EX-99.E2 4 dex99e2.htm AMENDMENT OF DISTRIBUTION AGREEMENT
Exhibit (e)(2)
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 Fundamental Value Fund 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 agreethat (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 amountspayable 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 Agreement 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 Fundamental Value
Fund 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
Xxxxx Xxxxxx Fundamental Value Fund Inc.
Date Added:
December 1, 2005
EXHIBIT B
DEALER AGREEMENT
