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 Allocation Series
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
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Othe 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
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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
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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.
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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 Allocation Series Inc.
By: /s/ R. Xxx Xxxxxx
-------------------------------
Name: R. Xxx Xxxxxx
Title: Chief Executive Officer
Agreed to as of the date first above written:
PFS Distributors, Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
PFS Investments Inc.
By: /s/ Xxxxxxx X. Xxxxx
-------------------------------
Name: Xxxxxxx X. Xxxxx
Title: Chief Executive Officer
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EXHIBIT A
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Fund Date Added:
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Xxxxx Xxxxxx Allocation Series Inc. December 1, 2005
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EXHIBIT B
DEALER AGREEMENT
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