DISTRIBUTION AGREEMENT
Agreement made as of the 8th day of July, 1999, by and between AXP Tax-Free
Money Fund, Inc. (the "Fund"), a Minnesota corporation, 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 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
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 develop 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 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's
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 or any of its affiliates, in the offering for sale or sale
of each class of the Fund's share.
(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 Four: 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 TAX-FREE MONEY FUND, INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇
Vice President
AMERICAN EXPRESS FINANCIAL ADVISORS INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Vice President
