DISTRIBUTION AGREEMENT
THIS
DISTRIBUTION AGREEMENT is made as of this [29th]
day of
September, 2008, 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 and classes thereof set forth in Annex A 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 said 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., Xxx Xxxxxxxx Xxxxx - Xxxxx 000, X. Xxxxx and Xxxxxx Xxxxxxx,
Xxxxxxxxxx, XX 00000; (b) if to the Trust, at its principal place of business,
Secretary, PFM Funds, Xxx Xxxxxxxx Xxxxx - Xxxxx 000, X. Xxxxx 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
FUNDS
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By:______________________________________
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Name:
Xxxxxxx X. Xxxxx
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Title:
President
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PFM
Fund Distributors, Inc.
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By:______________________________________
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Name:
Xxxxxx X. Xxxxxxxx
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Title:
President
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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 classes of shares of the Funds:
Prime
Series
SNAP®
Fund Class
Institutional
Class
Cash
Management Class
IllinoisPrimeSM
Class
Government
Series
(single
class)
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