Exhibit 7
UNDERWRITING AGREEMENT FOR
PILGRIM SMALLCAP OPPORTUNITIES FUND
AGREEMENT made and entered into by and between PILGRIM SMALLCAP OPPORTUNITIES
FUND (the "Fund"), a Massachusetts business trust, and PILGRIM SECURITIES, INC.,
a Delaware corporation (the "Underwriter") on this ___th day of September 2000.
1. The Fund hereby appoints the Underwriter as its exclusive agent to promote
the sale and to arrange for the sale of shares of beneficial interest of each
class of the Fund, including both unissued shares and treasury shares, through
broker-dealers of otherwise, in all parts of the United States and elsewhere
throughout the world. The Fund agrees to sell and deliver its shares of each
class, upon the terms hereinafter set forth, as long as it has unissued and/or
treasury shares of each class available for sale.
(a) The Fund hereby authorizes the Underwriter, subject to applicable law and
the Trust's Declaration of Trust (the "Declaration"), to accept, for the
account of the Fund, orders for the purchase of its 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 the shares shall of the Fund be the net asset
value per share (as determined by the Fund) of the outstanding 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 ("NYSE") and the public offering price based upon such net asset
value 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 based thereon 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 daily to the Underwriter, with all possible
promptness, a detailed computation of net asset value of its shares.
(c) Class A Shares
(i) The public offering price of Class A shares shall be equal to the net
asset value, as described above, plus a commission to be fixed from time to
time by the Underwriter not to exceed 6% of the public offering price,
except that such price per share may be adjusted to the nearest cent. The
Underwriter may fix quantity discounts and other similar terms not
inconsistent with the provisions of the Investment Company Act of 1940, as
amended (the "1940 Act"). The Underwriter shall not impose any commission,
permit any quantity discounts or impose any other similar terms in
connection with the sale of shares of the Fund except as disclosed in the
Prospectus of the Fund.
(ii) The Underwriter shall be entitled to deduct a commission on all Class
A shares sold equal to the difference between the public offering price and
the net asset value on which such price is based. If any such commission is
received by the Fund, it will pay the commission to the Underwriter. Out of
such commission, the Underwriter may allow to dealers such concessions as
the Underwriter may determine from time to time. Notwithstanding anything
in the Agreement, sales may be made at net asset value as provided in the
Fund's prospectus.
(d) Class B Shares
(i) In consideration of the Underwriter's services as principal underwriter
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 "Class B 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 A) 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
of (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 to 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 1940
Act, the rules thereunder or the Conduct Rules of the NASD, in each case
enacted or promulgated after December 29, 1997, or in connection with a
"Complete Termination" (as hereinafter defined) of the Class B Plan.
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(iv) 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 Class B 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 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 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) 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 A.
(viii) For purposes of this Agreement, the term "Complete Termination" of
the Plan in respect of the Fund means a termination of the Class B 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 Class
B Plan and the complete cessation of the payment of distribution fees
pursuant to any other distribution Plan pursuant to Rule 12b-1 under the
1940 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
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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, CDSC or other similar charges
borne directly or indirectly by the holders of such shares.
(ix) The Underwriter may reallow any or all of the Distribution and
Services Fees and CDSCs which it is paid under the Agreement to such
dealers as the Underwriters may from time to time determine.
(x) The Underwriter may fix quantity discounts and other similar variances
or waivers of the CDSCs not inconsistent with the provisions of the 1940
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.
(e) Class C Shares
(i) As compensation for providing services under this Agreement, (A) the
Underwriter shall receive from the Fund distribution and service fees under
the terms and conditions set forth in the Class C Distribution Plan ("Class
C Plan") for the Fund adopted under Rule 12b-1 under the 1940 Act, as
amended, as that Class C Plan may be amended from time to time and subject
to any further limitation on the fees as the Trustees may impose, and (B)
the Underwriter shall receive from each Fund all contingent deferred sales
charges applied on redemption of Class C shares of the Fund. Whether and to
what extent a contingent deferred sales charge will be imposed with respect
to a redemption shall be determined in accordance with, and in a manner set
forth in, the Fund's Prospectus.
(ii) and CDSC's which it is paid under the Agreement to such dealers as the
Underwriter may from time to time determine.
(iii) The Underwriter may fix quantity discounts and other similar
variances or waivers of the contingent deferred sales charge not
inconsistent with the provisions of the 1940 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 C shares except as disclosed in the Prospectus of the
Fund.
(f) Class T Shares
(i) The public offering price of Class T shares shall be based on the net
asset value per share (as determined by the Fund) of the outstanding Class
T shares of the Fund. The net asset value of Class T shares shall be
regularly determined on every business day as of the time of the regular
closing of the New York Stock Exchange ("NYSE") and the offering price
based upon such net asset value shall become effective as set forth from
time to time in the Fund's Prospectus; such net asset value shall also be
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regularly determined, and the offering price based thereon 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 daily to the
Underwriter, with all possible promptness, a detailed computation of net
asset value of its Class T shares.
(ii) As compensation for providing services under this Agreement, (A) the
Underwriter shall receive from each Fund distribution and service fees
under the terms and conditions set forth in the Class T Distribution Plan
("Class T Plan") for the Fund adopted under Rule 12b-1 under the 1940 Act,
as that Class T Plan may be amended from time to time and subject to any
further limitation on such fees as the Trustees may impose, and (B) the
Underwriter shall receive from the Fund all CDSC's applied on redemption of
Class T share of the Fund. Whether and to what extent a contingent deferred
sales charge will be imposed with respect to a redemption shall be
determined in accordance with, and in a manner set forth in, the Trust's
Prospectus.
(iii) The Underwriter may reallow any or all of the distribution and
services fees and contingent deferred sales charges which it is paid under
the Agreement to such dealers as the Underwriter may from time to time
determine.
(iv) The Underwriter may fix quantity discounts and other similar variances
or waivers of the contingent deferred sales charge not inconsistent with
the provisions of the 1940 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 T
shares except as disclosed in the Prospectus of the Trust.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell shares of each class of the Fund and otherwise
promote the sale and distribution and act as Underwriter for the sale and
distribution of the shares 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 of shares of each class 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 Investment Company Xxx 0000.
3. To the extent the Fund shall offer (as set forth in the Fund's Prospectus) to
provide physical certificates evidencing ownership of a class of 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 of 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.
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4. All sales literature and advertisements used by the Underwriter in connection
with sales of the shares of the Fund shall be subject to the approval of the
Fund to which such literature relates. The Fund authorizes the Underwriter in
connection with the sale or arranging for the sale of its 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 shares of each class for redemption at prices
not in excess of their net asset value, determined as prescribed in the
Prospectus of the Fund. 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, but the Underwriter shall not be entitled to any
commissions or other compensation in respect to such redemptions. 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 shares of each class of shares of the Fund 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 each class of its 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 shares of each class
of the Fund, for fees and expenses incident to the issuance of shares of
beneficial interest of each class, 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 shares of each class 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
shares of each class 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 0000 Xxx.
9. The Fund agrees to register, from time to time as necessary, additional
shares of beneficial interest of each class 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 there 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 that term is defined in the
1940 Act of the Fund, or by vote of a majority of the Trustees,, who are not
"interested persons" of the Fund and who have not direct or indirect financial
interest in the operation of the Plan or 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 1940 Act. With regards to Class T shares, this Agreement shall
also terminate automatically when Class T shares no longer exist.
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 who
are not interested persons of the parties hereto as defined in the 1940 Act and
either (a) a majority of the Trustees of the Fund or (b) by vote of a majority
or the outstanding voting securities of the Fund, as defined in the Investment
Company Act of 1940.
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13. The Declaration, establishing the Fund, a copy of which together with all
amendments thereto is on file in the office of the Secretary of the Commonwealth
of Massachusetts, provides that the name of the Fund refers to the Trustees
under the Declaration collectively as trustees, but not individually or
personally; and no Trustee, shareholder officer, employee or agent of the Fund
may be held to any personal liability, nor may resort be had to their private
property for the satisfaction of any obligation or claim or otherwise in
connection with affairs of the Fund, but the Fund property only shall be liable.
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 the
day and year set forth above.
PILGRIM SMALLCAP OPPORTUNTIES FUND
By:
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Senior Vice President
PILGRIM SECURITIES, INC.
By:
-------------------------------------
Senior Executive Vice President
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SCHEDULE 1
LAST CONTINUED/
NAME OF FUND APPROVED BY BOARD RE-APPROVAL DAY
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Pilgrim SmallCap June 13, 2000 September ___, 2002
Opportunities Fund
