DISTRIBUTION AGREEMENT
THIS AGREEMENT, made this 4th day of December, 1995, by and between
The Xxxxx Growth Fund, Inc., a Minnesota corporation (the "Fund"), and U.S.
Growth Investments, Inc., a Minnesota corporation (the "Distributor").
W I T N E S S E T H:
1. DISTRIBUTION SERVICES. The Fund hereby engages the
Distributor, and the Distributor hereby agrees to act, as principal
underwriter for the Fund in the sale and distribution to the public of the
Fund's shares of common stock, $.01 par value (the "Shares"), either through
dealers or otherwise. The Distributor agrees to offer such Shares for sale
at all times when such Shares are available for sale and may lawfully be
offered for sale and sold. The Shares may be offered in one or more classes
(each a "Class") in accordance with Rule 18f-3 under the Investment Company
Act of 1940, as amended (the "1940 Act"). The classes currently authorized
are Class A, Class B, Class C and Class D.
2. SALE OF FUND SHARES. Such Shares are to be sold only on the
following terms:
(a) All subscriptions, offers or sales shall be subject to acceptance
or rejection by the Fund. Any offer or sale shall be conclusively presumed
to have been accepted by the Fund if the Fund shall fail to notify the
Distributor of the rejection of such offer or sale prior to the computation
of the net asset value of the shares next following receipt by the Fund of
notice of such offer and sale.
(b) No Share shall be sold by the Fund for any consideration other
than cash or for any amount less than the net asset value of such Share,
computed as provided in the currently effective prospectus of the Fund (the
"Net Asset Value"). All Shares sold by the Distributor shall be sold at
the public offering price, as hereinafter defined, provided that the
Distributor may allow, or sell at, a discount from said public offering
price to broker-dealers that have entered into sales agreements with the
Distributor, which discount shall be no greater than the applicable sales
load or charge.
(c) The public offering price of the Shares shall be the Net Asset
Value thereof next determined following receipt of an order by the
Distributor plus any applicable sales load or charge. The sales load or
charge may be an initial charge of a percentage of the public offering
price or a contingent deferred sales charge upon redemption of Shares
within specified periods of purchase, as set forth in Fund's current
prospectus and specifically approved by the Board of Directors of the Fund.
(d) Any applicable sales loads or charges may, at the discretion of
the Fund and the Distributor, be reduced or eliminated as permitted by the
1940 Act and the rules and regulations thereunder, as they may be amended
from time to time, provided that such reduction or elimination shall be set
forth in the currently effective prospectus for the Fund, and provided that
the Fund shall in no event receive for any Shares sold an amount less than
the Net Asset Value thereof.
3. INVESTMENT OF DIVIDENDS AND DISTRIBUTIONS. The Fund may extend
to its shareholders the right to purchase Shares of any Class at the Net Asset
Value thereof with the proceeds of any dividend or capital gain distribution
paid or payable with respect to Shares of such Class.
4. REGISTRATION OF SHARES. The Fund agrees to make prompt and
reasonable efforts to effect and keep in effect, at its own expense, the
registration or qualification of its Shares for sale in such jurisdictions as
the Fund may designate.
5. INFORMATION TO BE FURNISHED TO DISTRIBUTOR. The Fund agrees that
it will furnish the Distributor with such information with respect to the
affairs and accounts of the Fund as the Distributor may from time to time
reasonably require, and further agrees that the Distributor, at all reasonable
times, shall be permitted to inspect the books and records of the Fund.
6. ALLOCATION OF EXPENSES. During the period of this Agreement, the
Fund shall pay or cause to be paid all expenses, costs and fees incurred by the
Fund which are not assumed by the Distributor or Xxxxx Associates, Inc. (the
"Adviser"). The Distributor shall pay all costs of distributing the Shares,
including, but not limited to, (a) compensation paid to broker-dealers,
including the Distributor and its registered representatives, for their sales of
Shares, including the payment of trailer commissions and the implementation of
various incentive programs with respect to broker-dealers, banks and other
financial institutions; (b) compensation paid to banks and other institutions
for providing administrative and accounting services with respect to the Fund's
shareholders; (c) other advertising and promotional expenses in connection with
the distribution of Shares; and (d) other distribution-related costs as set
forth in the Plans of Distribution adopted by the Fund with respect to the
Class B Shares, Class C Shares and Class D Shares (collectively, the "Rule 12b-1
Plans" or the
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"Plans"); provided that the Adviser, rather than the Distributor, may bear
the expenses referred to in this sentence, but the Distributor shall be
primarily liable for such expenses until paid.
7. COMPENSATION TO DISTRIBUTOR. As compensation for all of its
services provided and its costs assumed under this Agreement, the Distributor
shall receive such front-end sales charges, contingent deferred sales charges,
and fees payable pursuant to Rule 12b-1 Plans, all as described in the Fund's
current prospectus, as amended and supplemented from time to time.
8. LIMITATION OF DISTRIBUTOR'S AUTHORITY. The Distributor shall be
deemed to be an authorized independent contractor and, except as specifically
provided or authorized herein, shall have no authority to act for or represent
the Fund.
9. SUBSCRIPTION FOR SHARES; REFUND FOR CANCELED ORDERS. The
Distributor shall subscribe for the Shares of the Fund only for the purpose of
covering purchase orders already received by it or for the purpose of investment
for its own account. In the event that an order for the purchase of Shares is
placed with the Distributor by a customer or dealer and subsequently canceled,
the Distributor shall forthwith cancel the subscription for such Shares entered
on the books of the Fund and, if the Distributor has paid the Fund for such
Shares, shall be entitled to receive from the Fund in refund of such payment the
lesser of:
(a) the consideration received by the Fund for said Shares; or
(b) the Net Asset Value of such Shares at the time of cancellation by
the Distributor.
10. INDEMNIFICATION OF FUND. The Distributor agrees to indemnify the
Fund against any and all litigation and other legal proceedings of any kind or
nature and against any liability, judgment, cost or penalty imposed as a result
of such litigation or proceedings in any way arising out of or in connection
with the sale or distribution of the Shares of the Fund by the Distributor. In
the event of the threat or institution of any such litigation or legal
proceedings against the Fund, the Distributor shall defend such action on behalf
of the Fund at its own expense, and shall pay any such liability, judgment, cost
or penalty resulting therefrom, whether imposed by legal authority or agreed
upon by way of compromise and settlement; provided, however, that the
Distributor shall not be required to pay or reimburse the Fund for any
liability, judgment, cost or penalty incurred as a result of an omission to
supply information by the Fund to the Distributor, or to the Distributor by a
director, officer or employee of the
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Fund who is not an Interested Person of the Distributor (as defined in
Section 2(a)(19) of the 1940 Act and the rules, regulations and releases
relating thereto), unless the information so supplied or omitted was
available to the Distributor or the Fund's investment adviser without
recourse to the Fund or any such Interested Person of the Fund.
11. FREEDOM TO DEAL WITH THIRD PARTIES. The Distributor shall be
free to render to others services of a nature either similar to or different
from those rendered under this Agreement, except such as may impair its
performance of the services and duties to be rendered by it hereunder.
12. EFFECTIVE DATE. This Agreement shall become effective upon
conversion of the Fund to an open-end management investment company. Wherever
referred to in this Agreement, the vote or approval of the holders of a majority
of the outstanding Shares of the Fund or of a Class of Shares shall mean the
vote of 67% or more of such Shares if the holders of more than 50% of such
Shares are present in person or by proxy or the vote of more than 50% of such
Shares, whichever is less.
13. DURATION. Unless sooner terminated as hereinafter provided, this
Agreement shall continue in effect from year to year but only so long as such
continuance is specifically approved at least annually either (a) by the Board
of Directors of the Fund, including the specific approval of a majority of the
directors who are not Interested Persons of the Fund or of the Distributor and
who have no direct or indirect financial interest in the operation of the Plans,
or in any agreements relating to the Plans, cast in person at a meeting called
for the purpose of voting on such approval; or (b) by the vote of the holders of
a majority of the outstanding Shares of the Fund, provided that, if a majority
of the outstanding Shares of any Class approves this Agreement, this Agreement
shall continue in effect with respect to such approving Class whether or not the
shareholders of any other Class of the Fund have approved this Agreement.
14. TERMINATION. This Agreement may be terminated at any time
without the payment of any penalty by the vote of a majority of the members of
the Board of Directors of the Fund who are not Interested Persons of the Fund
and who have no direct or indirect financial interest in the operation of the
Plans or in any agreements relating to the Plans, or by the Distributor, upon
not more than 60 days' written notice to the other party. This Agreement may be
terminated with respect to a particular Class at any time without the payment of
any penalty by the vote of the holders of a majority of the outstanding Shares
of such Class, upon 60 days' written notice to the Distributor. This Agreement
shall automatically terminate in the event of its assignment.
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15. AMENDMENTS TO AGREEMENT. No material amendment to this Agreement
shall be effective until approved by the Distributor and by the vote of a
majority of the Board of Directors of the Fund who are not Interested Persons of
the Distributor.
16. NOTICES. Any notices under this Agreement shall be in writing,
addressed, delivered or mailed, postage prepaid, to the other party at such
address as such other party may designate in writing for the receipt of such
notice.
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IN WITNESS WHEREOF, the Fund and the Distributor have caused this
Agreement to be executed by their duly authorized officers as of the day and
year first above written.
THE XXXXX GROWTH FUND, INC.
By_____________________________________
Its___________________________________
U.S. GROWTH INVESTMENTS, INC.
By_____________________________________
Its___________________________________
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