AMENDED AND RESTATED UNDERWRITING AGREEMENT FOR
CLASS B SHARES OF
PILGRIM SMALLCAP OPPORTUNITIES FUND
WHEREAS, Northstar Distributors, Inc., a Minnesota corporation, and Northstar
Special Fund, a Massachusetts business trust (the "Fund"), have entered into an
Underwriting Agreement pursuant to which Northstar Distributors, Inc. served as
principal distributor of the Class B shares of the Fund; and
WHEREAS, Northstar Distributors, Inc. has merged with Pilgrim Securities, Inc.,
a Delaware corporation, which merged entity shall be known as Pilgrim
Securities, Inc.; and
WHEREAS, the name of the Fund has been changed to Pilgrim SmallCap Opportunities
Fund; and
WHEREAS, the Board of the Fund wishes to amend and restate the Underwriting
Agreement to reflect that Pilgrim Securities, Inc. shall serve as the new
principal distributor of the Class B shares of the Fund (the "Underwriter") and
the new name of the Fund is Pilgrim SmallCap Opportunities Fund.
NOW, THEREFORE, the Agreement is hereby restated as follows:
1. The Fund hereby appoints the Underwriter as its exclusive agent to
promote the sale and to arrange for the sale of Class B shares of beneficial
interest of the Fund, including both unissued shares and treasury shares,
through broker-dealers or otherwise, in all parts of the United States and
elsewhere throughout the world. The Fund agrees to sell and deliver its Class B
shares, upon the terms hereinafter set forth, as long as it has unissued and/or
treasury Class B shares available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to law and
the Declaration of Trust of the Fund, to accept, for the account of the Fund,
orders for the purchase of its Class B shares, satisfactory to the Underwriter,
as of the time of receipt of such orders by the dealer--or as otherwise
described in the Prospectus of the Fund.
(b) The public offering price of Class B shares shall be the net
asset value per share (as determined by or on behalf of the Fund) of the
outstanding Class B shares of the Fund. The net asset value shall be regularly
determined on every business day as of the time of the regular closing of the
New York Stock Exchange and the public offering price shall become effective as
set forth from time to time in the Fund's Prospectus; such net asset value shall
also be regularly determined, and the public offering price shall become
effective, as of such other times for the regular determination of net asset
value as may be required or permitted by rules of the National Association of
Securities Dealers, Inc. ("NASD") or of the Securities and Exchange Commission
("SEC"). The Fund shall furnish, or cause to be furnished, daily to the
Underwriter, with all possible promptness, a detailed computation of net asset
value of its Class B shares.
(c) (i) In consideration of the Underwriter's services as principal
distributor of the Fund's Class B shares pursuant to this Agreement and in
accordance with the provisions of the Fund's Amended and Restated Distribution
and Service Plan (the "Plan") in respect of such shares the Fund agrees: (I) to
pay to the Underwriter or, at the Underwriter's direction, to a third party,
monthly in arrears on or prior to the 5th business day of the following calendar
month (A) a service fee (the "Service Fee") equal to 0.25 of 1% per annum of the
average daily net asset value of the Class B shares of the Fund outstanding from
time to time, and (B) the Underwriter's "Allocable Portion" (as hereinafter
defined) of a fee (the "Distribution Fee") equal to 0.75 of 1% per annum of the
average daily net asset value of the Class B shares of the Fund outstanding from
time to time, and (II) to withhold from redemption proceeds in respect of Class
B shares of the Fund the Underwriter's Allocable Portion of the Contingent
Deferred Sales Charges ("CDSCs") payable in respect of such redemption as
provided in the Prospectus of the Fund and to pay the same over to the
Underwriter or, at the Underwriter's direction, to a third party, at the time
the redemption proceeds in respect of such redemption are payable to the holder
of the Class B shares redeemed.
(ii) The Underwriter will be deemed to have performed all
services required to be performed in order to be entitled to receive its
Allocable Portion of the Distribution Fee payable in respect of the Class B
shares of the Fund upon the settlement date of each sale of a "Commission Share"
(as defined in the Allocation Schedule attached hereto as Schedule B) of the
Fund taken into account in determining the Underwriter's Allocable Portion of
such Distribution Fees.
(iii) Notwithstanding anything to the contrary set forth in this
Agreement or (to the extent waiver thereof is permitted thereby) applicable law,
the Fund's obligation to pay the Underwriter's Allocable Portion of the
Distribution Fees payable in respect of the Class B shares of the Fund shall not
be terminated or modified for any reason (including a termination of this
Agreement) except to the extent required by a change in the Investment Company
Act of 1940 (the "Act"), the rules thereunder or the Conduct Rules of the NASD,
in each case enacted or promulgated after November 16, 1999, or in connection
with a "Complete Termination" (as hereinafter defined) of the Plan.
(iv) The Fund will not take any action to waive or change any
CDSC in respect of the Class B shares of the Fund, except as provided in the
Fund's Prospectus or statement of additional information as in effect as of the
date hereof, without the consent of the Underwriter and the permitted assigns of
all or any portion of its rights to its Allocable Portion of the CDSCs.
(v) Notwithstanding anything to the contrary in this Agreement,
neither the termination of the Underwriter's role as principal distributor of
the Class B shares of the Fund, nor the termination of this Agreement nor the
termination of the Plan will terminate the Underwriter's right to its Allocable
Portion of the CDSCs in respect of the Class B shares of the Fund.
(vi) Notwithstanding anything to the contrary in this Agreement,
the Underwriter may assign, sell or pledge (collectively, "Transfer") its rights
to the Service Fees and its Allocable Portion of the Distribution Fees and CDSCs
(but not its obligations to the Fund under this Agreement) to raise funds to
make the expenditures related to the distribution of Class B shares of the Fund
and in connection therewith, upon receipt of notice of such Transfer, the Fund
shall pay, or cause to be paid, to the assignee, purchaser or pledgee
(collectively with their subsequent transferees, "Transferees") such portion of
the Underwriter's Service Fees, Allocable Portion of the Distribution Fees and
CDSCs in respect of the Class B shares of the Fund so Transferred. Except as
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provided in (iii) above and notwithstanding anything to the contrary set forth
elsewhere in this Agreement, to the extent the Underwriter has Transferred its
rights thereto to raise funds as aforesaid, the Fund's obligation to pay the
Underwriter's Allocable Portion of the Distribution Fees and CDSCs payable in
respect of the Class B shares of the Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or any defense
whatsoever, at law or equity, including, without limitation, any of the
foregoing based on the insolvency or bankruptcy of the Underwriter (it being
understood that such provision is not a waiver of the Fund's right to pursue the
Underwriter and enforce such claims against the assets of the Underwriter other
than the Underwriter's right to the Distribution Fees and CDSCs in respect of
the Class B shares of the Fund, which have been so transferred in connection
with such Transfer). The Fund agrees that each such Transferee is a third party
beneficiary of the provisions of this clause (vi) but only insofar as those
provisions relate to Distribution Fees and CDSCs transferred to such Transferee.
(vii) For purposes of this Agreement, the term Allocable Portion
of Distribution Fees and CDSCs payable in respect of the Class B shares of the
Fund shall mean the portion of such Distribution Fees and CDSCs allocated to the
Underwriter in accordance with the Allocation Schedule attached hereto as
Schedule B.
(viii) For purposes of this Agreement, the term "Complete
Termination" of the Plan in respect of the Fund means a termination of the Plan
involving the complete cessation of the payment of Distribution Fees in respect
of all Class B shares of the Fund, and the termination of the distribution plans
and the complete cessation of the payment of distribution fees pursuant to every
other Distribution Plan pursuant to Rule 12b-1 under the Act in respect of the
Class B shares of the Fund and any successor fund or any fund acquiring a
substantial portion of the assets of the Fund and for every future class of
shares which has substantially similar characteristics to the Class B shares of
the Fund taking into account the manner of payment and amount of sales charge,
contingent deferred sales charge or other similar charges borne directly or
indirectly by the holders of such shares.
(d) The Underwriter may reallow any or all of the Distribution
and Services Fees and CDSCs which it is paid under this Agreement to such
dealers as the Underwriter may from time to time determine.
(e) The Underwriter may fix quantity discounts and other
similar variances or waivers of the CDSC not inconsistent with the provisions of
the Act; provided however, that the Underwriter shall not impose any commission,
permit any quantity discount, or impose any other similar waiver or variance in
connection with the sale of Class B shares except as disclosed in the Prospectus
of the Fund.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell Class B shares of the Fund and otherwise promote the
sale and distribution and act as Underwriter for the sale and distribution of
the Class B shares of the Fund as such arrangements may profitably be made; but
so long as its does so, nothing herein contained shall prevent the Underwriter
from entering into similar arrangements with other funds and to engage in other
activities. The Fund reserves the right to issue Class B shares in connection
with any merger or consolidation of the Fund with any other investment company
or any personal holding company or in connection with offers of exchange
exempted from Section 22(d) of the Act.
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3. To the extent the Fund shall offer (as set forth in the Fund's
Prospectus) to provide physical certificates evidencing ownership of Class B
shares, upon receipt by the Fund at its principal place of business of a written
order from the Underwriter, together with delivery instructions, the Fund shall,
as promptly as practicable, cause certificates for the Class B shares called for
in such order to be delivered or credited in such amounts and in such names as
shall be specified by the Underwriter, against payment therefor in such manner
as may be acceptable to the Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the Class B shares of the Fund shall be subject to the
approval of the Fund. The Fund authorizes the Underwriter in connection with the
sale or arranging for the sale of its Class B shares to give only such
information and to make only such statements or representations as are contained
in the Prospectus or in sales literature or advertisements approved by the Fund
or in such financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Fund shall not be responsible in any way for
any information, statements or representations given or made by the Underwriter
or its representatives or agents other than such information, statements and
representations.
5. The Underwriter, as agent of the Fund, is authorized, subject to the
direction of the Fund, to accept Class B shares for redemption at prices
determined as prescribed in the Prospectus of the Fund. Such price shall reflect
the subtraction of the applicable CDSC, if any, computed in accordance with and
in the manner set forth in the Fund's Prospectus. The Fund shall reimburse the
Underwriter monthly for its out-of-pocket expenses reasonably incurred on behalf
of the Fund in carrying out the foregoing authorization. The Underwriter shall
report all redemptions promptly to the Fund.
6. The Fund shall keep the Underwriter fully informed with regard to its
affairs, shall furnish the Underwriter with a certified copy of all financial
statements, and a signed copy of each report, prepared by independent public
accountants and with such reasonable number of printed copies of each annual and
other periodic report of the Fund as the Underwriter may request, and shall
cooperate fully in the efforts of the Underwriter to sell and arrange for the
sale of its Class B shares and in the performance by the Underwriter of all its
duties under this Agreement.
7. The Fund will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of its Class B shares of beneficial
interest under, but not limited to, Federal, state or other regulatory
authority, fees of filing periodic reports with regulatory bodies and of
preparing, setting in type and printing the Prospectus and any amendments
thereto prepared for use in connection with the offering of Class B shares of
the Fund, for fees and expenses incident to the issuance of Class B shares of
beneficial interest, such as the cost of stock certificates (if offered),
issuance taxes, fees of the transfer agent, including the cost of preparing and
mailing notices to shareholders pertaining to transactions with respect to
shareholders' accounts, dividend disbursing agent's costs, including the cost
for preparing and mailing notices confirming shares acquired by shareholders
pursuant to the reinvestment of dividends and distributions, and the mailing to
shareholders of prospectuses, and notices and reports as may be required from
time to time by regulatory bodies or for such other purposes, except for
purposes of sales by the Underwriter as outlined in paragraph 8 hereof.
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8. The Underwriter shall pay all of its own costs and expenses (other
than expenses and costs heretofore deemed payable by the Fund and other than
expenses which one or more dealers may bear pursuant to any agreement with the
Underwriter) incident to the sale and distribution of the shares issued or sold
hereunder including (a) expenses of printing copies of the Prospectus to be used
in connection with the sale of Class B shares of the Fund at printer's overrun
costs; (b) expenses of printing and distributing or disseminating any other
literature, advertising or selling aids in connection with the offering of Class
B shares for sale (however, the expenses referred to in (a) and (b) do not
include expenses incurred in connection with the preparation, printing and
distribution of the Prospectus or any report or other communication to
shareholders, to the extent that such expenses are necessarily incurred to
effect compliance by the Fund with any Federal or state law or other regulatory
bodies); and (c) expenses of advertising in connection with such offering;
provided, however, that the Underwriter shall not be required to pay for any
such expenses to the extent that they are paid pursuant to the Fund's
distribution plan adopted pursuant to Rule 12b-1 under the Act.
9. The Fund agrees to register, from time to time as necessary,
additional Class B shares with the SEC, State and other regulatory bodies and to
pay the related filing fees therefor and to file such amendments, reports and
other documents as may be necessary in order that there may be no untrue
statement of a material fact in the Registration Statement or Prospectus or that
their may be no omission to state a material fact therein necessary in order to
make the statements therein, in light of the circumstances under which they were
made, not misleading. As used in this Agreement, the term "Registration
Statement" shall mean the Registration Statement most recently filed by the Fund
with the SEC and effective under the Securities Act of 1933, as amended, as such
Registration Statement is amended from time to time, and the term "Prospectus"
shall mean the most recent form of prospectus authorized by the Fund for use by
the Underwriter and by dealers.
10. This Agreement may be terminated at any time on not more than 60 days
written notice, without payment of a penalty, by the Underwriter, by vote of a
majority of the outstanding voting securities as defined in the Act of the Class
B shares of the Fund or by vote of a majority of the Trustees who are not
"interested persons" of the Fund as defined in the Act and who have no direct or
indirect financial interest in the operation of the Plan or in any agreements.
11. This Agreement shall terminate automatically in the event of its
assignment. The term "assignment" for this purpose shall have the meaning
defined in Section 2(a)(4) of the Act.
12. This Agreement has been approved by the Trustees of the Fund and shall
continue in effect for two years from its effective date. Thereafter, this
Agreement shall continue for successive annual periods, provided that such
continuance is specifically approved annually by a majority of the Trustees of
the Fund who are not interested persons of the parties hereto as defined in the
Act and either (a) by vote of a majority of the Trustees of the Fund or (b) by
vote of a majority of the outstanding voting securities of the Class B shares of
the Fund, as defined in the Act.
13. A copy of the Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts and notice is hereby
given that this Agreement is executed on behalf of the Trustees of the Fund as
trustees and not individually and that the obligations of this instrument are
not binding upon the Trustees or holders of shares of the Fund individually but
are binding only upon the assets and property of the Fund.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their officers thereunto duly authorized and to become effective as
of this 16th day of November, 1999.
Attest: PILGRIM SMALLCAP OPPORTUNITIES FUND
By: By:
-------------------------------- ------------------------------------
Attest: PILGRIM SECURITIES, INC.
By: By:
-------------------------------- ------------------------------------
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