DISTRIBUTION AGREEMENT
Xxxxxxxx Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxxxxxxx 00000
Gentlemen:
This is to confirm that, in consideration of the agreements hereinafter
contained, the undersigned, The Capitol Mutual Funds ("Capitol Funds"), a
Massachusetts business trust, has agreed that Xxxxxxxx Inc. (the "Distributor")
shall be, for the period of this Agreement, the exclusive distributor of the
units of beneficial interest in all classes of shares ("Shares") of the
investment portfolios of Capitol Funds listed on Schedule I (individually, a
"Fund" and collectively the "Funds"). Absent written notification to the
contrary by either Capitol Funds or the Distributor, each new investment
portfolio of Capitol Funds established in the future shall automatically become
a "Fund" for all purposes hereunder and shares of each new class established in
the future shall automatically become "Shares" for all purposes hereunder as if
set forth on Schedule I.
1. Services as Distributor.
------------------------
1.1 The Distributor will act as agent for the distribution of Shares in
accordance with the instructions of Capitol Funds' Board of Trustees and Capitol
Funds' registration statement and prospectus then in effect under the Securities
Act of 1933, as amended, and will transmit promptly any orders received by it
for the purchase or redemption of Shares to Capitol Funds or its transfer agent.
1.2 The Distributor agrees to use appropriate efforts to solicit orders
for the sale of Shares and will undertake such advertising and promotion as it
believes appropriate in connection with such solicitation. Capitol Funds
understands that the Distributor is and may in the future be the distributor of
shares of other investment company portfolios ("Portfolios") including
Portfolios having investment objectives similar to those of the Funds. Capitol
Funds further understands that existing and future investors in the Funds may
invest in shares of such other Portfolios. Capitol Funds agrees that the
Distributor's duties to such Portfolios shall not be deemed in conflict with its
duties to Capitol Funds under this paragraph 1.2.
1.3 The Distributor shall, at its own expense, finance such activities
as it deems reasonable and which are primarily intended to result in the sale of
Shares, including, but not limited to, advertising, compensation of
underwriters, dealers and sales personnel, the printing and mailing of
prospectuses to other than current shareholders, and the printing and mailing of
sales literature. The Distributor shall be responsible for reviewing and
providing advice and counsel on all sales literature (e.g., advertisements,
brochures and shareholder communications) with respect to each of the Funds. In
addition, the Distributor will provide one or more persons, during normal
business hours, to respond to telephone questions with respect to the Funds.
1
1.4 All activities by the Distributor and its agents and employees as
distributor of Shares shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations made or
adopted pursuant to the Investment Company Act of 1940 ("1940 Act") by the
Securities and Exchange Commission (the "SEC") or any securities association
registered under the Securities Exchange Act of 1934.
1.5 Whenever in their judgment such action is warranted by unusual
market, economic or political conditions, or by other circumstances of any kind,
Capitol Funds' officers may decline to accept any orders for, or make any sales
of Shares until such time as those officers deem it advisable to accept such
orders and to make such sales.
1.6 Capitol Funds agrees at its own expense to execute any and all
documents and to furnish any and all information and otherwise to take all
actions that may be reasonably necessary in connection with the registration or
qualification of Shares for sale in such states as the Distributor may designate
to Capitol Funds and Capitol Funds may approve, and Capitol Funds shall pay all
fees and other expenses incurred in connection with such registration or
qualification.
1.7 Capitol Funds shall furnish from time to time, for use in
connection with the sale of Shares, such information with respect to the Funds
and Shares as the Distributor may reasonably request; and Capitol Funds warrants
that the statements contained in any such information shall fairly show or
represent what they purport to show or represent. Capitol Funds shall also
furnish the Distributor upon request with: (a) audited annual and unaudited
semi-annual statements of Capitol Funds' books and accounts with respect to each
Fund, and, (b) from time to time such additional information regarding the
Funds' financial condition as the Distributor may reasonably request.
1.8 The Distributor may be compensated or reimbursed for all or a
portion of the expenses described above to the extent permitted by a
distribution plan adopted by Capitol Funds on behalf of a Fund pursuant to Rule
12b-1 under the 1940 Act. No provision of this Agreement shall be deemed to
prohibit any payments by a Fund to the Distributor or by a Fund or the
Distributor to investment dealers, banks or other financial institutions through
whom shares of the Fund are sold where such payments are made under a
distribution plan adopted by Capitol Funds on behalf of such Fund pursuant to
Rule 12b-1 under the 1940 Act. In addition, Capitol Funds shall pay to the
Distributor the proceeds from any contingent deferred sales charge imposed on
the redemption of the shares as specified in the Fund's Registration Statement.
1.9 The Distributor will execute and deliver agreements with
broker/dealers, financial institutions and other industry professionals based on
the forms attached hereto or based on the additional forms of agreement approved
from time to time by Capitol Funds' Board of Trustees with respect to the
various classes of shares of the Funds, including but not limited to forms of
sales support agreements and shareholder servicing agreements approved in
connection with a distribution and/or servicing plan approved in accordance with
Rule 12b-1 under the 1940 Act.
2
2. Representations; Indemnification.
---------------------------------
2.1 Capitol Funds represents to the Distributor that all registration
statements and prospectuses filed by Capitol Funds with the SEC under the
Securities Act of 1933, as amended ("Act"), with respect to Shares have been
prepared in conformity with the requirements of said Act and rules and
regulations of the SEC thereunder. As used in this Agreement, the terms
"registration statement" and "prospectus" shall mean any registration statement
and then current prospectus (together with any related then current statement of
additional information) filed with the SEC with respect to Shares, and any
amendments and supplements thereto which at any time shall have been filed
therewith. Capitol Funds represents and warrants to the Distributor that any
registration statement and prospectus, when such registration statement becomes
effective, will contain all statements required to be stated therein in
conformity with said Act and the rules and regulations of the SEC; that all
statements of fact contained in any such registration statement and prospectus
will be true and correct when such registration statement and prospectus become
effective; and that neither any registration statement nor any prospectus when
any registration statement becomes effective will include an untrue statement of
a 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. Capitol Funds 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 which in light of future
developments, may, in the opinion of Capitol Funds' counsel, be necessary or
advisable. Capitol Funds shall promptly notify the Distributor of any advice
given to it by Capitol Funds' counsel regarding the necessity or advisability so
to amend or supplement such registration statement or prospectus. If Capitol
Funds shall not propose such amendment or amendments and/or supplement or
supplements within fifteen days after receipt by Capitol Funds of a written
request from the Distributor to do so, the Distributor may, at its option,
terminate this Agreement. Capitol Funds shall not file any amendment to any
registration statement or supplement to any prospectus without giving the
Distributor reasonable notice thereof in advance; provided, however, that
nothing contained in this Agreement shall in any way limit Capitol Funds' right
to file at any time such amendments to any registration statement and/or
supplements to any prospectus, of whatever character, as Capitol Funds may deem
advisable, such right being in all respects absolute and unconditional.
2.2 Capitol Funds authorizes the Distributor and dealers to use any
prospectus in the form furnished from time to time in connection with the sale
of Shares and represented by Capitol Funds as being the then current form of
prospectus. Capitol Funds agrees to indemnify, defend and hold the Distributor,
its several officers and directors, and any person who controls the Distributor
within the meaning of Section 15 of the 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 the Distributor, its officers and
directors, or any such controlling person, may incur under the Act or under
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 or any prospectus 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 or prospectus or necessary to
3
make any statement in such documents not misleading; provided, however, that
Capitol Funds' agreement to indemnify the Distributor, its officers or
directors, and any such controlling person shall not be deemed to cover any
claims, demands, liabilities or expenses arising out of any untrue statement or
alleged untrue statement or omission or alleged omission made in any
registration statement or prospectus or in any financial or other statements, in
reliance upon and in conformity with, any information furnished to Capitol Funds
by the Distributor or any affiliate thereof and used in the preparation thereof;
and further provided that Capitol Funds' agreement to indemnify the Distributor
and Capitol Funds' representations and warranties herein set forth shall not be
deemed to cover any liability to Capitol Funds or its shareholders to which the
Distributor would otherwise be subject by reason of willful misfeasance, bad
faith or gross negligence in the performance of its duties, or by reason of the
Distributor's reckless disregard of its obligations and duties under this
Agreement. Capitol Funds' agreement to indemnify the Distributor, its officers
and directors, and any such controlling person, as aforesaid, is expressly
conditioned upon Capitol Funds' being notified of any action brought against the
Distributor, its officers or directors, or any such controlling person, such
notification to be given by letter or by telegram addressed to Capitol Funds at
its principal office and sent to Capitol Funds by the person against whom such
action is brought, within a reasonable period of time after the summons or other
first legal process shall have been served. The failure to so notify Capitol
Funds of any such action shall not relieve Capitol Funds from any liability
which Capitol Funds may have to the person against whom such action is brought
by reason of any such untrue, or allegedly untrue, statement or omission, or
alleged omission, otherwise than on account of Capitol Funds' indemnity
agreement contained in this paragraph 2.2. Capitol Funds will be entitled to
assume the defense of any suit brought to enforce any such claim, demand or
liability, but, in such case, such defense shall be conducted by counsel of good
standing chosen by Capitol Funds and approved by the Distributor, which approval
shall not unreasonably be withheld. In the event Capitol Funds elects to assume
the defense of any such suit and retain counsel of good standing approved by the
Distributor, the defendant or defendants in such suit shall bear the fees and
expenses of any additional counsel retained by any of them; but in case Capitol
Funds does not elect to assume the defense of any such suit, or in case the
Distributor reasonably does not approve of counsel chosen by Capitol Funds,
Capitol Funds will reimburse the Distributor, its officers and directors, or the
controlling person or persons named as defendant or defendants in such suit, for
the fees and expenses of any counsel retained by the Distributor or them.
Capitol Funds' indemnification agreement contained in this paragraph 2.2 and
Capitol Funds' 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 the Distributor, its officers and directors, or any controlling
person, and shall survive the delivery of any Shares. This agreement of
indemnity will inure exclusively to the Distributor'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. Capitol Funds agrees
promptly to notify the Distributor of the commencement of any litigation or
proceedings against Capitol Funds or any of its officers or trustees in
connection with the issue and sale of any Shares.
2.3 The Distributor agrees to indemnify, defend and hold Capitol Funds,
its several officers and trustees, and any person who controls Capitol Funds
within the meaning of Section 15 of the Act free and harmless from and against
any and all claims, demands, liabilities
4
and expenses (including the costs of investigation or defending such claims,
demands or liabilities and any counsel fees incurred in connection therewith)
which Capitol Funds, its officers or trustees or any such controlling person,
may incur under the Act or under common law or otherwise, but only to the extent
that such liability or expense incurred by Capitol Funds, its officers or
trustees, or such controlling person resulting from such claims or demands,
shall arise out of or be based upon any untrue, or alleged untrue, statement of
a material fact contained in information furnished by the Distributor or any
affiliate thereof to Capitol Funds or its counsel and used in Capitol Funds'
registration statement or corresponding statements made in the prospectus, 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 by the Distributor
or any affiliate thereof to Capitol Funds or its counsel required to be stated
in such answers or necessary to make such information not misleading. The
Distributor's agreement to indemnify Capitol Funds, its officers and trustees,
and any such controlling person, as aforesaid, is expressly conditioned upon the
Distributor's being notified of any action brought against Capitol Funds, its
officers or trustees, or any such controlling person, such notification to be
given by letter or telegram addressed to the Distributor at its principal office
in Little Rock, Arkansas and sent to the Distributor by the person against whom
such action is brought, within a reasonable period of time after the summons or
other first legal process shall have been served. The Distributor shall have the
right to control the defense of such action, with counsel of its own choosing,
satisfactory to Capitol Funds, if such action is based solely upon such alleged
misstatement or omission on the Distributor's part or any affiliate thereof, and
in any other event Capitol Funds, its officers or trustees or such controlling
person shall each have the right to participate in the defense or preparation of
the defense of any such action. The failure so to notify the Distributor of any
such action shall not relieve the Distributor or any affiliate thereof from any
liability which the Distributor or any affiliate thereof may have to Capitol
Funds, its officers or trustees, 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 the Distributor's indemnity agreement contained in
this paragraph 2.3.
2.4 No Shares shall be offered by either the Distributor or Capitol
Funds under any of the provisions of this Agreement and no orders for the
purchase or sale of Shares hereunder shall be accepted by Capitol Funds 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 Act, or if and so long as a current prospectus, as required by Section 10(b)
of said Act, as amended, is not on file with the SEC; provided, however, that
nothing contained in this paragraph 2.4 shall in any way restrict or have any
application to or bearing upon Capitol Funds' obligation to repurchase Shares
from any shareholder in accordance with the provisions of Capitol Funds'
prospectus or Declaration of Trust.
2.5 Capitol Funds agrees to advise the Distributor as soon as
reasonably practical:
(a) of any request by the SEC for amendments to the registration
statement or prospectus then in effect;
(b) of the issuance by the SEC of any stop order suspending the
effectiveness
5
of the registration statement or prospectus then in effect or of 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 or prospectus then in
effect or which requires the making of a change in such registration statement
or prospectus in order to make the statements therein not misleading;
(d) of all actions of the SEC with respect to any amendment to any
registration statement or prospectus which may from time to time be filed with
the SEC; and
(e) if a current prospectus is not on file with the SEC.
For purposes of this section, informal requests by or acts of the Staff of
the SEC shall not be deemed actions of or requests by the SEC.
3. Confidentiality.
----------------
The Distributor agrees on behalf of itself and its employees to treat
confidentially and as proprietary information of Capitol Funds, all records and
other information relative to the Funds and/or Capitol Funds and its prior,
present or potential shareholders, and not to use such records and information
for any purpose other than performance of its responsibilities and duties
hereunder, except after prior notification to and approval in writing by Capitol
Funds, which approval shall not be unreasonably withheld and may not be withheld
where the Distributor may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by Capitol Funds.
4. Limitations of Liability.
-------------------------
4.1 Except as provided in paragraph 2.3, the Distributor shall not be
liable for any error of judgment or mistake or law or for any loss suffered by
Capitol Funds or any Fund in connection with matters to which this agreement
relates, except a loss resulting from willful misfeasance, bad faith or gross
negligence on its part in the performance of its duties or from reckless
disregard of its obligations and duties under this agreement.
4.2 The names "The Capitol Mutual Funds" and "Trustees of The Capitol
Mutual Funds" refer respectively to the Trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under an
Agreement and Declaration of Trust dated January 22, 1990, which is hereby
referred to and a copy of which is on file at the office of the State Secretary
of the Commonwealth of Massachusetts and at the principal office of Capitol
Funds. The obligations of "The Capitol Mutual Funds" entered into, in the name
or on behalf thereof, by any of Capitol Funds' representatives or agents are
made not individually, but in such capacities, and are not binding upon any of
Capitol Funds' Shareholders, or representatives of Capitol Funds personally, but
bind only Capitol Funds Property, and all persons dealing with any class of
Shares of Capitol Funds Property, and all persons dealing with any class of
Shares of
6
Capitol Funds must look solely to Capitol Funds Property belonging to
such class for the enforcement of any claims against Capitol Funds.
5. Term.
-----
This agreement shall become effective on the date of its execution and,
unless sooner terminated as provided herein, shall continue thereafter with
respect to each Fund for successive annual periods, provided such continuance is
specifically approved at least annually by (i) Capitol Funds' Board of Trustees
or (ii) by a vote of a majority (as defined in the 1940 Act) of the outstanding
voting securities of the Fund, provided that in either event the continuance is
also approved by the majority of Capitol Funds' Trustees who are not parties to
this agreement or interested persons (as defined in the 1940 Act) of any such
party, by vote cast in person at a meeting called for the purpose of voting on
such approval. This agreement is not assignable and is terminable with respect
to a Fund, without penalty, on not less than sixty days' notice, by Capitol
Funds' Board of Trustees, by vote of a majority (as defined in the 1940 Act) of
the outstanding voting securities of such Fund, or by the Distributor. This
agreement will also terminate automatically in the event of its assignment (as
defined in the 1940 Act).
6. Miscellaneous.
--------------
6.1 No provision of this Agreement may be changed, waived, discharged
or terminated orally, but only by an instrument in writing signed by the party
against which an enforcement of the change, waiver, discharge or termination is
sought.
6.2 This agreement shall be governed by the laws of the State of
Arkansas.
Please confirm that the foregoing is in accordance with your
understanding by indicating your acceptance hereof at the place indicated below,
whereupon it shall become a binding agreement between us.
7
Yours very truly,
THE CAPITOL MUTUAL FUNDS
By: /s/ X. Xxx Xxxxxx
---------------------------------
X. Xxx Xxxxxx
President and Chairman of the Board
Accepted:
XXXXXXXX INC.
By: /s/ X. Xxxx Xxxxxx
-------------------------------
X. Xxxx Xxxxxx
Senior Vice President
Dated as of : May 1, 1994
8
SCHEDULE I
Nations Cash Reserves
Nations Money Market Reserves
Nations Treasury Reserves
Nations Government Reserves
Nations Municipal Reserves
Nations California Tax Exempt Reserves
Nations Convertible Securities Fund
Nations California Municipal Bond Fund
Nations Intermediate Bond Fund
Nations Blue Chip Fund
Nations International Equity Fund
Nations International Value Fund
Nations Emerging Markets Fund
Dated: May 1, 1994
Last Amended: June 8, 2001
9
