XXXX FUNDS, INC.
DISTRIBUTION AGREEMENT
THIS AGREEMENT is entered into as of the 1st day
of October, 1997 between Xxxx Funds, Inc., a Minnesota
corporation (the "Corporation") and Centennial Lakes
Capital, Inc., a Minnesota corporation (the
"Distributor").
W I T N E S S E T H
WHEREAS, the Corporation is an open-end investment
company registered under the Investment Company Act of
1940, as amended (the "1940 Act"). The Corporation is
authorized to create separate series and classes
thereof, each with its own separate investment
portfolio (the "Funds"), and the beneficial interest in
each such series and class thereof will be represented
by a separate series, and class, of shares (the
"Shares").
WHEREAS, the Distributor is a registered broker-
dealer under state and federal laws and regulations and
is a member of the National Association of Securities
Dealers, Inc. (the "NASD").
WHEREAS, the Corporation desires to retain the
Distributor as the principal distributor of Shares of
certain Funds of the Corporation.
NOW, THEREFORE, the Corporation and the
Distributor mutually agree and promise as follows:
1. Appointment of the Distributor; Acceptance of
Appointment. The Corporation hereby appoints the
Distributor as its agent for the distribution of Shares
for each of the Funds on whose behalf the Corporation
executes an Exhibit to this Agreement in jurisdictions
wherein the Shares may lawfully be offered for sale,
and the Distributor, by execution of each such Exhibit,
hereby accepts such appointment.
2. Exclusive Nature of Distribution Services.
The Distributor shall be the exclusive representative
of the Corporation to act as the principal distributor
of each Fund's Shares, except that the exclusive rights
granted to the Distributor to sell Shares shall not
apply to (i) Shares issued by the Corporation directly
to Fund investors upon such terms and conditions and
for such consideration, if any, as the Corporation may
determine, whether in connection with the reinvestment
of dividends or capital gains distributions or through
the exercise of any exchange privilege, or otherwise,
and (ii) purchases made by investors through Firstar
Trust Company, the Corporation's transfer and dividend
disbursing agent (the "Transfer Agent"), or any
successor Transfer Agent, in the manner set forth in
the Prospectus of the Corporation. The term
"Prospectus" shall mean the Prospectus and Statement of
Additional Information included as part of the
Corporation's Registration Statement, as such
Prospectus and Registration Statement may be amended
from time to time, and the term "Registration
Statement" shall mean the Registration Statement on
Form N-1A filed by the Corporation with the Securities
and Exchange Commission (the "SEC") and effective under
the Securities Act of 1933, as amended (the "1933
Act"), and the 1940 Act, as may be amended from time to
time.
3. Services of the Distributor.
(a) Distribution of Shares. The Distributor
shall use its best efforts to solicit orders for the
sale of such part of the authorized Shares of each Fund
remaining unissued as from time to time shall be
effectively registered under the 1933 Act, at prices
determined as hereinafter provided and on terms
hereinafter set forth, all subject to applicable
federal and state laws and regulations and to the
Articles of Incorporation, Bylaws and Registration
Statement of the Corporation; provided, however, the
Distributor is not obligated to sell any specific
number of Shares. In addition, the Distributor shall
undertake such advertising and promotion as it believes
is reasonable in connection with such solicitation.
(b) Selected Dealer Agreements. The Distributor
may enter into selected dealer agreements with
registered and qualified dealers and other financial
institutions of its choice for the sale of Shares (the
"Selected Dealers"), provided that the Corporation
shall approve the form of such agreements and provided
further that, in entering into any such agreement, the
Distributor shall act only on its own behalf as
principal and not as agent for the Corporation. Shares
sold to Selected Dealers by the Distributor shall be
for resale by such dealers only at the prices as set
forth herein.
(c) Transmission of Sales Orders. The
Distributor shall transmit any order received by it for
the purchase of Shares to the Transfer Agent. Any
order may be rejected by the Transfer Agent, upon
instructions from the Corporation; provided, however
that the Corporation will not arbitrarily or without
reasonable cause refuse to accept orders for the
purchase of Shares. The Corporation will cause the
Transfer Agent to confirm orders for Shares upon their
receipt and make appropriate book entries therefor
pursuant to the instructions of the Distributor. The
Distributor shall cause payment for Shares and
instructions as to book entries to be delivered
promptly to the Transfer Agent. With respect to Shares
sold by any Selected Dealer, the Distributor is
authorized to direct the Transfer Agent to receive
instructions directly from the Selected Dealer on
behalf of the Distributor as to the registration of
Shares in the names of investors and to confirm the
issuance of such Shares to such investors. The
Distributor is also authorized to instruct the Transfer
Agent to receive payment directly from a Selected
Dealer on behalf of the Distributor for the purchase
price of the Shares. In such event, the Transfer Agent
will obtain from the Selected Dealer and maintain a
record of such registration and payments.
(d) Suspension of Sales. The Distributor
acknowledges that, whenever in the judgment of the
Corporation's officers such action is warranted for any
reason, including, without limitation, market, economic
or political conditions, the Corporation's officers may
decline to accept orders for, or make any sales of,
Shares of a Fund or Funds until such time as those
officers deem it advisable to accept such orders and to
make such sales.
(e) Redemption of Shares. The Distributor is
authorized, as agent for the Corporation, to repurchase
Shares held in an investor's account with a Fund or
Funds in accordance with applicable provisions in the
Prospectus. The Distributor shall promptly transmit to
the Transfer Agent of the Corporation, for redemption,
all such orders for the repurchase of Shares. Payment
for such Shares repurchased may be made by the Transfer
Agent directly for the account of the investor and the
Distributor shall, under no circumstances, be
responsible for transmitting funds or crediting a
client's account. The Distributor shall, however, be
responsible for the accuracy of the instructions
transmitted to the Transfer Agent in connection with
all such repurchases. With respect to Shares tendered
for redemption by any Selected Dealer on behalf of an
investor, the Distributor is authorized to instruct the
Transfer Agent to accept orders for redemption directly
from the Selected Dealer on behalf of the Distributor
and to instruct the Corporation to transmit payments
for such redemptions directly to the Selected Dealer
for the account of the investor and, in such
circumstances, the Distributor shall be solely
responsible for the transmission of funds or crediting
of a client's account by the Selected Dealer. The
Transfer Agent will obtain from the Selected Dealer and
maintain a record of all such orders.
(f) Rule 12b-1 Plan Reports. In connection with
the distribution services provided hereunder and with
respect to a Rule 12b-1 Plan (the "Rule 12b-1 Plan")
adopted by the Corporation on behalf of the Funds, the
Distributor shall provide the Corporation such
information as may be reasonably requested concerning
the Distributor's activities and the costs incurred in
performing such activities with respect to the Funds.
(g) Exclusive Services. The services of the
Distributor hereunder are exclusive, it being
understood that the Distributor may not act as
principal distributor for other registered investment
companies. It is also understood, however, that the
Selected Dealers may sell shares for other registered
investment companies in addition to the Corporation.
(h) Use of Unauthorized Information. Neither the
Distributor nor any Selected Dealer shall give any
information or make any representations, other than
those contained in the Registration Statement or
Prospectus and any sales literature specifically
approved by officers of the Corporation.
(i) Compliance with Applicable Law. The
Distributor will in all material respects conform its
activities hereunder to the requirements of applicable
state and federal laws and all applicable rules of the
NASD. In addition, the Distributor will observe and be
bound by all the provisions of the Corporation's
Articles of Incorporation, Bylaws and Registration
Statement which at any time in any way require, limit,
restrict, or prohibit or otherwise regulate any action
on the part of the Distributor.
4. Price of Shares.
(a) Sales. Shares offered for sale or sold by
the Distributor or any Selected Dealer for the account
of a Fund shall be so offered or sold at a price per
Share determined in accordance with the Prospectus
relating to the sale of such Shares. The price the
Corporation shall receive for any Shares purchased by
an investor from the Corporation through the
Distributor or a Selected Dealer shall be the net asset
value (the "NAV") used in determining the public
offering price applicable to the sale of such Shares,
as calculated in the manner set forth in the
Prospectus. Any excess amounts paid by an investor for
the purchase of Shares shall be allocated as set forth
in Paragraph 6(a) below.
(b) Redemptions. Shares tendered for redemption
by the Distributor or a Selected Dealer on behalf of an
investor shall be redeemed in accordance with the
applicable provisions as set forth in the Prospectus at
a price equal to the NAV of the Fund as determined in
accordance with the procedures set forth in the
Prospectus, less any applicable contingent deferred
sales charge or redemption fee.
5. Duties of the Corporation.
(a) Registration of Shares with SEC. The
Corporation agrees that it will use its best efforts to
keep effectively registered under the 1933 Act for sale
as herein contemplated such Shares as the Distributor
shall reasonably request and as the SEC shall permit to
be so registered.
(b) Qualification of Shares with States;
Registration of Corporation. The Corporation agrees to
execute any and all documents, furnish any and all
information and take any other actions which may be
reasonably necessary in connection with the
qualification of Shares for sale, including the
qualification of the Corporation as a broker or dealer
where necessary or advisable, in such states as the
Distributor may reasonably request (it being understood
that the Corporation shall not be required without its
consent to comply with any requirement which in its
opinion is unduly burdensome).
(c) Available Information. At the expense of the
Distributor, the Corporation shall furnish to the
Distributor copies of all information, financial
statements, annual and interim reports, and other
papers which the Distributor may reasonably request for
use in connection with the distribution of Shares.
6. Payments to the Distributor.
(a) Front-End Sales Charge. With respect to
Funds which impose a front-end sales charge, the
Distributor shall receive and may retain any portion of
any front-end sales charge which is imposed on such
sales and not reallocated by the Distributor to
Selected Dealers as set forth in the Prospectus,
subject to applicable NASD rules.
(b) Contingent Deferred Sales Charge. With
respect to Funds which impose a contingent deferred
sales charge ("CDSC"), the Distributor shall receive
and may retain any portion of any CDSC which is imposed
on such redemptions, subject to applicable NASD rules.
(c) Rule 12b-1 Fee. Pursuant to the terms of
the Rule 12b-1 Plan, the Corporation may pay the
Distributor up to 0.50% per annum of each Fund's
average daily net assets to the extent specified under
the Rule 12b-1 Plan. The Distributor may pay all or a
portion of this fee to Selected Dealers or any other
qualified persons who render assistance in distributing
or promoting the sale of Shares pursuant to a written
agreement, provided the form of such agreement shall be
approved by the Corporation and provided further that
in entering into any such agreement, the Distributor
shall act only on its own behalf as principal and not
as agent for the Corporation. To the extent such fee
is not paid to such persons, the Distributor may use
the fee for its own distribution and shareholder
servicing expenses incurred in connection with its
services to the Corporation hereunder to the extent
specified under the Rule 12b-1 Plan.
7. Expenses.
(a) Payable by the Corporation. The Corporation
shall bear the expenses of (i) registering the Shares
under the 1933 Act, (ii) qualifying or continuing the
qualification of Shares for sale under the laws of such
states as may be designated by the Distributor under
the conditions herein specified, (iii) qualifying or
continuing the qualification of the Corporation as a
broker or dealer under the laws of such states as may
be designated by the Distributor under the conditions
herein specified, and (iv) issuing Shares, such as
issue taxes and fees of the transfer agent.
(b) Payable by the Distributor. Other than the
expenses payable by the Corporation as set forth in
paragraph 7(a) above or as otherwise provided herein,
the Distributor shall bear all expenses incident to the
sale and distribution of the Shares issued or sold
hereunder, including, without limitation, (i) any sales
commissions or other expenses payable to Selected
Dealers and others for their services in connection
with the sale of Shares, (ii) the expenses of printing
and distributing Prospectuses and any other literature,
advertising and selling aids used in connection with
the offering of Shares for sale (except that such
expenses shall not include expenses incurred by the
Corporation in connection with the preparation,
printing and distribution of any prospectus, report or
other communication to holders of Shares in their
capacity as such), and (iii) the expenses of
advertising in connection with the offering of Shares.
In addition, so long as the Rule 12b-1 Plan continues
in effect, any expenses incurred by the Distributor
hereunder may be paid from amounts the Distributor and
any Selected Dealer or other person are entitled to
receive from the Corporation under such plan.
8. Indemnification.
(a) By the Corporation. The Corporation agrees
to indemnify the Distributor and its officers,
directors and controlling persons (within the meaning
of the federal securities laws), and the officers and
directors of its controlling persons, for any liability
and expenses, including reasonable attorneys' fees,
which may be sustained by any of the indemnitees as a
result of (i) any untrue statement or alleged untrue
statement of a material fact contained in the
Registration Statement, Prospectus or Statement of
Additional Information with respect to the Shares, (ii)
any omission or alleged omission to state a material
fact required to be stated in the Registration
Statement, Prospectus or Statement of Additional
Information or necessary to make the statements in any
of them not misleading, or (iii) the Corporation's
willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties and obligations
hereunder; provided, however, that the Corporation
shall not be required to indemnify the Distributor or
any of its officers, directors or controlling persons,
or the officers and directors of its controlling
persons, for any liability or expenses arising out of
or based upon any statements or representations made by
the Distributor or its agents other than such
statements or representations as are contained in the
Registration Statement, Prospectus or Statement of
Additional Information with respect to the Shares
(other than statements or omissions relating to the
Distributor) and in such other financial and other
statements as are furnished to the Distributor pursuant
to paragraph 5(c) hereof.
(b) By the Distributor The Distributor agrees to
indemnify the Corporation and its officers, directors
and controlling persons (within the meaning of the
federal securities laws) for any liability and
expenses, including reasonable attorneys' fees, which
may be sustained by any of the indemnitees as a result
of (i) any alleged or actual material misrepresentation
or omission by the Distributor or its agents, or (ii)
the Distributor's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties and
obligations hereunder.
9. Duration and Termination.
(a) Duration. This Agreement shall become
effective for each Fund as of the date of execution of
the applicable Exhibit and shall continue in effect
with respect to each Fund (and any subsequent Funds
added pursuant to an Exhibit during the initial term of
this Agreement) for two years from the date of this
Agreement and thereafter for successive periods of one
year, subject to the provisions for termination and all
other terms and conditions hereof, if such continuation
shall be specifically approved at least annually (i) by
the vote of a majority of the Board of Directors of the
Corporation, including a majority of the Directors who
are not parties to this Agreement or "interested
persons" (as defined in the 0000 Xxx) of any such
party, cast in person at a meeting called for that
purpose or (ii) by a vote of a majority of the
outstanding voting securities (as that phrase is
defined in Section 2(a)(42) of the 0000 Xxx) of each
Fund. If a Fund is added after the first approval as
described above, this Agreement will be effective as to
that Fund upon execution of the applicable Exhibit and
will continue in effect until the next annual approval
of this Agreement by the Board of Directors of the
Corporation or Fund shareholders and thereafter for
successive periods of one year, subject to approval as
described above.
(b) Termination. Notwithstanding whatever may be
provided herein to the contrary, this Agreement may be
terminated at any time, without penalty, by the Board
of Directors of the Corporation or by the shareholders
of a Fund acting by the vote of at least "a majority of
its outstanding voting securities" (as that phrase is
defined in Section 2(a)(42) of the 1940 Act), or by the
Distributor, in each case, on not more than 60 days'
written notice to the other party. In addition, this
Agreement shall automatically terminate in the event of
its "assignment" (as defined in Section 2(a)(4) of the
1940 Act).
10. Notice. Any notice under this Agreement
shall be in writing, delivered or mailed, postage
prepaid, or transmitted by facsimile with
acknowledgment of receipt, to the other party at such
party's principal place of business, which may from
time to time be changed by one party by notice to the
other party.
11. Miscellaneous.
(a) Governing Law. This Agreement shall be
construed in accordance with the laws of the State of
Minnesota, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act,
the 1933 Act, the Securities Exchange Act of 1934, as
amended, or any rule or order of the SEC under such
Acts or any rule of the NASD.
(b) Captions. The captions of this Agreement are
included for convenience only and in no way define or
limit any of the provisions hereof or otherwise affect
their construction or effect.
(c) Severability. If any provision of this
Agreement shall be held or made invalid by a court
decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to
this extent, the provisions of this Agreement shall be
deemed to be severable.
This Agreement will become binding on the parties
hereto upon their execution of the Exhibit(s) to this
Agreement.
EXHIBIT A
to the
Distribution Agreement
XXXX EMERGING GROWTH FUND
The Corporation hereby appoints the Distributor,
and the Distributor hereby accepts such appointment, as
the Corporation's exclusive agent for the distribution
of Shares of the above-named Fund, subject to the terms
of the Distribution Agreement of which this Exhibit is
a part.
Executed as of this 1st day of October, 1997.
The Corporation:
XXXX FUNDS, INC.
By: /s/ XxXxx X. Xxxx
---------------------------
XxXxx X. Xxxx, President
The Distributor:
CENTENNIAL LAKES CAPITAL, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Xxxxxx X. Xxxxx, President
