Exhibit (e.1)
FORM OF UNDERWRITING AGREEMENT
[NAME OF AETNA RETAIL ENTITY]
[ADDRESS]
____________ ___, 2001
ING Pilgrim Securities, Inc.
00 X. Xxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxx 00000
Re: Underwriting Agreement
Ladies and Gentlemen:
[Name of Entity] is a [corporate form] 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 __ separate series: [name
series] (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 ING 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 the shares of the Funds. We have been authorized by
the Company to execute and deliver this Agreement to you by a resolution of our
Board of Trustees (the "Trustees") adopted at a meeting of the Trustees, at
which a majority of Trustees, including a majority of our Trustees 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 Underwriting 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
distributor 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 may be sold
through your efforts. 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 its net asset value plus, as appropriate, a variable percentage of
the public offering price as a sales load, as set forth in the Funds'
registration statement filed with the Securities and Exchange Commission under
the Securities Act of 1933 and the Investment Company Act of 1940, as amended or
supplemented from time to time ("Registration Statement"). 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 time described in the Company's Registration Statement. The
net asset value so determined shall apply to all orders for the purchase of the
shares received by dealers prior to the time as of which net asset value is
determined, 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 the time as of which 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. Orders. You shall promptly advise us of all purchase orders for
shares of the Funds received by you. Any order may be rejected by us; provided,
however, that we will not arbitrarily or without reasonable cause refuse to
accept or confirm orders for the purchase of shares of the Funds. We or our
agent will confirm orders upon receipt, will make appropriate book entries and,
upon receipt by the Company (or its agent) of payment therefor, will deliver
deposit receipts for the shares.
5. 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' Registration Statement.
(ii) In addition to the payments of the sales commissions to
you provided for in paragraph 5(a)(i), 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").
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(b) In respect of the Class B Common Shares of the Funds, the
following provisions shall apply (if such shares are offered):
(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 and Service 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 [____%] per annum multiplied by (B)
the net asset value of the Class B Common Shares of the Funds 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.
(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 and Service 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.
(iii) In addition to the payments of amounts provided for in
Section 5(b)(i) and (ii), you may also receive reimbursement for expenses or a
maintenance or trail fee as may be required by and described in the Class B
Distribution and Service Plan.
(c) You may allow appointed sub-agents or dealers such commissions
or discounts as you shall deem advisable, so long as any such commissions or
discounts are set forth in the Funds' then current Registration Statement, to
the extent required by the applicable federal and state securities laws.
6. 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, or direct the selling
Sub-Agent or Dealer to pay, for our account, an amount in cash or, subject to
approval by the President or Vice President of the Fund, in securities 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.
7. Redemption. (a) We represent that any of the outstanding shares of
the Funds may be tendered for redemption at any time, and we represent that the
Company will repurchase or redeem the shares so tendered in accordance with the
Company's Articles of Incorporation and Bylaws and the applicable provisions of
the Funds' Prospectus. The price to be paid to redeem or repurchase the shares
shall be equal to the net asset value, less any applicable contingent deferred
sales charge, unless any redemption fee if any, determined as set forth in the
applicable Registration Statement (the "redemption price").
8. 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
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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.
9. Purchases for Your Own Account. 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.
10. Sale of Shares to Affiliates. You may sell the Class A and Class C
shares (if such shares are offered) at net asset value, without a sales charge
as appropriate, pursuant to a uniform offer described in the Funds' current
Registration Statement (i) to our Trustees 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 Registration Statement; provided
that such sales are made in accordance with the rules and regulations under the
1940 Act.
11. 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
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(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; and
(ii) 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.
12. 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.
13. 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.
14. 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.
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15. 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.
16. Term of Agreement. This Agreement shall become effective on the date
first written above or on such later date approved by the Company's Board of
Trustees, including a majority of those Trustees who are not parties to this
Agreement or interested persons (as such term is defined in the Investment
Company Act of 1940) thereof. Unless terminated as provided herein, the
Agreement shall continue in full force and effect for two (2) years from the
effective date of this Agreement, and shall continue in effect from year to year
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 Trustees of the Company, and (ii) by a vote of a majority of the
Trustees of the Company who are not interested persons or parties to this
Agreement (other than as Trustees of the Company), cast in person at a meeting
called for the purpose of voting on this Agreement.
17. Termination. This Agreement: (i) may be terminated at any time
without the payment of any penalty, either by vote of the Trustees of the
Company or by a vote of a majority of the outstanding voting securities of the
Funds, 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.
18. 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.
19. Miscellaneous. This Agreement shall be subject to the laws of the
State of Arizona 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,"
"Prospectus" 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.
20. 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.
21. Amendment. This Agreement may be amended with respect to the Funds
by the parties only if such amendment is specifically approved by (a) the
Trustees or by the vote of a majority of the outstanding voting securities of
the Funds, and (b) by the vote of a majority of the disinterested Trustees cast
in person at a meeting called for the purpose of voting on such amendment.
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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,
[NAME OF ENTITY]
_______________________
By:
Title:
Agreed to and Accepted:
ING PILGRIM SECURITIES, INC.
________________________
By: Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
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SCHEDULE A
to the Underwriting Agreement
UNDERWRITING AGREEMENT ALLOCATION PROCEDURES
CDSCs and Distribution Fees related to Shares of each separate
series of [Name of Entity] (each a "Fund") shall be allocated by such Fund among
Pilgrim Securities, Inc. ("PSI") and any replacement principal underwriter for
Shares of such 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 each Fund to which this Schedule A is attached. As used herein the
following terms shall have the meanings indicated.
"Commission Share" means, in respect of any 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 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 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 one 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, in respect of any 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.
"Inception Date" means, in respect of any Fund, the first date on
which such Fund issued Shares.
"Net Asset Value" means, (i) with respect to any 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
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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.
"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 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 any Fund, each Class B share of such
Fund.
PART I: ATTRIBUTION OF SHARES
Shares of each 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 such Fund and on or
prior to the last day on which PSI acts as principal underwriter of Shares for
such 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 such Fund
and on or prior to the last day such Successor for Distributor acts as principal
underwriter of Shares for such Fund.
(c) A Commission Share (other than an Omnibus 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 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.
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(2) Free Shares Other Than Omnibus Shares:
Free Shares (excluding Omnibus Shares) of a 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 (excluding Omnibus Shares) of
such 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 all Funds 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
----------
(B + D) /2
where:
A = The aggregate Net Asset Value of all Shares of all Funds
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 all Funds at
the beginning of such calendar month
C = The aggregate Net Asset Value of all Shares of all Funds
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 all Funds 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 all Funds 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 all
Funds for such calendar month
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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 any Fund, these allocation procedures must be revised in light of such
changes in a manner which carries out the intent of these allocation procedures.
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EXHIBIT I
To Schedule A
to the [Name of Entity]
Underwriting Agreement
SELLING AGENTS
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