AMENDMENT OF DISTRIBUTION AGREEMENT AND ASSUMPTION OF
DUTIES AND RESPONSIBILITIES BY XXXX
Xxxxxxxx 0, 0000
XXX Xxxxxxxxxxxx, Inc.
PFS Investments Inc.
0000 Xxxxxxxxxxxx Xxxx., Xxxx. 000
Xxxxxx, XX 00000-0000
Dear Sirs:
Reference is made to that certain distribution agreement (the
"Agreement"), dated as of June 5, 2000, between Xxxxx Xxxxxx
Investment Funds Inc. (the "Investment Company"),with respect
to one or more separate series listed on Exhibit A (each a
"Fund") and PFS Distributors, Inc. ("PFSD"). This letter
agreement (the "Amendment") incorporates all of the conditions,
responsibilities, representations and other terms of the
Agreement, except as amended or modified in this Amendment.
WHEREAS, PFS Investments Inc. ("PFSI") and PFSD intend to
effect a transaction pursuant to which PFSD will merge with
and into PFSI (the "Merger");
WHEREAS, effective as of the Merger, PFSI, as the successor of
the Merger, is expected to perform all of the responsibilities,
obligations, duties and liabilities of PFSD under that Agreement,
as amended or supplemented by this Amendment, effective December
1, 2005, and WHEREAS, PFSD, or its successor, PFSI, wishes to
serve as principal underwriter and distributor for each Fund
under the terms of the Agreement, as modified and amended by
this Amendment;
THEREFORE, the Investment Company, on behalf of each Fund, PFSD
and PFSI agree that (i) as of the date hereof, PFSD shall discharge,
perform and be liable for such obligations and responsibilities of
PFSD under the Agreement, as amended by this Amendment and (ii)
in the event that the Merger is consummated, from and after the
effective time of the Merger, PFSI shall discharge, perform and
be liable for such obligations and responsibilities of PFSD under
the Agreement, as amended by this Amendment.
Except as expressly amended hereby, the provisions of the Agreement
(after giving effect to the foregoing substitution of parties) will
remain in full force and effect between PFSI and the Investment
Company. Capitalized terms not defined in this Amendment shall
have the meanings given to them in the Agreement.
We acknowledge that Xxxx Xxxxx Inc. ("Xxxx Xxxxx") and Citigroup
Inc. ("Citigroup") have entered into that certain Global
Distribution Agreement (the "Global Distribution Agreement"), dated
as of June 23, 2005, which provides, for a period of three years
from December 1, 2005, for the distribution by Citigroup distributors
of Citigroup investment products and Xxxx Xxxxx investment products
within the United States and internationally and for Citigroup's
access to certain Xxxx Xxxxx investment products pursuant to the
terms of the Global Distribution Agreement.
1. Services as a Non-Exclusive Principal Underwriter and Distributor
Notwithstanding anything to the contrary contained in
the Agreement:
1.1 You shall be, for the period of the Agreement as amended by this
Amendment, a non-exclusive principal underwriter and distributor of
each Fund.
1.2 You may perform any services for any entity, including investment
companies that are not advised or administered by Citigroup or its
subsidiaries.
1.3 You shall retain all rights to the information of your customers,
including, but not limited to, the names, addresses, telephone numbers
and social security numbers of applicants for, purchasers of, and other
customers of each Fund as well as other identity and private information
in respect of your customers, employees, registered representatives and
agents ("Confidential Information"); provided, however, that Confidential
Information shall not include any customer information that: (x) was
previously known by us from a source other than you without obligations
of confidence; (y) was or is rightfully received by us from a third
party without obligations of confidence to you or from publicly available
sources without obligations of confidence to you; or (z) was or is
developed by means independent of information obtained from you.
2. Termination
In addition to the termination rights already contained in the Agreement,
(i) at any time prior to the second anniversary hereof, at your option
you may terminate the Agreement at any time in order for you to enter
into a mutually satisfactory mutual fund dealer agreement with the
principal underwriter that is an affiliate of Xxxx Xxxxx for the
Investment Company (a "Dealer Agreement") and (ii) at any time following
the second anniversary of the date hereof, either party may at its option
terminate the Agreement at any time in order for you to enter into a
Dealer Agreement ; provided, that any such termination shall only be
effective upon execution and delivery of a Dealer Agreement which shall
be, unless the parties thereto otherwise agree, in substantially the form
presented to the Board of the Investment Company and attached hereto as
Exhibit B with such additional changes as may be appropriate to reflect
changes in applicable laws, regulations or industry practice.
3. Dealer and Other Agreements
You may not enter into dealer or similar agreements with unaffiliated
brokers, dealers, banks or other similar firms or recordkeeping, shareholder
servicing and sub-accounting services with unaffiliated intermediaries
without the written consent of the Investment Company or its authorized
designee. No such unaffiliated intermediary is authorized to act as agent
for the Fund in connection with the offering or sale of Shares of the Fund
to the public or otherwise, except for the limited purpose of determining
the time as of which transactions in Shares are deemed to have been received.
4. Compliance Matters
(a) You shall act as a distributor and principal
underwriter of Shares in compliance in all material respects with all
applicable laws, rules and regulations, including, without limitation, all
rules and regulations made or adopted pursuant to (i) the 1940 Act, (ii)
the Securities Exchange Act of 1934 ("1934 Act"), (iii) any securities
association registered under the 1934 Act, including without limitation
the NASD Conduct Rules or rules of any other applicable self-regulatory
organization. You shall offer the Shares, and accept purchases, redemptions
and exchanges for Shares, in compliance with the Fund's registration
statement (including its prospectus and statement of additional information),
as it may be amended or supplemented from time to time ("Registration
Statement"). You will comply with and abide by the terms of a Fund's Plan,
as it may be amended from time to time.
(b) You agree to submit sales literature and marketing
materials (including memorandums, bulletins, and/or information or related
materials) prepared by you intended for public distribution ("PFSI Marketing
Materials") to the co-principal underwriter of the Investment Company which
is an affiliate of Xxxx Xxxxx prior to distribution or publication for
written approval. Such PFSI Marketing Materials shall be for review in
accordance with procedures to be agreed upon by the parties. You shall
be responsible for reviewing and making such filings with the NASD, as
required, of PFSI Marketing Materials relating to each Fund.
(c) You shall adopt and follow procedures for the confirmation
of sales to investors and qualified securities dealers, banks and other
intermediaries (collectively "Intermediaries") timeliness of orders, the
collection of amounts payable by investors and Intermediaries on such sales,
the correction of errors related to distribution of Shares, the cancellation
of unsettled transactions, and assisting with the solicitation of proxies,
and any other matters governed by Rule 38a-1 under the 1940 Act (as may
apply to a distributor or principal underwriter for a registered investment
company), each as may be necessary to comply with the requirements of the
NASD, any other self-regulatory organization, and the federal securities
laws. You shall provide reports or other information to the Investment
Company at the Investment Company's reasonable request, including, without
limitation, reports related to the operation and implementation of the
Investment Company's policies related to customer privacy, safeguarding
of customer information, anti-money-laundering, sales and marketing
practices, the operation of your code of ethics or other policies and
procedures of the Investment Company.
(d) You represent, warrant and agree that you have adopted
and implemented: (i) an anti-money-laundering program in compliance with
the USA Patriot Act of 2001, the regulations thereunder and NASD Conduct
Rules, including, without limitation, customer identification program
procedures, monitoring for suspicious activity, and (ii) procedures to
comply with applicable law and regulation related to cash transaction
reporting requirements, as well as monitoring and reporting under FinCEN,
OFAC and other government watch lists.
(e) The Investment Company agrees that the information exchanged
under the Agreement and information about the respective customers and
potential customers of each is confidential and as such shall not be
disclosed by the Fund, sold or used by the Fund in any way except to
carry out the terms of this Agreement. Notwithstanding the foregoing, such
customer information may be disclosed by the Investment Company on a "need
to know" basis as set forth in applicable privacy rules and regulations.
The obligations regarding confidentiality hereunder shall not apply to any
information which is (i) otherwise publicly available, (ii) already
possessed by the entity to whom the information was disclosed prior to
disclosure hereunder, (iii) independently developed by the entity, or
(iv) disclosed pursuant to law, rule, regulation or court or administrative
order. The Investment Company shall have the right to use any list of
shareholders of the Fund or any other list of investors which it obtains
in connection with its provision of services under this Agreement,
provided that such use is consistent with applicable law and your privacy
policies and those of the Fund, including the provision of information to
the Fund's transfer agent or to agents used for the solicitation of
proxies. You agree that you will comply with all of the foregoing
obligations of this paragraph to the extent that information is treated
as customer information of the Fund under applicable law or regulation,
including without limitation Regulation S-P. Each party further agrees
to take commercially reasonable steps, in accordance with applicable law,
to safeguard customer information. The provisions of this paragraph will
survive termination of the Agreement.
(f) From time to time, each Fund may implement policies,
procedures or charges in an effort to avoid the potential adverse effects
on the Fund of short-term trading by market timers. You agree to provide
other assistance reasonably designed to achieve compliance with these
policies. You will maintain and enforce policies with respect to frequent
trading and share redemption as are reasonable and customary in the
industry. To the extent that accounts are held in street name, you agree
to cooperate with the Investment Company and the Investment Company's
Chief Compliance Officer (including, to the extent practicable, providing
account level sales and redemption information) to assist in compliance
with the frequent trading and redemption fee provisions as set forth in
the Fund's prospectus and other policies set forth in the Fund's
Registration Statement.
(g) Purchases, exchanges and redemptions of Shares through
you will be at the public offering price of such Shares (the net asset
value of the Shares, with appropriate adjustments for any applicable
sales charge), as determined in accordance with the then effective
Registration Statement used in connection with the offer and sale of
the Shares. The public offering price will reflect scheduled variations
in or the elimination of sales charges on sales of Shares either
generally to the public or in connection with special purchase plans,
as described in the Registration Statement. You agree to apply any
scheduled variation in or waivers of sales charges uniformly to all
customers meeting the qualifications therefor as specified in the
Registration Statement. With respect to Funds sold with an initial
sales charge, your customers will be entitled to reduced sales charges
on purchases made under any letter of intent or right of accumulation
as described in the Registration Statement. In such case, the concession
from the public offering price retained by you will be based upon such
reduced sales charge. When placing wire trades, your agree to advise
the Funds of any letter of intent executed by its customer or any
available right of accumulation. The minimum initial purchase and the
minimum subsequent purchase of any Shares shall be as set forth in the
applicable Registration Statement. All orders are subject to acceptance
or rejection by the applicable Fund in its sole discretion for any reason.
(h) The handling and settlement of purchase, exchange and
redemption orders will be subject to the provisions of the Registration
Statement and such further procedures as the Investment Company and you
may determine to be appropriate from time-to-time, consistent with this
Amendment. Citigroup Global Markets' internal systems are suitably
designed to handle such orders. Each Fund shall notify you of the
states or jurisdictions in which its Shares are currently available for
sale to the public. The Investment Company shall have no obligation to
register or make available Fund shares in any state or jurisdiction.
You will be responsible for the accuracy, timeliness and completeness
of purchase, redemption or exchange orders accepted by you.
(i) PFSI may print current Fund prospectuses and
statements of additional information for PFSI's use, which may not
vary in any material respect from the relevant Fund's then-current
prospectus and statement of additional information. PFSI's printing
will comply in all material respects with all applicable legal and
regulatory standards. The Board of the Investment Company may terminate
these printing services at any time upon written notice to PFSI.
(j) The Investment Company acknowledges that the
co-principal underwriter which is affiliated with Xxxx Xxxxx shall be
responsible for reviewing the Registration Statement of each Fund, as
applicable, for the accuracy and completeness of all disclosure
concerning the distribution of Shares and that you shall not have such
responsibility, except, in each case, to the extent the disclosure
information is provided by you or pertains to information concerning
your operations. Notwithstanding the foregoing, nothing in this paragraph
shall alter your responsibilities for complying with the terms of the
Registration Statement in your offering of Shares.
5. Records. Upon the Investment Company's reasonable request, you
will provide access to or make copies of any such records the Investment
Company does not possess in order to: (a) comply with a request from a
government body or self-regulatory organization; (b) verify compliance
by the other party of the terms of this Agreement; or (c) make required
regulatory reports.
6. Section 9 of the 1940 Act. You agree to promptly notify the
Investment Company should you cease to be such a member of the NASD
through expulsion or otherwise or if its membership is suspended or
should you be subject to any limitations on your conduct under Section
9 of the 1940 Act.
7. Indemnification
You agree to indemnify, defend and hold the Investment Company, its
several officers and Board members, and any person who controls the
Investment Company 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 counsel fees
incurred in connection therewith) which the Investment Company, its
officers or Board members, or any such controlling person may incur,
under the 1933 Act or under common law or otherwise, on account of (i)
any act of yours or any of your employees constituting willful misfeasance,
bad faith, or gross negligence in the performance of your duties, (ii)
by reason of your reckless disregard of your obligations and duties under
the Agreement or this Amendment; or (iii) any act of yours or any of your
employees constituting negligence with respect to any services performed
related to printing prospectuses or statements of additional information
for a Fund, as described in Paragraph 4(i) of this Amendment. The
foregoing indemnification provisions supplement the indemnification
provisions of the Agreement. The indemnifications provisions of this
Amendment and the Agreement shall survive the termination of the
greement and/or this Amendment.
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If the foregoing is in accordance with your understanding, kindly
indicate your acceptance of this Amendment by signing and returning
to us the enclosed copy, whereupon this Amendment will become binding
on you.
Very truly yours,
Xxxxx Xxxxxx Investment Funds Inc.
By: _________________________
Name: R. Xxx Xxxxxx
Title: Chief Executive Officer
Agreed to as of the date first above written:
PFS Distributors, Inc.
By: _____________________________
Name:
Title:
PFS Investments Inc.
By: _____________________________
Name:
Title:
EXHIBIT A
Fund Date Added:
Xxxxx Xxxxxx Investment Funds Inc.
-Xxxxx Xxxxxx Investment Grade Bond Fund
-Xxxxx Xxxxxx Small Cap Growth Fund
-Xxxxx Xxxxxx Multiple Discipline Funds
-All Cap Growth and Value Fund
-Global All Cap Growth and Value Fund
-Large Cap Growth and Value Fund
Balanced All Cap Growth and Value Fund
December 1, 2005
EXHIBIT B
DEALER AGREEMENT
