DISTRIBUTION AGREEMENT
This AGREEMENT, dated this the 3rd day of December, 2003, between the PMFM
INVESTMENT TRUST, a statutory trust organized under the laws of the State of
Delaware (the "Trust"), and CAPITAL INVESTMENT GROUP, INC., a North Carolina
corporation (the "Distributor").
WITNESSETH:
WHEREAS, the Trust is engaged in business as an open-end management investment
company and is so registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Trust is authorized to issue an unlimited number of shares of
beneficial interest ("Shares") representing interests in a series of securities
and other assets, as identified in Appendix A (each a "Fund"); and
WHEREAS, the Trust offers the Shares of such Fund and has registered (or will
register) the Shares under the Securities Act of 1933, as amended (the "1933
Act"), pursuant to a registration statement on Form N-1A (the "Registration
Statement"), including a prospectus (the "Prospectus") and a statement of
additional information (the "Statement of Additional Information"); and
WHEREAS, the Trust has adopted a Plan of Distribution Pursuant to Rule 12b-1
under the 1940 Act (the "Distribution Plan") with respect to Shares of certain
of the Fund, and may enter into related agreements providing for the
distribution of such Shares; and
WHEREAS, Distributor has agreed to act as distributor of the Shares of the Fund
for the period of this Agreement;
NOW, THEREFORE, it is hereby agreed between the parties hereto as follows:
1. Appointment of Distributor.
(a) The Trust hereby appoints Distributor its exclusive agent for the
distribution of the Shares of the Fund in jurisdictions wherein such Shares
may be legally offered for sale; provided, however, that the Trust in its
absolute discretion may issue Shares of the Fund in connection with (i) the
payment or reinvestment of dividends or distributions; (ii) any merger or
consolidation of the Trust or of a Fund with any other investment company
or trust or any personal holding company, or the acquisition of the assets
of any such entity or another fund of the Trust; or (iii) any offer of
exchange permitted by Section 11 of the 1940 Act, or any other applicable
provision.
(b) Distributor hereby accepts such appointment as exclusive agent for the
distribution of the Shares of the Fund and agrees that it will sell the
Shares as agent for the Trust at prices determined as hereinafter provided
and on the terms hereinafter set forth, all according to applicable federal
and state laws and regulations and to the Trust Instrument of the Trust.
(c) Distributor may sell Shares of the Fund to or through qualified
securities dealers or others. Distributor will require each dealer or other
such party to conform to the provisions hereof, the Registration Statement
and the Prospectus and Statement of Additional Information, and applicable
law; and neither Distributor nor any such dealers or others shall withhold
the placing of purchase orders for Shares so as to make a profit thereby.
(d) Distributor shall order Shares of the Fund from the Trust only to the
extent that it shall have received purchase orders therefor. Distributor
will not make, or authorize any dealers or others to make: (i) any short
sales of Shares; or (ii) any sales of Shares to any Trustee or officer of
the Trust or to any officer or director of Distributor or of any
corporation or association furnishing investment advisory, managerial or
supervisory services to the Trust, or to any such corporation or
association, unless such sales are made in accordance with the then current
Prospectus and Statement of Additional Information.
(e) Distributor is not authorized by the Trust to give any information or
make any representations regarding the Shares of any Fund, except such
information or representations as are contained in the Registration
Statement or in the current Prospectus or Statement of Additional
Information of the Fund, or in advertisements and sales literature prepared
by or on behalf of the Trust for Distributor's use.
(f) Notwithstanding any provision hereof, the Trust may terminate, suspend
or withdraw the offering of Shares of any Fund whenever, in its sole
discretion, it deems such action to be desirable.
2. Offering Price of Shares. All Funds Shares sold under this Agreement shall be
sold at the public offering price per Share in effect at the time of the sale,
as described in the then current Prospectus of the Fund. The excess, if any, of
the public offering price over the net asset value of the Shares sold by
Distributor as agent shall be retained by Distributor as a commission for its
services hereunder. Out of such commission Distributor may allow commissions or
concessions to dealers and may allow them to others in its discretion in such
amounts as Distributor shall determine from time to time. Except as may be
otherwise determined by Distributor from time to time, such commissions or
concessions shall be uniform to all dealers. At no time shall the Trust receive
less than the full net asset value of the Shares, determined in the manner set
forth in the then current Prospectus and Statement of Additional Information.
Distributor shall also be entitled to such commissions and other fees and
payments as may be authorized by the Trustees of the Trust from time to time
under the Distribution Plan.
3. Furnishing of Information. The Trust shall furnish to Distributor copies of
any information, financial statements and other documents that Distributor may
reasonably request for use in connection with the sale of Shares of the Fund
under this Agreement. The Trust shall also make available a sufficient number of
copies of the Fund's current Prospectus and Statement of Additional Information
for use by the Distributor.
4. Fees and Expenses.
(a) In addition to any commissions, fees or payments authorized by the Trustees
under the Distribution Plan, the Trust will pay or cause to be paid to the
Distributor for services provided and expenses assumed by the Distributor the
fee of $5,000.00 per annum. Such fee shall be paid to the Distributor in monthly
installments.
(b) The Trust will also pay or cause to be paid the following expenses: (i)
preparation, printing and distribution to shareholders of the Prospectus and
Statement of Additional Information; (ii) preparation, printing and distribution
of reports and other communications to shareholders; (iii) registration of the
Shares under the federal securities laws; (iv) qualification of the Shares for
sale in certain states; (v) qualification of the Trust as a dealer or broker
under state law as well as qualification of the Trust as an entity authorized to
do business in certain states; (vi) maintaining facilities for the issue and
transfer of Shares; (vii) supplying information, prices and other data to be
furnished by the Trust under this Agreement; (viii) certain taxes applicable to
the sale or delivery of the Shares or certificates therefore, and (ix) such
other compensation to the Distributor as the Trustees may authorize, from time
to time, in their sole discretion.
(c) Except to the extent such expenses are borne by the Trust pursuant to the
Distribution Plan, Distributor will pay or cause to be paid the following
expenses: (i) payments to sales representatives of the Distributor and to
securities dealers and others in respect of the sale of Shares of the Fund; (ii)
payment of compensation to and expenses of employees of the Distributor and any
of its affiliates to the extent they engage in or support distribution of Fund's
Shares or render shareholder support services not otherwise provided by the
Trust's transfer agent, administrator, or custodian, including, but not limited
to, answering routine inquiries regarding a Fund, processing shareholder
transactions, and providing such other shareholder services as the Trust may
reasonably request; (iii) formulation and implementation of marketing and
promotional activities, including, but not limited to, direct mail promotions
and television, radio, newspaper, magazine and other mass media advertising;
(iv) preparation, printing and distribution of sales literature and of
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Prospectuses and Statements of Additional Information and reports of the Trust
for recipients other than existing shareholders of a Fund; and (v) obtaining
such information, analyses and reports with respect to marketing and promotional
activities as the Trust may, from time to time, reasonably request.
(d) If so request by the Trustees in connection with the Distribution Plan,
Distributor shall prepare and deliver reports to the Trustees of the Trust on a
regular basis, at least quarterly, showing the expenditures with respect to each
Fund pursuant to the Distribution Plan and the purposes therefor, as well as any
supplemental reports as the Trustees of the Trust, from time to time, may
reasonably request.
5. Repurchase of Shares. Distributor as agent and for the account of the Trust
may repurchase Shares of the Fund offered for resale to it and redeem such
Shares at their net asset value.
6. Indemnification by the Trust. In absence of willful misfeasance, bad faith,
gross negligence or reckless disregard of obligations or duties hereunder on the
part of Distributor, the Trust agrees to indemnify Distributor and its officers
and partners against any and all claims, demands, liabilities and expenses that
Distributor may incur under the 1933 Act, or common law or otherwise, arising
out of or based upon any alleged untrue statement of a material fact contained
in the Registration Statement or any Prospectus or Statement of Additional
Information of a Fund, or in any advertisements or sales literature prepared by
or on behalf of the Trust for Distributor's use, or any omission to state a
material fact therein, the omission of which makes any statement contained
therein misleading, unless such statement or omission was made in reliance upon
and in conformity with information furnished to the Trust in connection
therewith by or on behalf of Distributor. Nothing herein contained shall require
the Trust to take any action contrary to any provision of its Agreement and
Declaration of Trust or any applicable statute or regulation.
7. Indemnification by Distributor. Distributor agrees to indemnify the Trust and
its officers and Trustees against any and all claims, demands, liabilities and
expenses which the Trust may incur under the 1933 Act, or common law or
otherwise, arising out of or based upon (i) any alleged untrue statement of a
material fact contained in the Registration Statement or any Prospectus or
Statement of Additional Information of any Fund, or in any advertisements or
sales literature prepared by or on behalf of the Trust for Distributor's use, or
any omission to state a material fact therein, the omission of which makes any
statement contained therein misleading, if such statement or omission was made
in reliance upon and in conformity with information furnished to the Trust in
connection therewith by or on behalf of Distributor; or (ii) any act or deed of
Distributor or its sales representatives, or securities dealers and others
authorized to sell Fund Shares hereunder, or their sales representatives, that
has not been authorized by the Trust in any Prospectus or Statement of
Additional Information of any Fund or by this Agreement.
8. Term and Termination.
(a) With respect to the Fund, this Agreement shall become effective upon the
commencement of operations of such Fund as set forth in the attached appendices.
Unless terminated as herein provided, with respect to the Fund, this Agreement
shall continue in effect for two years from the date of the Fund's commencement
of operations and, with respect to the Fund, shall continue in full force and
effect for successive periods of one year thereafter, but only so long as each
such continuance is approved (i) by either the Trustees of the Trust or by vote
of a majority of the outstanding voting securities (as defined in the 0000 Xxx)
of the Fund and, in either event, (ii) by vote of a majority of the Trustees of
the Trust who are not parties to this Agreement or interested persons (as
defined in the 0000 Xxx) of any such party and who have no direct or indirect
financial interest in this Agreement or in the operation of the Distribution
Plan or in any agreement related thereto ("Independent Trustees"), cast at a
meeting called for the purpose of voting on such approval.
(b) With respect to the Fund, this Agreement may be terminated at any time
without the payment of any penalty by vote of the Trustees of the Trust or a
majority of the Independent Trustees or by vote of a majority of the outstanding
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voting securities (as defined in the 0000 Xxx) of the Fund or by Distributor, on
sixty days' written notice to the other party.
(c) This Agreement shall automatically terminate in the event of its assignment
(as defined in the 1940 Act).
9. Subcontract. The Distributor may, at its expense and with the approval of the
Trustees, appoint another firm or company as its sub-distributor or agent. The
Distributor shall not, however, be relieved of any of its obligations under this
Agreement by the appointment of such sub-distributor or agent.
10. Limitation of Liability. The obligations of the Trust hereunder shall not be
binding upon any of the Trustees, officers or shareholders of the Trust
personally, but shall bind only the assets and property of the Trust. The term
"PMFM Investment Trust" means and refers to the Trustees from time to time
serving under the Agreement and Trust Instrument of the Trust. The execution and
delivery of this Agreement has been authorized by the Trustees, and this
Agreement has been signed on behalf of the Trust by an authorized officer of the
Trust, acting as such and not individually, and neither such authorization by
such Trustees nor such execution and delivery by such officer shall be deemed to
have been made by any of them individually or to impose any liability on any of
them personally, but shall bind only the assets and property of the Trust as
provided in the Agreement and Trust Instrument of Trust.
11. Books and Records. In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Distributor hereby agrees that all records which it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any of such records upon the Trust's request.
12. Notices. Notices of any kind to be given to the Trust hereunder by the
Distributor shall be in writing and shall be duly given if mailed or delivered
to the PMFM Investment Trust, 0000 Xxxxxxxx Xxxx Xxxx - Xxxxx 0000X, Xxxxxx,
Xxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxx or to such other address or to such
individual as shall be so specified by the Trust to the Distributor. Notices of
any kind to be given to the Distributor hereunder by the Trust shall be in
writing and shall be duly given if mailed or delivered to the Capital Investment
Group, Inc., X.X. Xxx 0000, Xxxxx Xxxxx, XX 00000, or at such other address or
to such individual as shall be so specified by the Distributor to the Trust.
Notices shall be effective upon delivery.
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IN WITNESS THEREOF, the parties hereto have caused this Agreement to be executed
as of the date first written above.
PMFM INVESTMENT TRUST
By: /s/ Xxxxxxx X. Xxxxxxx
________________________________
Name: Xxxxxxx X. Xxxxxxx
Title: President
CAPITAL INVESTMENT GROUP, INC.
By: /s/ Xxxxxxx X. Xxxxxx
________________________________
Name: Xxxxxxx X. Xxxxxx
Title: President
APPENDIX A
Dated as of December ___, 2003
PMFM Moderate Portfolio Trust
Date Fund commenced operations:
