EXHIBIT 99.6A
FORM OF DISTRIBUTION AGREEMENT
DISTRIBUTION AGREEMENT
October 21, 1988
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, ND 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 .85% 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 12 b-1
under the Investment Company Act of 1940 (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.
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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 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 Shares, (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
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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 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,
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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 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 or alleged 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
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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, 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.
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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 making 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.
7. Term of Agreement
This Agreement shall continue until October 21, 1990, and thereafter
shall continue automatically for successive annual periods ending on
October 21 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 Company's
Directors who are not interested
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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 Director 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.
ND TAX-FREE FUND, INC.
By:
Title:
Date:
Accepted:
ND CAPITAL, INC.
By:
Title:
Date:
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