DISTRIBUTION AGREEMENT
Agreement made as of the 13th day of November, 1996, by and between IDS
Tax-Exempt Bond Fund, Inc. (the "Corporation"), a Minnesota corporation, for and
on behalf of its underlying series fund: IDS Intermediate Tax-Exempt Fund (the
"Fund"); and American Express Financial Advisors Inc., a Delaware corporation.
Part One: DISTRIBUTION OF SECURITIES
(1) The Corporation covenants and agrees that, during the term of this agreement
and any renewal or extension, American Express Financial Advisors Inc. shall
have the exclusive right to act as principal underwriter for the Fund and to
offer for sale and to distribute either directly or through any affiliate any
and all shares of each class of common stock of the Fund.
(2) American Express Financial Advisors Inc. hereby covenants and agrees to act
as the principal underwriter of each class of common stock of the Fund during
the period of this agreement and agrees during such period to offer for sale
such common stock as long as such common stock remains available for sale,
unless American Express Financial Advisors Inc. 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.
(3) With respect to the offering for sale and sale of shares of each class of
common stock to be issued by the Fund, it is mutually understood and agreed that
such shares are to be sold on the following terms:
(a) All sales shall be made by means of an application, and every
application shall be subject to acceptance or rejection by the Corporation at
its principal place of business. Shares are to be sold for cash, payable at the
time the application and payment for such shares are received at the principal
place of business of the Corporation.
(b) No shares shall be sold at less than the asset value (computed in
the manner provided by the Fund's currently effective Prospectus or Statement of
Additional Information and the Investment Company Act of 1940, and rules
thereunder). The number of shares or fractional shares to be acquired by each
applicant shall be determined by dividing the amount of each accepted
application by the public offering price of one share of the capital stock of
the appropriate class as of the close of business on the day when the
application, together with payment, is received by the Corporation at its
principal place of business. The computation as to the number of shares and
fractional shares shall be carried to three decimal points of one share with the
computation being carried to the nearest 1/lOOOth of a share. If the day of
receipt of the application and payment is not a full business day, then the
asset value of the share for use in such computation shall be determined as of
the close of business on the next succeeding full business day. In the event of
a period of emergency, the computation of the asset value for the purpose of
determining the number of shares or fractional shares to be acquired by the
applicant 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,
and rules thereunder.
(4) The Corporation agrees to make prompt and reasonable effort to do any and
all things necessary, in the opinion of American Express Financial Advisors
Inc., 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
American Express Financial Advisors Inc. may from time to time designate in
order that the Fund's shares may be offered or sold in such jurisdictions.
(5) The Corporation agrees that it will furnish American Express Financial
Advisors Inc. with information with respect to the affairs and accounts of the
Fund, and in such form, as American Express Financial Advisors Inc. may from
time to time reasonably require and further agrees that American Express
Financial Advisors Inc., at all reasonable times, shall be permitted to inspect
the books and records of the Fund.
(6) American Express Financial Advisors Inc. or its agents may prepare or cause
to be prepared from time to time circulars, sales literature, broadcast
material, publicity data and other advertising material to be used in the sales
of shares of common stock issued by the Fund, including material which may be
deemed to be a prospectus under rules promulgated by the Securities and Exchange
Commission (each separate promotional piece is referred to as an "Item of
Soliciting Material"). At its option, American Express Financial Advisors Inc.
may submit any Item of Soliciting Material to the Corporation for its prior
approval. Unless a particular Item of Soliciting Material is approved in writing
by the Corporation prior to its use, American Express Financial Advisors Inc.
agrees to indemnify the Corporation and its directors and officers against any
and all claims, demands, liabilities and expenses which the Corporation or such
persons may incur arising out of or based upon the use of any Item of Soliciting
Material. The term "expenses" includes amounts paid in satisfaction of judgments
or in settlements. The foregoing right of indemnification shall be in addition
to any other rights to which the Corporation or any director or officer may be
entitled as a matter of law. Notwithstanding the foregoing, such indemnification
shall not be deemed to abrogate or diminish in any way any right or claim
American Express Financial Advisors Inc. may have against the Corporation or its
officers or directors in connection with the Fund's Registration Statement,
Prospectus, Statement of Additional Information or other information furnished
by or caused to be furnished by the Corporation.
(7) American Express Financial Advisors Inc. agrees to submit to the
Corporation each application for shares immediately after the receipt of such
application and payment therefor by American Express Financial Advisors Inc.
at its principal place or business.
(8) American Express Financial Advisors Inc. agrees to cause to be delivered
to each person submitting an application a current prospectus or circular in
the form required by the applicable federal laws or by the acts or statutes of
any applicable state, province or country.
(9) The Fund shall have the right to extend to shareholders of each class of
common stock the right to use the proceeds of any cash dividend paid by the Fund
to that shareholder to purchase shares of the same class at the net asset value
at the close of business upon the day of purchase, to the extent set forth in
the Fund's currently effective Prospectus or Statement of Additional
Information.
(10) Shares of each class of common stock of the Fund may be offered and sold at
their asset value to the shareholders of the same class of other funds in the
IDS MUTUAL FUND GROUP who wish to exchange their investments in shares of the
other funds in the IDS MUTUAL FUND GROUP to investments in shares of the Fund,
to the extent set forth in the Fund's currently effective Prospectus or
Statement of Additional Information, such asset value to be computed as of the
close of business on the day of sale of such shares of the Fund.
(11) American Express Financial Advisors Inc. and the Corporation 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 term of this
agreement.
Part Two: ALLOCATION OF EXPENSES
Except as provided by any other agreements between the parties, American Express
Financial Advisors Inc. covenants and agrees that during the period of this
agreement it will pay or cause or be paid all expenses incurred by American
Express Financial Advisors Inc., or any of its affiliates, in the offering for
sale or sale of each class of the Fund's shares that is subject to the terms of
this agreement.
Part Three: COMPENSATION
(1) It is covenanted and agreed that American Express Financial Advisors
Inc. shall be paid:
(i) for a class of shares imposing a front-end sales charge, by the
purchasers of shares in an amount equal to the difference between the total
amount received upon each sale of shares issued by the Fund and the asset value
of such shares at the time of such sale; and
(ii) for a class of shares imposing a deferred sales charge, by owners
of shares at the time the sales charge is imposed in an amount equal to any
deferred sales charge, as described in the Fund's prospectus.
Such sums as are received by the Corporation shall be received as Agent for
American Express Financial Advisors Inc. and shall be remitted to American
Express Financial Advisors Inc. as soon as practicable after receipt.
(2) The asset value of any share of each class of common stock of the Fund shall
be determined in the manner provided by the Fund's currently effective
Prospectus and Statement of Additional Information and the Investment Company
Act of 1940, and rules thereunder.
Part Four: MISCELLANEOUS
(1) American Express Financial Advisors Inc. 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 Corporation.
(2) American Express Financial Advisors Inc. 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 Corporation are or may be interested in American
Express Financial Advisors Inc. as directors, officers, shareholders
or otherwise; that directors, officers, shareholders or agents of American
Express Financial Advisors Inc. are or may be interested in the Corporation as
directors, officers, shareholders or otherwise; or that American Express
Financial Advisors Inc. is or may be interested in the Corporation as
shareholder or otherwise, provided, however, that neither American Express
Financial Advisors Inc. nor any officer or director of American Express
Financial Advisors Inc. or any officers or directors of the Corporation shall
sell to or buy from the Corporation any property or security other than a
security issued by the Corporation, except in accordance with a rule, regulation
or order of the United States 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 Corporation.
(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) American Express Financial Advisors Inc. agrees that no officer,
director or employee of American Express Financial Advisors Inc. will deal for
or on behalf of the Corporation with himself or herself as principal or agent,
or with any corporation or partnership in which he or she may have a financial
interest, except that this shall not prohibit:
(a) Officers, directors and employees of American Express Financial
Advisors Inc. from having a financial interest in the Corporation, the Fund or
in American Express Financial Advisors Inc;
(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 American Express Financial Advisors Inc., provided such transactions are
handled in the capacity of broker only and provided commissions charged do not
exceed customary brokerage charges for such services; or
(c) Transactions with the Fund by a broker-dealer affiliate of American
Express Financial Advisors Inc. if allowed by rule or order of the Securities
and Exchange Commission and if made pursuant to procedures adopted by the Board
of Directors.
(7) American Express Financial Advisors Inc. agrees that, except as otherwise
provided in this agreement, or as may be permitted consistent with the use of a
broker-dealer affiliate of American Express Financial Advisors Inc. 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.
Part Five: TERMINATION
(1) This agreement shall continue from year to year unless and until terminated
by American Express Financial Advisors Inc. or the Corporation, except that such
continuance shall be specifically approved at least annually by a vote of a
majority of the Board of Directors of the Corporation 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 Corporation. As used in this paragraph, the term
"interested person" shall have the meaning as set forth in the Investment
Company Act of 1940, as amended.
(2) This agreement may be terminated by American Express Financial Advisors
Inc. or the Corporation 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
Investment Company Act of 1940, as amended.
IN WITNESS WHEREOF, The parties hereto have executed the foregoing agreement on
the date and year first above written.
IDS TAX-EXEMPT BOND FUND, INC.
IDS INTERMEDIATE TAX-EXEMPT FUND
By _/s/ Xxxxxx X. Ogg_________________
Xxxxxx X. Xxx
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By _/s/ Xxxxxxx X. Hogan______________
Xxxxxxx X. Xxxxx
Vice President
