THE CAPITOL MUTUAL FUNDS
FAMILY OF FUNDS
BROKERAGE AGREEMENT
Ladies and Gentlemen:
We are the exclusive distributor of the shares of the portfolios of
The Capitol Mutual Funds ("Capitol Funds") (each a "Fund" and collectively the
"Funds") pursuant to the terms of a Distribution Agreement with Capitol Funds.
We invite you, as agent for your customer, to participate in the sale of those
Fund shares listed on Schedule I hereto (the "Shares"), as such Schedule may be
amended from time to time, on the following terms:
1. EXEMPTION FROM REQUIREMENT TO REGISTER AS A BROKER OR DEALER
(a) You represent and warrant that you are a bank exempt from registration
as a broker-dealer under the federal securities laws, and that you will conduct
your activities hereunder and otherwise in a manner so as to remain exempt from
such registration and in compliance with the provisions of the Xxxxx-Xxxxxxxx
Act and all other rules and regulations that are now or may become applicable to
you and your activities hereunder.
(b) You represent and warrant that you are exempt from being required to
register or qualify to act as a broker or dealer in the states or other
jurisdictions where you transact business. If such exemption becomes no longer
available to you, you agree to immediately become registered or qualified to act
in such capacity in those jurisdictions where such exemption is no longer
available. You agree to comply with all applicable federal, state and local
laws, including, without limiting the generality of the foregoing, the
Securities Act of 1933 ("1933 Act"), the Securities Exchange Act of 1934 (the
"1934 Act") and the Investment Company Act of 1940 ("1940 Act"), and all
applicable rules or regulations thereunder. You agree to offer and sell Shares
only in the states and other jurisdictions in which we have indicated that such
offers and sales can be made and in which you are permitted to so act. You
further agree not to offer or sell Shares outside the several states,
territories or possessions of the United States.
2. SALE OF FUND SHARES
(a) You agree to offer and sell Shares of the Funds to your customers
("Customers") only at the applicable public offering price (which is the net
asset value per share) then in effect as described in the respective Fund's then
currently effective prospectus, including any supplements or amendments thereto
("Prospectus"). You may establish and charge reasonable service fees to your
Customers for processing exchange or redemption orders for Shares, provided you
disclose the fees to your Customers and provided further that such fees do not
constitute sales loads as defined in Section 2(a)(35) of the 0000 Xxx.
(b) You agree to provide reasonable sales support assistance in connection
with the sale of those Shares for which a distribution plan has been adopted
pursuant to Rule 12b-1 under the 1940 Act to your Customers, which assistance
may include forwarding sales literature and advertising provided by us to your
Customers and providing such other sales support assistance as may be requested
by us from time to time. All support services rendered by you shall be performed
in a professional, competent and timely manner.
(c) We will furnish you, upon request, with a reasonable quantity of copies
of the Prospectuses, Statements of Additional Information, sales literature
issued by us supplemental to the Prospectuses and Statements of Additional
Information ("Sales Literature") and amendments and supplements thereto. You
agree that if and when we supply you with copies of any supplements to any
Prospectus, you will affix copies of such supplements to all such Prospectuses
in your possession, that thereafter you will distribute such Prospectuses only
with such supplements affixed, and that you will present purchase orders for
Shares ("Purchase Orders") only from persons who have received Prospectuses with
such supplements affixed. You agree not to use Sales Literature in connection
with the solicitation of Purchase Orders for Shares unless accompanied or
preceded by the relevant Prospectus.
(d) You agree not to hold Shares that may be subject to a contingent
deferred sales charge in an account registered in your name or in the name of
your nominee for the benefit of your Customers. You agree to hold such Shares in
a separate account for each Customer who is a beneficial owner of Fund Shares
(e) You agree to submit to us, for review and approval prior to use, any
sales literature prepared by you regarding the Funds that you wish to distribute
to your Customers.
(f) We agree to prepare all sales literature and prospectuses to comply
with the disclosure and advertising guidelines set forth in the National
Association of Securities Dealers, Inc. Rules of Fair Practice and in accordance
with applicable laws and regulations.
3. EXECUTION OF PURCHASE ORDERS AND REDEMPTION OF SHARES
(a) Any Purchase Orders for Shares received from you and accepted by us
will be executed at the applicable public offering price next determined after
our receipt and acceptance of such Purchase Order in accordance with the
Prospectuses. All Purchase Orders must meet the applicable minimum initial and
subsequent investment requirements as described and set forth in the
Prospectuses. You agree to date and time stamp all orders received by you and to
promptly forward all Purchase Orders to us or the Funds' Transfer Agent in time
for processing at the public offering price next determined after receipt by
you. You agree that you will not withhold Purchase Orders or purchase Shares in
anticipation of receiving Purchase Orders from Customers. The procedures
applicable to the handling of Purchase Orders shall be subject to such
instructions as may be issued by us or the Funds' Transfer Agent from time to
time.
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(b) All Purchase Orders are subject to acceptance by us and confirmation by
the Funds or their Transfer Agent. We reserve the right in our sole discretion
to reject any Purchase Order, including contingent or conditional Purchase
Orders, in whole or in part. We also reserve the right in our discretion without
notice to you to suspend sales or withdraw the offering of Shares, in whole or
part.
(c) If payment for Shares purchased hereunder is not received or made
within the applicable time period specified in the governing Prospectus, or if
you cancel any order at any time after our acceptance of the Purchase Order, we
reserve the right to cancel the sale (or, at our option, to redeem the Shares),
in which case you shall be responsible to the Funds, their Transfer Agent and us
for any losses, claims, damages or expenses resulting from your failure to make
payment or cancellation as aforesaid.
(d) You agree to purchase Shares only through us. Purchases through us
shall be made only for the purpose of covering Purchase Orders already received
from your Customers or for your bona fide investment. All transactions in Shares
shall be subject to the terms and provisions set forth in the Prospectuses.
(e) Shares purchased hereunder will not be issued in certificated form
except where permitted by the applicable Prospectus, upon written request by you
or your Customer, and only when payment and proper registration or transfer
instructions have been received by the Funds or their Transfer Agent.
4. REPRESENTATION REGARDING THE ACCURACY OF CUSTOMER INSTRUCTIONS
If a Customer's account with a Fund is established without the
Customer signing an Account Application, you represent that the instructions
relating to the registration and shareholder options selected (whether on the
Account Application, in some other document or orally) are in accordance with
the Customer's instructions, and you shall be responsible to the Funds, their
Transfer Agent and us for any losses, claims, damages or expenses resulting from
acting upon such instructions.
5. NATIONSBANK OF VIRGINIA, N.A. IS NOT AN AGENT FOR XXXXXXXX OR THE FUNDS
(a) You have no authority whatsoever to act as agent for, partner of, or
participant in, a joint venture with the Funds or us or any other member of the
Selling Group, and nothing in this Agreement shall constitute either of us the
agent of the other or shall constitute you, or the Funds the agent of each
other. In all transactions in Shares, you are acting as agent for your Customer
and we are acting as agent for the Funds and not as principal.
(b) Neither you nor any of your officers, employees or agents is authorized
to make any representations concerning us, the Funds or the Shares except those
contained in the Prospectuses and Statements of Additional Information, and in
Sales Literature provided by us or the Funds. In purchasing Shares through us,
you shall rely solely upon the representations contained in the Prospectuses,
the Statements of Additional Information and Sales Literature.
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6. PROTECTION AGAINST UNAUTHORIZED USE OF THE FUNDS' RECORDKEEPING SYSTEMS
You agree to provide such security as is necessary to prevent any
unauthorized use of the Funds' recordkeeping system, accessed via any computer
hardware or software provided to you by us or the Transfer Agent.
7. COMPENSATION
(a) As compensation for the sales support assistance provided by you under
Paragraph 2(b) hereof, we will pay to you, and you will accept as full payment
therefor, a periodic fee based upon a percentage of the average daily net asset
value of the Fund Shares attributable to you, as disclosed in the governing
Prospectus. Such fees shall be used primarily for sales support services
provided, and related expenses incurred, by you. The fee rate payable to you may
be prospectively increased or decreased at any time upon notice to you.
8. REPORTS
You agree to provide us at least quarterly a written report of the
amounts expended by you in connection with the provision of the sales support
services referenced in Paragraph 2(b) hereof and the purposes for which such
expenditures were made. In addition, you agree to cooperate with us in
connection with the preparation of reports to the Board of Trustees of Capitol
Funds or regulatory authorities concerning this Agreement and the amounts
expended pursuant hereto.
9. DISCLOSURES TO SHAREHOLDERS
You agree and warrant that the compensation payable to you under
this Agreement, together with any other compensation you receive in connection
with the investment of your Customers' assets in Shares, will be disclosed by
you to your Customers to the extent required by applicable laws and regulations,
will be authorized by your Customers and will not result in an excessive or
unreasonable fee to you.
10. PROTECTION AGAINST UNAUTHORIZED USE OF CUSTOMER NAMES
The names of your Customers are and shall remain your sole property
and shall not be used by us for any purpose except for servicing and
informational mailings in the normal course of business. The provisions of this
paragraph shall survive the termination of this Agreement.
11. INDEMNIFICATION
(a) You agree to indemnify the Funds, their Transfer Agent and us for any
losses, claims, damages or expenses arising out of or in connection with any
wrongful act or omission by you, your representatives, agents or sub-agents not
in accordance with this Agreement, provided that such losses, claims, damages or
expenses were not caused by the willful misfeasance, bad faith or gross
negligence by us, our representatives, agents or sub-agents.
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(b) We agree to indemnify you for any losses, claims, damages or expenses
arising out of or in connection with any wrongful act or omission by us,
provided that such losses, claims, damages or expenses were not caused by the
willful misfeasance, bad faith or gross negligence by you, your representatives,
agents or sub-agents.
(c) The provisions of this paragraph shall survive the termination of this
Agreement.
12. AMENDMENT AND TERMINATION OF AGREEMENT
(a) This Agreement shall become effective upon receipt by us of a signed
copy hereof, and shall cancel and supersede any and all prior Selling Group
Agreements or similar agreements or contracts relating to the distribution of
the Shares between you and the Funds or their distributor. We reserve the right
to amend this Agreement at any time. Any amendments to this Agreement shall be
deemed accepted by you, and will take effect with respect to, and on the date
of, any orders placed by you after the date set forth in any notice of amendment
sent by us to you.
(b) This Agreement may be terminated upon written notice by either party at
any time, and shall automatically terminate upon its assignment by you, whether
by operation of law or otherwise, or by us otherwise than by operation of law.
We reserve the right to cancel this Agreement at any time without notice if any
Shares are offered for sale by you at less than the applicable public offering
price as set forth in the Prospectuses.
13. NOTICES
All communications to us shall be sent to us by first class mail,
postage prepaid, or by confirmed telefacsimile at 000 Xxxxxx Xxxxxx, Xxxxxx
Xxxx, Xxxxxxxx 00000; telefacsimile (000) 000-0000. Any notice to you shall be
duly given if sent by first class mail, postage prepaid, or by confirmed
telefacsimile to you at your address or telefacsimile number as set forth on the
signature page hereof. Any party that changes its address or telefacsimile
number shall promptly notify the other party in accordance with the terms of
this paragraph.
14. MISCELLANEOUS
(a) This Agreement is in all respects subject to statements regarding the
sale and repurchase or redemption of Shares made in the Prospectuses, and to the
Rules of Fair Practice of the National Association of Securities Dealers, Inc.,
pursuant to the Interagency Statement on Retail Sales on Nondeposit Investment
Products dated February 15, 1994, which shall control and override any provision
to the contrary in this Agreement. You further acknowledge that this Agreement
has been entered into pursuant to Rule 12b-1 under the 1940 Act, and is subject
to the provisions of that Rule as well as any other applicable rules and
regulations promulgated by the Securities and Exchange Commission.
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(b) The sub-headings in this Agreement are for convenience only and are not
a part of the Agreement.
15. GOVERNING LAW
This Agreement shall be governed by, and construed in accordance
with, the laws of the State of Arkansas without giving effect to principles of
conflict of laws.
Date: November 18, 1994 XXXXXXXX INC.
BY: ____________________________
TITLE: _________________________
The undersigned accepts this invitation to become a member of the Selling Group
and agrees to abide by the foregoing terms and conditions.
Print Firm Name: NATIONSBANK OF VIRGINIA, N.A.
Address: ____________________________
____________________________
____________________________
Telephone: (___) ______________________
Telefacsimile: (___) ________________
Date: November 18, 1994
By: __________________________
Name: ________________________
Title: _______________________
Please execute this Agreement in duplicate
and return one copy to Xxxxxxxx Inc.
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SCHEDULE I
Capitol Cash Reserves - Class C Shares
Capitol Government Reserves - Class C Shares
Capitol Treasury Reserves - Class C Shares
Capitol Tax Free Reserves - Class C Shares
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