INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the ___ day of _____, 1999, by
and between PILGRIM INVESTMENT FUNDS, INC., a corporation organized and existing
under the laws of the State of Maryland (hereinafter called the "Company") on
behalf of its PILGRIM HIGH YIELD FUND series (the "Fund"), and PILGRIM
INVESTMENTS, INC., a corporation organized and existing under the laws of the
State of Delaware (hereinafter called the "Manager").
W I T N E S S E T H:
WHEREAS, the Fund is a series of the Company, an open-end management
investment company, registered as such under the Investment Company Act of 1940;
and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, and is engaged in the business of supplying
investment advice, investment management and administrative services, as an
independent contractor; and
WHEREAS, the Company on behalf of the Fund desires to retain the Manager to
render advice and services to the Fund pursuant to the terms and provisions of
this Agreement, and the Manager is interested in furnishing said advice and
services.
NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
1. The Company on behalf of the Fund hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and
investment services with respect to the assets of the Fund, subject to the
supervision and direction of the Board of Directors of the Company. The Manager
shall, except as otherwise provided for herein, render or make available all
administrative services needed for the management and operation of the Fund, and
shall, as part of its duties hereunder, (i) furnish the Fund with advice and
recommendations with respect to the investment of the Fund's assets and the
purchase and sale of its portfolio securities, including the taking of such
other steps a may be necessary to implement such advice and recommendations,
(ii) furnish the Fund with reports, statements and other data on securities,
economic conditions and other pertinent subjects which the Board of Directors
may request, (iii) furnish such office space and personnel as is needed by the
Fund, and (iv) in general superintend and manage the investments of the Fund,
subject to the ultimate supervision and direction of the Board of Directors.
2. The Manager shall use its best judgment and efforts in rendering the
advice and services to the Fund as contemplated by this Agreement.
3. The Manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Fund in any way, or in
any way be deemed an agent for the Fund. It is expressly understood and agreed
that the services to be rendered by the Manager to the Fund under the provisions
of this Agreement are not to be deemed exclusive, and the Manager shall be free
to render similar or different services to others so long as its ability to
render the services provided for in this Agreement shall not be impaired
thereby.
4. The Manager agrees to use its best efforts in the furnishing of such
advice and recommendations to the Fund, in the preparation of reports and
information, and in the management of the Fund's assets, all pursuant to this
Agreement, and for this purpose the Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical, research, and other factual information, advice regarding economic
factors and trends, information with respect to technical and scientific
developments, and such other information, advice and assistance as the Manager
may desire and request.
5. The Fund will from time to time furnish to the Manager detailed
statements of the investments and assets of the Fund and information as to its
investment objectives and needs, and will make available to the Manager such
financial reports, proxy statements, legal and other information relating to its
investments as may be in the possession of the Fund or available to it and such
other information as the Manager may reasonably request.
6. Whenever the Manager has determined that the Fund should tender
securities pursuant to a "tender offer solicitation", the Manager shall
designate an affiliate as the "tendering dealer" so long as it is legally
permitted to act in such capacity under the Federal securities laws and rules
thereunder and the rules of any securities exchange or association of which such
affiliate may be a member. Such affiliated dealer shall not be obligated to make
any additional commitments of capital, expense or personnel beyond that already
committed (other than normal periodic fees or payments necessary to maintain its
corporate existence and membership in the National Association of Securities
Dealers, Inc.) as of the date of this Agreement. This Agreement shall not
obligate the Manager or such affiliate (i) to act pursuant to the foregoing
requirement under any circumstances in which they might reasonably believe that
liability might be imposed upon them as a result of so acting, or (ii) to
institute legal or other proceedings to collect fees which may be considered to
be due from others to it as a result of such a tender, unless the Fund shall
enter into an agreement with such affiliate to reimburse it for all expenses
connected with attempting to collect such fees, including legal fees and
expenses and that portion of the compensation due to their employees which is
attributable to the time involved in attempting to collect such fees.
7. The Manager shall bear and pay the costs of rendering the services to be
performed by it under this Agreement. The Fund shall bear and pay for all other
expenses of its operation, including, but not limited to, expenses incurred in
connection with the issuance, registration and transfer of its shares; fees of
its custodian, transfer and shareholder servicing agent; costs and expenses of
pricing and calculating its daily net asset value and of maintaining its books
of account required by the Investment Company Act of 1940; expenditures in
connection with meetings of the shareholders and directors, except those called
solely to accommodate the Manager; salaries of officers and fees and expenses of
directors or members of any advisory board or committee who are not members of,
affiliated with or interested persons of the Manager; salaries of personnel
involved in placing orders for the execution of the Fund's portfolio
transactions or in maintaining registration of its shares under state securities
laws; insurance premiums on property or personnel of the Fund which inure to its
benefit; the cost of preparing and printing reports, proxy statements and
prospectuses of the Fund or other communications for distribution to its
shareholders; legal, auditing and accounting fees; trade association dues; fees
and expenses of registering and maintaining registration of its shares for sale
under Federal and applicable state securities laws; and all other charges and
costs of its operation plus any extraordinary and non-recurring expenses, except
as herein otherwise prescribed. To the extent the Manager incurs any costs or
performs any services which are an obligation of the Fund, as set forth herein,
the Fund shall promptly reimburse the Manager for such costs and expenses. To
the extent the services for which the Fund is obligated to pay are performed by
the Manager, the Manager shall be entitled to recover from the Fund only to the
extent of its costs for such services.
8. (a) The Fund agrees to pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management
services furnished or provided to the Fund and as full reimbursement for all
expenses assumed by the Manager, a management fee computed at an annual
percentage rate of .60% of the average daily net assets of the Fund.
(b) The management fees shall be accrued daily by the Fund and paid to the
Manager at the end of each calendar month.
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(c) To the extent that the gross operating costs and expenses of the Fund
(excluding any interest taxes, brokerage commissions, and, with the prior
written approval of any state securities commission requiring same, any
extraordinary expenses, such as litigation) exceed the allowable expense
limitations of the state in which shares of the Fund are registered for sale
having the most stringent expense reimbursement provisions, the Manager shall
reimburse the Fund for the amount of such excess.
(d) The management fee payable by the Fund hereunder shall be reduced to
the extent that an affiliate of the Manager has actually received cash payments
of tender offer solicitation fees less certain costs and expenses incurred in
connection therewith, as referred to in Paragraph 6 herein.
9. The Manager agrees that neither it nor any of its officers or employees
shall take any short position in the capital stock of the Fund. This prohibition
shall not prevent the purchase of such shares by any of the officers and
directors or bona fide employees of the Manager or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof, at
a price not less than the net asset value thereof at the time of purchase, as
allowed pursuant to rules promulgated under the Investment Company Act of 1940,
as amended
10. Nothing herein contained shall be deemed to require the Fund to take
any action contrary to the Articles of Incorporation or By-Laws of the Company,
or any applicable statute or regulation, or to relieve or deprive the Board of
Directors of the Company of its responsibility for and control of the conduct of
the affairs of the Fund.
11. (a) In the absence of willful misfeasance, bad faith, gross negligence,
or reckless disregard of obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Fund, or to any
shareholder of the Fund, for any act or omission in the course of, or connected
with, rendering services hereunder or for any losses that may be sustained in
the purchase, holding or sale of any security by the Fund.
(b) Notwithstanding the foregoing, the Manager agrees to reimburse the Fund
for any and all costs, expenses, and counsel and Directors' fees reasonably
incurred by the Company in the preparation, printing and distribution of proxy
statements, amendments to its Registration Statement, the holding of meetings of
its shareholders or Directors, the conduct of factual investigations, any legal
or administrative proceedings (including any applications for exemptions or
determinations by the Securities and Exchange Commission) which the Fund incurs
as a result of action or inaction of the Manager or any of its shareholders
where the action or inaction necessitating such expenditures (i) is directly or
indirectly related to any transactions or proposed transaction in the shares or
control of the Manager or its affiliates (or litigation related to any pending
or proposed future transaction in such shares or control) which shall have been
undertaken without the prior, express approval of the Company's Board of
Directors; or (ii) is within the sole control of the Manager or any of its
affiliates or any of their officers, directors, employees or shareholders. The
Manager shall not be obligated pursuant to the provisions of this Subparagraph
11(b), to reimburse the Fund for any expenditures related to the institution of
an administrative proceeding or civil litigation by the Fund or by a Fund
shareholder seeking to recover all or a portion of the proceeds derived by any
shareholder of the Manager or any of its affiliates from the sale of his shares
of the Manager, or similar matters. So long as this Agreement is in effect, the
Manager shall pay to the Fund the amount due for expenses subject to this
Subparagraph 11(b) within thirty (30) days after a xxxx or statement has been
received by the Fund therefor. This provision shall not be deemed to be a waiver
of any claim the Fund may have or may assert against the Manager or others or
costs, expenses, or damages heretofore incurred by the Fund for costs, expenses,
or damages the Fund may hereafter incur which are not reimbursable to it
hereunder.
(c) No provision of this Agreement shall be construed to protect any
director or officer of the Fund, or of the Manager, from liability in violation
of Section 17(h) and (i) of the Investment Company Act of 1940, as amended.
12. This Agreement shall become effective on the date first written above,
subject to the condition that the Company's Board of Directors, including a
majority of those Directors who are not interested persons (as such term is
defined in the 0000 Xxx) of the Manager, and the shareholders of the Fund, shall
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have approved this Agreement. 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 from year to year
thereafter so long as such continuation is approved at least annually by (i) the
Board of Directors of the Company or by the vote of a majority of the
outstanding voting securities of the Fund, and (ii) the vote of a majority of
the directors of the Company who are not parties to this Agreement or interested
persons thereof, cast in person at a meeting called for the purpose of voting on
such approval.
13. This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by vote of a majority of
the outstanding voting securities of the Company, upon sixty (60) days written
notice to the Manager, and by the Manager upon sixty (60) days written notice to
the Fund.
14. This Agreement shall terminate automatically in the event of any
transfer or assignment thereof, as defined in the Investment Company Act of
1940, as amended.
15. This Agreement may not be transferred, assigned, sold or in any manner
hypothecated or pledged without the affirmative vote or written consent of the
holders of a majority of the outstanding voting securities of the Fund.
16. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.
17. The term "majority of the outstanding voting securities" of the Fund
shall have the meaning as set forth in the Investment Company Act of 1940, as
amended.
18. In consideration of the execution of this Agreement, the Manager hereby
grants to the Company and the Fund the right to use the name "Pilgrim" as part
of their corporate names. The Company and Fund agree that in the event this
Agreement is terminated, the Company and the Fund shall immediately take such
steps as are necessary to amend their corporate names to remove the reference to
"Pilgrim."
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, on the day and
year first above written.
PILGRIM INVESTMENT FUNDS, INC.
(on behalf of its Pilgrim High
Yield Fund series)
By:
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Title
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PILGRIM INVESTMENTS, INC.
By:
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Title
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