PILGRIM BANK AND THRIFT FUND, INC.
00 XXXXX XXXXXXX XXXXXX
XXXXXXX, XXXXXXX 00000
November 30, 1998
Pilgrim Securities, Inc.
00 Xxxxx Xxxxxxx Xxxxxx
Xxxxxxx, Xxxxxxx 00000
Re: Amended and Restated Underwriting Agreement
Gentlemen:
Pilgrim Bank and Thrift Fund, Inc. is a Maryland corporation operating as
an open-end management investment company (hereinafter referred to as the
"Company"). The Company is registered as such under the Investment Company Act
of 1940, as amended (the "1940 Act"), and its shares are registered under the
Securities Act of 1933, as amended (the "1933 Act"). The Company desires to
offer and sell the authorized but unissued shares of the Company to the public
in accordance with applicable federal and state securities laws.
You have informed us that Pilgrim Securities, Inc. is registered as a
broker-dealer under the provisions of the Securities Exchange Act of 1934 and is
a member in good standing of the National Association of Securities Dealers,
Inc. You have indicated your desire to act as the exclusive selling agent and
principal underwriter for Company shares. We have been authorized by the Company
to execute and deliver this Agreement to you by a resolution of our Board of
Directors (the "Directors") adopted at a meeting of the Directors, at which a
majority of Directors, including a majority of our Directors who are not
otherwise interested persons of our investment manager or its related
organizations, were present and voted in favor of the said resolution approving
this Amended and Restated Underwriting Agreement. This Amended and Restated
Underwriting Agreement is intended to apply to all Shares of the Funds issued
before or after this amendment..
1. APPOINTMENT OF UNDERWRITER. Upon the execution of this Agreement and in
consideration of the agreements on your part herein expressed and upon the terms
and conditions set forth herein, we hereby appoint you as the exclusive sales
agent for distribution of the shares (other than sales made directly by the
Company without sales charge) and agree that we will deliver to you such shares
as you may sell. You agree to use your best efforts to promote the sale of the
shares, but you are not obligated to sell any specific number of the shares.
2. INDEPENDENT CONTRACTOR. You will undertake and discharge your
obligations hereunder as an independent contractor and shall have no authority
or power to obligate or bind the Company by your actions, conduct or contracts,
except that you are authorized to accept orders for the purchase or repurchase
of the shares as our agent. You may appoint sub-agents or distribute the shares
through dealers (or otherwise) as you may determine necessary or desirable from
time to time. This Agreement shall not, however, be construed as authorizing any
dealer or other person to accept orders for sale or repurchase on our behalf or
to otherwise act as our agent for any purpose.
3. OFFERING PRICE. Shares of the Company shall be offered at a price
equivalent to their net asset value plus, as appropriate, a variable percentage
of the public offering price as a sales load, as set forth in the Company's
Prospectus. On each business day on which the New York Stock Exchange is open
for business, we will furnish you with the net asset value of the shares, which
shall be determined and become effective as of the close of business of the New
York Stock Exchange on that day. The net asset value so determined shall apply
to all orders for the purchase of the shares received by dealers prior to such
determination, and you are authorized in your capacity as our agent to accept
orders and confirm sales at such net asset value; PROVIDED THAT, such dealers
notify you of the time when they received the particular order and that the
order is placed with you prior to your close of business on the day on which the
applicable net asset value is determined. To the extent that our Shareholder
Servicing and Transfer Agent (collectively, "Agent") and the Custodian(s) for
any pension, profit-sharing, employer or self-employed plan receive payments on
behalf of the investors, such Agent and Custodian(s) shall be required to record
the time of such receipt with respect to each payment, and the applicable net
asset value shall be that which is next determined and effective after the time
of receipt by them. In all events, you shall forthwith notify all of the dealers
comprising your selling group and the Agent and Custodian(s) of the effective
net asset value as received from us. Should we at any time calculate our net
asset value more frequently than once each business day, you and we will follow
procedures with respect to such additional price or prices comparable to those
set forth above in this Section 3.
4. SALES COMMISSION.
(a) In respect of each Class of Shares other than Class B Shares:
(i) You shall be entitled to receive a sales commission on the
sale of shares of the Funds in the amounts and according to the procedures set
forth in the Funds' Prospectus then in effect under the 1933 Act (including any
supplements or amendments thereto).
(ii) In addition to the payments of the sales commissions to you
provided for in paragraph 4(a), you may also receive reimbursement for expenses
or a maintenance or trail fee as may be required by and described in the
distribution plans adopted by the Funds pursuant to Rule 12b-1 under the 1940
Act (the "Distribution Plans").
(b) In respect of the Class B Shares of each Fund, the following
provisions shall apply:
(i) In consideration of your services as principal underwriter of
the Funds' Class B Shares pursuant to this Underwriting Agreement and our
distribution plan pursuant to Rule 12b-1 under the 1940 Act in respect of such
shares (the "Class B Distribution Plan"), we agree: (I) to pay to you monthly in
arrears your "Allocable Portion" (as hereinafter defined) of a fee (the
"Distribution Fee") which shall accrue daily in an amount equal to the product
of (A) the daily equivalent of 0.75% per annum multiplied by (B) the net asset
value of the Class B Shares of each Fund outstanding on such day, and (II) to
withhold from redemption proceeds your Allocable Portion of the Contingent
Deferred Sales Charges ("CDSCs") and to pay the same over to you or at your
direction.
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(ii) The Allocation Schedule attached hereto as Schedule A and
each of the provisions set forth in clauses (I) through (V) of the second
sentence of Section 1(A) of the Class B Distribution Plan as in effect on the
date hereof, together with the related definitions, are hereby incorporated
herein by reference with the same force and effect as if set forth herein in
their entirety.
(c) You may allow appointed sub-agents or dealers such commissions or
discounts (not exceeding the total sales commission) as you shall deem
advisable, so long as any such commissions or discounts are set forth in the
Company's then current Prospectus, to the extent required by the applicable
federal and state securities laws.
5. PAYMENT OF SHARES. At or prior to the time of delivery of any of our
shares you will pay or cause to be paid to the Custodian, for our account, an
amount in cash equal to the net asset value of such shares. In the event that
you pay for shares sold by you prior to your receipt of payment from purchasers,
you are authorized to reimburse yourself for the net asset value of such shares
from the offering price of such shares when received by you.
6. REGISTRATION OF SHARES. No shares shall be registered on our books until
(i) receipt by us of your written request therefor; (ii) receipt by the
Custodian and Agent of a certificate signed by an officer of the Company stating
the amount to be received therefor; and (iii) receipt of payment of that amount
by the Custodian. We will provide for the recording of all shares purchased in
unissued form in "book accounts", unless a request in writing for certificates
is received by the Agent, in which case certificates for shares in such names
and amounts as is specified in such writing will be delivered by the Agent, as
soon as practicable after registration thereof on the books.
7. PURCHASES FOR YOUR OWN ACCOUNT. You shall not purchase shares for your
own account for purposes of resale to the public, but you may purchase shares
for your own investment account upon your written assurance that the purchase is
for investment purposes only and that the shares will not be resold except
through redemption by us.
8. SALE OF SHARES TO AFFILIATES. You may sell the shares at net asset
value, plus a varying sales charge as appropriate, pursuant to a uniform offer
described in the Company's current Prospectus (i) to our Directors and officers,
our investment manager or your company or affiliated companies thereof, (ii) to
the bona fide, full time employees or sales representatives of any of the
foregoing who have acted as such for at least ninety (90) days, (iii) to any
trust, pension, profit-sharing, or other benefit plan for such persons, or (iv)
to any other person set forth in the Company's then current Prospectus; PROVIDED
THAT such sales are made in accordance with the rules and regulations under the
1940 Act and that such sales are made upon the written assurance of the
purchaser that the purchases are made for investment purposes only, not for the
purpose of resale to the public and that the shares will not be resold except
through redemption by us.
9. ALLOCATION OF EXPENSES.
(a) We will pay the following expenses in connection with the sales
and distribution of shares of the Company:
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(i) expenses pertaining to the preparation of our audited and
certified financial statements to be included in any amendments
("Amendments") to our Registration Statement under the 1933 Act,
including the Prospectuses and Statements of Additional Information
included therein;
(ii) expenses pertaining to the preparation (including legal
fees) and printing of all Amendments or supplements filed with the
Securities and Exchange Commission, including the copies of the
Prospectuses and Statements of Additional Information included in such
Amendments and the first ten (10) copies of the definitive
Prospectuses and Statements of Additional Information or supplements
thereto, other than those necessitated by or related to your
(including your "Parents") activities where such amendments or
supplements result in expenses which we would not otherwise have
incurred;
(iii) expenses pertaining to the preparation, printing, and
distribution of any reports or communications, including Prospectuses
and Statements of Additional Information, which are sent to our
existing shareholders;
(iv) filing and other fees to federal and state securities
regulatory authorities necessary to register and maintain registration
of the shares; and
(v) expenses of the Agent, including all costs and expenses in
connection with the issuance, transfer and registration of the shares,
including but not limited to any taxes and other governmental charges
in connection therewith.
(b) Except to the extent that you are entitled to reimbursement under
the provisions of any of the Distribution Plans for the Company, you will pay
the following expenses:
(i) expenses of printing additional copies of the Prospectus and
Statement of Additional Information and any amendments or supplements
thereto which are necessary to continue to offer our shares to the
public;
(ii) expenses pertaining to the preparation (excluding legal
fees) and printing of all amendments and supplements to our
Registration Statement if the Amendment or supplement arises from or
is necessitated by or related to your (including your "Parent")
activities where those expenses would not otherwise have been incurred
by us; and
(iii) expenses pertaining to the printing of additional copies,
for use by you as sales literature, of reports or other communications
which have been prepared for distribution to our existing shareholders
or incurred by you in advertising, promoting and selling our shares to
the public.
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10. FURNISHING OF INFORMATION. We will furnish to you such information with
respect to our company and its shares, in such form and signed by such of our
officers as you may reasonably request, and we warrant that the statements
therein contained when so signed will be true and correct. We will also furnish
you with such information and will take such action as you may reasonably
request in order to qualify our shares for sale to the public under the Blue Sky
Laws or in jurisdictions in which you may wish to offer them. We will furnish
you at least annually with audited financial statements of our books and
accounts certified by independent public accountants, and with such additional
information regarding our financial condition, as you may reasonably request
from time to time.
11. CONDUCT OF BUSINESS. Other than the currently effective Prospectus and
Statement of Additional Information, you will not issue any sales material or
statements except literature or advertising which conforms to the requirements
of federal and state securities laws and regulations and which have been filed,
where necessary, with the appropriate regulatory authorities. You will furnish
us with copies of all such material prior to their use and no such material
shall be published if we shall reasonably and promptly object.
You shall comply with the applicable federal and state laws and regulations
where our shares are offered for sale and conduct your affairs with us and with
dealers, brokers or investors in accordance with the Conduct Rules of the
National Association of Securities Dealers, Inc.
12. REDEMPTION OR REPURCHASE WITHIN SEVEN DAYS. If shares are tendered to
us for redemption or are repurchased by us within seven (7) business days after
your acceptance of the original purchase order for such shares, you will
immediately refund to us the full amount of any sales commission (net of
allowances to dealers or brokers) allowed to you on the original sale, and will
promptly, upon receipt thereof, pay to us any refunds from dealers or brokers of
the balance of sales commissions reallowed by you. We shall notify you of such
tender for redemption within ten (10) days of the day on which notice of such
tender for redemption is received by us.
13. OTHER ACTIVITIES. Your services pursuant to this Agreement shall not be
deemed to be exclusive, and you may render similar services and act as an
underwriter, distributor or dealer for other investment companies in the
offering of their shares.
14. TERM OF AGREEMENT. This Agreement shall become effective on the date of
its execution and shall remain in effect for a period of two (2) years from the
date of this Agreement. This Agreement shall continue annually thereafter for
successive one (1) year periods if approved at least annually (i) by a vote of a
majority of the outstanding voting securities of the Company or by a vote of the
Directors of the Company, and (ii) by a vote of a majority of the Directors of
the Company who are not interested persons or parties to this Agreement (other
than as Directors of the Company), cast in person at a meeting called for the
purpose of voting on this Agreement.
15. TERMINATION. This Agreement: (i) may be terminated at any time without
the payment of any penalty, either by vote of the Directors of the Company or by
a vote of a majority of the outstanding voting securities of the Company, on
sixty (60) days' written notice to you; (ii) shall terminate immediately in the
event of its assignment; and (iii) may be terminated by you on sixty (60) days'
written notice to us.
16. SUSPENSION OF SALES. We reserve the right at all times to suspend or
limit the public offering of the shares upon written notice to you, and to
reject any order in whole or in part.
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17. MISCELLANEOUS. This Agreement shall be subject to the laws of the State
of Maryland and shall be interpreted and construed to further and promote the
operation of the Company as an open-end investment company. As used herein, the
terms "Net Asset Value," "Offering Price," "Investment Company," "Open-End
Investment Company," "Assignment," "Principal Underwriter," "Interested Person,"
"Parents," and "Majority of the Outstanding Voting Securities," shall have the
meanings set forth in the 1933 Act and the 1940 Act, as applicable, and the
rules and regulations promulgated thereunder.
18. LIABILITY. Nothing contained herein shall be deemed to protect you
against any liability to us or to our shareholders to which you would otherwise
be subject by reason of willful misfeasance, bad faith or gross negligence in
the performance of your duties hereunder, or by reason of your reckless
disregard of your obligations and duties hereunder.
If the foregoing meets with your approval, please acknowledge your
acceptance by signing each of the enclosed counterparts hereof and returning
such counterparts to us, whereupon this shall constitute a binding agreement as
of the date first above written.
Very truly yours,
PILGRIM BANK AND THRIFT FUND, INC.
By:
---------------------------
Title:
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Agreed to and Accepted:
PILGRIM SECURITIES, INC.
By:
--------------------------------
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SCHEDULE A
to the Underwriting Agreement
UNDERWRITING AGREEMENT ALLOCATION PROCEDURES
CDSCs and Distribution Fees related to Shares of Pilgrim Bank and Thrift
Fund, Inc. (the "Fund") shall be allocated by the Fund among Pilgrim Securities,
Inc. ("PSI") and any replacement principal underwriter for Shares of the Fund
(the "Successor Distributor") in accordance with this Schedule A.
Defined terms used in this Schedule A and not otherwise defined herein
shall have the meaning assigned to them in the Underwriting Agreement for Shares
of the Fund to which this Schedule A is attached. As used herein the following
terms shall have the meanings indicated.
"COMMISSION SHARE" means each Share of the Fund which is issued under
circumstances which would normally give rise to an obligation of the holder of
such Share to pay a CDSC upon redemption of such Share (including, without
limitation, any Share of the Fund issued in connection with a Free Exchange) and
any such Share shall continue to be a Commission Share of the Fund prior to the
redemption (including a redemption in connection with a Free Exchange) or
conversion of such Share, even though the obligation to pay the CDSC may have
expired or conditions for waivers thereof may exist.
"DATE OF ORIGINAL ISSUANCE" means in respect of any Commission Share, the
date with reference to which the amount of the CDSC payable on redemption
thereof, if any, is computed.
"FREE EXCHANGE" means an exchange of a Commission Share of the Fund for a
Commission Share of another Fund under circumstances where the CDSC which would
have been payable in respect of a redemption of the exchanged Commission Share
on the date of such exchange is waived and the Commission Share issued in such
exchange is treated as a continuation of the investment in the Commission Share
exchanged for purposes of determining the CDSC payable if such Commission Share
issued in the exchange is thereafter redeemed.
"FREE SHARE" means each Share of the Fund, other than a Commission Share,
including, without limitation, any Share issued in connection with the
reinvestment of dividends or capital gains.
"INCEPTION DATE" means the first date on which the Fund issued Shares.
"NET ASSET VALUE" means, (i) with respect to the Fund, as of the date any
determination thereof is made, the net asset value of the Fund computed in the
manner such value is required to be computed by the Fund in its reports to its
shareholders, and (ii) with respect to any Share of the Fund as of any date, the
quotient obtained by dividing: (A) the net asset value of the Fund (as computed
in accordance with clause (i) above) allocated to Shares of the Fund (in
accordance with the constituent documents for the Fund) as of such date, by (B)
the number of Shares of the Fund outstanding on such date.
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"OMNIBUS SHARE" means, in respect of the Fund, a Commission Share or Free
Share sold by one of the Selling Agents listed on Exhibit I to this Schedule.
If, subsequent to closing of the Program, PSI and its Transferees reasonably
determine that the Transfer Agent is able to track all Commission Shares and
Free Shares sold by any of the Selling Agents listed on Exhibit I (taking into
account all information provided to the Transfer Agent by such Selling Agent on
a schedule sufficient to enable the Transfer Agent to Complete all required
reports involving such information in a timely manner), in the same manner as
Commission Shares and Free Shares are currently tracked in respect of Selling
Agents not listed on Exhibit I, then Exhibit I shall be amended to delete such
Selling Agent from Exhibit I so that Commission Shares and Free Shares sold by
such Selling Agent will no longer be treated as Omnibus Shares.
"SHARE" means, in respect of the Fund, each Class B share of the Fund.
PART I: ATTRIBUTION OF SHARES
Shares of the Fund, which are outstanding from time to time, shall be
attributed to PSI and any Successor Distributor in accordance with the following
rules;
(1) COMMISSION SHARES OTHER THAN OMNIBUS SHARES:
(a) Commission Shares (excluding Omnibus Shares) attributed to PSI shall be
Commission Shares (excluding Omnibus Shares) the Date of Original Issuance of
which occurred on or after the Inception Date of the Fund and on or prior to the
last day on which PSI acts as principal underwriter of Shares for the Fund.
(b) Commission Shares (excluding Omnibus Shares) attributable to the
Successor Distributor shall be Commission Shares (excluding Omnibus Shares) the
Date of Original Issuance of which occurs on or after the first day on which
such Successor Distributor acts as principal underwriter of Shares for the Fund
and on or prior to the last day such Successor for Distributor acts as principal
underwriter of Shares for the Fund.
(c) A Commission Share (other than an Omnibus Share) of the Fund (the
"ISSUING FUND") issued in consideration of the investment of proceeds of the
redemption of a Commission Share of another Fund (the "REDEEMING FUND") in
connection with a Free Exchange, is deemed to have a Date of Original Issuance
identical to the Date of Original Issuance of the Commission Share of the
Redeeming Fund and any such Commission Share will be attributed to PSI or the
Successor Distributor based upon such Date of Original Issuance in accordance
with Part I(a) and (b) above.
(d) A Commission Share (other than an Omnibus Share) redeemed (other than
in connection with a Free Exchange) or converted to a Class A share is
attributable to PSI or Successor Distributor based upon the Date of Original
Issuance in accordance with Part I(a), (b) and (c) above.
(2) FREE SHARES OTHER THAN OMNIBUS SHARES:
Free Shares (excluding Omnibus Shares) of the Fund outstanding on any date
shall be attributed to PSI or Successor Distributor, as the case may be, in the
same proportion that the Commission Shares (excluding Omnibus Shares) of the
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Fund outstanding on such date are attributed to it on such date; PROVIDED that
if PSI reasonably determines that the Transfer Agent or the Selling Agent is
able to produce monthly reports which track the Date of Original Issuance for
the Commission Shares related to such Free Shares, then the Free Shares shall be
allocated pursuant to clause 1(a), (b) and (c) above.
(3) OMNIBUS SHARES:
Omnibus Shares of the Fund outstanding on any date shall be attributed to
PSI or a Successor Distributor, as the case may be, in the same proportion that
the Commission Shares which are not Omnibus Shares of the Fund outstanding on
such date are attributed to it on such date; PROVIDED that if PSI and its
transferees reasonably determine that the Transfer Agent is able to produce
monthly reports which track the Date of Original Issuance for the Omnibus
Shares, then the Omnibus Shares shall be allocated pursuant to clause 1(a), (b)
and (c) above.
PART II: ALLOCATION OF CDSCS
(1) CDSCS RELATED TO THE REDEMPTION OF COMMISSION SHARES OTHER THAN OMNIBUS
SHARES:
CDSCs in respect of the redemption of Commission Shares which are not
Omnibus Shares shall be allocated to PSI or Successor Distributor depending upon
whether the related redeemed Commission Share is attributable to PSI or
Successor Distributor, as the case may be, in accordance with Part I above.
(2) CDSCS RELATED TO THE REDEMPTION OF OMNIBUS SHARES:
CDSCs in respect of the redemption of Omnibus Shares shall be allocated to
PSI or a Successor Distributor in the same proportion that CDSCs related to the
redemption of Commission Shares are allocated to each thereof; PROVIDED, that if
PSI and its transferees reasonably determine that the Transfer Agent is able to
produce monthly reports which track the Date of Original Issuance for the
Omnibus Shares, then the CDSCs in respect of the redemption of Omnibus Shares
shall be allocated among PSI and any Successor Distributors depending on whether
the related redeemed Omnibus Share is attributable to PSI or a Successor
Distributor, as the case may be, in accordance with Part I above.
PART III: ALLOCATION OF DISTRIBUTION FEES
Assuming that the Distribution Fee remains constant over time and among
Funds so that Part IV hereof does not become operative:
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(1) The portion of the aggregate Distribution Fees accrued in respect of
all Shares of the Fund during any calendar month allocable to PSI or a Successor
Distributor is determined by multiplying the total of such Distribution Fees by
the following fraction:
(A + C) /2
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(B + D) /2
where:
A = The aggregate net Asset Value of all Shares of the Fund attributed to PSI
or such Successor Distributor, as the case may be, and outstanding at the
beginning of such calendar month
B = the aggregate Net Asset Value of all Shares of the Fund at the beginning
of such calendar month
C = The aggregate Net Asset Value of all Shares of the Fund attributed to PSI
or such Successor Distributor, as the case may be, and outstanding at the
end of such calendar month
D = The aggregate Net Asset Value of all Shares of the Fund at the end of
such calendar month
(2) If PSI reasonably determines that the Fund or its transfer agent is
able to produce automated monthly reports which allocate the average Net Asset
Value of the Commission Shares (or all Shares if available) of all Funds among
PSI and each Successor Distributor in a manner consistent with the methodology
detailed in Part I and Part III(1) above, the portion of the Distribution Fees
accrued in respect of all such Shares of all Funds during a particular calendar
month will be allocated to PSI or each Successor Distributor by multiplying the
total of such Distribution Fees by the following fraction:
(A) / (B)
where:
A = Average Net Asset Value of all such Shares of the Fund for such calendar
month attributed to PSI or such Successor Distributor, as the case may be
B = Total average Net Asset Value of all such Shares of the Fund for such
calendar month
PART IV: ADJUSTMENT OF PSI'S SHARE AND SUCCESSOR DISTRIBUTORS' SHARES
If the terms of any Underwriting Agreement, any Plan, any Prospectus, the
Conduct Rules or any other applicable law change the rate at which Distribution
Fees or Service Fees are computed with reference to the Net Asset Value of
Shares of the Fund, these allocation procedures must be revised in light of such
changes in a manner which carries out the intent of these allocation procedures.
EXHIBIT I
To Schedule A
to the Pilgrim Bank and Thrift Fund, Inc.
Amended and Restated Underwriting Agreement
SELLING AGENTS
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