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
xxxxxxxx.Xx 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 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
