or
representations or (b) any untrue or alleged untrue statement of a material fact
contained in information furnished in writing by Capital to the Fund and used in
the answers to any of the items of the registration statement or in the
corresponding statements made in the prospectus or statement of additional
information, or shall arise out of or be based upon any omission or alleged
omission to state a material fact in connection with such information furnished
in writing by Capital to the Fund and required to be stated in such answers or
necessary to make such information not misleading. Capital's agreement to
indemnify the Fund, its officers and directors, and any such controlling person,
as aforesaid, is expressly conditioned upon Capital's being notified of any
action brought against the Fund, its officers or directors, or any such
controlling person, such notification to be given by letter or telegram
addressed to Capital at its principal office in Minot, North Dakota, and sent to
Capital by the person against whom such action is brought, within ten days after
the summons or other first legal process shall have been served. The failure so
to notify Capital of any such action shall not relieve Capital from any
liability that Capital may have to the Fund, its officers or directors, or to
such controlling person by reason of any such untrue or alleged untrue statement
or omission or alleged omission otherwise than on account of Capital's indemnity
agreement contained in this paragraph 4.2. Capital agrees to notify the Fund
promptly of the commencement of any litigation or proceedings against Capital or
any of its officers or directors in connection with the issuance and sale of any
Shares.
4.3 In case any action shall be brought against any indemnified
party under paragraph 4.1 or 4.2, and it shall notify the indemnifying party of
the commencement thereof,
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the indemnifying party shall be entitled to participate in, and, to the extent
that it shall wish to do so, to assume the defense thereof with counsel
satisfactory to such indemnified party. If the indemnifying party opts to
assume the defense of such action, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than (a)
reasonable costs of investigation or the furnishing of documents or witnesses
and (b) all reasonable fees and expenses of separate counsel to such indemnified
party if (i) the indemnifying party and the indemnified party shall have agreed
to the retention of such counsel or (ii) the indemnified party shall have
concluded reasonably that representation of the indemnifying party and the
indemnified party by the same counsel would be inappropriate due to actual or
potential differing interests between them in the conduct of the defense of such
action.
5. Effectiveness of Registration
None of the Shares shall be offered by either Capital or the Fund
under any of the provisions of this Agreement and no orders for the purchase or
sale of the Shares hereunder shall be accepted by the Fund if and so long as the
effectiveness of the registration statement then in effect or any necessary
amendments thereto shall be suspended under any of the provisions of the 1933
Act or if and so long as a current prospectus as required by Section 5(b)(2) of
the 1933 Act is not on file with the SEC: provided, however, that nothing
contained in this paragraph 5 shall in any way restrict or have an application
to or bearing upon the Fund's obligation to repurchase Shares from any
shareholder in accordance with the provisions of the Fund's prospectus,
statement of additional information, or articles of incorporation.
6. Notice to Capital
The Fund agrees to advise Capital immediately in writing:
(a) of any request by the SEC for amendments to the
registration statement, prospectus, or statement of additional
information then in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop
order suspending the effectiveness of the registration statement, prospectus, or
statement of additional information then in effect or the initiation of any
proceeding for that purpose;
(c) of the happening of any event that makes untrue any
statement of a material fact made in the registration statement, prospectus, or
statement of additional information then in effect or that requires the malting
of a change in such registration statement, prospectus, or statement of
additional information in order to make the statements therein not misleading;
and
(d) of all actions of the SEC with respect to any amendment
to any registration statement, prospectus, or statement of additional
information which may from time to time be filed with the SEC.
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7. Term of Agreement
This Agreement shall continue until October 26, 1995, and thereafter
shall continue automatically for successive annual periods ending on October
26th of each year, provided such continuance is specifically approved at least
annually by (a) the Fund's Board of Directors and (b) a vote of a majority (as
defined in the 0000 Xxx) of the Fund's Directors who are not interested persons
(as defined in the 0000 Xxx) of the Fund and who have no direct or indirect
financial interest in the operation of the Plan, in this Agreement, or any
agreement related to the Plan (the "Qualified Directors"), by vote cast in
person at a meeting called for the purpose of voting on such approval. This
Agreement is terminable with respect to the Fund, without penalty, (a) on 60
days' written notice, by vote of a majority of the Qualified Directors or by
vote of a majority (as defined in the 0000 Xxx) of the outstanding voting
securities of the Fund or (b) on 90 days' written notice by Capital. This
Agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
8. Miscellaneous
8.1 The Fund recognizes that directors, officers, and employees
of Capital may from time to time serve as directors, officers, and employees of
corporations and business trusts (including other investment companies) and that
Capital or its affiliates may enter into distribution or other agreements with
such other corporations and trusts.
8.2 It is expressly agreed that the obligations of the Fund
hereunder shall not be binding upon any of the directors, shareholders,
nominees, officers, agents, or employees of the Fund, personally, but bind only
the property of the Fund. The execution and delivery of this Agreement have
been authorized by the Directors and the sole shareholder of the Shares and
signed by an authorized officer of the Fund, acting as such, and neither such
authorization by such Directors and shareholder nor such execution and delivery
by such officer shall be deemed to have been made by any of them individually or
to impose any liability on any of them personally, but shall bind only the
property of the Fund.
8.3 This Agreement shall be construed in accordance with the laws of the
State of North Dakota.
8.4 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original; but such counterparts shall, together,
constitute only one instrument.
8.5 This Agreement may not be amended or modified in any manner except by
both parties with the same formality as this Agreement and as may be permitted
or required by the 0000 Xxx.
8.6 The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth herein.
SOUTH DAKOTA TAX-FREE FUND, INC.
By: /s/ Xxxxxx X. Xxxxxxx
-------------------------------
Title: President
Date: October 26, 1993
Accepted:
ND CAPITAL, INC.
By: /s/ Xxxxxx X. Xxxxxxx
---------------------------
Title: President
Date: October 26, 1993
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