Exhibit 23(e)(2)
[LOGO OF PROFUNDS]
ProFunds Distributors, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx, Xxxx 00000-0000
DEALER AGREEMENT
FOR INVESTOR CLASS SHARES
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 Investor Class shares
("Shares") of each of the investment portfolios of the Trust as set forth on
Schedule A (individually, a "Fund" and collectively, the "Funds"), 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 sale of Shares to your clients, members, or customers
("Customers"). 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.
2. ACTIVITIES PERFORMED BY AUTHORIZED FIRM.
2.1 The Authorized Firm is specifically authorized to distribute the Prospectus
and Statement of Additional Information and any sales material received
from the Distributor. No person is authorized to distribute any other sales
material relating to a Fund without the Distributor's prior written
approval. The Authorized Firm further agrees to deliver, upon the
Distributor's request, copies of any relevant amended Prospectus and
Statement of Additional Information to Customers to whom it has sold
Shares. As agent for its Customers, the Authorized Firm shall not withhold
placing Customers' orders for any Shares so as to profit itself as a result
of such withholding and shall not purchase any Shares from the Distributor
except for the purpose of covering purchase orders already received.
Notice will be given to the Authorized Firm of any repurchase or redemption
within ten days of the date on which the tender of Shares for redemption is
delivered to the Distributor or to the Trust. Neither party to this
Agreement shall purchase any Shares from a record holder at a price lower
than the net asset value next computed by or for the Trust. Nothing in this
subparagraph shall prevent the Authorized Firm from selling Shares for the
account of a record holder to the Distributor or the Trust and charging the
investor a fair commission for handling the transaction. Any order placed
by the Authorized Firm for the repurchase of Shares of a Fund is subject to
the timely receipt by the Trust or its designee of all required documents
in good order. If such documents are not received within a reasonable time
after the order is placed, the order is subject to cancellation, in which
case the Authorized Firm agrees to be responsible for any loss resulting to
the Trust or to the Distributor from such cancellation.
The Distributor will furnish the Authorized Firm, upon request, with
offering prices for the Shares in accordance with the then-current
Prospectuses and Statement of Additional Information for the Funds, and the
Authorized Firm agrees to quote such prices subject to confirmation by the
Distributor on any Shares offered to the Authorized Firm for sale. The
public offering price shall equal the net asset value per Share of a Fund.
Each price is always subject to confirmation, and will be based upon the
net asset value next computed after receipt by the Trust or its designee of
an order that is in good form. The Authorized Firm acknowledges that it is
its responsibility to
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date and time stamp all orders received by it and to transmit such orders
promptly to the Trust or its designee. The Authorized Firm further
acknowledges that any failure to promptly transmit such orders that causes
a purchaser of Shares to be disadvantaged, based upon the pricing
requirements of Rule 22c-1 under the 1940 Act, shall be its sole
responsibility. The Distributor reserves the right to terminate this
Agreement at any time, effective immediately, if any Shares shall be
offered for sale by the Authorized Firm at less than the then-current
offering price determined by or for the applicable Fund.
With respect to orders that are placed for the purchase of Shares, unless
otherwise agreed, settlement shall be made with the Trust within three (3)
business days after acceptance of the order. If payment is not so received
or made, the Distributor reserves the right to cancel the sale, or, at its
option, to sell the Shares to the Funds at the then prevailing net asset
value. In this event or in the event that the Authorized Firm cancels the
trade for any reason, the Authorized Firm agrees to be responsible for any
loss resulting to the Funds or to the Distributor from its failure to make
payments as aforesaid. The Authorized Firm shall not be entitled to any
gains generated thereby.
The Authorized Firm shall be responsible for the accuracy, timeliness and
completeness of any orders transmitted by it on behalf of its Customers by
wire or telephone for purchases, exchanges or redemptions, and shall
indemnify the Distributor against any claims by its Customers as a result
of its failure to properly transmit their instructions. In addition, the
Authorized Firm agrees to guarantee the signatures of its Customers when
such guarantee is required by the Prospectus of a Fund. In that connection,
the Authorized Firm agrees to indemnify and hold harmless all persons,
including the Distributor and the Funds' Transfer Agent, against any and
all loss, cost, damage or expense suffered or incurred in reliance upon
such signature guarantee.
2.2 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.
2.3 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
3.3, 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.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
3.1 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 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.
3.2 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
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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.
3.3 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, and the
Conduct Rules of the NASD. 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 registered or otherwise 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.
3.4 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.
3.5 The 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 Agreement.
3.6 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 Distributor and 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) the
Board of Trustees' evaluation of this Agreement; and (ii) any other
determinations that the Board of Trustees deems appropriate.
3.7 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
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Authorized Firm's services under this Agreement that may be requested,
following notice to the Distributor.
3.8 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.
4. EXCULPATION; INDEMNIFICATION.
4.1 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.
4.2 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.
5. EFFECTIVE DATE; AMENDMENTS; TERMINATION.
5.1 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.
5.2 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 outstanding Shares of a Fund on sixty days' written notice.
6. GENERAL.
6.1 The Distributor may enter into other similar agreements with any other
person or persons without the Authorized Firm's consent.
6.2 Upon receiving the written 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 4 hereof, for all acts of such subcontractor as if such
acts were its own.
6.3 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
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in Sections 3 and 4) 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.
6.4 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:
6.5 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.
6.6 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 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 6.6 shall continue in full force and
effect notwithstanding the termination of this Agreement.
6.7 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
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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*
UltraSmall-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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