1
EXHIBIT 15.12
SERVICING AGREEMENT RELATING TO CLASS B SHARES OF CERTAIN
COMMON SENSE TRUST MUTUAL FUNDS
----------------------------------------
Dear Sir:
This Servicing Agreement (the "Agreement") between PFS Distributors, Inc.
("Distributor"), an indirect subsidiary of Travelers Group Inc., defines the
services to be provided by PFS Investments Inc. ("Dealer") for Class B shares
for which Dealer may receive payment pursuant to the Class B Distribution Plan
(hereinafter referred to as the "Plan") adopted pursuant to Rule 12b-1 under
the Investment Company Act of 1940 (the "Act") by the Common Sense Emerging
Growth Fund, Common Sense International Equity Fund, Common Sense Growth Fund,
Common Sense Growth and Income Fund, the Common Sense Government Fund and the
Common Sense Municipal Bond Fund (the "Funds") of Common Sense Trust (the
"Trust") for which Distributor serves as distributor. Each such Fund has acted
severally and not jointly in adopting the Plan and the Agreement and
hereinafter is referred to severally as the "Fund". The Plan and the Agreement
have been approved by a majority of the Trustees including a majority of the
Trustees who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of the Plan or any related
agreements (the "non-interested Trustees"), cast in person at a meeting called
for the purpose of voting on the Plan. Such approval included a determination
that in the exercise of their reasonable business judgment and in light of
their fiduciary duties, there is a reasonable likelihood that the Plan will
benefit the Fund and its shareholders. The Plan has also been approved by a
vote of a majority of the Fund's outstanding Class B voting securities, as
defined in the Act.
--------------------------------------------------------------------------------
1. To the extent you provide servicing and maintenance of
Customers' accounts who may from time to time, directly or
beneficially own shares of the Funds, including but not
limited to, distributing prospectuses and sales literature,
answering routine Customer inquiries regarding the Fund,
assisting Customers in changing dividend options, account
designations and addresses, and in enrolling into the
pre-authorized check plan, systematic withdrawal plan or any
of several tax sheltered retirement plans offered in
connection with the purchase of shares in the case of those
Funds offering such Plans, assisting in the establishment and
maintenance of customer accounts and records and in the
processing of purchase and redemption transactions, investing
dividends and capital gains
2
distributions automatically in shares and providing such other
services as the Fund or the Customer may reasonably request
("service activities"), we shall pay you at least quarterly a
fee for Class B shares as indicated in each Fund's then
current Prospectus based on the net asset value of Class B
shares of the Fund. Such fee will be payable only so long as
the Plan remains in effect. You understand and agree that you
shall not be paid such quarterly fee until we are in receipt
of the service fee described in the Fund's then current
Prospectus for the period in which you provide the services
described above, and our liability to you for the payment of
such quarterly fee is limited to the proceeds of that Fund's
service fee. No such quarterly fee will be paid to you with
respect to shares purchased by you and redeemed or repurchased
by the Fund or by us as Agent within seven (7) business days
after the date of our confirmation of such purchase. No such
fee shall be payable with respect to shares purchased at net
asset value without a sales charge by investors of the classes
described in the Fund's Prospectus pursuant to Rule 22d-1
under the Act other than classes of net asset value categories
pursuant to Rule 22d-1 as may from time to time be approved by
the Fund. For purposes of this Agreement, "service
activities" shall mean activities covered by the definition of
"service fee" contained in Article III, Section 26(b) of the
Rules of Fair Practice of the National Association of
Securities Dealers, Inc.
--------------------------------------------------------------------------------
2. By accepting such fee you agree to assign a representative to
each account, to require such representative to contact the
Customer regularly and to pay at least a portion of such fee
to such representative. Additionally, you understand that
Distributor will monitor service levels which you provide to
your Customers pursuant to this agreement and that
consistently low levels of service will result in non-payment
of the fee.
--------------------------------------------------------------------------------
3. You agree to use your best efforts to support the asset value
of the Fund to the extent consistent with the suitability
requirements of your Customer. You understand that
Distributor will monitor levels of redemption and that
redemption levels consistently above those dictated by market
conditions will result in non-payment of the fee.
--------------------------------------------------------------------------------
4. This Agreement does not require Dealer to hold Fund shares in
street name or to provide shareholder accounting and record
keeping services for any Customers who are beneficial owners
of Fund shares.
--------------------------------------------------------------------------------
2
3
5. You shall furnish us and the Fund with such information as
shall reasonably be requested by either the Trustees of the
Fund or by us with respect to the fees paid to you pursuant to
this Agreement.
--------------------------------------------------------------------------------
6. We shall furnish to the Trustees of the Fund, for their review
on a quarterly basis, a written report of the amounts expended
under the Plan by us and the purposes for which such
expenditures were made.
--------------------------------------------------------------------------------
7. Neither you nor any of your employees or agents are authorized
to make any representation concerning shares of the Fund
except those contained in the then current Prospectus for the
Fund, and you shall have no authority to act as Agent for the
Fund or for Distributor.
--------------------------------------------------------------------------------
8. This Agreement may be terminated with respect to any Fund at
any time without payment of any penalty by the vote of a
majority of the non-interested Trustees or by a vote of a
majority of the Fund's outstanding Class B shares, on sixty
(60) days written notice. It will be terminated by any act
which terminates either the Fund's Underwriting Agreement with
us or the Selling Agreement between Dealer and us and shall
terminate automatically in the event of its assignment as that
term is defined in the Act.
--------------------------------------------------------------------------------
9. The provisions of the Underwriting Agreement between the Fund
and us, insofar as they relate to the Plan, are incorporated
herein by reference. This Agreement shall become effective
upon execution and delivery hereof and shall continue in full
force and effect so long as the continuance of the Plan and
this related Agreement are approved at least annually by a
vote of the Trustees, including a majority of the
non-interested Trustees, cast in person at a meeting called
for the purpose of voting thereon. All communications to us
should be sent to the foregoing address. Any notice to you
shall be duly given if mailed or telegraphed to you at the
address specified by you below.
--------------------------------------------------------------------------------
10. The Declaration of Trust establishing Common Sense Trust, a
copy of which, together with all amendments thereto (the
"Declaration"), is on file in the office of the Secretary of
the Commonwealth of Massachusetts, provides that the name of
the Trust refers to the Trustees under the Declaration
collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder or officer of said
Trust shall be held to any
3
4
personal liability, nor shall resort be had to their private
property for the satisfaction of any obligation or claim or
otherwise in connection with the affairs of said Trust, but
only the assets and property of the Trust, or of the
particular series of the Trust in question, as the case may
be, shall be liable. All obligations under this Agreement
shall apply only on a Fund by Fund basis and the assets of one
Fund shall not be liable for the obligations of any other
Fund.
--------------------------------------------------------------------------------
11. This Agreement shall be construed in accordance with the laws
of the State of Georgia.
PFS DISTRIBUTORS, INC
By:______________________________ Date:______________________________
ACCEPTED:
PFS INVESTMENTS INC.
a Georgia corporation
By:______________________________ Date:______________________________
Name:____________________________
Title:___________________________
4
