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CAPSTONE ASSET PLANNING COMPANY
0000 XXX XXXXXX, XXXXX 0000
XXXXXXX, XXXXX 00000
000-000-0000
000-000-0000
SELLING GROUP AGREEMENT
Ladies/Gentlemen:
We invite you to participate in the distribution of the shares of any open-end
investment companies (herein collectively referred to as the "shares"), of which
we are or may become the principal underwriter (herein collectively referred to
as the "Funds" and individually as a "Fund"), subject to the following terms:
1. You agree to use your best efforts in the development and promotion of
shares of the Funds. In all sales of shares of the Funds to the public, you
shall act as dealer for your own account, and in no transaction shall you
have any authority to act as agent for the Fund or for us.
2. Orders for the purchase of shares of a Fund will be accepted by us only at
its public offering price (net asset value plus the applicable sales
commission, if any) described in the Fund's then current prospectus and in
accordance with the terms and conditions set forth in the prospectus. You
will forward to us the orders in accordance with our procedures then in
effect.
3. All orders are subject to acceptance or rejection by us and become
effective only upon confirmation by us. We reserve the right not to accept
any specific order for the purchase of shares. We will not accept a
conditional order.
4. Payment for shares purchased from us must be received by us within five
business days after the acceptance of your order or such shorter time as
may be required by law. If such payment is not so received, we reserve the
right, without notice, forthwith to cancel the sale or, at our option, to
sell the shares ordered by you back to the Fund, in which latter case you
may be held responsible for any loss, including loss of profit, suffered by
us and/or the Fund resulting from your failure to make the aforesaid
payment. Where sales of any Fund shares are contingent upon the Fund's
receipt of funds in payment therefor, you will forward promptly to us any
purchase orders and payments received by you from investors.
5. You shall purchase shares only from us or from your customers. If you
purchase shares from us, all such purchases shall be made only to cover
orders received by you from customers or for your own bona fide investment.
If you purchase shares from your customers, you shall pay such customers
not less than the applicable redemption price as established by the then
current prospectus.
6. You shall sell shares only: (a) to customers at the applicable public
offering price; and (b) to us as agent for the Fund at the repurchase
price. In such a sale to us, you may act either as principal for your own
account or as agent for your customer. If you act as agent for your
customer in selling shares to us, you agree not to charge your customer
more than a fair commission for handling the transaction.
7. You shall not withhold placing with us orders received from your customers
so as to profit yourself as a result of such withholding; e.g., by a change
in the net asset value from that used in determining the public offering
price to your customers.
8. Unless at the time of transmitting an order you advise us to the contrary,
we may consider the order to be the total holding of the investor and
assume that the investor is not entitled to any reduction in sales price
beyond that accorded to the amount of the purchase as determined by the
schedule set forth in the then current prospectus.
9. We shall pay to you a commission on each order solicited by you and
accepted by us equal to the amount calculated pursuant to the commission
schedule in effect on the day such order is accepted. We may amend such
schedule from time to time by providing written notice of amendment to you.
You shall not share or rebate any portion of such commissions or otherwise
grant any concessions, discounts or other allowances to any person who is
not a broker or dealer actually engaged in the investment banking or
securities business. No commission will be payable with respect to a
purchase of shares involving the reinvestment of income dividends and
capital gain distributions.
10. If any shares sold pursuant to an order solicited by you under the terms of
this Agreement are redeemed by any of the Funds (including redemptions
resulting from an exchange for shares of another investment company) or are
repurchased by us as agent for the Fund or are tendered to a Fund for
redemption within seven business days after the confirmation to you of the
original purchase order for such shares, you shall pay forthwith to us the
full amount of the commission allowed to you on the original sale, provided
we notify you of such repurchase or redemption within ten days of the date
upon which written redemption requests and, if applicable, share
certificates are delivered to us or to the Fund.
11. (a) To the extent you provide distribution and shareholder services to
shareholders of any Fund which has adopted a Service and Distribution Plan
("12b-1 Plan") pursuant to Rule 12b-1 of the Investment Company Act of 1940
(the "Act"), we shall pay you a fee, as established by the Board of
Directors or Trustees and stated in the then current Fund prospectus, based
upon the average net asset value of Fund shares for which you are the
dealer of record or holder of record, or owned by shareholders with whom
you have a servicing relationship. These distribution and shareholder
services may include, among other items, services in connection with the
distribution of Fund shares to your clients; answering client inquiries
about the Fund; assisting clients in changing dividend options, account
designations and addresses; performance of sub-accounting; establishing and
maintaining shareholder accounts and records; processing purchase and
redemption transactions; investing client account cash balances
automatically in shares of the Fund; providing periodic statements with
those of other transactions and balances in the client's other accounts
serviced by you; arranging for bank wires; and such other information and
services as may be requested, to the extent permitted by applicable
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statute, rule or regulation. You shall provide such office space and
equipment, telephone facilities and personnel as is necessary or beneficial
for providing information and services to shareholders of the Fund, and to
assist you in servicing accounts of clients. You shall transmit promptly to
clients all communications sent to you for transmittal to clients by or on
behalf of the Fund, us or the Fund's investment adviser, custodian or
transfer or dividend disbursing agent.
(b) You shall furnish us with such information as shall reasonably be
requested by us or by directors or trustees of the Fund with respect to
fees paid to you pursuant to this Section. It is our obligation to furnish
to the directors or trustees, for their review, (1) on a quarterly basis, a
written report of the amounts expended under this Section, and the purposes
for which such expenditures were made, and (2) on an annual basis, such
information as may be reasonably necessary to make an informed
determination as to whether the 12b-1 Plan should be continued.
(c) The provisions of this Section shall continue in full force and effect
(1) from year to year only so long as such continuance is specifically
approved at least annually by vote of the Fund's Board of Director or
Trustees, and of the directors or trustees who are not "interested persons"
of the Fund as defined in the Act and have no direct or indirect financial
interest in the 12b-1 Plan or in any agreements related to the 12b-1 Plan,
cast in person at a meeting called for the purpose of voting on the 12b-1
Plan or this Section, and (2) only so long as the Fund's Distribution
Agreement with us or this Agreement remains in effect. The provisions of
this Section may be terminated at any time, without the payment of any
penalty, by vote of the directors or trustees, or by vote of a majority of
the Fund's outstanding voting securities, and shall be terminated
immediately in the event of assignment as that term is defined in the Act.
The provisions of the 12b-1 Plan and the Distribution Agreement between the
Fund and us, insofar as they relate to this Section, are incorporated
herein by reference. The 12b-1 Plans in effect on the date of this
Agreement are substantially in the form set forth as Exhibit A hereto.
12. You represent that (check one):
(a) You are a member of the National Association of Securities Dealers,
Inc. ("NASD") and agree to maintain membership in the NASD. You agree to
abide by all the rules and regulations of the Securities and Exchange
Commission and the NASD which are binding upon underwriters and dealers in
the distribution of the securities of open-end investment companies,
including without limitation, Section 26 of Article III of the NASD Rules
of Fair Practice, all of which are incorporated herein as if set forth in
full. You shall comply with all applicable state and Federal laws and the
rules and regulations of authorized regulatory agencies. You will not sell
or offer for sale shares of any Fund in any state where (i) you are not
qualified to act as a dealer or (ii) the shares are not qualified for sale
under the Blue Sky laws and regulations for such state, except for states
in which they are exempt from qualification. You agree to notify us
immediately if your license or registration to act as a broker-dealer is
revoked or suspended by any Federal, self-regulatory or state agency; or
(b) You are a broker or dealer in a country other than the United States
who is not eligible for membership in the NASD (or any other registered
securities association) and, as a condition of your receipt of commissions
hereunder with respect to transactions in Fund shares, you agree that, in
making sales to purchasers within the United States of Fund shares as to
which commissions are paid to you hereunder, you will conform, to the same
extent as if you were an NASD member, to the provisions of paragraphs (a)
and (b) of Section 25 of the NASD Rules of Fair Practice, which paragraphs
are attached hereto and incorporated herein.
13. Stock certificates for shares sold to you shall be issued only if
specifically requested.
14. Each Fund reserves the right in its discretion, and we reserve the right in
our discretion, without notice, to suspend sales or withdraw the offering
of shares entirely. We reserve the right, without notice, to amend, modify
or cancel this Agreement.
15. We may cooperate with other broker-dealers who are licensed members of the
NASD, registered with the SEC and duly licensed by the appropriate
regulatory agency of each state in which they will solicit orders to
purchase shares of the Funds and with qualified broker-dealers in other
countries. Such other broker-dealers may be employed by us on terms and
conditions identical or similar to this Agreement and to that extent such
other broker-dealers shall compete with you in the sale of shares.
16. This Agreement shall become effective as of the date when it is executed
and dated by you below. After this Agreement becomes effective, either
party may terminate it at any time for any reason by giving 30 days'
written notice to the other party. This Agreement shall automatically
terminate at the first occurrence of any of the following events: (a) the
Registration Statement shall cease to be effective; (b) the Fund shall be
dissolved or liquidated; or (c) your license or registration to act as a
broker-dealer shall be revoked or suspended by any Federal, self-regulatory
or state agency, or, with respect to a firm that has checked paragraph
12(b), above, by any equivalent non-United States regulatory organization.
17. Any and all notices or other communications required or permitted under
this Agreement shall be in writing and shall be delivered at or mailed to
you at the address specified below and to us at Capstone Asset Planning
Company - Compliance Dept., 0000 Xxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000. Either party may change the address to which notices are to be
delivered to it by providing the other party with written notice of such
change of address. Any notice required or permitted under this Agreement
shall not be deemed given until actual receipt.
18. This Agreement shall not be assigned by either party without the prior
written consent of the other party.
19. This Agreement shall be construed and enforced in accordance with the laws
of the State of Texas without giving effect to conflict of laws.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first below written.
CAPSTONE ASSET PLANNING COMPANY
By
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President
Accepted and Agreed to this ____________ day ___________ of ______, 19___.
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(Firm)
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(Firm's Tax Identification Number)
By:
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Name:
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Title:
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Address:
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Telephone:
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EXHIBIT A
FORM OF 12b-1 PLANS
THE 12b-1 PLANS ADOPTED BY FUNDS IN THE CAPSTONE GROUP WITH SUCH PLANS ARE
SUBSTANTIALLY IN THE FOLLOWING FORM:
SERVICE AND DISTRIBUTION PLAN
INTRODUCTION: It has been determined that the Fund will pay for certain costs
and expenses incurred in connection with the distribution of its shares and
servicing of its shareholders and adopt the Service and Distribution Plan (the
"Plan") set forth herein pursuant to Rule 12b-1 under the Investment Company Act
of 1940 (the "Act").
The Board of Directors, in considering whether the Fund should implement the
Plan, has requested and evaluated such information as it deemed necessary to
make an informed determination as to whether the Plan should be implemented and
has considered such pertinent factors as it deemed necessary to form the basis
for a decision to use assets of the Fund for such purposes.
In voting to approve the implementation of the Plan, the directors have
concluded, in the exercise of their reasonable business judgment and in light of
their respective fiduciary duties, that there is a reasonable likelihood that
the Plan will benefit the Fund and its existing and future shareholders.
THE PLAN: The material aspects of the financing by the Fund of distribution
expenses to be incurred in connection with securities of which it is the issuer
are as follows:
1. The Fund will reimburse Capstone Asset Planning Company ("CAPCO") for costs
and expenses incurred in connection with the distribution and marketing of
shares of the Fund and servicing of Fund shareholders. Such distribution
and servicing costs and expenses may include: (1) printing and advertising
expenses; (2) payments to employees or agents of CAPCO who engage in or
support distribution of the Fund's shares, including salary, commissions,
travel and related expenses; (3) the costs of preparing, printing and
distributing prospectuses and reports to prospective investors; (4)
expenses of organizing and conducting sales seminars; (5) expenses related
to selling and servicing efforts, including processing new account
applications, transmitting customer transaction information to the Fund's
transfer agent and answering questions of shareholders; (6) payments of
fees to one or more broker-dealers (which may include CAPCO itself),
financial institutions or other industry professionals, such as investment
advisers, accountants and estate planning firms (severally, a "Service
Organization"), in respect of the average daily value of the Fund's
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shares owned by shareholders for whom the Service Organization is the
dealer of record or holder of record, or owned by shareholders with whom
the Service Organization has a servicing relationship; (7) costs and
expenses incurred in implementing and operating the Plan; and (8) such
other similar services as the Fund's Board of Directors determines to be
reasonably calculated to result in the sale of Fund shares.
CAPCO will be reimbursed monthly for such costs, expenses or payments at an
annual rate of up to but not more than ______% of the average daily net
assets of the Fund. Any expense payable hereunder may be carried forward
for reimbursement for up to twelve months beyond the date in which it is
incurred, subject always to the limit that not more than ______% of the
Fund's average daily net assets may be used in any month to pay expenses
pursuant to the Plan. The Fund shall incur no interest or carrying charges
for expenses carried forward. In the event the Plan is terminated as herein
provided, the Fund shall have no liability for expenses that were not
reimbursed as of the date of termination.
2. CAPCO may periodically pay to one or more Service Organizations (which may
include CAPCO itself) a fee in respect of the Fund's shares owned by
shareholders for whom the Service Organizations are the dealers of record
or holders of record, or owned by shareholders with whom the Service
Organizations have servicing relationships. Such fees will be computed
daily and paid quarterly by CAPCO at an annual rate not exceeding ______%
of the average net asset value of the Fund's shares owned by shareholders
for whom the Service Organizations are the dealers of record or holders of
record, or owned by shareholders with whom the Service Organizations have
servicing relationships.
The payment to a Service Organization is subject to compliance by the
Service Organization with the terms of a Selling Group Agreement between
the Service Organization and CAPCO (the "Agreement"), the form of which is
attached hereto as Exhibit A. If a shareholder of the Fund ceases to be a
client of a Service Organization that has entered into an Agreement with
CAPCO, but continues to hold shares of the Fund, CAPCO will be entitled to
receive a similar payment in respect of the servicing provided to such
investors. For the purposes of determining the fees payable under the Plan,
the average daily net asset value of the Fund's shares shall be computed in
the manner specified in the Fund's current prospectus for the computation
of the value of the Fund's net asset value per share.
3. The Board of Directors shall be provided, at least quarterly, with a
written report of all amounts expended pursuant to the Plan. The report
shall state the purposes for which the amounts were expended.
4. The Plan will become effective immediately upon approval by (a) a majority
of the outstanding voting securities of the Fund, and (b) a majority of the
Board of Directors, including a majority of the directors who are not
"interested persons" (as defined in the Act) of the Fund and have no direct
or indirect financial interest in the operation of the Plan or in any
agreements entered into in connection with the Plan (the "Plan Directors"),
pursuant to a vote cast in person at a meeting called for the purpose of
voting on the approval of the Plan. If additional series are added to the
Fund, the Plan will become effective as to each such series upon approval
by (a) a majority of the outstanding voting securities of such series, and
(b) a majority of the Board of Directors, including a majority of the Plan
Directors, pursuant to a vote cast in person at a meeting called for such
purpose.
5. The Plan shall continue for a period of one year from its effective date,
unless earlier terminated in accordance with its terms, and thereafter
shall continue automatically for successive annual periods, provided such
continuance is approved by a majority of the Board of Directors, including
a majority of the Plan Directors pursuant to a vote cast in person at a
meeting called for the purpose of voting on the continuance of the Plan.
6. The Plan may be amended at any time by the Board of Directors provided that
(a) any amendment to increase materially the costs which the Fund or a
series may bear for distribution pursuant to the Plan shall be effective
only upon approval by a vote of a majority of the outstanding voting
securities of the respective series of the Fund and (b) any material
amendments of the terms of the Plan shall become effective only upon
approval as provided in paragraph 4(b) hereof.
7. The Plan is terminable without penalty at any time with respect to any
series of the Fund by (a) vote of a majority of the Plan Directors, or (b)
vote of a majority of the outstanding voting securities of the respective
series of the Fund.
8. Any person authorized to direct the disposition of monies paid or payable
by the Fund pursuant to the Plan or any agreement entered into in
connection with the Plan shall provide to the Board of Directors, and the
Board of Directors shall review, at least quarterly, a written report of
the amounts expended pursuant to the Plan and the purposes for which such
expenditures were made.
9. While the Plan is in effect, the selection and nomination of directors who
are not "interested persons" (as defined in the Act) of the Fund shall be
committed to the discretion of the directors who are not "interested
persons."
10. The Fund shall preserve copies of the Plan, any agreement in connection
with the Plan, and any report made pursuant to paragraph 8 hereof, for a
period of not less than six years from the date of the Plan or such
agreement or report, the first two years in an easily accessible place.
