EXHIBIT 6(A)
DISTRIBUTION AGREEMENT
September 15, 1998
ND Capital, Inc.
0 Xxxxx Xxxx
Xxxxx, Xxxxx Xxxxxx 00000
Dear Sirs:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, Integrity Small-Cap Fund of Funds, Inc. (the
"Fund"), an open-end, 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, the Fund shall pay Capital the proceeds from any
contingent deferred sales charges imposed on the redemption of
Shares. In addition, Capital may receive dealer reallowances (up
to a maximum of 1% of the public offering price) and/or
distribution payments and/or service fees on purchases by the Fund
of mutual funds which are sold with a sales load and/or which have
a distribution plan and/or which pay services fees. ND Holdings,
Inc., shall provide Capital with any funds necessary to defray the
costs of sales commissions paid to dealers who sell Shares and to
reimburse Capital for any costs and expenses it incurs in
discharging its responsibilities under this Agreement.
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.
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 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) semiannual 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 Fund, (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.
2.4. The Fund shall provide Capital with any funds necessary to defray
the costs of service fees paid to dealers who render personal
service to shareholders and/or the maintenance of shareholder
accounts.
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
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, 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 no-
tify 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 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 innure
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 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.
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 September 15, 2000, and thereafter
shall continue automatically for successive annual periods ending on
September 15 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 Fund's Directors who
are not interested 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, neither such authorization by
such Directors 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.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the date first set forth herein.
INTEGRITY SMALL-CAP FUND OF FUNDS, INC.
By: /Xxxxxx X. Xxxxxxx/
Title: President
Date: September 15, 1998
Accepted:
ND CAPITAL, INC.
By: /Xxxxxx X. Xxxxxxx/
Title: President
Date: September 15, 1998
