DISTRIBUTION AGREEMENT
AGREEMENT, made the --------day of-------- , 1994, between KPM FUNDS, INC.,
a Nebraska corporation (hereinafter called the "Fund"), and KIRKPATRICK, PETTIS,
SMITH, POLIAN, INC., a Nebraska corporation (hereinafter called the
"Distributor"):
W I T N E S S E T H:
In consideration of the mutual covenants herein contained it is agreed
as follows:
1. Appointment of Fund Distributor. The Fund hereby appoints the
Distributor as its exclusive agent to sell shares of common stock of the Fund
("Shares") during the term of this Agreement. The Distributor hereby accepts the
appointment and agrees to use its best efforts to find investors to purchase
Shares through the Distributor. The Distributor does not undertake to sell any
specific number of Shares.
2. Sale of Shares through Distributor. The Fund hereby agrees to offer
and sell through the Distributor as its agent, Shares of the Fund at the
applicable public offering price consisting of the net asset value per share.
The Fund reserves the right to reject any offer to purchase its Shares.
3. Fund to Supply Net Asset Value. The Fund shall determine in the
manner provided in the Fund's By-Laws, and promptly furnish to the Distributor,
a statement of the net asset value per Share as often and at such times as the
Fund shall determine, but not less than daily as of the close of business of the
New York Stock Exchange on any business day on which the New York Stock Exchange
is open for unrestricted trading. The net asset value shall become effective at
such time and shall remain in effect during such period as may be stated in a
statement thereof furnished to the Distributor by the Fund.
4. Delivery of Shares. Upon receipt by the Fund at its principal place of
business of a written order or confirmation from the Distributor, the Fund will,
if it elects to accept such order, as promptly as practicable, shall cause an
entry to be made in the records maintained by or on behalf of the Fund crediting
such Shares to the account of the purchaser thereof, in either event against
payment therefor in such manner as may be acceptable to the Fund.
5. Distributor Not Agent of Fund in Certain Circumstances. In making
agreements with its salesmen or with dealers, the Distributor shall act only in
its own behalf as principal and not as agent for the Fund. Distributor shall be
agent for the Fund only in respect of sales of the Fund's Shares.
6. Issue of Shares by Fund to Shareholders as Dividend. Nothing herein
shall prevent the Fund from issuing, distributing, or transferring Shares, at
any time to its stockholders as stock dividends, for not less than the net asset
value of such Shares.
7. Information Furnished by Fund to Distributor. The Fund shall furnish the
Distributor from time to time for use under Federal and state laws in the filing
of registration statements, copies of corporate documents, agreements and any
other related documents; provided that the Fund shall pay all legal, accounting,
registration and filing fees incident to such registrations and filings.
8. Sales Literature. The Distributor shall pay the initial and continuing
expenses of preparing, printing and distributing all advertising and sales
literature.
9. Compensation. The Distributor shall be entitled to receive the
compensation as set forth in the Fund's Plan of Distribution attached hereto and
incorporated by reference herein, as such Plan may be amended from time to time
and approved by the Board of Directors of the Fund.
10. Indemnities.
(a) The Fund agrees to indemnify, defend and hold Distributor, its
officers and directors and any person who controls Distributor within the
meaning of Section 15 of the Securities Act of 1933, 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 Distributor, its officers
and directors or any such controlling person may incur under the Securities Act
of 1933, or under the common law or otherwise, arising out of or based upon any
alleged untrue statement of a material fact contained in the Fund's Registration
Statement or Prospectus or arising out of or based upon any alleged omission to
state a material fact required to be stated in either thereof or necessary to
make the statements in either thereof not misleading; providing, however, that
this indemnity, to the extent that it might require indemnity of any person who
is an officer or director or controlling person of Distributor and who is also a
director or officer of the Fund, shall not inure to the benefit of such officer
or director or controlling person unless a court of competent jurisdiction shall
determine, or it shall have been determined by controlling precedent, that such
result would not be against public policy as expressed in the Securities Act of
1933; and further provided, that in no event shall anything herein contained be
so construed as to protect Distributor (or its officers and directors or any
controlling persons) against any liability to the Fund or its security holders
to which 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 its reckless disregard of its obligations and duties under this
Agreement. The Fund's agreement to indemnify Distributor, its officers and
directors and any such controlling person as aforesaid is expressly conditioned
upon its being notified of any action brought against Distributor, its officers
and directors or any such controlling person, such notification to be given by
letter or telegram addressed to the Fund at its principal office in Omaha,
Nebraska, and sent to it by the person against whom such action is brought,
within ten (10) days after the summons or other legal process shall have been
served. The failure to so notify the Fund of any such action shall not relieve
it from any liability which it may have to the person against whom such action
is brought by reason of any such alleged untrue statement or omission otherwise
than on account of the indemnity contained in this paragraph. The Fund will be
entitled, at its election, 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 the Fund and approved by
Distributor. In the event the Fund does elect 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 the Fund does not elect
to assume the defense of any such suit, or in case Distributor does not approve
of counsel chosen by the Fund, the Fund will reimburse Distributor, its officers
and directors, or the controlling person named as defendant or defendants in
such suit, for the reasonable fees and expenses of any counsel retained by
Distributor or them. This indemnity will inure exclusively to Distributor's
benefit, to the benefit of its successors, to the benefit of its officers and
directors and their respective estates, and to the benefit of any controlling
person and its successors. The Fund agrees to notify the Distributor promptly of
the commencement of any litigation or proceedings against it or any of its
officers or directors in connection with the issue and sale of any of its
Shares.
(b) Distributor agrees to indemnify, defend and hold the Fund, its
several officers and directors, and any person who controls the Fund within the
meaning of Section 15 of the Securities Act of 1933, 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 Fund, its officers or
directors, or any such controlling person may incur under the Securities Act of
1933 or under the common law or otherwise: but only to the extent that such
liability or expense incurred by the Fund, its officers or directors, or such
controlling person resulting from such claims or demands shall arise out of or
be based upon any alleged untrue statement of a material fact contained in
information furnished in writing by Distributor to the Fund for use in the
Fund's Registration Statement or Prospectus or shall arise out of or be based
upon any alleged omission to state a material fact in connection with such
information required to be stated in the Registration Statement or Prospectus or
necessary to make such information not misleading. Distributor's agreement to
indemnify the Fund, its officers and directors, and any such controlling person
is expressly conditioned upon its being notified of any action brought against
the Fund, its officers and directors and any such controlling person, such
notification to be given by letter or telegram addressed to Distributor at its
principal office in Omaha, Nebraska, and sent to it by the person against whom
such action is brought, within ten (10) days after the summons or other first
legal process shall have been served. Distributor shall have a right to control
the defense of such action, with counsel of its own choosing, satisfactory to
the Fund, if such action is based solely upon such alleged misstatement or
omission on its part, and in any other event Distributor 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 to so notify
Distributor of any such action shall not relieve Distributor from any liability
which Distributor may have to the Fund, its officers or directors, or to such
controlling person by reason of any such untrue statement or omission on
Distributor's part otherwise than on account of its indemnity contained in this
paragraph.
11. Registration and Qualification of Distributor and Salesmen.
(a) Distributor shall be registered and qualified to act as a
broker-dealer with the U.S. Securities and Exchange Commission, the National
Association of Securities Dealers, Inc. and the securities commissions of the
states where the Shares of the Fund will be offered. Distributor will comply
with all Federal and state securities laws applicable to the offer and sale of
securities and to the operation and conduct of the business of a broker-dealer.
(b) Distributor, at its sole expense, shall employ, train, register and
qualify such securities salesmen in such states as shall be agreed upon by the
Distributor and the Fund. Thereafter, Distributor shall supervise the activities
of such salesmen to assure their continuing compliance with the applicable
securities laws.
12. Assignment Terminates this Agreement; Amendment of this Agreement.
This Agreement shall automatically terminate in the event of its assignment; and
this Agreement may be amended only if the terms of the amendment are approved
either (a) by action of a majority of the Fund's directors and by a majority of
those directors of the Fund who are not interested or affiliated persons of the
Distributor or officers or employees of the Fund or (b) by affirmative vote of
the holders of a majority of the outstanding voting securities of the Fund.
13. Effective Period and Termination of this Agreement.
(a) This Agreement shall become effective as of the date first set
forth above and shall continue in force for an indefinite period, subject to
prior termination as provided herein, but only so long as its continuance shall
be specifically approved at least annually by a vote of a majority of the Board
of Directors of the Fund or by a vote of the majority of the outstanding voting
securities of the Fund. In any event, this Agreement shall not be renewed or
performed unless it has been approved annually by a majority vote of those
directors of the Fund who are not parties to such agreement or interested or
affiliated persons of any such party, cast in person at a meeting called for the
purpose of voting on such approval.
(b) This Agreement may be terminated at any time, without payment of
any penalty, by the Board of Directors of the Fund, or by vote of a majority of
the outstanding voting securities of the Fund, in either case upon sixty (60)
days' written notice to the Distributor, and it may be terminated by the
Distributor upon sixty (60) days' written notice to the Fund.
14. Definitions. For the purpose of this Agreement, the terms "vote of a
majority of the outstanding securities", "assignment", "affiliated person" and
"interested person" shall have the respective meanings specified in the
Investment Company Act of 1940 as now or hereafter in effect.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their proper officers and their corporate seals to be hereunto
affixed, all as of the day and year first above written.
KPM FUNDS, INC.
By ------------------------
President
Attest:
---------------------------------
Secretary
KIRKPATRICK, PETTIS, SMITH,
POLIAN, INC.
By -------------------------
President
Attest:
---------------------------------
Secretary
