DISTRIBUTION AGREEMENT
THIS DISTRIBUTION AGREEMENT is made as
of this 16th day of December, 2009, by and between
PFM FUNDS, a Virginia business trust (the “Trust”), and PFM FUND DISTRIBUTORS,
INC., a Pennsylvania corporation (the “Distributor”).
WHEREAS, the Trust is registered as an
open-end, diversified, management investment company under the Investment
Company Act of 1940, as amended (“1940 Act“); and
WHEREAS, the Trust is authorized to
issue multiple series of its shares of beneficial interest, each such series of
Shares representing interests in a separate investment portfolio of the Trust,
and to issue multiple classes of such series, and the Board of Trustees of the
Trust (the “Board”) has authorized the issuance and sale of Shares of the series
set forth in Annex A, and classes thereof, to this Agreement (the “Shares” and
each series of the Shares, a “Fund” and collectively, the “Funds”);
and
WHEREAS, the Shares are registered under
the Securities Act of 1933, as amended (the “1933 Act“) pursuant to the Trust’s
Registration Statement on Form N-1A (the “Registration
Statement“).
NOW, THEREFORE, in consideration of the
premises and mutual covenants set forth herein and intending to be legally bound
hereby, the Trust and Distributor agree as follows:
1. Service as
Distributor
1.1. The Distributor will act on behalf of
the Trust for the distribution of the Shares covered by the Registration
Statement under the 1933 Act. The Distributor will have no liability
for payment for the purchase of the Shares sold pursuant to this Agreement or
with respect to redemptions or repurchases of the Shares.
1.2. The Distributor agrees to use such
efforts as is deemed appropriate by the Distributor to solicit orders for the
sale of the Shares and to undertake such advertising and promotion and other
activities as it believes reasonable in connection with such
solicitation. The Trust understands that the Distributor may serve as
the distributor of the shares of other investment companies and series thereof
(collectively, “Companies”), including Companies having investment objectives
similar to those of the Trust. The Trust further understands that
investors and potential investors in the Trust may invest in shares of such
other Companies. The Trust agrees that the Distributor‘s duties to
such Companies shall not be deemed in conflict with its duties to the Trust
under this paragraph 1.2.
1.3. The Distributor shall, at its own
expense, finance appropriate activities which it deems reasonable which are
primarily intended to result in the sale of the Shares, including, but not
limited to, the payment of compensation to brokers, dealers and other financial
institutions which make shares available to their customers (collectively,
“Dealers”); the payment of compensation to sales personnel of the Distributor;
the costs of printing and mailing of prospectuses, annual reports and other
periodic reports to prospective shareholders; and the costs of printing,
distributing and publishing sales literature and advertising
material; provided,
however, that the Funds (or particular classes thereof) may bear certain of
these expenses to the extent authorized by the Board and permitted under a plan
of distribution adopted by the Trust pursuant to Rule 12b-1 under the 1940
Act.
1.4. All activities by the Distributor and
its agents and employees, as distributor of the Shares, shall comply with all
applicable laws, rules and regulations, including, without limitation, all rules
and regulations made or adopted by the Securities and Exchange Commission (the
“SEC”) and the Financial Industry Regulatory Authority
(“FINRA“).
1.5. The Distributor will transmit any orders
received by it for purchase or redemption of the Shares to the transfer agent
for the Trust.
1.6. Whenever in its judgment such action is
warranted by unusual market, economic or political conditions, the Trust may
decline to accept any orders for, or make any sales of, the Shares until such
time as the Trust deems it advisable to accept such orders and to make such
sales.
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1.7. The Trust 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 qualification of the Shares for sale in such states as the Distributor
may designate.
1.8. The Trust shall furnish from time to
time, for use in connection with the sale of the Shares, such information with
respect to the Trust and the Shares as the Distributor may reasonably request;
and the Trust warrants that the statements contained in any such information
shall fairly show or represent what they purport to show or
represent. The Trust shall also furnish the Distributor upon request
with: (a) audited annual statements and unaudited semi-annual statements of each
Fund‘s books and accounts prepared by the Trust, (b) quarterly earnings
statements prepared by the Trust, (c) a monthly itemized list of the securities
comprising the portfolio of each Fund, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the financial condition of the Trust and the
Funds as the Distributor may reasonably request.
1.9. The Trust represents to the Distributor
that the Registration Statements and prospectuses filed by the Trust with the
SEC under the 1933 Act with respect to the Shares have been prepared in
conformity with the requirements of said Act and the rules and regulations of
the SEC thereunder. As used in this Agreement, the term “Registration
Statement” shall mean any Registration Statement and any prospectus and any
statement of additional information relating to the Trust filed with the SEC and
any amendments or supplements thereto at any time filed with the
SEC. Except as to information included in the Registration Statement
in reliance upon information provided to the Trust by the Distributor or any
affiliate of the Distributor, the Trust represents and warrants to the
Distributor that: any Registration Statement, when such Registration
Statement becomes effective, will contain statements required to be stated
therein in conformity with the 1933 Act and the rules and regulations of the SEC
thereunder; all statements of fact contained in any such Registration Statement
will be true and correct when such Registration Statement becomes effective; and
no Registration Statement when such 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 the Shares. The Trust 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
as, in the light of future developments, may, in the opinion of the Trust‘s
counsel, be necessary or advisable. The Trust shall promptly notify
the Distributor of any advice given to it by its counsel regarding the necessity
or advisability of amending or supplementing such Registration
Statement. If the Trust shall not propose such amendment or
amendments and/or supplement or supplements within fifteen (15) days after
receipt by the Trust of a written request from the Distributor to do so, the
Distributor may, at its option, terminate this Agreement. The Trust
shall not file any amendment to any Registration Statement or supplement to any
prospectus without giving the Distributor reasonable notice thereof in advance;
provided that, nothing contained in this Agreement shall in any way limit the
Trust‘s right to file at any time such amendments to any Registration Statements
and/or supplements to any prospectus, of whatever character, as the Trust may
deem advisable, such right being in all respects absolute and
unconditional.
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1.10. The Trust authorizes the Distributor and
Dealers to use any prospectus or statement of additional information in the form
furnished from time to time in connection with the sale of the
Shares. The Trust agrees to indemnify and hold harmless the
Distributor, its officers, directors, and employees, and any person who controls
the Distributor within the meaning of Section 15 of the 1933 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 legal fees incurred in connection therewith) which the
Distributor, its officers, directors, employees or any such controlling person
may incur under the 1933 Act, under any other statute, at common law or
otherwise, arising out of or based upon:
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(a) any untrue statement, or alleged untrue
statement, of a material fact contained in the Trust‘s Registration Statement,
prospectus, statement of additional information, or sales literature (including
amendments and supplements thereto), or
(b) any omission, or alleged omission, to
state a material fact required to be stated in the Trust‘s Registration
Statement, prospectus, statement of additional information or sales literature
(including amendments or supplements thereto), necessary to make the statements
therein not misleading, provided, however, that insofar as losses, claims,
damages, liabilities or expenses arise out of or are based upon any such untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information furnished to the Trust by the Distributor
or its affiliated persons for use in the Trust‘s Registration Statement,
prospectus, or statement of additional information or sales literature
(including amendments or supplements thereto), such indemnification is not
applicable.
The Distributor, its officers,
directors, and employees, and any such controlling person, as aforesaid, shall
notify the Trust of any such claim, demand or action described within this
Section 1.10 brought against the Distributor, its officers, directors or
employees, or any such controlling person, such notification to be given by
letter or by facsimile addressed to the Trust and sent to the Trust 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. The
failure to notify the Trust of any such action shall not relieve the Trust from
any liability which the Trust 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 the Trust‘s
indemnity agreement contained in this paragraph 1.10. The Trust 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 the Trust and approved by the Distributor,
which approval shall not unreasonably be withheld. In the event the
Trust 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 the Trust does not elect to assume the defense of any such
suit, or in case the Distributor reasonably does not approve of counsel chosen
by the Trust, or in case there is a conflict of interest between the Trust or
the Distributor, the Trust will reimburse the Distributor, its officers,
directors and employees, 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. The Trust‘s indemnification agreement
contained in this paragraph 1.10 and the Trust‘s 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,
directors and employees, or any controlling person, and shall survive the
delivery of any Shares and the termination of this Agreement. This
agreement of indemnity will inure exclusively to the Distributor‘s benefit, to
the benefit of its several officers, directors and employees, and their
respective estates, and to the benefit of the controlling persons and their
successors. The Trust agrees promptly to notify the Distributor of
the commencement of any litigation or proceedings against the Trust or any of
its officers or directors in connection with the issue and sale of any
Shares.
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1.11. The Distributor agrees to indemnify and
hold harmless the Trust, its several officers and directors and each person, if
any, who controls the Trust or the Fund within the meaning of Section 15 of the
1933 Act against any loss, claims, damages, liabilities and expenses (including
the cost of any reasonable legal fees incurred in connection therewith) which
the Trust, its officers, directors or any such controlling person may incur
under the 1933 Act, under any other statute, at common law or otherwise, but
only to the extent that such liability or expense incurred by the Trust, its
officers or directors, or any controlling person resulting from such claims or
demands arose out of the acquisition of any Shares by any person which may be
based upon any untrue statement or alleged untrue statement of a material fact
contained in the Trust‘s Registration Statement, prospectus or statement of
additional information (including amendments and supplements thereto), or any
omission, or alleged omission, to state a material fact required to be stated
therein or necessary to make the statements therein not misleading, if such
statement or omission was made in reliance upon information furnished or
confirmed in writing to the Trust by the Distributor or its affiliated persons
(as defined in the 1940 Act).
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The agreement of the Distributor to
indemnify the Trust, its officers and directors, and any such controlling
person, as aforesaid, is expressly conditioned upon the Distributor being
notified of any action brought against the Trust, its officers or directors, or
any such controlling person, such notification to be given by letter or
facsimile addressed to the Distributor at its principal office, and sent to the
Distributor 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. The
Distributor shall have the right of first control of the defense of such action,
with counsel of its own choosing, satisfactory to the Trust, if such action is
based solely upon such alleged misstatement or omission on the Distributor‘s
part, and in any other event the Trust, its officers or directors 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 the Distributor of any such action shall not relieve the Distributor from
any liability that the Distributor may have to the Trust, its officers or
directors, 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
1.11.
1.12. No Shares shall be offered by either the
Distributor or the Trust under any of the provisions of this Agreement and no
orders for the purchase or sale of Shares hereunder shall be accepted by the
Trust if and so long as effectiveness of the Registration Statement then in
effect or any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a current prospectus as
required by Section 5(b)(2) of the 1933 Act is not on file with the SEC;
provided, however, that nothing contained in this paragraph 1.12 shall in any
way restrict or have any application to or bearing upon the Trust‘s obligation
to redeem Shares tendered for redemption by any shareholder in accordance with
the provisions of the Trust’s Registration Statement, Declaration of Trust, or
bylaws.
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1.13. The Trust agrees to advise the
Distributor as soon as reasonably practical by a notice in writing delivered to
the Distributor:
(a) of any request by the SEC for amendments
to the Registration Statement, prospectus or statement of additional information
then in effect or for additional information;
(b) in the event of the issuance by the SEC
of any stop order suspending the effectiveness of the Registration Statement,
prospectus or statement of additional information then in effect or the
initiation by service of process on the Trust of any proceeding for that
purpose;
(c) of the happening of any event that makes
untrue any statement of a material fact made in the Registration Statement,
prospectus or statement of additional information then in effect or that
requires the making of a change in such Registration Statement, prospectus or
statement of additional information in order to make the statements therein not
misleading; and
(d) of all actions of the SEC with respect
to any amendments to any Registration Statement, prospectus or statement of
additional information which may from time to time be filed 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.
1.14. The Distributor may enter into selling
agreements with Dealers with respect to the offering of the Shares to the
public. Each such selling agreement will provide (a) that all
payments for purchases of Shares will be sent directly from the Dealer to the
Fund’s custodian account, (b) that the Dealer will notify the transfer
agent for the Trust of the purchase of Shares and (c) that, if payment is
not made with respect to purchases of Shares at the customary or required time
for settlement of the transaction, the Distributor will have the right to cancel
the sale of the Shares ordered by the Dealer, in which case the Dealer will be
responsible for any loss suffered by any Fund or the Distributor resulting from
such cancellation. The Distributor may also act as disclosed agent for the Fund
and sell Shares of the Fund to individual investors. The Distributor
shall enter into selling agreements only with Dealers that are either members in
good standing of the FINRA or entities that are not required to be such
members. All selling agreements shall be in such form as is approved
by the President of the Trust.
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2. Term
This Agreement shall become effective as
of the date first written above, and, unless sooner terminated as provided
herein, shall continue for an initial two-year term from the date of its
execution and shall continue in effect from year to year thereafter, provided
that such continuance is specifically approved at least annually by (i) the
Board or (ii) a vote of a majority (as defined in the 1940 Act and Rule 18f-2
thereunder) of the outstanding voting securities of the Trust, and further
provided that in either event the continuance is also approved by a majority of
the Trustees who are not parties to this Agreement and who are not interested
persons (as defined in the 0000 Xxx) of any party to this Agreement, by vote
cast in person at a meeting called for the purpose of voting on such approval.
This Agreement is terminable without penalty, on at least sixty (60) days‘
written notice, by the Board, by vote of a majority (as defined in the 1940 Act
and Rule 18f-2 thereunder) of the outstanding voting securities of the Trust, or
by the Distributor. This Agreement shall terminate automatically in
the event of its assignment (as defined in the 1940 Act and the rules
thereunder).
3. Limitation
of Liability
(a) The Distributor shall not be liable to
the Trust for any error of judgment or mistake of law or for any loss suffered
by the Trust in connection with the performance of its obligations and duties
under this Agreement, except a loss resulting from the Distributor‘s willful
misfeasance, bad faith or gross negligence in the performance of such
obligations and duties, or by reason of its reckless disregard
thereof. The Trust will indemnify the Distributor against and hold it
harmless from any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees and expenses) resulting from any claim,
demand, action or suit not resulting from the willful misfeasance, bad faith or
gross negligence of the Distributor in the performance of such obligations and
duties or by reason of its reckless disregard thereof.
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(b) In no event and under no circumstances
shall either party to this Agreement be liable to the other party for
consequential or indirect loss of profits, reputation or business or any other
special damages under any provision of this Agreement.
4. Notices
All notices and other communications
(collectively referred to as a “Notice” or “Notices” in this paragraph)
hereunder shall be given in writing or by telegram, cable, telex or facsimile
sending device. Notices shall be addressed (a) if to the Distributor
at its principal place of business, President, PFM Fund Distributors,
Inc., One Keystone Plaza – Xxxxx 000, X. Xxxxx xxx Xxxxxx Xxxxxxx,
Xxxxxxxxxx, XX 00000; (b) if to the Trust, at its principal place of business,
Secretary, PFM Funds, One Keystone Plaza – Suite 300, N. Front and Market
Streets, Harrisburg, PA 17101 or (c) if to neither of the foregoing, at such
other address as to which the sender shall have been notified by any such Notice
or other communication. The Notice may be sent by first-class mail, in which
case it shall be deemed to have been given three days after it is sent, or if
sent by telegram, cable, telex or facsimile sending device, it shall be deemed
to have been given immediately. Either party hereto may change the
address to which Notices to it shall be sent by giving Notice of such change to
the other party.
5. Further
Actions
Each party agrees to perform such
further acts and execute such further documents as are necessary to effectuate
the purposes hereof.
6. Amendments
This Agreement or any part hereof may be
changed or waived only by an instrument in writing signed by the party against
which enforcement of such change or waiver is sought.
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7. Governing
Law
This Agreement shall be governed by and
its provisions shall be construed in accordance with the laws of the
Commonwealth of Virginia and the applicable provisions of the 1940
Act. To the extent the provisions of Virginia law conflict with the
1940 Act, the latter shall control.
8. Miscellaneous
This Agreement embodies the entire
agreement and understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to the subject matter
thereof. The captions in this Agreement are included for convenience
of reference only and in no way define or delimit any of the provisions hereof
or otherwise affect their construction or effect. If any provision of
this Agreement shall be held or made invalid by a court decision, statute, rule
or otherwise, the remainder of this Agreement shall not be affected
thereby. This Agreement shall be binding and shall inure to the
benefit of the parties hereto and their respective
successors.
9. Liability of
the Trust
The obligations of the Trust hereunder
shall not be binding upon the Trustees, shareholders or officers of the Trust
personally and shall be binding only on the assets of the Trust, and the
obligations of each Fund hereunder shall be binding only on the assets of such
Fund and shall not bind the assets of any other Fund.
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IN WITNESS WHEREOF, the parties hereto
have caused this Agreement to be duly executed all as of the day and year first
above written.
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PFM Fund Distributors,
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ANNEX A
FUNDS COVERED BY THE
AGREEMENT
The Distributor shall render services
under this Agreement with respect to the following Funds and any classes of
shares of the Funds:
Prime Series
Government
Series
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