ADVISORY AGREEMENT
AGREEMENT,
made and executed on December 16, 2009 between PFM Funds (herein called the
“Trust”), and PFM ASSET MANAGEMENT LLC, a Delaware limited liability company
(the “Adviser”).
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 desires to appoint the Adviser as investment adviser to Prime Series
(the “Fund”), a series of the Trust;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein
contained, it is agreed between the parties hereto as follows:
1. Delivery of
Documents. The Trust has furnished the Adviser with copies
properly certified or authenticated of each of the following:
(a) The
Trust’s Articles of Trust, as filed with the Clerk of the State Corporation
Commission of the Commonwealth of Virginia on September 25, 2008 and all
amendments thereto (such Articles of Trust, as presently in effect as it shall
from time to time be amended, is herein called the “Articles of
Trust”);
(b) The
Trust’s By-laws, and amendments thereto (such By-laws, as presently in effect
and as it shall from time to time be amended, is herein called the
“By-laws”)
(c) Resolution
of the Trust’s Board of Trustees authorizing the appointment of the Adviser and
approving this Agreement;
(d) The
Trust’s Notification of Registration on Form N-8A under the 1940 Act as filed
with the Securities and Exchange Commission (“SEC”) on December 11, 1986 and all
amendments thereto;
(e) The
Trust’s Registration Statement on Form N-1A under the Securities Act of 1933 as
amended (“1933 Act”) (File No. 33-10754) and under the 1940 Act as filed with
the SEC on December 11, 1987, and all amendments thereto; and
(f) The
Trust’s most recent Prospectuses and Statements of Additional Information (such
Prospectuses, and Statements of Additional Information as presently in effect
and all amendments and supplements thereto are herein called the
“Prospectuses’).
The Trust
will furnish the Adviser from time to time with copies of all amendments of or
supplements to the foregoing.
2. Services. The
Trust hereby appoints the Adviser to act as investment adviser to the Fund for
the period and on the terms set forth in this Agreement. Intending to be legally
bound, the Adviser accepts such appointment and agrees to furnish the services
required herein to the Fund with compensation as hereinafter
provided.
Subject
to the supervision of the Trust’s Board of Trustees the Adviser will provide a
continuous investment program, including investment research and management with
respect to all securities and investments and cash equivalents in the Fund. The
Adviser will compute the Net Asset Value and daily net income of the Fund at the
times and in the manner set forth in the Prospectuses and resolutions of the
Trust’s Board of Trustees. The Adviser will determine from time to time what
securities and other investments will be purchased, retained or sold by the
Fund. The Adviser will provide the services under this Agreement in accordance
with the Fund’s investment objective, policies and restrictions as stated in the
Prospectuses and resolutions of the Trust’s Board of Trustees applicable to the
Fund.
3. Covenants by
Adviser. The Adviser agrees with respect to the services
provided to the Fund that it:
(a) will
conform with all applicable Rules and Regulations of the SEC;
(b) will
use the same skill and care in providing such services as it uses in providing
services to fiduciary accounts for which it has investment
responsibilities;
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(c) will
not make loans to any person to purchase or carry Fund shares, or make loans to
the Fund;
(d) will
place orders pursuant to its investment determinations for the Fund either
directly with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Adviser will attempt to obtain the best net price and
the most favorable execution of its orders. Consistent with the obligation, when
the execution and price offered by two or more brokers or dealers are
comparable, the Adviser may, in its discretion, purchase and sell portfolio
securities from and to brokers and dealers who provide the Trust with research
advice and other services. In no instance will portfolio securities be purchased
from or sold to the Adviser, any sub-adviser, the Fund’s administrator, the
Fund’s distributor, or an affiliated person of the Fund, the Adviser, any
sub-adviser, or the Fund’s distributor; except as permitted under the 1940
Act;
(e) will
maintain all books and records with respect to the securities transactions for
the Fund to the extent agreed upon between the Trust and the Adviser, keep the
Trust’s books of account with respect to the Fund and furnish the Trust’s Board
of Trustees with such periodic and special reports as the Board may reasonably
request with respect to the Fund;
(f) will
treat confidentially and as proprietary information of the Trust all records and
other information relative to the Trust and prior, present or potential
shareholders, and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder (except
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld and may not be withheld and will be deemed
granted where the Adviser may be exposed to civil or criminal contempt
proceedings for failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust).
4. Services Not
Exclusive. The services furnished by the Adviser hereunder are
deemed not to be exclusive, and the Adviser shall be free to furnish similar
services to others so long as its services under this Agreement are not impaired
thereby.
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5. Books and
Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Adviser 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.
The Adviser further agrees to maintain the records required by the following
sections of Rule 31 under the 1940 Act; all in the manner required under Rules
31a-2 and 31a-3; 31a-1(a); 31a-1 (b) (1), (2), (3), (5) through
(11).
6. Expenses. During
the term of this Agreement, the Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions, if any) purchased for the
Fund.
For the
services provided and the expenses assumed with respect to the Fund pursuant to
this Agreement, the Trust will pay the Adviser from the assets belonging to the
Fund and the Adviser will accept as full compensation therefor a fee, computed
daily and paid monthly, at an annual rate of .07 of 1% of the first $1 billion
of average daily net assets of the Fund, .05 of 1% of the next $2 billion of
average daily net assets of the Fund and .04 of 1% of the average daily net
assets of the Fund over $3 billion.
7. Limitation of
Liability. The Adviser shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Trust in connection
with the performance of this Agreement, except a loss resulting from a breach of
fiduciary duty with respect to the receipt of compensation for services or loss
resulting from willful misfeasance, bad faith or gross negligence on the part of
the Adviser in the performance of its duties or from reckless disregard by it of
its obligations and duties under the Agreement. Any person, even though also an
officer, partner, employee, or agent of the Adviser, who may be or become an
officer, Trustee, employee or agent of the Trust, shall be deemed, when
rendering service to the Trust or acting on any business of the Trust (other
than services or business in connection with Adviser’s duties as investment
adviser hereunder), to be rendering such services to or acting solely, for the
Trust and not as an officer, partner, employee or agent or one under the control
or direction of the Adviser even though paid by it.
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8. Duration and
Termination. This Agreement shall become effective as of the
date first written above, and shall continue in effect for a period of two
years. Thereafter if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive annual periods, provided such
continuance is specifically approved at least annually by: (a) the vote of a
majority of those members of the Trust’s Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval; and (b) by a majority of the
Trust’s Board or by vote of a majority of the outstanding voting securities of
the Fund. Notwithstanding the foregoing, this Agreement may be terminated at any
time without the payment of any penalty, by the Trust (by vote of the Trust’s
Board of Trustees or by vote of a majority of the outstanding voting securities
of the Fund), or by the Adviser on sixty days’ written notice. This Agreement
will immediately terminate in the event of its assignment. As used in the
Agreement, the terms “majority of the outstanding voting securities,”
“interested person” and “assignment” shall have the same meaning of such terms
in the 1940 Act.
9. Amendment of this
Agreement. No provision of this Agreement may be changed,
waived, discharged or terminated, except by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought. No material amendment of this Agreement shall be
effective with respect to the Fund until approved by vote of a majority of the
outstanding voting securities of the Fund.
10. Miscellaneous. 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 be not be affected thereby. This Agreement shall be binding upon
and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by Virginia law.
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11. Names. The
names “PFM Funds” and “Trustees of PFM Funds” refer respectively to the Trust
created and the Trustees as Trustees but not individually or personally, acting
from time to time under the Articles of Trust dated September 22, 2008, which is
hereby referred to and a copy of which is on file at the office of the Clerk of
the State Corporation Commission of the Commonwealth of Virginia and the
principal office of the Trust. The obligations of “PFM Funds” entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities, and are not binding upon any
of the Trustees, Shareholders, or representatives of the Trustees personally,
but bind only the Trust’s Property, and all persons dealing with any class of
shares of the Trust must look solely to the Trust’s Property belonging to such
class for the enforcement of any claims against the Trust.
IN
WITNESS WHEREOF, the parties hereto have caused this instrument to be executed
by their Officers designated below as of the day and year first above
written.
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ON
BEHALF OF PRIME SERIES
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BY:
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PFM
ASSET MANAGEMENT LLC
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BY:
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