Exhibit 23 (m)(5)
[LOGO OF PROFUNDS]
ProFunds Distributors, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
SHAREHOLDER SERVICES AGREEMENT
FOR NON-NASD MEMBERS
Ladies and Gentlemen:
The Board of Trustees of ProFunds (the "Trust"), an open-end management
investment company organized as a Delaware business trust and registered with
the Securities and Exchange Commission (the "SEC") under the Investment Company
Act of 1940 (the "1940 Act"), on behalf of the holders of Service Shares
("Shares") of each of the investment portfolios of the Trust (individually, a
"Fund" and collectively, the "Funds", identified in Schedule A, as amended from
time to time), have adopted a Distribution and Service Plan (the "Plan")
pursuant to Rule 12b-1 under the 1940 Act for the Shares which, among other
things, authorizes ProFunds Distributors, Inc. (the "Distributor"), as principal
underwriter of the Shares of the Funds, to enter into this Agreement with you
(the "Authorized Firm"), concerning the provision of service activities to your
clients, members, or customers ("Customers") who may from time to time
beneficially own such Funds' Shares. The terms and conditions of this Agreement
are as follows:
1. REFERENCE TO PROSPECTUS; DETERMINATION OF NET ASSET VALUE.
1.1 Reference is made to the prospectus for the Shares of each Fund
(individually, a "Prospectus" and collectively, the "Prospectuses") as from
time to time are effective under the Securities Act of 1933 (the "1933
Act"). Terms defined therein and not otherwise defined herein are used
herein with the meaning so defined.
1.2 For purposes of determining the fees payable to you under Section 3, the
average daily net asset value of a Fund's Shares will be computed in the
manner specified in the Trust's registration statement (as the same is in
effect from time to time) in connection with the computation of the net
asset value of such Fund's Shares for purposes of purchases and
redemptions.
2. SERVICES AS AUTHORIZED FIRM.
2.1 The Authorized Firm is hereby authorized and may from time to time
undertake to perform support services to Customers in connection with
investments in the Shares of a Fund, which services may include, but are
not limited to: the provision of personal, continuing services to investors
in each Fund; receiving, aggregating and processing purchase and redemption
orders; providing and maintaining retirement plan records; communicating
periodically with shareholders and answering questions and handling
correspondence from shareholders about their accounts; acting as the sole
shareholder of record and nominee for shareholders; maintaining account
records and providing beneficial owners with account statements; processing
dividend payments; issuing shareholder reports and transaction
confirmations; providing subaccounting services for Fund shares held
beneficially; forwarding shareholder communications to beneficial owners;
receiving, tabulating and transmitting proxies executed by beneficial
owners; general account administration activities; and providing such other
similar services as the Trust may reasonably request to the extent the
Authorized Firm is permitted to do so under applicable statutes, rules, or
regulations. Overhead and other expenses of the Authorized Firm related to
its "service activities," including telephone and other communications
expenses, may be included in the information regarding amounts expended for
such activities.
2.2 The Authorized Firm will provide such office space and equipment, telephone
facilities, and personnel (which may be any part of the space, equipment,
and facilities currently used in the Authorized Firm's business, or any
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personnel employed by the Authorized Firm) as may be reasonably necessary
or beneficial in order to provide such support services with respect to a
Fund's Shares.
2.3 The minimum dollar transaction of a Fund's Shares (including Shares being
acquired by Customers pursuant to any exchange privileges described in the
Fund's Prospectus) shall be the applicable minimum amount set forth in the
Prospectus of such Fund, and no order for less than such amount shall be
processed by the Authorized Firm. The procedures relating to the handling
of orders shall be subject to instructions which the Trust shall forward
from time to time to the Authorized Firm. All orders for a Fund's Shares
are subject to acceptance or rejection by the Trust in its sole discretion,
and the Trust may, in its discretion and without notice, suspend or
withdraw the sale of a Fund's Shares, including the sale of such Shares to
the Authorized Firm for the account of any Customer or Customers.
2.4 In no transaction shall the Authorized Firm act as dealer for its own
account; the Authorized Firm shall act solely for, upon the specific or
pre-authorized instructions of, and for the account of, its Customers. For
all purposes of this Agreement except as specifically provided in section
4.2, the Authorized Firm will be deemed to be an independent contractor,
and will have no authority to act as agent for the Distributor or the Trust
or any dealer of the Shares in any matter or in any respect. No person is
authorized to make any representations concerning the Trust or a Fund's
Shares except those representations contained in the Fund's then-current
Prospectus and Statement of Additional Information and in such printed
information as the Trust or Distributor may subsequently prepare.
2.5 The Authorized Firm and its employees will, upon request, be available
during normal business hours to consult with the Distributor, the Trust or
its designees concerning the performance of the Authorized Firm's
responsibilities under this Agreement. Any person authorized to direct the
disposition of monies paid or payable pursuant to Section 3 of this
Agreement will provide to the Trust's Board of Trustees, and the Trust's
Trustees will review at least quarterly, a written report of the amounts so
expended.
In addition, the Authorized Firm will furnish to the Distributor, the Trust
or its designees such information as the Trust or its designees may
reasonably request (including, without limitation, periodic certifications
confirming the rendering of support services with respect to Shares
described herein), and will otherwise cooperate with the Trust and its
designees (including, without limitation, any auditors designated by the
Trust), in the preparation of reports to the Trust's Board of Trustees
concerning this Agreement and the monies paid or payable pursuant hereto,
as well as any other reports or filings that may be required by law.
3. FEES.
3.1 In consideration of the costs and expenses of furnishing the services and
facilities provided by the Authorized Firm hereunder, and subject to the
limitations of applicable law and regulations, the Authorized Firm will be
compensated monthly at an annual rate of up to but not more than 0.25% of
the average daily net assets of the Fund attributable to the Fund's Shares
which are held in the name of the Authorized Firm for its Customers.
However, no such fee shall be due to the Authorized Firm until the
Distributor receives such fee payments from the applicable Fund. In
addition, the fee will not be paid to the Authorized Firm with respect to
Shares of a Fund that are redeemed or repurchased by the Trust within seven
business days of receipt of confirmation of such sale.
3.2 The fee rate with respect to any Fund may be prospectively increased or
decreased by the Distributor, in its sole discretion, at any time upon
notice to the Authorized Firm.
4. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
4.1 The parties acknowledge that they are financial institutions subject to the
USA Patriot Act of 2001 and the Bank Secrecy Act (collectively, the "AML
Acts") or are otherwise aware of and agree to abide by the AML Acts, by
implementing reasonable procedures to monitor money laundering and by
taking all other necessary actions to adhere to the AML Acts. The parties
acknowledge that the AML Acts require, among other things, that financial
institutions adopt compliance programs to guard against money laundering
and provide for customer identification programs. The parties further
acknowledge that they are in compliance
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and will continue to comply with the AML Acts and applicable anti-money
laundering rules of self-regulatory organizations, including NASD Conduct
Rule 3011, in all relevant respects.
4.2 By written acceptance of this Agreement, the Authorized Firm represents,
warrants, and agrees that: (i) the Authorized Firm will provide to
Customers a schedule of the services it will perform pursuant to this
Agreement and a schedule of any fees that the Authorized Firm may charge
directly to Customers for services it performs in connection with
investments in the Trust on the Customer's behalf; and (ii) any and all
compensation payable to the Authorized Firm by Customers in connection with
the investment of their assets in the Trust will be disclosed by the
Authorized Firm to Customers and will be authorized by Customers and will
not result in an excessive fee to the Authorized Firm.
4.3 The Authorized Firm agrees to comply with all requirements applicable to it
by reason of all applicable laws, including federal and state securities
laws, the Rules and Regulations of the SEC, including, without limitation,
all applicable requirements of the 1933 Act, the Securities Exchange Act of
1934, the Investment Advisers Act of 1940, and the 1940 Act. Upon request,
the Distributor will furnish the Authorized Firm with a list of the states
or other jurisdictions in which the Distributor believes the Shares of the
Funds are qualified for sale, and the Authorized Firm agrees that it will
not purchase a Fund's Shares on behalf of a Customer's account in any
jurisdiction in which such Shares are not qualified for sale. The
Authorized Firm further agrees that it will maintain all records required
by applicable law or otherwise reasonably requested by the Distributor
relating to the services provided by it pursuant to the terms of this
Agreement. The Authorized Firm agrees that it will comply at all times with
the provisions of Rule 22c-1 of the 1940 Act. Purchase and redemption
orders, and payment for shares of a Fund ordered from the Trust, must be
received at the time, and in the manner, as determined by the Trust. All
Orders are subject to acceptance or rejection by the Trust or the relevant
Fund in the sole discretion of either, or by the relevant Fund's transfer
agent acting on the Trust's or the Fund's behalf, and orders shall be
effective only upon receipt in proper form. The Trust may, if necessary,
delay redemption of shares of a Fund to the extent permitted by the 1940
Act. The Authorized Firm may submit a purchase, exchange or redemption
order (an "Order") for shares of a Fund on behalf of a Customer to such
Trust's designated contact in the manner determined by the Trust. Receipt
and acceptance of any such Order on any day the New York Stock Exchange is
open for trading and on which a Fund calculates its net asset value (a
"Business Day") pursuant to SEC rules by the Authorized Firm as limited
agent of the Fund prior to the time that the Fund ordinarily calculates its
net asset value as described from time to time in the Fund's prospectus
(which as of the date of execution of this Agreement is 4:00 p.m. Eastern
Time) shall constitute receipt and acceptance by the Fund on that same
Business Day. To facilitate the Funds' daily trading practices, the
Authorized Firm (i) may be required to provide the Funds with estimated
daily net aggregate trade and other information relating to the Funds at
times and in the manner reasonably specified by the Funds prior to the
close of business on each Business Day and (ii) may be required to provide
the Funds on the following Business Day with a confirmed final report of
the previous Business Day's transaction information related to the Funds at
such times mandated by the Funds.
4.4 Authorized Firm agrees that under no circumstances shall the Distributor be
liable to the Authorized Firm or any other person under this Agreement as a
result of any action by the SEC affecting the operation or continuation of
the Plan.
4.5 Each party hereto agrees that any Nonpublic Personal Information, as the
term is defined in Securities and Exchange Commission Regulation S-P ("Reg
S-P"), that may be disclosed by a party hereunder is disclosed for the
specific purpose of permitting the other party to perform the services set
forth in this Agreement. Each party agrees that, with respect to such
information, it will comply with Reg S-P and any other applicable
regulations and that it will not disclose any Non-Public Personal
Information received in connection with this Agreement to any other party,
except to the extent required to carry out the services set forth in this
Agreement or as otherwise permitted by law.
4.6 The Authorized Firm agrees that the obligations of the parties hereto and
the operation and/or continuation of this Agreement are subject to any
applicable policies of the Trust, as they may be amended from time to time.
The Authorized Firm further agrees that the operation and/or continuation
of this Agreement is subject to: (i)
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the Board of Trustees' evaluation of the services; (ii) any determinations
by the Board of Trustees regarding the nature and quality of and the
compensation for the services; and (iii) any other determinations that the
Board of Trustees deems appropriate.
4.7 The Authorized Firm will make available to the Distributor, promptly upon
request, appropriate books and records as are maintained under this
Agreement, and will furnish to regulatory authorities having the requisite
authority any such books and records and any information or reports in
connection with the Authorized Firm's services under this Agreement that
may be requested, following notice to the Distributor.
4.8 The Funds' prospectus will generically identify the Authorized Firm as a
party that may accept purchase and redemption orders on behalf of a Fund
and will provide: (i) that the Funds have authorized one or more
intermediaries to accept on its behalf purchase and redemption orders that
are in "good order"; (ii) that the intermediaries are authorized to
designate other intermediaries to accept purchase and redemption orders on
the Funds' behalf; (iii) that the Funds will be deemed to have received a
purchase or redemption order when an authorized intermediary or, if
applicable, an intermediary's authorized designee, accepts the order; and
(iv) that customer orders will be priced at the Funds' net asset value next
computed after they are accepted by an authorized intermediary or the
intermediary's designee.
5. EXCULPATION; INDEMNIFICATION.
5.1 The Distributor shall not be liable to the Authorized Firm and the
Authorized Firm shall not be liable to the Distributor except for acts or
failures to act which constitute lack of good faith or gross negligence and
for obligations expressly assumed by either party hereunder. Nothing
contained in this Agreement is intended to operate as a waiver by the
Distributor or by the Authorized Firm of compliance with any applicable
law, rule, or regulation.
5.2 The Authorized Firm will indemnify the Distributor and hold it harmless
from any claims or assertions relating to a breach of any representation or
warranty under this Agreement, failure by the Authorized Firm to maintain
required anti-money laundering procedures (including customer
identification programs), the lawfulness of the Authorized Firm's
participation in this Agreement and the transactions contemplated hereby or
relating to any activities of any persons or entities affiliated with the
Authorized Firm performed in connection with the discharge of its
responsibilities under this Agreement. If any such claims are asserted, the
Distributor shall have the right to manage its own defense, including the
selection and engagement of legal counsel of its choosing, and all costs of
such defense shall be borne by the Authorized Firm.
6. EFFECTIVE DATE; TERMINATION.
6.1 This Agreement will become effective with respect to each Fund on the date
of its acceptance by the Authorized Firm. Unless sooner terminated with
respect to any Fund, this Agreement will continue with respect to a Fund
until terminated in accordance with its terms, provided that the
continuance of the Plan is specifically approved at least annually in
accordance with the terms of the Plan.
6.2 This Agreement will automatically terminate with respect to a Fund in the
event of its assignment (as such term is defined in the 0000 Xxx) or upon
the termination of the Distributor's distribution agreement with the Trust.
This Agreement may be terminated with respect to any Fund by the Trust or
by the Authorized Firm, without penalty, upon sixty days' prior written
notice to the other party. This Agreement may also be terminated with
respect to any Fund at any time without penalty by the vote of a majority
of the Plan Trustees or a majority of the outstanding Shares of a Fund on
sixty days' written notice.
7. GENERAL.
7.1 The Distributor may enter into other similar agreements for the provision
of Shareholder support services with any other person or persons without
the Authorized Firm's consent.
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7.2 Upon receiving the consent of the Distributor, the Authorized Firm may, at
its expense, subcontract with any entity or person concerning the provision
of the services contemplated hereunder; provided, however, that the
Authorized Firm shall not be relieved of any of its obligations under this
Agreement by the appointment of such subcontractor and provided further,
that the Authorized Firm shall be responsible, to the extent provided in
Article 5 hereof, for all acts of such subcontractor as if such acts were
its own.
7.3 This Agreement supersedes any other agreement between the Distributor and
the Authorized Firm relating to support services in connection with a
Fund's Shares and relating to any other matters discussed herein. All
covenants, agreements, representations, and warranties made herein
(including but not limited to those set forth in sections 4 and 5) shall be
deemed to have been material and relied on by each party, notwithstanding
any investigation made by either party or on behalf of either party, and
shall survive the execution and delivery of this Agreement. The invalidity
or unenforceability of any term or provision hereof shall not affect the
validity or enforceability of any other term or provision hereof. The
headings in this Agreement are for convenience of reference only and shall
not alter or otherwise affect the meaning hereof. This Agreement may be
executed in any number of counterparts which together shall constitute one
instrument and shall be governed by and construed in accordance with the
laws (other than the conflict of laws rules) of the Commonwealth of
Massachusetts and shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
7.4 Notices and communications required or permitted hereby will be given to
the following persons at the following addresses or facsimile numbers as
the party receiving such notices or communications may subsequently direct
in writing:
If to the Distributor:
ProFunds Distributors, Inc.
00 Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, XX 00000
Attention: Broker Dealer Compliance
Telephone:
Facsimile:
If to the Authorized Firm:
Attention:
7.5 The Authorized Firm shall for all purposes herein be deemed to be an
independent contractor and shall, unless otherwise expressly provided
herein or authorized by the Distributor from time to time, have no
authority to act for or represent the Distributor in any way or otherwise
be deemed its agent.
7.6 During the term of this Agreement, the Authorized Firm will pay all
ordinary expenses incurred by it in connection with its obligations under
this Agreement.
7.7 Each party acknowledges that the identities of the other party's customers,
as well as information maintained by such other party regarding those
customers, and all computer programs, technical, trade secret or business
information, including, without limitation, financial information, business
or marketing strategies or plans, product development and procedures
developed by such other party or such other party's agents in connection
with this arrangement which is disclosed to the other party hereto or
otherwise obtained by the other party, its affiliates, agents or
representatives during the term of this Agreement, constitute the valuable
property of such other party ("Proprietary Information"). Each party agrees
that should either of them be furnished any Proprietary Information, the
party who acquired such Proprietary Information shall use its best efforts
to hold such information or property in confidence and refrain from using,
disclosing, or distributing any of such information or other property
except (i) with the other party's prior written consent, or (ii) as
required by law or judicial process. Each party acknowledge that any
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breach of the foregoing agreements as to the other party would result in
immediate and irreparable harm to such other party for which there would be
no adequate remedy at law and agree that in the event of a breach such
other party will be entitled to seek equitable relief, as well as such
other relief as any court of competent jurisdiction deems appropriate. Each
party shall promptly notify the other in writing of any unauthorized,
negligent or inadvertent use or disclosure of Proprietary Information. Each
party shall be liable under this Agreement for any use or disclosure in
violation of this Agreement by its employees, attorneys, accountants, or
other advisors or agents. This section 7.7 shall continue in full force and
effect notwithstanding the termination of this Agreement.
7.8 Any and all disputes arising under or in connection with this Agreement
will be finally and exclusively resolved by arbitration under the rules of
arbitration then in effect for the National Association of Securities
Dealers, Inc. or the American Arbitration Association, such organization to
be selected in the sole discretion of the Distributor. The arbitration will
be held in Boston, Massachusetts before three arbitrators who have no
present or former affiliation with any party to this Agreement and who are
knowledgeable about mutual funds, the asset management industry and the
subject of the dispute. Each party will choose one arbitrator, and the two
arbitrators so chosen will choose a third who will chair the proceedings.
In no event will the arbitrators have the authority to make any award that
provides for punitive or exemplary damages. Any decision rendered by the
arbitrators will be binding, final and conclusive upon both parties, and a
judgment thereon may be entered in, and enforced by, any court having
jurisdiction over the party against which an award is entered, or by any
court having jurisdiction over the assets of any party against which an
award is entered, and the parties hereby irrevocably waive any objections
to the jurisdiction of such court based on any ground, including improper
venue or forum non conveniens. Except where clearly prevented by the
subject matter of the dispute, both parties will continue performing their
respective obligations under this Agreement while the dispute is being
resolved. The prevailing party in any claim, action, arbitration, or other
proceeding arising under or in connection with the implementation or
enforcement of this Agreement will be entitled to recover from the other
party all reasonable attorneys' fees incurred in connection therewith.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below.
ProFunds Distributors, Inc.
By:
-------------------------------
Title:
-------------------------------
The foregoing Agreement is hereby
accepted:
----------------------------------
Authorized Firm
By:
Name:
Title:
Date:
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SCHEDULE A
Airlines UltraSector ProFund*
Asia 30 ProFund*
Banks UltraSector ProFund
Basic Materials UltraSector ProFund
Bear ProFund
Biotechnology UltraSector ProFund
Bull ProFund
Consumer Cyclical UltraSector ProFund*
Consumer Non-Cyclical UltraSector ProFund*
Dow 30 ProFund*
Energy UltraSector ProFund
Europe 30 ProFund
Financial UltraSector ProFund
Healthcare UltraSector ProFund
Industrial UltraSector ProFund*
Internet UltraSector ProFund
Large-Cap Growth ProFund
Large-Cap Value ProFund
Leisure Goods & Services UltraSector ProFund*
Mid-Cap Growth ProFund
Mid-Cap ProFund
Mid-Cap Value ProFund
Money Market ProFund
Oil Drilling Equipment & Services UltraSector ProFund*
OTC ProFund
Pharmaceuticals UltraSector ProFund
Precious Metals UltraSector ProFund
Real Estate UltraSector ProFund
Rising Rates Opportunity ProFund
Semiconductor UltraSector ProFund
Short Dow 30 ProFund*
Short Mid-Cap ProFund*
Short OTC ProFund
Short Small-Cap ProFund
Small-Cap Growth ProFund
Small-Cap ProFund
Small-Cap Value ProFund
Technology UltraSector ProFund
Telecommunications UltraSector ProFund
U.S. Government Plus ProFund
UltraBear ProFund
UltraBull ProFund
UltraDow 30 ProFund
UltraJapan ProFund
UltraMid-Cap ProFund
UltraOTC ProFund
UltraShort Dow 30 ProFund*
UltraShort Mid-Cap ProFund*
UltraShort OTC ProFund
UltraShort Small-Cap ProFund*
Utilities UltraSector ProFund
Wireless Communications UltraSector ProFund
*ProFunds has not commenced investment operations.
Dated as of: December 17, 2003
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