PILGRIM AMERICA INVESTMENT FUNDS, INC.
(formerly Pilgrim Investment Funds, Inc.)
on behalf of its
Pilgrim America MagnaCap Fund series
(formerly Pilgrim MagnaCap Fund)
and
Pilgrim America High Yield Fund series
(formerly Pilgrim High Yield Fund)
00 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
April 7, 0000
Xxxxxxx Xxxxxxx Securities, Inc.
00 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Re: Restated Underwriting Agreement to Reflect Name
Changes to the Above Company and Series.
Gentlemen:
Pilgrim America Investment Funds, 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
consists of two separate series: Pilgrim America MagnaCap Fund and Pilgrim
America High Yield Fund (the "Funds"). The Company on behalf of the Funds
desires to offer and sell the authorized but unissued shares of the Funds to the
public in accordance with applicable federal and state securities laws.
You have informed us that your company, Pilgrim America Securities,
Inc. ("PAS"), is registered as a broker-dealer under the provisions of the
Securities Exchange Act of 1934 and that PAS 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 the shares
of the Funds. We have been authorized by the Company to execute and deliver this
Agreement to you by a
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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 Agreement.
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 or the Funds 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 Funds 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
Funds' 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.
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4. Sales Commission. (a) 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).
(b) 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 Fund pursuant to Rule 12b-1 under the 1940
Act (the "Distribution Plan").
(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 Fund'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 Class A and
Class M shares at net asset value, without a sales charge as appropriate,
pursuant to a uniform offer described in the Fund'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 Funds' 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.
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9. Allocation of Expenses.
(a) We will pay the following expenses in connection with the
sales and distribution of shares of the Funds:
(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 Funds, 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
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(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.
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 Rules of
Fair Practice 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 remain in effect
until April 7, 1998, and 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 Funds 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
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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 each
Fund, 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.
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.
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Very truly yours,
PILGRIM AMERICA INVESTMENT FUNDS, INC.
(on behalf of its Pilgrim America MagnaCap Fund series
and Pilgrim America High Yield Fund series)
By: ___________________________________
Title: ___________________________________
Agreed to and Accepted:
PILGRIM AMERICA SECURITIES, INC.
By: ______________________________
Title: ______________________________
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