DISTRIBUTION AGREEMENT
Agreement made as of the 8th day of July, 1999, by and between AXP Utilities
Income Fund, Inc. (the "Fund"), a Minnesota corporation, for and on behalf of
each class of the Fund and American Express Financial Advisors Inc. ("AEFA"), a
Delaware corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Fund covenants and agrees that, during the term of this agreement and
any renewal or extension, AEFA shall have the exclusive right to act as
principal underwriter for the Fund and to offer for sale and to distribute any
and all shares of each class of capital stock issued or to be issued by the
Fund.
The exclusive right to act as principal underwriter will not apply to
transactions by the Fund at net asset value as permitted by the currently
effective prospectus and statement of additional information (the "prospectus")
or to transactions by the Fund that do not involve sales to the general public,
including transactions between the Fund and its shareholders only, transactions
involving the reorganization of the Fund and transactions involving the merger,
consolidation or acquisition of assets with another corporation or trust.
(2) AEFA hereby covenants and agrees to act as the principal underwriter of each
class of capital shares issued and to be issued by the Fund during the period of
this agreement and agrees to offer for sale such shares as long as such shares
remain available for sale, unless AEFA is unable or unwilling to make such offer
for sale or sales or solicitations therefor legally because of any federal,
state, provincial or governmental law, rule or agency or for any financial
reason. AEFA agrees to devote reasonable time and effort to effect sales of
shares of the Fund but is not obligated to sell any specific number of shares.
(3) With respect to the offering for sale and sale of shares of each class to be
issued by the Fund, it is mutually understood and agreed that such shares are to
be sold on the following terms:
(a) AEFA has the right, as principal, to buy from the Fund the shares
needed to fill unconditional orders placed with AEFA by investors or
selling dealers (as defined below). The price AEFA will pay to the Fund
is the net asset value, determined as set forth in the currently
effective prospectus.
(b) The shares will be resold by AEFA to investors at the public
offering price, determined as set forth in the currently effective
prospectus, or to selling dealers having agreements with AEFA upon the
terms and conditions set forth in section 3(f). Shares may be sold to
certain groups or in certain transactions without a sales charge or at
a reduced sales charge, as described in the currently effective
prospectus.
(c) AEFA also has the right, as agent for the Fund, to sell shares at
the public offering price or at net asset value to certain persons and
upon certain conditions as the Fund may from time to time determine.
(d) The Fund or its transfer agent shall be promptly advised of all
orders received.
(e) The net asset value of the shares will be determined by the Fund or
any agent of the Fund in accordance with the method set forth in the
currently effective prospectus. In the event of a period of emergency,
the computation of the net asset value for the purpose of determining
the number of shares or fractional shares to be acquired may be
deferred until the close of business on the first full business day
following the termination of the period of emergency. A period of
emergency shall have the definition given thereto in the Investment
Company Act of 1940.
(f) AEFA is authorized to enter into agreements with broker-dealers
that are lawfully registered under federal law and any applicable state
law or with other institutions lawfully able to distribute securities
(selling dealers) providing for the selling dealers to obtain
unconditional orders for purchases of the Fund's shares from investors,
provided however, that AEFA may in its discretion refuse to accept
orders for shares from any particular applicant and may provide similar
discretion to selling dealers. AEFA will determine the portion of the
sales charge that may be allocated to the selling dealers. Shares sold
to selling dealers are for resale only at the public offering price
determined as set forth in the currently effective prospectus.
(4) The Fund agrees to make prompt and reasonable effort to do any and all
things necessary, in the opinion of AEFA to have and to keep the Fund and the
shares properly registered or qualified in all appropriate jurisdictions and, as
to shares, in such amounts as AEFA may from time to time designate in order that
the Fund's shares may be offered or sold in such jurisdictions.
(5) The Fund agrees that it will furnish AEFA with information with respect to
the affairs and accounts of the Fund, and in such form as AEFA may from time to
time reasonably require and further agrees that AEFA, at all reasonable times,
shall be permitted to inspect the books and records of the Fund.
(6) AEFA agrees to indemnify and hold harmless the Fund and each person who has
been, is, or may hereafter be a director of the Fund against expenses reasonably
incurred by any of them in connection with any claim or in connection with any
action, suit or proceeding to which any of them may be a party, which arises out
of or is alleged to arise out of any misrepresentation or omission to state a
material fact, or out of any alleged misrepresentation or omission to state a
material fact, on the part of AEFA or any agent or employee of AEFA or any other
person for whose acts AEFA is responsible or is alleged to be responsible,
unless such misrepresentation or omission was made in reliance upon information
furnished by the Fund. AEFA also agrees likewise to indemnify and hold harmless
the Fund and each such person in connection with any claim or in connection with
any action, suit or proceeding which arises out of or is alleged to arise out of
AEFA's (or an affiliate of AEFA's) failure to exercise reasonable care and
diligence with respect to its services rendered. The term "expenses" includes
amounts paid in satisfaction of judgments or in settlements which are made with
AEFA's consent. The foregoing rights of indemnification shall be in addition to
any other rights to which the Fund or a director may be entitled as a matter of
law.
(7) AEFA agrees to cause to be delivered to each purchaser a prospectus or
circular to be furnished by the Fund in the form required by the applicable
federal laws or by the acts or statutes of any applicable state, province or
country.
(8) In connection with the repurchase of shares, AEFA will act as agent of the
Fund. Any outstanding shares may be tendered for redemption at any time and the
Fund agrees to repurchase or redeem the shares in accordance with the terms and
conditions of the currently effective prospectus. The Fund will pay the amount
of the redemption price to shareholders on or before the seventh business day
after receiving the notice of redemption in proper form. Any applicable
contingent deferred sales charge will be paid to AEFA and the balance will be
paid to or for the account of the shareholder.
(9) AEFA and the Fund agree to use their best efforts to conform with all
applicable state and federal laws and regulations relating to any rights or
obligations under the terms of this agreement.
Part Two: ALLOCATION OF EXPENSES AND COMPENSATION
(1) Except as provided by the Plan and Agreement of Distribution any other
agreement between the parties, AEFA covenants and agrees that during the period
of this agreement it will pay or cause to be paid all expenses incurred by AEFA
in the offering for sale or sale of each class of the Fund's shares.
(2) AEFA's compensation as principal underwriter shall be (a) that part of the
sales charge retained by AEFA and (b) amounts payable as contingent deferred
sales charges on certain redemptions of shares.
Part Three: MISCELLANEOUS
(1) AEFA shall be deemed to be an independent contractor and, except as
expressly provided or authorized in this agreement, shall have no authority to
act for or represent the Fund.
(2) AEFA shall be free to render to others services similar to those rendered
under this agreement.
(3) Neither this agreement nor any transaction had pursuant hereto shall be
invalidated or in any way affected by the fact that directors, officers, agents
and/or shareholders of the Fund are or may be interested in AEFA as directors,
officers, shareholders or otherwise; that directors, officers, shareholders or
agents of AEFA are or may be interested in the Fund as directors, officers,
shareholders or otherwise; or that AEFA is or may be interested in the Fund as
shareholder or otherwise, provided however, that neither AEFA nor any officer or
director of AEFA or any officers or directors of the Fund shall sell to or buy
from the Fund any property or security other than a security issued by the Fund,
except in accordance with a rule, regulation or order of the Securities and
Exchange Commission.
(4) For the purposes of this agreement, a "business day" shall have the same
meaning as is given to the term in the By-laws of the Fund.
(5) Any notice under this agreement shall be given in writing, addressed and
delivered, or mailed postpaid, to the parties to this agreement at each
company's principal place of business in Minneapolis, Minnesota, or to such
other address as either party may designate in writing mailed to the other.
(6) AEFA agrees that no officer, director or employee of AEFA will deal for or
on behalf of the Fund with himself as principal or agent, or with any
corporation or partnership in which he may have a financial interest, except
that this shall not prohibit:
(a) Officers, directors and employees of AEFA from having a financial
interest in the Fund or in AEFA.
(b) The purchase of securities for the Fund, or the sale of securities
owned by the Fund, through a security broker or dealer, one or more of whose
partners, officers, directors or employees is an officer, director or employee
of AEFA, provided such transactions are handled in the capacity of broker only
and provided commissions charged do not exceed customary brokerage charges for
such services.
(c) Transactions with the Fund by a broker-dealer affiliate of AEFA if
allowed by rule or order of the SEC and if made pursuant to procedures adopted
by the Board of Directors.
(7) AEFA agrees that, except as otherwise provided in this agreement or in the
Plan and Agreement of Distribution, or as may be permitted consistent with the
use of a broker-dealer affiliate of AEFA under applicable provisions of the
federal securities laws, neither it nor any of its officers, directors or
employees shall at any time during the period of this agreement make, accept or
receive, directly or indirectly, any fees, profits or emoluments of any
character in connection with the purchase or sale of securities (except
securities issued by the Fund) or other assets by or for the Fund.
(8) This agreement may not be amended or modified in any manner except by a
written agreement executed by both parties.
(9) This agreement is governed by the laws of the state of Minnesota.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and until terminated
by AEFA or the Fund, except that such continuance shall be specifically approved
at least annually by a vote of a majority of the Board of Directors who are not
parties to this agreement or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and by a
majority of the Board of Directors or by vote of a majority of the outstanding
voting securities of the Fund. As used in this paragraph, the term "interested
person" shall have the meaning as set forth in the 1940 Act.
(2) This agreement may be terminated by AEFA or the Fund at any time by giving
the other party sixty (60) days written notice of such intention to terminate.
(3) This agreement shall terminate in the event of its assignment, the term
"assignment" for this purpose having the same meaning as set forth in the 1940
Act.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing agreement on
the date and year first above written.
AXP UTILITIES INCOME FUND, INC.
By /s/ Xxxxxx X. Xxx
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By /s/ Xxxxxx X. Xxxxx
Xxxxxx X. Xxxxx
Vice President
