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 make any statement in
3
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 and expenses (including the
costs of investigation or defending such claims, demands or liabilities and any
4
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 of the registration statement or prospectus then in effect or
of the initiation of any proceeding for that purpose;
5
(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 Capitol Funds must look solely to Capitol Funds Property belonging to
such class for the enforcement of any claims against Capitol Funds.
6
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
------------------------------
Name: X. Xxx Xxxxxx
Title: President and Chairman
of the Board
Accepted:
XXXXXXXX INC.
By: /s/ X. Xxxx Xxxxxx
------------------
Name: X. Xxxx Xxxxxx
Title: Senior Vice President
Dated as of : May 1, 1994
8
SCHEDULE I
Cash Reserves
Money Market Reserves
Treasury Reserves
Government Reserves
Municipal Reserves
Nations California Tax Exempt Reserves
Nations Asset Allocation Fund
Nations Capital Income Fund
Nations California Municipal Bond Fund
Nations Intermediate Bond Fund
Nations Blue Chip Fund
Nations Xxxxxxx Focused Equities Fund
Nations Xxxxxxx Growth & Income Fund
Nations International Equity Fund
Nations International Value Fund
Nations Emerging Markets Fund
Dated: May 1, 1994
Last Amended: August 19, 1999
9
