GOVERNMENT SECURITIES INCOME FUND, INC.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
April 7, 0000
Xxxxxxx Xxxxxxx Securities, Inc.
00000 Xxxxx Xxxxxx Xxxxxxxxx
Xxx Xxxxxxx, Xxxxxxxxxx 00000
Re: Underwriting Agreement
Gentlemen:
We are a California corporation operating as an open-end management
investment company (hereinafter referred to as the "Fund"). As such, the Fund is
registered 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"). We desire to offer and sell our authorized but
unissued capital shares to the public in accordance with the applicable Federal
and state securities laws.
You have informed us that your company 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 to
execute and deliver this Agreement to you by a resolution of our Board of
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 Fund
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
of the Fund, 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 us 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, but this
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Agreement shall not 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 a variable percentage of the public
offering price as a sales commission. 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
plus your sales commission; 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 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 such
Agent and Custodian(s) of the effective net asset value as received from us.
Should we at any time calculate our net asset value more frequently than once
each business day, you and we will follow procedures with respect to such
additional price or prices comparable to those set forth above in this Section
3.
4. Sales Commission. You shall be entitled to charge a sales commission on
the sale of our shares in the amount set forth in our Prospectus (including any
supplements or amendments thereto) then in effect under the 1933 Act. Such
commission (subject to any quantity or other discounts or eliminations of
commission as set forth in our then currently effective Prospectus) shall be an
amount mutually agreed upon between us and equal to the difference between the
net asset value and the public offering price of our shares. You may allow such
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 our 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 Transfer Agent of a certificate signed by an officer of the Fund
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
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Transfer Agent, in which case certificates for shares in such names and amounts
as is specified in such writing will be delivered by the Transfer Agent, as soon
as practicable after their registration on the books.
7. Purchases for Your Own Account. You shall not purchase our 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 our shares at net asset
value, pursuant to a uniform offer described in our Prospectus, to our Directors
and officers, our investment manager or your company or affiliated companies
thereof, or 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, or to
any trust, pension, profit-sharing, or other benefit plan for such persons, or
to any other person set forth in our current Prospectus, provided that such
sales are made in accordance with the Rules and Regulations under the 1940 Act
and that such sales are made upon the written assurance of the purchaser that
the purchases are made for investment purposes only, not for the purpose of
resale to the public and that the shares will not be resold except through
redemption by us.
9. Allocation of Expenses.
(a) We will pay the expenses:
(i) Of 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) Of 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 your
(including your "Parents") or related to your activities where such
amendments or supplements result in expenses which we would not otherwise
have incurred;
(iii) Of the preparation, printing, and distribution of any reports or
communications, including Prospectuses and Statements of Additional
Information, which are sent to our existing shareholders; and
(iv) Of filing and other fees to Federal and state securities
regulatory authorities necessary to register and maintain registration of
the shares.
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(b) Except to the extent that you are entitled to reimbursement under the
provisions of the Distribution Plan pursuant to Rule 12b-1 under the
1940 Act, you will pay the following expenses:
(i) 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) Of 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 your
(including your "Parent") or related to your activities where those
expenses would not otherwise have been incurred by us; and
(iii) Of printing 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, from time to time,
with such additional information regarding our financial condition, as you may
reasonably request.
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
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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,
1997. This Agreement shall continue annually thereafter for successive one (1)
year periods if approved at least annually (i) by a vote of a majority of the
outstanding voting securities of the Fund or by a vote of the Board of Directors
of the Fund, and (ii) by a vote of a majority of the Board of Directors of the
Fund who are not interested persons or parties to this Agreement (other than as
Directors of the Fund), cast in person at a meeting called for the purpose of
voting on this Agreement.
This Agreement: (i) may, at any time, be terminated without the payment of
any penalty, either by vote of the Board of Directors of the Fund or by a vote
of a majority of the outstanding voting securities of the 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 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 securities holders 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 two
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 GOVERNMENT SECURITIES
INCOME FUND, INC.
By: ___________________________________
Senior Vice President and Assistant
Secretary
Accepted:
PILGRIM AMERICA SECURITIES, INC.
By: ____________________________
President and Chairman
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