Mutual Fund Dealer Agreement



 Exhibit 10.26 
 Confidential materials omitted and filed 
 separately with the
Securities and Exchange 
 Commission. Asterisks denote omissions. 
 PFS INVESTMENTS INC. 
 MUTUAL FUND DEALER AGREEMENT

 Ladies and Gentlemen: 
 We understand that you are principal underwriter of shares (the “Shares”) of certain mutual funds listed on Schedule A attached hereto (the “Funds”) registered with the Securities and Exchange Commission under the
Investment Company Act of 1940, as amended (“1940 Act”). Legg Mason Investor Services, LLC (“LMIS” or “You”) desires that PFS Investments Inc. (“Dealer” or “PFSI”) act as a dealer with respect to the
sale of Shares to its customers. In consideration of the mutual covenants stated below, you and Dealer agree as follows: 
  

	1.	Purchase of Shares at Public Offering Price. You authorize Dealer, among other things, to receive purchase orders for Shares on your behalf. Dealer will use such
efforts to sell Shares as it in its sole discretion determines in accordance with applicable federal and state laws and rules and regulations, including rules and regulations of relevant self-regulatory organizations (collectively, “Applicable
Law”). Sales of Shares through Dealer will be at the public offering price of such Shares (the net asset value of Shares plus any applicable sales charge), as determined in accordance with the then effective prospectus(es) and statement(s) of
additional information, as such may be amended and supplemented from time-to-time, used in connection with the offer and sale of the Shares (collectively, the “Prospectus”). 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 Prospectus. Dealer agrees to apply any scheduled variation in or waivers of sales charges uniformly
to all customers meeting the qualifications therefor as specified in the Prospectus. Purchases of Shares by PFSI will be effected in the manner and upon the terms described in the Prospectus (including restrictions on frequent trading, imposition of
redemption fees and restrictions on small account balances.) All orders are subject to acceptance or rejection by the applicable Fund or you in the sole discretion of either for any reason. The minimum initial purchase and the minimum subsequent
purchase of any Shares shall be as set forth in the applicable Prospectus. Dealer agrees to comply with provisions of Rule 22c-2 under the 1940 Act as applicable to each Fund (including reporting procedures adopted to comply with the Rule).


  

	2.	Rights of Accumulation and Letters of Intent. With respect to Funds sold with an initial sales charge, Dealer’s customers will be entitled to reduce sales
charges on purchases made under any letter of intent or right of accumulation as described in the Prospectus. In such case, the concession from the public offering price retained by Dealer will be based upon such reduced sales charge; however, if a
Dealer customer fails to fulfill a letter of intent, thereafter you will pay Dealer the amount required to reflect the appropriate concession based on the actual purchases made by the customer. When placing wire trades, Dealer agrees to advise you
of any letter of intent executed by its customer or any available right of accumulation. 

  

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	3.	Exchanges and Redemptions. You further authorize Dealer to receive exchange or redemption orders for Shares on your behalf. Exchanges of Shares between Funds and
redemptions of Shares by a Fund or repurchases of Shares by Dealer will be effected in the manner and subject to or consistent with the terms described in the Prospectus and in accordance with Applicable Law. Exchanges will be subject to such
restrictions and charges as are provided for in the Prospectus. Redemptions and repurchases will be subject to any applicable contingent deferred sales charges, redemption fees or other charges as are provided for in the Prospectus. Any order placed
by Dealer for the repurchase or redemption of Shares is subject to the timely receipt by you or the pertinent Fund’s transfer agent of all required documents in good order. 

  

	4.	Handling and Receipt of Orders. The handling and settlement of purchase, exchange and redemption orders will be subject to the provisions of the Prospectus and
such further procedures as you and Dealer may determine to be appropriate from time-to-time, consistent with this Agreement. You acknowledge and understand that Dealer operates as an introducing broker-dealer that does not hold customer funds or
securities and that Dealer will transmit orders direct to your transfer agent via check and application. You will provide such assistance to Dealer in processing orders as Dealer reasonably requests. You shall notify Dealer of the states or
jurisdictions in which each Fund’s shares are currently available for sale to the public. You shall have no obligation to register or make available Fund shares in any state or jurisdiction. With each order, Dealer will notify you of the state
of residence of the customer to whom the order pertains. Dealer will be responsible for the accuracy, timeliness and completeness of purchase, redemption or exchange orders it transmits to you by wire or telephone. All orders shall be subject to
your confirmation. 

  

	5.	Settlement and Delivery. 

  

	 	A.	Certificates evidencing Shares will not be available. Upon payment for Shares, the Transfer Agent will issue and transmit to Dealer or its customer a confirmation
statement evidencing the purchase of such Shares. Any transaction in uncertificated Shares, including purchases, transfers, redemptions and repurchases, shall be effected and evidenced by book-entry on the records of the Transfer Agent.


  

	 	B.	Dealer will transmit orders (new account applications) direct to your Transfer Agent on a fully disclosed basis, and shares of Funds owned by customers of Dealer will
be held at your Transfer Agent. 

  

	6.	 Shareholder Servicing. For the compensation described in Paragraph 7, on an ongoing basis Dealer will provide shareholder servicing to its
customers who maintain investments in Shares. In so doing, Dealer and its employees and representatives may provide the following services, among others: (a) answer customer inquiries regarding the Funds and customer investments therein;
(b) assist customers in changing dividend options; (c) answer questions about special investment and



  

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withdrawal plans, and assist customers in enrolling in such plans; (d) distribute reports and materials relating to the Funds to customers; (e) assist in the establishment and maintenance of
accurate customer accounts and records, including assisting in processing changes in addresses and other customer information; and (f) assist in processing purchase, exchange and redemption orders. 


  

	7.	Compensation and Expenses. 

  

	 	A.	With respect to Class A Shares that are sold with an initial sales charge, LMIS shall pay to Dealer the sales charge imposed on the purchases of such shares less
any concession from the public offering price as specified in the applicable fund prospectus (the “dealer reallowance”). LMIS shall pay to Dealer the shareholder services fee beginning in the first month after purchase. LMIS shall cause
the dealer reallowance and shareholder service fees due Dealer to be paid in accordance with current payment practices that exist between Dealer and Transfer Agent. 

  

	 	B.	With respect to purchases of Class A shares that are sold without an initial sales charge at the net asset value breakpoint level (other than money market funds),
LMIS will pay a commission to Dealer of up to 1.00% of the purchase price of the shares and LMIS will retain the amount of any contingent deferred sales charge paid on redemption of such shares. LMIS will pay to Dealer the shareholder services fee
on such shares beginning in the thirteenth month after purchase. With respect to purchases of Class A shares of money market funds, LMIS shall pay to Dealer the shareholder services fee beginning in the first month after purchase. LMIS shall
cause the foregoing payments due Dealer to be made in accordance with current payment practices that exist between Dealer and Transfer Agent. LMIS shall pay to Dealer any contingent deferred sales charge received on redemption of Class A shares
that were sold by Dealer prior to December 1, 2007, and such payments shall be made by LMIS on a monthly basis, by wire transfer within ten (10) business days of the end of each month. 

  

	 	C.	With respect to Class B shares, Dealer will pay a commission to its representatives of up to 4.00% of the purchase price of the shares and LMIS shall pay to Dealer the
following: (i) any contingent deferred sales charges received upon redemption of Class B shares held in accounts on which Dealer is the broker-dealer of record, and (ii) the service and distribution fee, as disclosed in the then current
prospectus, received on all shares held in accounts on which Dealer is the broker-dealer of record. LMIS shall cause Transfer Agent to pay amounts due Dealer under this subparagraph in accordance with current payment practices that exist between
Dealer and Transfer Agent. 

  

	 	D.	The shareholder services fees paid to Dealer under Subparagraphs 7.A. B. and C. above shall survive any termination of this Agreement, and shall continue so long as
(i) Dealer provides shareholder services described in Paragraph 6 of this agreement to its customers who hold Shares and (ii) you or a Legg Mason, Inc. affiliate or one of your or their respective successors or assigns is the principal
underwriter for the Funds, unless the continued receipt of each payment would violate Applicable Law. 

  

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	 	E.	You will pay Dealer ongoing trail commission compensation with respect to holdings by customers of Dealer of Shares of Funds with respect to which you pay such
compensation generally to dealers as described in the Prospectus and at such rates as you and Dealer may determine from time to time. Payments under this Subparagraph 7.E. may be in addition to the payment of service fees as described in
Subparagraph 7.D. of this Agreement, and are subject to Applicable Law and this Agreement. Your obligation to make payments to Dealer under this Subparagraph 7.E. shall survive any termination of this Agreement, and shall continue so long as
(i) Dealer’s customers maintain their investments in Shares and (ii) you or a Legg Mason, Inc. affiliate or one of your or their respective successors or assigns is the principal underwriter for the Funds, unless the continued receipt
of each payment would violate Applicable Law. 

  

	 	F.	With respect to expenses not specifically addressed elsewhere in this Agreement, each party hereto will be responsible for the expenses it incurs in acting hereunder.
Consistent with the Prospectus and Applicable Law, from time to time you and Dealer may determine that you will pay or reimburse Dealer for expenses it incurs in connection with selling Shares. 

  

	 	G.	If your payments to Dealer under Subparagraphs 7.E and/or 7.D hereunder in whole or in part are financed by a Fund in accordance with a Fund’s plan of distribution
adopted pursuant to Rule 12b-1 under the 1940 Act, then in the event of the termination, cancellation or modification of such 12b-1 plan by a Fund’s board of directors or trustees or shareholders, Dealer agrees upon notification to waive its
right to receive Rule 12b-1 compensation pursuant to Subparagraphs 7.B. and/or 7.C. until such time, if ever, as you receive payment. 

  

	 	H.	With respect to shares subject to a contingent deferred sales load where Dealer has paid a commission to its representatives from its own resources, the parties agree
to cooperate in the transfer of shares held by customers of PFSI. The remaining contingent deferred sales charge on any such transferred shares will be tracked by PFPC, and, on a monthly basis, LMIS and PFSI shall net settle transferred contingent
deferred sales charges. Such payment shall be paid by wire transfer within ten (10) business days following month end. 

  

	 	I.	Mutual Fund Support Fee. LMIS hereby agrees to pay PFSI, in consideration of the Funds’ participation in PFSI’s retail distribution channel and related
mutual fund sales infrastructure, a Mutual Fund Support Fee (“Fee”) at the rates set forth in the attached Schedule B. LMIS understands and agrees that “participation” as used in the preceding sentence does not in any way mean
exclusive or preferential offering, access or participation, inclusion on any “recommended” list, or preferential consideration in investment recommendations to customers. LMIS shall pay the fee within 30 days of its receipt from PFSI of a
monthly invoice, beginning with the month ending December 31, 2007. LMIS confirms that it will pay the Fee from its own revenues, profits, or retained earnings and not from the assets of the Funds. Both parties will disclose the Fee as may be
required by applicable law and otherwise will comply with all applicable law with respect to the payment or receipt of the Fee 

  

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	8.	Broker-Dealer Regulation. Each party to this Agreement represents that it is a broker-dealer registered with the Securities and Exchange Commission
(“SEC”) and a member of Financial Industry Regulatory Authority (“FINRA”) and each party agrees to notify the other should it cease to be such a member through expulsion or otherwise or if its membership is suspended.


 With respect to the sale of Shares hereunder, you and Dealer agree to abide by the Conduct Rules of FINRA,
including but not limited to the following: 
  

	 	A.	Dealer shall not withhold placing customers’ orders for Shares so as to profit itself as a result of such withholding. Dealer shall not purchase any Shares from
you other than for its own investment or to cover purchase orders already received by it from its customers. 

  

	 	B.	If any Shares purchased by Dealer are repurchased by the Fund which issued such Shares or by you for the account of that Fund, or are tendered for redemption, within
seven (7) business days after confirmation by you of the original purchase order for such Shares, no compensation as set forth in paragraph 7 above will be payable to Dealer with respect to such Shares, and with respect to Shares which are not
sold with an initial sales charge, Dealer will refund to you the full amount of any such compensation paid or allowed to it on the original sale. You agree to notify Dealer in writing of any such repurchase or redemption within fifteen
(15) business days of the date on which the redemption is requested or Share certificates are tendered to you, the pertinent Fund or its Transfer Agent. Termination or cancellation of this Agreement will not relieve the parties from the
requirements of this Subparagraph 8.B. 

  

	 	C.	Neither party to this Agreement will, as principal, purchase any Shares from a customer at a price lower than the net asset value next determined by or for the Fund
that issued such Shares. Nothing in this subparagraph shall prevent Dealer from selling Shares for a customer to you or to the Fund which issued such Shares at the net asset value then quoted by or for such Fund (less any applicable contingent
deferred sales charge or other charges) and charging a fair commission or service fee for handling the transaction. 

  

	9.	Provision of Materials and Fund Information. 

  

	 	A.	You will furnish Dealer with each Fund’s current Prospectuses, periodic reports to Fund shareholders, marketing and other materials you have prepared relating to
the Funds, in such quantities as Dealer reasonably requests 

  

	 	B.	You shall use reasonable efforts to notify Dealer of any departure by a Fund portfolio manager promptly upon your receipt of such notice of an intended departure.


  

	 	C.	You shall make reasonable efforts to provide access to the portfolio manager(s) (or their representatives) of each Fund to the employees and representatives of Dealer,
as designated by Dealer from time-to-time, which access shall be for the limited purpose of conducting due diligence and discussing other significant issues. 

  


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	 	D.	Subject to all Applicable Law, you will promptly notify Dealer (upon your receipt of notice) of all material changes regarding: 

 (a) Proposed or actual mergers, name changes and liquidations 
 (b) Investment objective/strategy changes 
 (c) Proxy statements 
 (d) Changes to Fund’s Prospectus or statement of additional information, and 
 (e) Proposed or actual pricing changes 
  

	10.	Representations by Dealer Concerning the Funds. Dealer and its agents and employees are not authorized to make any representations concerning the Funds or their
Shares except those contained in or consistent with the Prospectus and such other written materials you may provide to Dealer regarding the Funds. 

  

	11.	Prospectus and Materials Delivery to Clients. Dealer will provide each of its customers purchasing Shares with the pertinent prospectus(es) prior to or at the
time of initial purchase. Dealer will provide any customer who so requests with the pertinent statement(s) of additional information. You are responsible for providing to shareholders, at your expense, all shareholder proxy materials, all annual or
interim reports, all prospectuses and prospectus amendments (other than that provided at the time of initial purchase by Dealer), and any other materials required by law, rule or regulation. 

  

	12.	Liability and Indemnification. 

  

	 	A.	You agree to be liable for, to hold Dealer, its officers, directors and employees harmless from and to indemnify each of them for any losses and costs arising from:
(i) any breach by you, your affiliates or their respective officers, directors, employees or agents of any material provision of this Agreement; (ii) any material misstatement in or omission of a material fact from a Fund’s Prospectus
necessary to make the statements in the Prospectus thereof not misleading, or any other sales material you have provided or any other written statements or representations, you or your affiliates and each of your and their respective officers,
directors, employees or agents have made to Dealer relating to the Funds; and (iii) any of your actions, or the actions of your affiliates, relating to the processing of purchase, exchange and redemption orders and the servicing of shareholder
accounts. This indemnity shall not apply to any claims, demands, liabilities, or expenses that arise out of or are based upon any such untrue statement or omission made in reliance upon and in conformity with information furnished by or on behalf of
Dealer to you, any Fund or the Funds’ counsel; and further provided, that in no event shall anything contained herein be so construed as to protect Dealer against any liability to you, any Fund or the shareholders of any Fund to which Dealer
would otherwise be subject by reason of willful misfeasance, recklessness, or gross negligence in the performance of its duties under this Agreement. You shall not be liable for any consequential or punitive damages. 

  

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	 	B.	Dealer agrees to be liable for, to hold you, your officers, directors and employees harmless from and to indemnify them from any losses and costs arising from:
(i) any breach by Dealer, its affiliates or their respective officers, directors, employees or agents of any material provision of this Agreement; (ii) any statements or representations that Dealer or its officers, directors, agents or
employees make concerning the Funds that are inconsistent with either the pertinent Funds’ then-current Prospectus or any other material you have provided or any other written statements or written representations you, your employees and your
affiliates have made to Dealer relating to the Funds; and (iii) any of Dealer’s actions, or the actions of Dealer’s affiliates, relating to the processing of purchase, exchange and redemption orders and the servicing of shareholder
accounts. This indemnity shall not apply to any claims, demands, liabilities, or expenses that arise out of or are based upon any untrue statement or omission made in reliance upon and in conformity with information furnished by or on behalf of you,
any Fund or the Funds’ counsel to Dealer, and further provided, that in no event shall anything contained herein be so construed as to protect you against any liability to Dealer, any Fund or the shareholders of any Fund to which you would
otherwise be subject by reason of willful misfeasance, recklessness, or gross negligence in the performance of your duties under this Agreement. Dealer shall not be liable for any consequential or punitive damages. 

  

	 	C.	The provisions of this Paragraph 12 shall survive the termination of this Agreement. 

  

	13.	Arbitration. If a dispute arises between you and Dealer with respect to this Agreement which the parties are unable to resolve themselves, it shall be settled by
arbitration in accordance with the then-existing FINRA Code of Arbitration Procedure (“FINRA Code”). The parties agree, that to the extent permitted by the FINRA Code, the arbitrator(s) shall be selected from the securities industry.


  

	14.	Anti-Money Laundering. Dealer represents and warrants that it has anti-money laundering policies in place reasonably designed to comply with the applicable
provisions of the Bank Secrecy Act and the USA PATRIOT Act and the regulations thereunder, including, without limitation, Section 352 of the USA Patriot Act, FINRA Rule 3011, and NYSE Rule 445 which include: Anti-Money Laundering/ “Know
Your Customer” policies and procedures; a Customer Identification Program in accordance with Section 326 of the USA Patriot Act; reporting of suspicious activity to government authorities in accordance with applicable law, including
Section 356 of the USA Patriot Act; anti-money laundering training; and an independent testing for compliance. You agree to determine, within a reasonable time after a customer of Dealer opens an account in any of the Funds, whether such
customer appears on any lists of known or suspected terrorists or terrorist organizations (“OFAC list”). Upon discovering that any such customer is identified on an OFAC list, you will, within a reasonable time after making such discovery
and as permitted by applicable law, notify Dealer. Also, you agree to establish (or cause your Transfer Agent to establish) reasonable procedures to monitor the accounts for suspicious activity, and, as permitted by Law, to (i) advise Dealer
when any customer activity is identified for heightened review and upon the filing of a suspicious activity report and (ii) to share information with Dealer about any such account. 

  

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	15.	Confidentiality and Privacy. The parties represent and warrant that they have adopted and implemented procedures to safeguard customer information and records
that are reasonably designed to ensure the security and confidentiality of customer records and information and to ensure compliance with the SEC’s Regulation S-P or other applicable privacy law. Both of us agree on behalf of ourselves, our
affiliates and employees, that the terms of the Agreement, information exchanged thereunder and information about our respective customers and potential customers is confidential and as such shall not be disclosed, sold or used in any way except to
carry out the terms of the Agreement. Notwithstanding the foregoing, such confidential information may be disclosed 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 provisions of this paragraph shall survive termination of the Agreement. The parties further represent and warrant that the
security of their respective computer system is commercially reasonable and reasonably designed to prevent any illegal or injurious activities of persons (including persons outside of the parties) attempting to access a computer system maintained or
operated by or on behalf of one party through the other party’s computer system. 

  

	16.	Duration and Termination. 

  

	 	A.	This Agreement is effective on June 1, 2008. 

  

	 	B.	This Agreement will terminate automatically in the event of its assignment unless both parties consent to such assignment. Notwithstanding anything to contrary in this
Agreement, both parties hereby consent to the assignment of your rights, obligations and responsibilities under this Agreement to Legg Mason Investor Services, LLC. 

  

	 	C.	This Agreement may be terminated at any time in its entirety or with respect to any Fund, without payment of any penalty, by either party, upon giving 30 days written
notice to the other party. 

  

	17.	Miscellaneous. 

  

	 	A.	This Agreement shall be governed by the laws of the State of New York. This Agreement may be amended only upon the written agreement of both parties hereto.


  

	 	B.	 This Agreement and the Amended and Restated Global Distribution Agreement (“GDA”) by and among Legg Mason, Inc. and Citigroup, Inc., dated as
of October 3, 2005 (collectively, the “Covered Agreements”) constitute the entire agreement between you and Dealer in relation to this Agreement and supersede all



  

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prior oral or written agreements between you and Dealer and its predecessors relating to the sale of Shares with respect to the subject matter of this Agreement. Each of you and Dealer
acknowledges and agrees that (i) nothing contained in this agreement is intended to amend or otherwise modify the terms of the GDA applicable to you and Dealer and (ii) in the event that the terms of this Agreement conflict with the terms
of the GDA, the terms of the GDA will control for purposes of this Agreement. 


  

	 	C.	The headings and captions in the Agreement are included for convenience of reference only and in no way define or delimit any of the provisions hereof or otherwise
affect their construction or effect. 

  

	 	D.	If any provision of the Agreement shall be held or made invalid by a court decision, statute, rule or otherwise, the remainder of the Agreement shall not be affected
thereby. 

  

	 	E.	The Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors. 

  

	 	F.	As used in the Agreement, the terms “majority of the outstanding voting securities,” “interested person” and “assignment” shall have the
same meaning as such terms have in the 1940 Act. Any terms defined in the Agreement shall have the meaning provided in the Agreement. 

  

	 	G.	Scheduled A attached to this agreement may be amended from time to time by mutual agreement of the parties pursuant to letter agreement or such other means as mutually
agreed to by the parties. 

  

	18.	Use of Names. Neither party shall use the name of the other party in any manner without the other party’s written consent, except as required by any
applicable federal or state law, rule or regulation, and except pursuant to any mutually agreed upon promotional programs. 

  

	19.	Notice. Notice under this Agreement shall be deemed to have been given on the date it is received in writing by the other party. 

  

	20.	Parties Not Partners. This Agreement shall not be construed to constitute a partnership, joint venture, or agency between you and Dealer and you or any Fund, nor
to create an employer-employee relationship between you and Dealer. Dealer acknowledges that it is an independent contractor, that its business is its own and entirely separate from that of you and the Funds, and that it will not deal with or
represent itself to the public in any other way. 

  

	21.	Services Not Exclusive. Except as otherwise agreed to by the parties or as provided in a Covered Agreement, the services furnished by Dealer hereunder are not to
be deemed exclusive, and Dealer shall be free to furnish similar services to others so long as its services under this Agreement are not impaired thereby. Except as otherwise provided for in a Covered Agreement, this Agreement also does not preclude
any other sales of Share by or through you or any other party. 

  

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	22.	Advertising. You agree to make available sales and advertising materials relating to the Shares as you in your discretion determine appropriate. You represent
and warrant that all such materials comply with Applicable Law. You agree not to distribute sales and advertising materials relating to the Shares at Dealer unless and until they have been reviewed and approved by Dealer’s Marketing Advisory
Unit. Dealer shall have the right to prepare its own marketing memorandums, bulletins, and/or information or related materials (“Marketing Pieces”) relating to any of the Funds or Fund Shares represented by this Agreement; provided,
however, that any information or descriptions regarding the Funds complies with the Fund’s Prospectus and Dealer is responsible for complying with all applicable requirements of law and regulation including, without limitation, any requirements
of filing with the SEC, FINRA, or other entity. Dealer agrees to submit Marketing Pieces intended for public distribution to you prior to distribution or publication. Dealer agrees not to publish or distribute Marketing Pieces without first
receiving any regulatory approval that may be required. 

  

	23.	Records. Each party agrees to maintain all records required of such party by Applicable Law related to the offer and sale of Shares. Upon reasonable request by
one party, the other party will provide access to or make copies of such records the requesting party 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. 

  

			
	Sincerely,
	
	PFS INVESTMENTS INC
		
	By:	 	 /s/ William A. Kelly

		
	Name:	 	William A. Kelly
		
	Title:	 	President and CEO
		
	Dated:	 	  

	
	AGREED AND ACCEPTED
	
	LEGG MASON INVESTOR SERVICES, LLC
		
	By:	 	 /s/ Joel Sauber

		
	Name:	 	 Joel Sauber

		
	Title:	 	 Managing Director

		
	Dated:	 	 6/4/08


  

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 Schedule A 
 LEGG MASON PARTNERS FUNDS 
  

								
	 Investment Category
	  	A Shares	  	 B Shares

	 	  	 Fund # / NASDAQ
	  	 Fund # / NASDAQ
	  	Max $
	 Money Market Funds
	  		  		  		
	 Western Asset Money Market Fund1
	  	 01740 / SBCXX
	  	 944/52470R870/SBOXX
	  	 	N/A
				
	Investment Category	  	A Shares	  	B Shares	  	 
	 Non-Money Market Funds2
	  	 Fund # / NASDAQ
	  	 Fund # / NASDAQ
	  	Max $
	 Taxable Bond / Income Funds
	  		  		  		
	 LMP Diversified Strategic Income Fund
	  	 01830 / SDSAX
	  	 01831 / SLDSX
	  	$	99,999
	 LMP Global High Yield Bond Fund
	  	 SAHYX
	  		  	$	99,999
	 LMP Government Securities Fund
	  	 01635 / SGVAX
	  	 01636 / HGVSX
	  	$	99,999
	 LMP High Income Fund
	  	 SHIAX
	  		  	$	99,999
	 LMP Inflation Management Fund
	  	 SBGLX
	  		  	$	99,999
	 LMP Investment Grade Bond Fund
	  	 01730 / SIGAX
	  	 01731 / HBDIX
	  	$	99,999
	 LMP Lifestyle Allocation 30%
	  	 01760 / SBCPX
	  	 01761 / SBCBX
	  	$	99,999
	 LMP Lifestyle Income Fund
	  	 01750 / SCAAX
	  	 01751 / SCIAX
	  	$	99,999
	 LMP Core Bond Fund
	  	 598 / TRBAX
	  	 599 / TRBBX
	  	$	99,999
	 LMP Core Plus Bond Fund
	  	 016 / SHMGX
	  	 184 / MGVBX
	  	$	99,999
	 Tax Exempt Bond Funds*
	  		  		  		
	 LMP California Municipals Fund
	  	 01840 / SHRCX
	  	 01841 / SCABX
	  	$	99,999
	 LMP Managed Municipals Fund
	  	 01655 / SHMMX
	  	 01656 / SMMBX
	  	$	99,999
	 LMP Massachusetts Municipals Fund
	  	 SLMMX
	  		  	$	99,999
	 LMP New Jersey Municipals Fund
	  	 SHNJX
	  		  	$	99,999
	 LMP New York Municipals Fund
	  	 01850 / SBNYX
	  	 01851 / SMNBX
	  	$	99,999
	 LMP Pennsylvania Municipals Fund
	  	 SBPAX
	  		  	$	99,999
	 Balanced Funds
	  		  		  		
	 LMP Lifestyle Allocation 50%
	  	 01720 / SBBAX
	  	 01721 / SCBBX
	  	$	99,999
	 LMP Lifestyle Allocation 70%
	  	 01790 / SCGRX
	  	 01791 / SGRBX
	  	$	99,999
	 Large Cap Equity / Fund of Funds
	  		  		  		
	 LMP Aggressive Growth Fund
	  	 01800 / SHRAX
	  	 01801 / SAGBX
	  	$	99,999
	 LMP Appreciation Fund
	  	 01710 / SHAPX
	  	 01711 / SAPBX
	  	$	99,999
	 LMP Capital Fund
	  	 SCCAX
	  		  	$	99,999
	 LMP Capital & Income Fund
	  	 01178 / SOPAX
	  	 01017 / SOPTX
	  	$	99,999
	 LMP Convertible Bond Fund
	  	 SCRAX
	  		  	$	99,999
	 LMP Dividend Strategy Fund
	  	 01610 / GROAX
	  	 01611 / GROBX
	  	$	99,999
	 LMP Fundamental Value Fund
	  	 01820 / SHFVX
	  	 01821 / SFVBX
	  	$	99,999
	 LMP Investors Value Fund
	  	 SINAX
	  		  	$	99,999
	 LMP Large Cap Growth Fund
	  	 01860 / SBLGX
	  	 01861 / SBLBX
	  	$	99,999
	 LMP Lifestyle Allocation 85%
	  	 01780 / SCHAX
	  	 01781 / SCHBX
	  	$	99,999
	 LMP Lifestyle Allocation 100%
	  	 01927 / LMLAX
	  	 01928 / LMLBX
	  	$	99,999

  

 11 









								
	 LMP All Cap Fund
	  	 01550 / SPAAX
	  	 01551 / SPBBX
	  	$	99,999
	 LMP Social Awareness Fund
	  	 01770 / SSIAX
	  	 01771 / SESIX
	  	$	99,999
	 Aggressive Bond Funds
	  		  		  		
	 None Approved / Offered
	  	 N/A
	  	 N/A
	  	 	N/A
	 Aggressive Equity Funds
	  		  		  		
	 LMP 130/30 US Large Cap Equity Fund
	  	 LMUAX
	  		  	$	99,999
	 LMP Global Equity Fund
	  	 01408 / CFIPX
	  	 01410 / SILCX
	  	$	99,999
	 LMP Mid Cap Core Fund
	  	 01675 / SBMAX
	  	 01676 / SBMDX
	  	$	99,999
	 LMP Small Cap Growth Fund
	  	 01117 / SASMX
	  	 01217 / SBSMX
	  	$	99,999
	 LMP Small Cap Value Fund
	  	 01647 / SBVAX
	  	 01648 / SBVBX
	  	$	99,999
	 Sector Funds
	  		  		  		
	 LMP Financial Services Fund
	  	 01520 / SBFAX
	  	 01521 / SBFBX
	  	$	99,999
	 International Equity Funds
	  		  		  		
	 LMP Emerging Markets Equity Fund
	  	 SMKAX
	  		  	$	99,999
	 LMP International All Cap Opportunity Fund
	  	 01320 / SBIEX
	  	 01321 / SBIBX
	  	$	99,999

  

	*	Municipal Bond Funds are not an allowable choice for Retirement Plan accounts. 

  

 12 








 Schedule B 
 MUTUAL FUND SUPPORT FEE SCHEDULE 
 The Fee shall be determined
based on purchases by PFSI customers of the Funds offered pursuant to the Agreement, and/or assets of such Funds held by PFSI customers, as more specifically described below. 
  

	A.	Non- Money Market Funds 

 The fee
shall be an annual amount equal to [**] basis points ([**]%) on sales and [**] basis points ([**]%) on the average daily assets held by PFSI customers in the Funds (excluding assets held in tuition savings programs qualifying under Section 529
of the I.R.C.) 
  

	B.	Money Market Funds 

 For the
Western Asset Money Market Fund the fee shall be an annual amount equal to a percentage of the average daily assets held by PFSI customers in the fund. The percentage shall be equal to [**]% of the following sum: (x) the fund’s current net
management fee, minus (y) [**] basis points. An example of the calculation is as follows: net management fee (currently 37 basis points) less [**] basis points, multiplied by [**]% equals a percentage of .135% or 13.5 basis points. 

 
  

	**	Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 

  

 13 








 FIRST AMENDMENT TO 
 MUTUAL FUND DEALER AGREEMENT 
 This First
Amendment to Mutual Fund Dealer Agreement (“Amendment”) is entered into by and among Legg Mason Investor Services, LLC, (“LMIS”) and PFS Investments Inc., (“PFSI”). 
 WHEREAS, the parties entered into a Mutual Fund Dealer Agreement effective as of June 1, 2008, (the “Agreement”).

 WHEREAS, the parties desire to amend the Agreement; 
 NOW, THEREFORE, in consideration of these premises and the terms and conditions set forth herein, the parties agree as follows:

 1. New Schedules. Schedule A and Schedule B of this Amendment, attached hereto, supersede and replace in their
entirety the Schedule A and Schedule B of the Mutual Fund Dealer Agreement dated June 1, 2008. 
 2. Other
Terms. Other than the foregoing, all other terms and conditions of the Agreement shall remain unchanged and in full force and effect and are ratified and confirmed in all respects by the parties to this Amendment. Capitalized terms used
herein and not otherwise defined herein shall have the meanings assigned to such terms in the Agreement. 
 IN WITNESS
WHEREOF, LMIS and PFSI have entered into this First Amendment to Mutual Fund Dealer Agreement on this 1st day of December, 2008. 
  

									
		 	Legg Mason Investor Services, LLC	 		 		 	PFS Investment Inc.
					
	By:	 	 /s/ Mark E. Freemyer
	 		 	By:	 	 /s/ William A. Kelly

	Name:	 	 Mark E. Freemyer
	 		 	Name:	 	William A. Kelly
	Title:	 	 Managing Director
	 		 	Title:	 	President and CEO
	Date:	 	 12/1/08
	 		 	Date:	 	 11/19/08


  

 Page 1 of 4 








 Schedule A 
 LEGG MASON PARTNERS FUNDS 
  

								
	 Investment Category
	  	A Shares	  	 B Shares

	 	  	 Fund # / NASDAQ
	  	 Fund # / NASDAQ
	  	Max $
	 Money Market Funds
	  		  		  		
	 Western Asset Money Market Fund ~
	  	 01740 / LMTXX
	  	 944/52470R870/SBOXX
	  	 	N/A
	 Western Asset Municipal Money Market Fund Exchange A*
	  	 LMUXX
	  		  		
				
	Investment Category	  	A Shares	  	B Shares	  	 
	 Non-Money Market Funds
	  	 Fund # / NASDAQ
	  	 Fund # / NASDAQ
	  	Max $
	 Taxable Bond / Income Funds
	  		  		  		
	 LMP Strategic Income Fund
	  	 01830 / SDSAX
	  	 01831 / SLDSX
	  	$	99,999
	 LMP Government Securities Fund
	  	 01635 / SGVAX
	  	 01636 / HGVSX
	  	$	99,999
	 LMP Corporate Bond Fund
	  	 01730 / SIGAX
	  	 01731 / HBDIX
	  	$	99,999
	 LMP Lifestyle Allocation 30%
	  	 01760 / SBCPX
	  	 01761 / SBCBX
	  	$	99,999
	 LMP Lifestyle Income Fund
	  	 01750 / SCAAX
	  	 01751 / SCIAX
	  	$	99,999
	 LMP Core Bond Fund
	  	 598 / TRBAX
	  	 599 / TRBBX
	  	$	99,999
	 LMP Core Plus Bond Fund
	  	 016 / SHMGX
	  	 184 / MGVBX
	  	$	99,999
	 Tax Exempt Bond Funds*
	  		  		  		
	 LMP California Municipals Fund
	  	 01840 / SHRCX
	  	 01841 / SCABX
	  	$	99,999
	 LMP Managed Municipals Fund
	  	 01655 / SHMMX
	  	 01656 / SMMBX
	  	$	99,999
	 LMP Massachusetts Municipals Fund
	  	 SLMMX
	  		  	$	99,999
	 LMP New Jersey Municipals Fund
	  	 SHNJX
	  		  	$	99,999
	 LMP New York Municipals Fund
	  	 01850 / SBNYX
	  	 01851 / SMNBX
	  	$	99,999
	 LMP Pennsylvania Municipals Fund
	  	 SBPAX
	  		  	$	99,999
	 LMP Intermediate Maturity California Municipals Fund
	  	 ITCAX
	  		  		
	 LMP Intermediate Maturity New York Municipals Fund
	  	 IMNYX
	  		  		
	 LMP Intermediate – Term Municipals
	  	 SBLTX
	  		  		
	 Balanced Funds
	  		  		  		
	 LMP Lifestyle Allocation 50%
	  	 01720 / SBBAX
	  	 01721 / SCBBX
	  	$	99,999
	 LMP Lifestyle Allocation 70%
	  	 01790 / SCGRX
	  	 01791 / SGRBX
	  	$	99,999
	 LMP Convertible Bond Fund
	  	 SCRAX
	  		  	$	99,999
	 Large Cap Equity / Fund of Funds
	  		  		  		
	 LMP Aggressive Growth Fund
	  	 01800 / SHRAX
	  	 01801 / SAGBX
	  	$	99,999
	 LMP Appreciation Fund
	  	 01710 / SHAPX
	  	 01711 / SAPBX
	  	$	99,999
	 LMP Capital Fund
	  	 SCCAX
	  		  	$	99,999
	 LMP Capital & Income Fund
	  	 01178 / SOPAX
	  	 01017 / SOPTX
	  	$	99,999
	 LMP Dividend Strategy Fund
	  	 01610 / GROAX
	  	 01611 / GROBX
	  	$	99,999
	 LMP Equity Income Builder Fund
	  	 LMOAX
	  		  		
	 LMP Fundamental Value Fund
	  	 01820 / SHFVX
	  	 01821 / SFVBX
	  	$	99,999
	 LMP Investors Value Fund
	  	 SINAX
	  		  	$	99,999
	 LMP Large Cap Growth Fund
	  	 01860 / SBLGX
	  	 01861 / SBLBX
	  	$	99,999
	 LMP Lifestyle Allocation 85%
	  	 01780 / SCHAX
	  	 01781 / SCHBX
	  	$	99,999
	 LMP Lifestyle Allocation 100%
	  	 01927 / LMLAX
	  	 01928 / LMLBX
	  	$	99,999
	 LMP All Cap Fund
	  	 01550 / SPAAX
	  	 01551 / SPBBX
	  	$	99,999

  

 Page 2 of 4 









								
	 LMP Social Awareness Fund
	  	 01770 / SSIAX
	  	 01771 / SESIX
	  	$	99,999
	 Aggressive Bond Funds
	  		  		  		
	 LMP Global High Yield Bond Fund
	  	 SAHYX
	  		  	$	99,999
	 LMP High Income Fund
	  	 SHIAX
	  		  	$	99,999
	 LMP Municipal High Income Fund*
	  	 01187 / STXAX
	  	 01287 / AXMTX
	  	$	99,999
	 Aggressive Equity Funds
	  		  		  		
	 LMP 130/30 US Large Cap Equity Fund
	  	 LMUAX
	  		  	$	99,999
	 LMP Global Equity Fund
	  	 01408 / CFIPX
	  	 01410 / SILCX
	  	$	99,999
	 LMP Mid Cap Core Fund
	  	 01675 / SBMAX
	  	 01676 / SBMDX
	  	$	99,999
	 LMP Small Cap Growth Fund
	  	 01117 / SASMX
	  	 01217 / SBSMX
	  	$	99,999
	 LMP Small Cap Value Fund
	  	 01647 / SBVAX
	  	 01648 / SBVBX
	  	$	99,999
	 Sector Funds
	  		  		  		
	 LMP Financial Services Fund
	  	 01520 / SBFAX
	  	 01521 / SBFBX
	  	$	99,999
	 International Equity Funds
	  		  		  		
	 LMP Emerging Markets Equity Fund
	  	 SMKAX
	  		  	$	99,999
	 LMP International All Cap Opportunity Fund
	  	 01320 / SBIEX
	  	 01321 / SBIBX
	  	$	99,999

  

	*	Municipal Bond Funds are not an allowable choice for Retirement Plan accounts 


	~	B Shares are available for exchanges only 

  

 Page 3 of 4 








 Schedule B 
 MUTUAL FUND SUPPORT FEE SCHEDULE 
 The Fee shall be determined
based on purchases by PFSI customers of the Funds offered pursuant to the Agreement, and/or assets of such Funds held by PFSI customers, as more specifically described below. 
  

	A.	Non- Money Market Funds 

 The fee
shall be an annual amount equal to [**] basis points ([**]%) on sales and [**] basis points ([**]%) on the average daily assets held by PFSI customers in the Funds (excluding assets held in tuition savings programs qualifying under Section 529
of the I.R.C.) 
  

	B.	Money Market Funds 

 The fee
shall be an annual amount equal to a percentage of the average daily assets held by PFSI customers in the Funds. The percentage shall be equal to [**]% of the following sum: (x) the Fund’s current net management fee, minus (y) [**]
basis points. An example of the calculation is as follows: net management fee (currently 37 basis points) less [**] basis points, multiplied by [**]% equals a percentage of .135% or 13.5 basis points. 
  
  

	**	Confidential materials omitted and filed separately with the Securities and Exchange Commission. Asterisks denote omissions. 

  

 Page 4 of 4