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 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.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the day and year first below written.
CAPSTONE ASSET PLANNING COMPANY
By ______________________________________________
President
Accepted and Agreed to this ____ day of __________, 19__.
________________________________________________________________________________
(Firm)
________________________________________________________________________________
(Firm's Tax Identification Number)
By:_____________________________________________________________________________
Name:___________________________________________________________________________
Title:__________________________________________________________________________
Address:________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
Telephone:______________________________________________________________________
Rev. 09/94
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
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.
