THIS
DISTRIBUTION AGREEMENT (this “Agreement”) is made and entered into as of
this ____ day of April, 2008, by and between PARNASSUS INCOME FUNDS, a
Massachusetts business trust (the “Trust”) and PARNASSUS FUNDS
DISTRIBUTOR, a California __________ (the “Distributor”).
RECITALS
WHEREAS,
the Trust is registered under the Investment Company Act of 1940, as amended (the
“1940 Act”), as an open-end management investment company, and it is in the
interest of the Trust to offer its shares for sale continuously;
WHEREAS,
the Distributor is registered as a broker-dealer under the Securities Exchange Act of
1934, as amended (the “1934 Act”), and is a member of the Financial Industry
Regulatory Authority (“FINRA”); and
WHEREAS,
the Trust and the Distributor wish to enter into an agreement with each other with respect
to the continuous offering of the Trust’s Shares of Beneficial Interest, no par value
(the “Shares”).
AGREEMENT
NOW,
THEREFORE, in consideration of the promises and mutual covenants herein contained,
and other good and valuable consideration, the receipt of which is hereby acknowledged,
the parties hereto, intending to be legally bound, do hereby agree as follows:
| 1. |
Appointment
of Distributor |
The
Trust hereby appoints the Distributor as its exclusive agent for the sale and distribution
of the Shares in jurisdictions wherein the Shares may be legally offered for sale, on the
terms and conditions set forth in this Agreement, and the Distributor hereby accepts such
appointment and agrees to perform the services and duties set forth in this Agreement. The
services and duties of the Distributor shall be confined to those matters expressly set
forth herein, and no implied duties are assumed by or may be asserted against the
Distributor hereunder. It is understood and agreed that the services of the Distributor
hereunder are not exclusive, and the Distributor may act as principal underwriter for the
shares of any other registered investment company.
| 2. |
Services
and Duties of the Distributor |
| |
A. |
The
Distributor agrees to sell the Shares, as agent for the Trust, from time to
time during the term of this Agreement upon the terms described in the
Trust’s Prospectus. As used in this Agreement, the term
“Prospectus” shall mean the prospectus and statement of
additional information included as part of the Trust’s Registration
Statement, as such prospectus and statement of additional information may
be amended or supplemented from time to time, and the term “Registration
Statement” shall mean the Registration Statement most recently filed
from time to time by the Trust with the Securities and Exchange Commission
and effective under the Securities Act of 1933, as amended (the “1933
Act”), and the 1940 Act, as such Registration Statement is amended by
any amendments thereto at the time in effect. The Distributor shall not be
obligated to sell any certain number of Shares. |
1
| |
B. |
The
Distributor will hold itself available to receive orders, satisfactory to
the Distributor, for the purchase of the Shares and will accept such
orders and will transmit such orders and funds received by it in payment
for such Shares as are so accepted to the Trust’s transfer agent or
custodian, as appropriate, as promptly as practicable. Purchase orders
shall be deemed effective at the time and in the manner set forth in the
Prospectus. The Distributor shall not make any short sales of Shares. |
| |
C. |
The
offering price of the Shares shall be the net asset value (as defined in the
Declaration of Trust of the Trust and determined as set forth in the
Prospectus) per share of the Shares. The Trust shall furnish the
Distributor, with all possible promptness, an advice of each computation
of net asset value. |
| |
A. |
Maintenance
of Federal Registration. The Trust shall, at its expense, take, from
time to time, all necessary action and such steps, including payment of
the related filing fees, as may be necessary to register and maintain
registration of a sufficient number of Shares under the 1933 Act. The
Trust agrees to file from time to time such amendments, reports and other
documents as may be necessary in order that there may be no untrue
statement of a material fact in a registration statement or prospectus, or
necessary in order that there may be no untrue statement of a material
fact in a registration statement or prospectus, or necessary in order that
there may be no omission to state a material fact in the registration
statement or prospectus which omission would make the statements therein
misleading. |
| |
B. |
Maintenance
of “Blue Sky” Qualifications. The Trust shall, at its
expense, use its best efforts to qualify and maintain the qualification of
an appropriate number of Shares for sale under the securities laws of such
states as the Distributor and the Trust may approve, and, if necessary or
appropriate in connection therewith, to qualify and maintain the
qualification of the Trust as a broker or dealer in such states; provided
that the Trust shall not be required to amend its Declaration of Trust or
By-Laws to comply with the laws of any state, to maintain an office in any
state, to change the terms of the offering of the Shares in any state from
the terms set forth in its Prospectus, to qualify as a foreign corporation
in any state or to consent to service of process in any state other than
with respect to claims arising out of the offering and sale of the Shares.
The Distributor shall furnish such information and other material relating
to its affairs and activities as may be required by the Trust in
connection with such qualifications. |
2
| |
C. |
Copies
of Reports and Prospectus. The Trust shall, at its expense, keep the
Distributor fully informed with regard to its affairs and in connection
therewith shall furnish to the Distributor copies of all information,
financial statements and other papers which the Distributor may reasonably
request for use in connection with the distribution of Shares, including
such reasonable number of copies of its Prospectus and annual and interim
reports as the Distributor may request and shall cooperate fully in the
efforts of the Distributor to sell and arrange for the sale of the Shares
and in the performance of the Distributor under this Agreement. |
| 4. |
Conformity
with Applicable Law and Rules |
The
Distributor agrees that in selling Shares hereunder it shall conform in all respects with
the laws of the United States and of any state in which Shares may be offered, and with
applicable rules and regulations of the FINRA.
| 5. |
Independent
Contractor |
In
performing its duties hereunder, the Distributor shall be an independent contractor and
neither the Distributor, nor any of its officers, directors, employees, or representatives
is or shall be an employee of the Trust in the performance of the Distributor’s
duties hereunder. The Distributor shall be responsible for its own conduct and the
employment, control, and conduct of its agents and employees and for injury to such agents
or employees or to others through its agents or employees. The Distributor assumes full
responsibility for its agents and employees under applicable statutes and agrees to pay
all employee taxes thereunder.
| |
A. |
Indemnification
of Trust. The Distributor agrees to indemnify and hold harmless the
Trust and each of its present or former trustees, officers, employees,
representatives and each person, if any, who controls or previously
controlled the Trust within the meaning of Section 15 of the 1933 Act
against any and all losses, liabilities, damages, claims or expenses
(including the reasonable costs or investigating or defending any alleged
loss, liability, damage, claims or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Trust or any such
person may become subject under the 1933 Act, under any other statute, at
common law, or otherwise, arising out of the acquisition of any Shares by
any person which (i) may be based upon any wrongful act by the Distributor
or any of the Distributor’s directors, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, shareholder report or other information covering Shares filed
or made public by the Trust or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein 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 to the Trust by the Distributor. In no case (i)
is the Distributor’s indemnity in favor of the Trust, or any person
indemnified to be deemed to protect the Trust or such indemnified person
against any liability to which the Trust or such person would otherwise be
subject by reason of willful misfeasance, bad faith, or negligence in the
performance of his duties or by reason of his reckless disregard of his
obligations and duties under this Agreement or (ii) is the Distributor to
be liable under its indemnity agreement contained in this Paragraph with
respect to any claim made against the Trust or any person indemnified
unless the Trust or such person, as the case may be, shall have notified
the Distributor in writing of the claim within a reasonable time after the
summons or other first written notification giving information of the
nature of the claim shall have been served upon the Trust or upon such
person (or after the Trust or such person shall have received notice to
such service on any designated agent). However, failure to notify the
Distributor of any such claim shall not relieve the Distributor from any
liability which the Distributor may have to the Trust or any person
against whom such action is brought otherwise than on account of the
Distributor’s indemnity agreement contained in the Paragraph. |
3
| |
The
Distributor shall be entitled to participate, at its own expense, in the defense, or, if
the Distributor so elects, to assume the defense of any suit brought to enforce any such
claim, but, if the Distributor ejects to assume the defense, such defense shall be
conducted by legal counsel chosen by the Distributor and satisfactory to the Trust, to
the persons indemnified defendant or defendants, in the suit. In the event that the
Distributor elects to assume the defense of any such suit and retain such legal counsel,
the Trust, the persons indemnified defendant or defendants in the suit, shall bear the
fees and expenses of any additional legal counsel retained by them. If the Distributor
does not elect to assume the defense of any such suit, the Distributor will reimburse the
Trust and the persons indemnified defendant or defendants in such suit for the reasonable
fees and expenses of any legal counsel retained by them. The Distributor agrees to
promptly notify the Trust of the commencement of any litigation of proceedings against it
or any of its officers, employees or representatives in connection with the issue or sale
of any Shares. |
| |
B. |
Indemnification
of the Distributor. The Trust agrees to indemnify and hold harmless
the Distributor and each of its present or former officers, employees,
representatives and each person, if any, who controls or previously
controlled the Distributor within the meaning of Section 15 of the 1933
Act against any and all losses, liabilities, damages, claims or expenses
(including the reasonable costs of investigating or defending any alleged
loss, liability, damage, claim or expense and reasonable legal counsel
fees incurred in connection therewith) to which the Distributor or and
such person may become subject under the 1933 Act, under any other
statute, at common law, or otherwise, arising out of the acquisition of
any Shares by any person which (i) may be based upon any wrongful act by
the Trust or any of the Trust’s trustees, officers, employees or
representatives, or (ii) may be based upon any untrue statement or alleged
untrue statement of a material fact contained in a registration statement,
prospectus, shareholder report or other information covering Shares filed
or made public by the Trust or any amendment thereof or supplement
thereto, or the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading unless such statement or omission was made in
reliance upon information furnished to the Trust by the Distributor. In no
case (i) is the Trust’s indemnity in favor of the Distributor, or any
person indemnified to be deemed to protect the Distributor or such
indemnified person against any liability to which the Distributor or such
person would otherwise be subject by reason of willful misfeasance, bad
faith, or negligence in the performance of his duties or by reason of his
reckless disregard of his obligations and duties under this Agreement, or
(ii) is the Trust to be liable under its indemnity agreement contained in
this Paragraph with respect to any claim made against Distributor, or
person indemnified unless the Distributor, or such person, as the case may
be, shall have notified the Trust in writing of the claim within a
reasonable time after the summons or other first written notification
giving information of the nature of the claim shall have been served upon
the Distributor or upon such person (or after the Distributor or such
person shall have received notice of such service on any designated agent).
However, failure to notify the Trust of any such claim shall not relieve
the Trust from any liability which the Trust may have to the Distributor
or any person against whom such action is brought otherwise than on
account of the Trust’s indemnity agreement contained in this
Paragraph. |
4
| |
The
Trust shall be entitled to participate, at its own expense, in the defense, or, if the
Trust so elects, to assume the defense of any suit brought to enforce any such claim, but
if the Trust elects to assume the defense, such defense shall be conducted by legal
counsel chosen by the Trust and satisfactory to the Distributor, to the persons
indemnified defendant or defendants, in the suit. In the event that the Trust elects to
assume the defense of any such suit and retain such legal counsel, the Distributor, the
persons indemnified defendant or defendants in the suit, shall bear the fees and expenses
of any additional legal counsel retained by them. If the Trust does not elect to assume
the defense of any such suit, the Trust will reimburse the Distributor and the persons
indemnified defendant or defendants in such suit for the reasonable fees and expenses of
any legal counsel retained by them. The Trust agrees to promptly notify the Distributor of
the commencement of any litigation or proceedings against it or any of its trustees,
officers, employees or representatives in connection with the issue or sale of any Shares. |
| 7. |
Authorized
Representations |
The
Distributor is not authorized by the Trust to give on behalf of the Trust any information
of to make any representations in connection with the sale of Shares other than the
information and representations contained in a registration statement of prospectus filed
with the Securities and Exchange Commission (“SEC”) under the 1933 Act and/or
the 1940 Act, covering Shares, as such registration statement and prospectus may be
amended or supplemented from time to time, or contained in shareholder reports or other
material that may be prepared by or on behalf of the Trust for the Distributor’s use.
This shall not be construed to prevent the Distributor from preparing and distributing
tombstone advertisements and sales literature or other material as it may deem
appropriate. No person other than Distributor is authorized to act as principal
underwriter (as such term is defined in the 0000 Xxx) for the Trust.
5
| 8. |
Confidential
Information |
The
Distributor agrees on behalf of itself and its managers, officers, and employees to treat
confidentially and as proprietary information of the Trust, all records and other
information relative to the Trust and prior, present or potential shareholders of the
Trust (and clients of said shareholders), and not to use such records and information for
any purpose other than the performance of its responsibilities and duties hereunder,
except (i) after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where the Distributor
may be exposed to civil or criminal contempt proceedings for failure to comply, (ii) when
requested to divulge such information by duly constituted authorities, or (iii) when so
requested by the Trust. Records and other information which have become known to the
public through no wrongful act of the Distributor or any of its employees, agents or
representatives, and information that was already in the possession of the Distributor
prior to receipt thereof from the Trust or its agent, shall not be subject to this
paragraph.
Further,
the Distributor will adhere to the privacy policies adopted by the Trust pursuant to Title
V of the Xxxxx-Xxxxx-Xxxxxx Act, as may be modified from time to time. In this regard, the
Distributor shall have in place and maintain physical, electronic and procedural
safeguards reasonably designed to protect the security, confidentiality and integrity of,
and to prevent unauthorized access to or use of, records and information relating to the
Trust and its shareholders.
The
term of this Agreement shall begin on the date first above written, and unless sooner
terminated as hereinafter provided, this Agreement shall remain in effect from year to
year so long as such continuation shall be specifically approved at least annually by the
Board of Trustees or by vote of a majority of the outstanding voting securities of the
Trust and, concurrently with such approval by the Board of Trustees or prior to such
approval by the holders of the outstanding voting securities of the Trust, as the case may
be, by the vote, cast in person at a meeting called for the purpose of voting on such
approval, of a majority of the trustees of the Trust who are not parties to this Agreement
or interested persons of any such party. The Distributor shall furnish to the Trust,
promptly upon its request, such information as may reasonably be necessary to evaluate the
terms of this Agreement or any extension, renewal or amendment hereof.
| 10. |
Amendment
and Assignment of Agreement |
This
Agreement may not be amended or assigned without the affirmative vote of a majority of the
outstanding voting securities of the Trust, and this Agreement shall automatically and
immediately terminate in the event of its assignment.
| 11. |
Termination
of Agreement |
6
This Agreement may be terminated by either
party hereto, without the payment of any penalty, on not more than upon 60 days’ nor
less than 30 days’ prior notice in writing to the other party; provided, that in the
case of termination by the Trust such action shall have been authorized by resolution of a
majority of the trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, or by vote of a majority of the outstanding voting securities
of the Trust.
| |
A. |
The
captions in this Agreement are included for convenience of reference only
and in no way define or delineate any of the provisions hereof or
otherwise affect their construction or effect. |
| |
B. |
Nothing
herein contained shall be deemed to require the Trust to take any action
contrary to its Declaration of Trust or By-Laws, or any applicable
statutory or regulatory requirement to which it is subject or by which it
is bound, or to relieve or deprive the Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Trust. |
| |
C. |
This
Agreement is made by the Trust on behalf of its various series portfolios,
individually and not jointly. Subject to the terms of the Declaration of
Trust of the Trust, the debts, liabilities, obligations and expenses of
any particular series or class shall be enforceable against the assets of
such series or class only, and not against the assets of any other series
or class. |
Any
question of interpretation of any term or provision of this Agreement having a counterpart
in or otherwise derived from a term or provision of the 1940 Act shall be resolved by
reference to such term or provision of the 1940 Act and to interpretation thereof, if any,
by the United States courts or, in the absence of any controlling decision of any such
court, by rules, regulations or orders of the Securities and Exchange Commission validly
issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the
outstanding voting securities”, “interested persons”,
“assignment”, and “affiliated person”, as used in Paragraphs 9, 10 and
11 hereof, shall have the meanings assigned to them by Section 2(a) of the 1940. In
addition, where the effect of a requirement of the 1940 Act reflected in any provision of
this Agreement is relaxed by a rule, regulation or order of the Securities and Exchange
Commission, whether of special or of general application, such provision shall be deemed
to incorporate the effect of such rule, regulation or order.
| 14. |
Compliance
with Securities Laws |
The
Trust represents that it is registered as an open-end management investment company under
the 1940 Act, and agrees that it will comply with all the provisions of the 1940 Act and
of the rules and regulations thereunder. The Trust and the Distributor each agree to
comply with all of the applicable terms and provisions on the 1940 Act, the 1933 Act and,
subject to the provisions of the 1940 Act, the 1933 Act and, subject to the provisions of
Section 4(d), and all applicable “Blue Sky” laws. The Distributor agrees to
comply with all of the applicable terms and provisions of the Securities Exchange Act of
1934.
7
Any
notice required or permitted to be given by any party to the others shall be in writing
and shall be deemed to have been given on the date delivered personally or by courier
service, or three days after sent by registered or certified mail, postage prepaid, return
receipt requested, or on the date sent and confirmed received by facsimile transmission to
the other parties’ respective addresses as follows: (1) to the Distributor at 0
Xxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000 or (2) to the Trust at 0 Xxxxxx Xxxxxx,
Xxxxx 0000, Xxx Xxxxxxxxx, XX 00000.
This
Agreement shall be governed and construed in accordance with the laws of the State of
California.
Any
provision of this Agreement which may be determined by competent authority to be
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such prohibition or unenforceability without invalidating the
remaining provisions hereof, and any such prohibition or unenforceability in any
jurisdiction shall not invalidate or render unenforceable such provision in any other
jurisdiction. In such case, the parties shall in good faith modify or substitute such
provision consistent with the original intent of the parties.
| 18. |
No
Shareholder Liability |
The
Distributor understands that the obligations of this Agreement are not binding upon any
shareholder of the Trust personally, but bind only the Trust’s property. The
Distributor represents that it has notice of the provisions of the Trust’s
Declaration of Trust disclaiming shareholder liability for acts or obligations of the
Trust.
This
Agreement may be executed on two or more counterparts, each of which when so executed
shall be deemed to be an original, but such counterparts shall together constitute but one
and the same instrument.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by a
duly authorized officer on one or more counterparts as of the date first above written.
| PARNASSUS INCOME FUNDS |
PARNASSUS FUNDS DISTRIBUTOR |
By: ______________________________ |
By: ______________________________ |
Title: _____________________________ |
Title: _____________________________ |
8
