] EXHIBIT (e)(4)
FORM OF
SECOND AMENDED AND RESTATED
UNDERWRITING AGREEMENT
PILGRIM EQUITY TRUST
AGREEMENT, made as of the 1st day of September 2000, as amended and
restated this 2nd day of November 2001, between Pilgrim Equity Trust, a
Massachusetts business trust (the "Trust"), on behalf of each series of
the Trust set forth on Schedule A hereto (each a "Fund," collectively, the
"Funds"), as such schedule may be amended from time to time to add
additional series, and ING Pilgrim Securities, Inc., a Delaware
corporation (the "Underwriter").
1. The Funds hereby appoint the Underwriter as their exclusive agent to
promote the sale and to arrange for the sale of shares of beneficial
interest of each class of each 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 Funds agree to sell
and deliver their shares of each class, upon the terms hereinafter set
forth, as long as they have unissued and/or treasury shares available for
sale.
(a) The Funds hereby authorize the Underwriter, subject to applicable
law and the Trust's Declaration of Trust (the "Declaration"), to
accept, for the respective account of the Funds, orders for the
purchase of their shares, satisfactory to the Underwriter, as of the
time of receipt of such orders by the dealer or as otherwise
described in the Prospectuses of the Funds.
(b) The public offering price of the shares of the Funds shall be the
net asset value per share (as determined by the Funds) of the
outstanding shares of the Funds. The net asset value shall be
determined, and the public offering price based thereon shall become
effective, as set forth from time to time in each Fund's Prospectus;
such net asset value may also be 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 Funds shall furnish daily to the Underwriter, with all
possible promptness, a detailed computation of net asset value of
their Class A 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 Class A
shares of the Funds except as disclosed in the Funds'
Prospectuses.
(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 a 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 Funds'
Prospectuses.
(d) Class B Shares
(i) In consideration of the Underwriter's services as principal
underwriter of each Fund's Class B shares pursuant to this
Agreement and in accordance with the provisions of the
Trust's Second Amended and Restated Distribution and
Service Plan (the "Plan") in respect of such shares, each
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 such 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 such
Fund outstanding from time to time, and (II) to withhold
from redemption proceeds in respect of Class B shares of
such 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
such 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 Funds upon the settlement
date of each sale of a "Commission Share" of the Funds 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, each Fund's obligation to pay the
Underwriter's Allocable Portion of the Distribution
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Fees payable in respect to the Class B shares of the Funds
shall not be terminated or modified for any reason (including
a termination of this Agreement) except: (a) 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 Xxxxx 00, 0000, (x) on a basis which does
not alter the Underwriter's Allocable Portion of the
Distribution Fees computed with reference to Commission Shares
the Date of Original Issuance (as defined in the Allocation
Schedule) of which occurs on or prior to the adoption of such
termination or modification and with respect to Free Shares
(as defined in the Allocation Schedule) which would be
attributed to such Underwriter under the Allocation Schedule
with reference, or (c) in connection with a "Complete
Termination" (as hereinafter defined) of the Plan.
(iv) The Funds will not take any action to waive or change any CDSC
in respect of the Class B shares, except as provided in each
Fund's Prospectus or statement of additional information
forming a part of that Fund's initial Registration Statement
on the date such Fund's initial Registration Statement was
declared effective by the SEC, 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 a Fund, nor the
termination of this Agreement with respect to a Fund, nor the
termination of the Plan with respect to a Fund will terminate
the Underwriter's right to its Allocable Portion of the CDSCs
in respect of the Class B shares of each 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 Funds under this Agreement) to raise funds
to make the expenditures related to the distribution of Class
B shares of a Fund and in connection therewith, upon receipt
of notice of such Transfer, a 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 a 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, a
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 a Fund shall be absolute and unconditional
and shall not be subject to dispute, offset, counterclaim or
any defense whatsoever, at law
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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
Funds' right to pursue the Underwriter and enforce 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 each Fund, which have been so
transferred in connection with such Transfer). The Funds agree
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 the Agreement, the term "Allocable Portion" of
Distribution Fees and CDSCs payable in respect of the Class B
shares of a Fund shall mean the portion of such Distribution
Fees and CDSCs allocated to the Underwriter.
(viii) For purposes of this Agreement, the term "Complete
Termination" of the Plan in respect of a 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 Funds, and the termination of the 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
Funds and any successor fund or the Funds acquiring a
substantial portion of the assets of the Funds and for every
future class of shares which has substantially similar
characteristics to the Class B shares of the Funds 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; provided that (a) the Trustees of the
Trust, including the Independent Trustees of the Trust, shall
have determined that such termination is in the best interest
of the Funds and the shareholders of the Funds, and (b) such
termination does not alter the CDSC as in effect at the time
of such termination applicable to Commission Shares of the
Funds, the Date of Original Issuance (as defined in the
Allocation Schedule) of which occurs on or prior to such
termination.
(ix) The Underwriter may reallow any or all of the Distribution and
Service Fees and CDSCs which it is paid under the Agreement to
such dealers as the Underwriter 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 each Fund's Prospectus.
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(e) Class C Shares
(i) 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 Plan for the Funds adopted under Rule 12b-1 under the 1940
Act, as that 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 each Fund
all CDSCs applied on redemption of Class C shares of the
Funds. Whether and to what extent a CDSC will be imposed with
respect to a redemption shall be determined in accordance
with, and in a manner set forth in, each Fund's Prospectus.
(ii) The Underwriter may reallow any or all of the distribution and
service fees and CDSCs 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 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 C shares except
as disclosed in each Fund's Prospectus.
(e) Class Q Shares
(i) As compensation for providing services under this Agreement,
the Underwriter shall receive from each Fund service fees
under the terms and conditions set forth in the Plan for the
Funds adopted under Rule 12b-1 under the 1940 Act, as that
Plan may be amended from time to time and subject to any
further limitation on such fees as the Trustees may impose.
(ii) The Underwriter may reallow any or all of the service fees and
CDSCs which it is paid under the Agreement to such dealers as
the Underwriter may from time to time determine.
2. The Underwriter agrees to devote reasonable time and effort to enlist
investment dealers to sell shares of each class of each Fund and otherwise
promote the sale and distribution and act as Underwriter for the sale and
distribution of the shares of each class of each 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 Funds
reserve the right to issue shares of each class in connection with any
merger or consolidation of the Funds with any other investment company or
any personal holding company or in connection with offers of exchange
exempted from Section 22(d) of the 1940 Act.
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3. To the extent the Funds shall offer (as set forth in each Fund's
Prospectus) to provide physical certificates evidencing ownership of a
class of shares, upon receipt by a Fund at its principal place of business
of a written order from the Underwriter, together with delivery
instructions, a 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 such Fund.
4. All sales literature and advertisements used by the Underwriter in
connection with sales of the shares of the Funds shall be subject to the
approval of the Funds to which such literature relates. The Funds
authorize 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 Funds or in such
financial statements and reports as are furnished to the Underwriter
pursuant to paragraph 6 below. The Funds 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 Funds, is authorized, subject to the
direction of the Funds, 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 each Fund. The Funds shall reimburse the Underwriter
monthly for its out-of-pocket expenses reasonably incurred on behalf of
the Funds 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 Funds.
6. The Trust, on behalf of the Funds, 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 the
report, prepared by independent public accountants and with such
reasonable number of printed copies of the annual and other periodic
reports of the Funds as the Underwriter may request, and shall cooperate
fully in the efforts of the Underwriter to sell and arrange for the sale
of each class of shares of the Funds and in the performance by the
Underwriter of all its duties under this Agreement.
7. The Funds will pay or cause to be paid expenses (including counsel fees
and disbursements) of any registration of each class of 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 Funds, 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
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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.
8. The Underwriter shall pay all of its own costs and expenses (other than
expenses and costs heretofore deemed payable by the Funds 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 Funds 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 Prospectuses or any report or other communication to shareholders, to
the extent that such expenses are necessarily incurred to effect
compliance by the Funds 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 each Fund's
distribution plan adopted pursuant to Rule 12b-1 under the 1940 Act.
9. The Funds agree 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 Trust
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 Trust with respect to each 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 0000
Xxx) of each Fund or by vote of a majority of the Trustees, who are not
"interested persons" of each Fund and who have no 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.
12. This Agreement has been approved by the Trustees of the Trust on
behalf of each Fund and shall continue in effect with respect to each Fund
until the Reapproval Date set forth for such Fund in Schedule A to this
Agreement. Thereafter, this Agreement shall
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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 Trust or (b) by vote of a
majority or the outstanding voting securities of each Fund, as defined in
the 1940 Act.
13. The Declaration, establishing the Trust, 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 Trust
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 Trust and/or each 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 Trust, but the Trust 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 EQUITY TRUST
By: _____________________________
Xxxxxx X. Naka
Senior Vice President
ING PILGRIM SECURITIES, INC.
By: _____________________________
Xxxxxxx X. Xxxxxx
Senior Vice President
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SCHEDULE A
WITH RESPECT TO THE
SECOND AMENDED AND RESTATED
UNDERWRITING AGREEMENT
BETWEEN
PILGRIM EQUITY TRUST
AND
ING PILGRIM SECURITIES, INC.
EFFECTIVE AS OF NOVEMBER 2, 2001
LAST CONTINUED/
NAME OF FUND APPROVED BY BOARD REAPPROVAL DATE
--------------------------------------------------------------------------------
Pilgrim MidCap June 13, 2000 September 1, 2002
Opportunities Fund
--------------------------------------------------------------------------------
Pilgrim Principal May 9, 2001 September 1, 2002
Protection Fund
--------------------------------------------------------------------------------
Pilgrim Principal November 2, 2001 September 1, 2003
Protection Fund II*
--------------------------------------------------------------------------------
Pilgrim Biotechnology Fund* November 2, 2001 September 1, 2003
--------------------------------------------------------------------------------
ING MidCap Value Fund* November 2, 2001 September 1, 2003
--------------------------------------------------------------------------------
ING SmallCap Value Fund* November 2, 2001 September 1, 2003
--------------------------------------------------------------------------------
-----------
* This Second Amended and Restated Underwriting Agreement will be effective
with respect to each of these Funds upon the effective date of the initial
Registration Statement with respect to each respective Fund.
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SCHEDULE B
WITH RESPECT TO THE
SECOND AMENDED AND RESTATED
UNDERWRITING AGREEMENT
BETWEEN
PILGRIM EQUITY TRUST
AND
ING PILGRIM SECURITIES, INC.
EFFECTIVE AS OF NOVEMBER 2, 2001
ALLOCATION SCHEDULE
Defined terms used in this Schedule and not otherwise defined herein shall
have the meaning assigned to them in the Second Amended and Restated
Underwriting Agreement of the Trust, on behalf of each Fund, and the Underwriter
made as of the 1st day of September, 2000, as amended and restated this 2nd day
of November, 2001, to which this Schedule B is attached (the "Underwriting
Agreement"). As used herein the following terms shall have the meanings
indicated:
CDSCs or Asset Based Sales Charges related to Class B Shares ("Shares") of
a Fund shall be allocated by a Fund among the Underwriter and any successor
principal distributor of Shares of such Fund (the "Successor Underwriter") in
accordance with this Schedule B.
"Commission Share" means, in respect of a Fund, each Share of such 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 such Fund issued in
connection with a Permitted Free Exchange) and any such Share shall continue to
be a Commission Share of such Fund prior to the redemption (including a
redemption in connection with a Permitted 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 Share" means, in respect of a Fund, each Share of such Fund, other
than a Commission Share (including, without limitation, any Share issued in
connection with the reinvestment of dividends or capital gains).
10
"Inception Date" means in respect of a Fund, the first date on which such
Fund issued Shares.
"Net Asset Value" means, (i) with respect to a Fund, as of the date any
determination thereof is made, the net asset value of such Fund computed in the
manner such value is required to be computed by such Fund in its reports to its
shareholders, and (ii) with respect to any share of such Fund as of any date,
the quotient obtained by dividing: (A) the net asset value of such Fund (as
computed in accordance with clause (i) above) allocated to Shares of such Fund
(in accordance with the constituent documents for such Fund) as of such date, by
(B) the number of Shares of such Fund outstanding on such date.
PART I: ATTRIBUTION OF SHARES
Shares of each Fund, which are outstanding from time to time, shall be
attributed to the Underwriter and each Successor Underwriter in accordance with
the following rules;
(1) Commission Shares:
(a) Commission Shares attributed to the Underwriter shall be Commission
Shares the Date of Original issuance of which occurred on or after the Inception
Date of such Fund and on or prior to the last date on which the Underwriter
acted as principal underwriter of Shares of such Fund.
(b) Commission Shares attributable to any Successor Underwriter shall be
Commission Shares, the Date of Original Issuance of which occurs after the last
date on which the immediately preceding principal underwriter of Shares of such
Fund acted as principal underwriter of Shares of such Fund and prior to the last
date on which the Successor Underwriter in question acted as principal
underwriter of Shares of such Fund.
(c) A Commission Share of a particular 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 Permitted 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 the Underwriter or any Successor
Underwriter based upon such Date of Original Issuance in accordance with rules
(a) and (b) above.
(d) A Commission Share redeemed (other than in connection with a Permitted
Free Exchange) or converted to a class A share is attributable to the
Underwriter or any Successor Underwriter based upon the Date of Original
Issuance in accordance with rule (a), (b) and (c) above.
(2) Free Shares:
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Free shares of a Fund outstanding on any date shall be attributed to the
Underwriter or any Successor Underwriter, as the case may be, in the same
proportion that the Commission Shares of such Fund outstanding on such date are
attributed to it on such date; provided that if the Transfer 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.
PART II: ALLOCATION OF CDSCs ("CDSCs")
CDSCs Related to the Redemption of Commission Shares:
CDSCs in respect of the redemption of Commission Shares shall be allocated
to the Underwriter or any Successor Underwriter depending upon whether the
related redeemed Commission Share is attributable to such Underwriter or
Successor Underwriter, as the case may be, in accordance with Part I above.
PART III: ALLOCATION OF ASSET BASED SALES CHARGES
Assuming that the Asset Based Sales Charge remains constant over time and
among Funds so that Part IV hereof does not become operative:
(1) The portion of the aggregate Asset Based Sales Charges accrued in
respect of all Shares of all Funds during any calendar month allocable to the
Underwriter or any Successor Underwriter is determined by multiplying the total
of such Asset Based Sales Charges by the following fraction:
(A + C) /2
----------
(B + D) /2
where:
A = The aggregate Net Asset Value of all Shares of all Funds attributed to
such Underwriter or Successor Underwriter, as the case may be, and
outstanding at the beginning of such calendar month
B = The aggregate Net Asset Value of all Shares of all Funds at the
beginning of such calendar month
C = The aggregate Net Asset Value of all Shares of all Funds attributed to
such Underwriter or Successor Underwriter, as the case may be, and
outstanding at the end of such calendar month
D = The aggregate Net Asset Value of all Shares of all Funds at the end of
such calendar month
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(2) If the Program Administrator reasonably determines that the 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 the Underwriter and any Successor Underwriter in a manner consistent
with the methodology detailed in Part I and Part III (l) above, the portion of
the Asset Based Sales Charges accrued in respect of all such Shares of all Funds
during a particular calendar month will be allocated to such Underwriter or
Successor Underwriter by multiplying the total of such Asset Based Sales Charges
by the following fraction:
(A) / (B)
where:
A = Average Net Asset Value of all such Shares of all Funds for such
calendar month attributed to such Underwriter or Successor Underwriter, as
the case may be
B = Total average Net Asset Value of all such Shares of all Funds for such
calendar month
PART IV: ADJUSTMENT OF THE UNDERWRITER'S OR SUCCESSOR UNDERWRITER'S SHARE
OF ASSET BASED SALES CHARGES AND CDSCS
The Parties to the Underwriting Agreement recognize that, if the terms of
the Underwriting Agreement, any Distribution Plan, any Prospectus, the Conduct
Rules or any other Applicable Law change, which change disproportionately
reduces, in a manner inconsistent with the intent of the Underwriting Agreement
and this Schedule B, the amount of the Underwriter's or the Successor
Underwriter's share of Asset Based Sales Charges and CDSCs that would have been
payable had no such change occurred, this Allocation Schedule should be adjusted
by agreement among the Funds, the Underwriter and each Successor Underwriter to
conform with such intent taking into account such change; provided, however, if
the Funds, the Underwriter and the Successor Underwriters cannot agree within
thirty (30) days after the date of any such change in Applicable Laws or in any
Underwriting Agreement, Distribution Plan, Prospectus or the Conduct Rules, the
Parties shall submit the question to arbitration in accordance with the
commercial arbitration rules of the American Arbitration Association and the
decision reached by the arbitrator shall be final and binding on the Parties
hereto.
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