EXHIBIT (E)(2)
FORM OF DEALER SALES AGREEMENT
INTEGRITY MUTUAL FUNDS
DEALER SALES AGREEMENT
To The Undersigned Dealer:
ND Capital, Inc., the principal underwriter of shares of the funds (the
"Funds"), open-end, management investment companies registered under the
Investment Company Act of 1940, for which ND Money Management, Inc., serves
as the investment adviser, understands that you are a member in good standing
of the National Association of Securities Dealers, Inc. (the "NASD"), and that
you and any individuals who represent you are properly qualified and
registered, if required, with the Securities and Exchange Commission and
with the state securities administrators of the various states in which shares
of one or more of the Funds are to be offered for sale or sold by you. In
consideration of the mutual promises stated below, you and we hereby agree as
follows:
1. COMPLIANCE WITH PROSPECTUS. Offers and sales of shares by you will comply
in all respects with the terms and conditions contained in the then-current
prospectuses of the Funds.
2. PURCHASE RESTRICTIONS. You agree to purchase shares solely through us and
only for the purpose of covering purchase orders already received from
customers or for your own bona fide investment. You agree not to purchase
for any other securities dealer unless you have an agreement with such other
dealer or broker to handle clearing arrangements and then only in the ordinary
course of business for such purpose and only if such other dealer has executed
a Dealer Sales Agreement with us. You also agree not to withhold any customer
order so as to profit therefrom.
3. PROCESSING ORDERS. The procedures relating to the handling of orders
shall be subject to instructions which we will forward from time to time to
all dealers with whom we have entered into a Dealer Sales Agreement. The
minimum initial and subsequent purchase order shall be specified in the Funds'
then-current prospectuses. All purchase orders are subject to receipt of shares
by us from the Funds and to acceptance of such orders by us. We reserve the
right in our sole discretion to reject any order.
4. PURCHASE ORDERS. We shall accept orders only on the basis of the then-
current offering price. You agree to place orders in respect of shares immedi-
ately upon the receipt of orders from your customers for the same number of
shares. Orders which you receive from your customers shall be deemed to be
placed with us when received by us. Orders which you receive prior to the close
of business, as defined in the prospectuses, and placed with us within the time
frame set forth in the prospectuses shall be priced at the offering price next
computed after they are received by you. We will not accept a conditional order
from you on any basis. All orders shall be subject to confirmation by us.
5. SETTLEMENT. Unless otherwise agreed, settlement shall be made at the
office of the Funds' transfer agent within three (3) business days after our
acceptance of the order. If payment is not so received or made within ten (10)
business days of our acceptance of the order, we reserve the right to cancel
the sale or, at our option, to sell the shares to the Funds at the then-
prevailing net asset value. In this event, or in the event that you cancel
the trade for any reason, you agree to be responsible for any loss resulting
to the Funds or to us from your failure to make payments as aforesaid. You
shall not be entitled to any gains generated thereby.
6. DEALER COMMISSIONS AND DISCOUNTS. You shall receive for each sale of
shares of the Funds listed in Category 1 on attached Schedule A, except shares
sold which are not subject to a contingent deferred sales charge, a commission
in an amount equal to three and three-quarters (3 3/4) percent of the offering
price of shares sold multiplied by the number of shares sold; provided,
however, that if the aggregate offering price of the shares sold is one
million dollars ($1,000,000) or more, the commission is reduced to one (1)
percent of the offering price multiplied by the number of shares sold.
You shall receive for each sale of shares of the Funds listed in Category
2 on attached Schedule A, except shares sold which are not subject to a contin-
gent deferred sales charge, a commission in an amount equal to four (4) percent
of the offering price of shares sold multiplied by the number of shares sold;
provided, however, that if the aggregate offering price of shares
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sold is one million dollars ($1,000,000) or more, the commission is reduced to
one (1) percent of the offering price multiplied by the number of shares sold.
The amount of the commission or discount is subject to change by us
without notice.
7. REDEMPTIONS. Redemptions of shares by the Funds will be effected in the
manner and upon the terms described in the then-current prospectuses. We will,
upon your request, assist you in processing orders for redemptions. If any
shares sold to you are redeemed by the Funds or are tendered to the Funds for
redemption within seven (7) business days after the date of our confirmation
to you of your original purchase order therefor, you agree to pay forthwith to
us the full amount of the commission or discount allowed you on the sale.
8. SUSPENSION OF SALES AND AMENDMENTS TO AGREEMENT. We reserve the right in
our discretion without notice to you to suspend sales or withdraw an offering
of shares entirely, to change the offering price as provided in the prospec-
tuses, or, upon notice to you, to amend or cancel this Agreement. Such amend-
ment may include, but is not limited to, the addition of any new fund or funds
to our fund group. You agree that any order to purchase shares placed by you
after notice of any amendment to this Agreement has been sent to you shall
constitute your agreement to any such amendment.
9. DEALER STATUS. In every transaction, you shall act as an independent
contractor and not as an agent for the Funds, the Funds' transfer agent, any
other dealer, or us. You agree that neither the Funds, the Funds' transfer
agent, any other dealer, nor we shall be deemed an agent of you. Nothing here-
in shall constitute you as a partner of the Funds, the Funds' transfer agent,
any other dealer, or us or render any of us liable for your obligations.
10. REPRESENTATIONS CONCERNING THE FUNDS. No person is authorized to make
any representations concerning shares of the Funds except those contained in
the then-current prospectuses. You shall not sell shares of the Funds pursuant
to this Agreement unless the then-current prospectuses are furnished to the
purchasers prior to or at the time of purchase. You shall not use any supple-
mental sales literature of any kind without our prior written approval unless
it is furnished by us for such purpose. In offering and selling shares of the
Funds, you will rely solely on the representations contained in the then-
current prospectuses.
11. DEALER'S REPRESENTATIONS AND AGREEMENTS. By accepting this Agreement,
you represent that you: (i) are registered as a broker-dealer under the
Securities Exchange Act of 1934, as amended; (ii) are qualified to act as a
dealer in the states in which the Funds' shares are offered for sale or sold
by you; (iii) are a member in good standing of the NASD; and (iv) will maintain
such registrations, qualifications, and memberships throughout the term of this
Agreement. You agree to abide by the Rules of Fair Practice of the NASD and all
federal and state laws and rules and regulations that are now or may become
applicable to the transactions hereunder. Your expulsion from the NASD will
automatically terminate this Agreement without notice. Your suspension from
the NASD or violation of applicable state and federal laws and rules and
regulations will terminate this Agreement effective upon our notice to you.
You shall not be entitled to any compensation during any period in which you
have been suspended or expelled from membership in the NASD.
12. INDEMNIFICATION. You hereby agree to indemnify and to hold harmless the
Funds and us and each person, if any, who controls the Funds or us within the
meaning of Section 15 of the Securities Act of 1933, as amended (the "Act"),
from and against any and all losses, claims, demands, or liabilities to which
the Funds or we may become subject under the Act, or otherwise, insofar as such
losses, claims, demands, or liabilities (or actions in respect thereof) arise
out of or are based upon any unauthorized use of sales materials by you or your
salesmen or upon alleged misrepresentations or omissions to state material
facts in connection with statements made by you or your salesmen orally or by
other means or upon sales of shares in any state or jurisdiction in which the
shares are not registered or qualified for sale; and you will reimburse the
Funds and us for any legal or other expenses reasonably incurred in connection
with the investigation or defense of any such action or claim. We shall, after
receiving the first summons or other legal process disclosing the nature of the
action being served upon the Funds or us, in any proceeding in respect of which
indemnity may be sought by the Funds or us hereunder, notify you in writing of
the commencement thereof within a reasonable time. In case any such litigation
be brought against the Funds or us, we shall notify you of the commencement
thereof, and you shall be entitled to participate in (and to the extent you
shall wish, to direct) the defense thereof at your expense, but such defense
shall be conducted by counsel in good standing satisfactory to the Funds and
us. If you fail to provide such defense, the Funds or we may defend such action
at your cost and expense. Your obligation under this Section 12 shall survive
the termination of this Agreement.
13. DEALER'S EXPENSES. All expenses incurred in connection with your
activities under this Agreement shall be borne by you.
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14. SUPERVISORY RESPONSIBILITY. By accepting this Agreement, you assume full
responsibility for the registration, qualification, and training of your repre-
sentatives in connection with the offer and sale of shares of the Funds.
15. PROSPECTUSES AND STATEMENTS OF ADDITIONAL INFORMATION. We will supply you
with copies of the prospectuses and statements of additional information of the
Funds (including any amendments thereto) in reasonable quantities upon request.
You will provide customers with prospectuses prior to or at the time customers
purchase shares. You will provide customers who so request copies of the state-
ments of additional information on file with the Securities and Exchange
Commission.
16. ASSIGNMENT. This Agreement may not be assigned by you without our
consent.
17. WAIVER. No failure, neglect, or forbearance on our part to require strict
performance of this Agreement shall be construed as a waiver of our rights or
remedies hereunder.
18. TERMINATION. Either party may terminate this Agreement at any time upon
giving written notice to the other party.
19. GOVERNING LAW. This Agreement shall be construed in accordance with the
laws of the State of North Dakota.
20. ENTIRE AGREEMENT. This Agreement constitutes the entire agreement between
the undersigned and supersedes all prior oral or written agreements between the
parties hereto.
21. SIPC MEMBERSHIP. Rule 10b-10 under the Securities Exchange Act of 1934,
as amended, requires the disclosure of non-SIPC membership on confirmations of
customer purchases of shares of the Funds. Please indicate your SIPC status by
checking the appropriate box below. It is your responsibility to promptly
notify us in writing of any change in your SIPC status.
________________________________________ ___is ___is not a member of SIPC.
Broker/Dealer Name (Please print.)
ND CAPITAL, INC.
Date: ________________________________ By: ________________________________
The undersigned accepts your invitation to become a dealer and agrees to
abide by the foregoing terms and conditions.
Date: __________________
By: ___________________________________ ___________________________________
Print Signature and Title
Contact Name: _______________________________________
Address: _______________________________________
_______________________________________
_______________________________________
Phone #: (_____) _______________________________
Fax #: (_____) _______________________________
Email: _______________________________________
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SCHEDULE A
CATEGORY 1 CATEGORY 2
ND Tax-Free Fund, Inc. Integrity Fund of Funds, Inc.
Montana Tax-Free Fund, Inc.
South Dakota Tax-Free Fund, Inc.
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*DATE*
Dear Selling Group Member:
This letter amends your Dealer Sales Agreement to include the newest addition
to Integrity Mutual Funds, (fund name). (Fund name) will be added to Category
(1 or 2) on Schedule A.
As indicated in the Dealer Sales Agreement, any order to purchase shares of
(fund name) placed by you after notice of this amendment has been sent you
constitutes your agreement to such amendment.
Best regards,
____________________________________
R.E. Xxxxxxx
President
