FORM OF AMENDMENT OF DISTRIBUTION AGREEMENTS AND ASSUMPTION OF DUTIES AND RESPONSIBILITIES BY PFSI [December 1], 2005
Exhibit (e)(6)
[December 1], 2005
PFS Distributors, Inc.
PFS Investments Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
PFS Investments Inc.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇. ▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Sirs:
Reference is made to that certain distribution agreement (the “Agreement”), dated as of [ ], between [ ],with respect to one or more separate series (each a
“Fund”) and PFS Distributors ___(“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 ___, 2005, and
WHEREAS, PFSD, or its successor, PFSI wishes to serve as principal underwriter and distributor
for the Funds under the terms of the Agreement, as modified and amended by this Amendment;
THEFEFORE, 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
Fund. Capitalized terms not defined in this Amendment shall have the meanings given to them in the
Agreement.
We acknowledge that ▇▇▇▇ ▇▇▇▇▇, Inc. (“▇▇▇▇ ▇▇▇▇▇”) 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 ▇▇▇▇ ▇▇▇▇▇
investment products within the United States and internationally and for Citigroup’s access to
certain ▇▇▇▇ ▇▇▇▇▇ 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 the Fund.
1.2 You may perform any services for any entity, including investment companies that are not
advised or administered by Citigroup Inc. 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 the 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 ▇▇▇▇ ▇▇▇▇▇ Inc. for the Fund (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 Fund and attached hereto as Exhibit A 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
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Fund 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, as amended (“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 Fund which is an
affiliate of ▇▇▇▇ ▇▇▇▇▇, Inc. 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 Fund at the Fund’s reasonable request, including, without
limitation, reports related to the operation and implementation of the Fund’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,
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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 Fund 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 Fund 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 Fund 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 Funds 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 Fund and the Fund’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
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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 Funds 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 Funds 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 Fund current 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 for any Fund may terminate
these printing services at any time upon written notice to PFSI.
(j) The Fund acknowledges that the co-principal underwriter which is affiliated with ▇▇▇▇
▇▇▇▇▇, Inc. 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 Fund’s reasonable request, you will provide access to or make
copies of any such records the Fund 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 Funds 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 Fund, its several officers and Board members, and
any person who controls the Fund 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 Fund, 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.
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, [Name of Fund] |
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Agreed to as of the date first above written:
| PFS Distributors, Inc. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| PFS Investments Inc. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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