AMENDED AND RESTATED
INVESTMENT MANAGEMENT AGREEMENT
THIS AMENDED AND RESTATED INVESTMENT MANAGEMENT AGREEMENT made as of the
7th day of April, 1995, as amended and restated on the 7th day of April, 1997,
by and between PILGRIM AMERICA PRIME RATE TRUST, (formerly Pilgrim Prime Rate
Trust) a Massachusetts Business Trust (hereinafter called the "Trust"), and
PILGRIM AMERICA 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 T H:
WHEREAS, the Trust is a closed-end management investment company,
registered as such under the Investment Company Act of 1940; and
WHEREAS, the Trust's name was changed to Pilgrim America Prime Rate Trust
on April 12, 1996; 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 and investment management services, as an independent
contractor; and
WHEREAS, the Trust desires to retain the Manager to render investment
advice and investment management services to the Trust 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 Trust hereby employs the Manager and the Manager hereby
accepts such employment, to render investment advice and
investment management services with respect to the assets of the
Trust, subject to the supervision and direction of the Trust's
Board of Trustees. The Manager shall, as part of its duties
hereunder (i) furnish the Trust with advice and recommendations
with respect to the investment of the Trust's assets and the
purchase and sale of its portfolio securities, including the
taking of such other steps as may be necessary to implement such
advice and recommendations, (ii) furnish the Trust with reports,
statements and other data on securities, economic conditions and
other pertinent subjects which the Trust's Board of Trustees may
request, (iii) permit its officers and employees to serve without
compensation as Trustees of the Trust if elected to such
positions and (iv) in general superintend and manage the
investment of the Trust, subject to the ultimate supervision and
direction to the Trust's Board of Trustees.
2. The Manager shall use its best judgment and efforts in rendering
the advice and services to the Trust 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 Trust in any way, or in any way be deemed an agent
for the Trust. It is expressly understood and agreed that the
services to be rendered by the Manager to the Trust 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 Trust, in the preparation
of reports and information, and in the management of the Trust'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 Trust will from time to time furnish to the Manager detailed
statements of the investments and assets of the Trust 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 Trust or available
to it and such information as the Manager may reasonably request.
6. Whenever the Manager has determined that the Trust 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, expenses or personnel
beyond that already committed (other than normal periodic fees or
payments necessary to maintain its corporate existence and
membership in the National Associations 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 Trust
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 Trust
shall be responsible for all other expenses of its operation,
including, but not limited to, expenses incurred in connection
with the sale, issuance, registration, and transfer of its
shares; fees of its custodian, transfer and shareholder servicing
agent; salaries of officers and fees and expenses of trustees or
members of any advisory board or committee of the Trust who are
not members of, affiliated with or interested persons of the
Manager; the cost of preparing and printing reports, proxy
statements and prospectuses of the Trust or other communications
for distribution to its shareholders; legal, auditing and
accounts fees; the fees of any trade associations of which the
Trust is a member; 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 Trust, as set forth herein, the Trust shall
promptly reimburse the Manager for such costs and expenses. To
the extent the services for which the Trust is obligated to pay
are performed by the Manager, the Manager shall be entitled to
recover from the Trust only to the extent of its costs for such
services.
8. (a)The Trust agrees to pay to the Manager, and the Manager agrees
to accept, as full compensation for all investment
management services furnished or provided to the Trust and
as full reimbursement for all expenses assumed by the
Manager, a management fee computed at the annual rate of
.85% of the average daily net assets of the Trust, plus the
proceeds of any outstanding borrowings, up to $700 million;
at an annual rate of .75% of the Trust's average daily net
assets, plus the proceeds of any outstanding borrowings, in
excess of $700 million up to but not including $800 million;
and at an annual rate of .65% of the Trust's average daily
net assets, plus the proceeds of any outstanding borrowings,
over $800 million.
(b) The management fee shall be accrued daily by the Trust and
paid to the Manager at the end of each calendar month.
(c) If, for any fiscal year, the expenses borne by the Trust,
including the investment advisory fee, but excluding
brokerage commissions and fees, taxes, interest and to the
extent permitted, any extraordinary expenses such as
litigation and non-recurring expenses, would exceed the
expense limitations applicable to the Trust imposed by the
securities laws or regulations thereunder of any state in
which the Trust's shares are qualified for sale, the Manager
agrees to reduce its fee or reimburse the Trust for all such
excess expenses exceeding such limitation no later than the
last day of the first month of the next succeeding fiscal
year. For the purposes of this paragraph, the term "fiscal
year" shall exclude the portion of the current fiscal year
which shall have elapsed prior to the date hereof and shall
include the portion of the then current fiscal year which
shall have elapsed at the date of termination of this
Agreement.
(d) The management fee payable by the Trust 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 Trust. 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.
10. Nothing herein contained shall be deemed to require the Trust to
take any action contrary to its Trust Indenture or applicable
statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of
the conduct of the affairs of the Trust.
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 Trust or to any shareholder
of the Trust 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 investment by the Trust.
(b) Notwithstanding the foregoing, the Manager agrees to
reimburse the Trust for any and all costs, expenses, and
counsel and trustees' fees reasonably incurred by the Trust
in the preparation, printing and distribution of proxy
statements, amendments to its Registration Statement,
holding of meetings of its shareholders or trustees, 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 Trust incurs as the 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 transaction 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 Trust's Board of Trustees; 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
Trust for any expenditures related to the institution of an
administrative proceeding or civil litigation by the Trust
or a Trust 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 Trust 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 Trust therefor. This provision shall not be deemed to
be a waiver of any claim the Trust may have or may assert
against the Manager or others or costs, expenses, or damages
heretofore incurred by the Trust for costs, expenses, or
damages the Trust may hereinafter incur which are not
reimbursable to it hereunder.
(c) No provision of this Agreement shall be construed to protect
any trustee or officer of the Trust, or 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 remain in effect until April 7, 1998, unless
sooner terminated as hereinafter provided, and shall continue in
effect from year to year so long as such continuation is
specifically approved at least annually by (i) the Board of
Trustees of the Trust or by the vote of a majority of the
outstanding voting securities of the Trust, and (ii) the vote of
a majority of the trustees of the Trust 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 Trustees of the Trust or by vote of
a majority of the outstanding voting securities of the Trust,
upon sixty (60) days written notice to the Manager, and by the
Manager upon sixty (60) days written notice to the Trust.
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. 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.
16. The term "majority of the outstanding voting securities" of the
Trust shall have the meaning as set forth in the Investment
Company Act of 1940, as amended.
17. In consideration of the execution of this Agreement the Manager,
on behalf of its sole shareholder, Pilgrim America Group, Inc.
hereby grants to the Trust the right to use the name "Pilgrim" as
part of its name. The Manager, on behalf of its sole shareholder,
Pilgrim America Group, Inc. reserves the right to grant to others
the right to use the name "Pilgrim" including to any other
investment company. The Trust agrees that in the event this
Agreement is terminated, the Trust shall immediately take such
steps as are necessary to amend its name and remove the reference
to "Pilgrim."
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers on the day and year first above written.
PILGRIM AMERICA PRIME RATE TRUST
Attest: By:_____________________________
Title: _______________________________ Title: ____________________________
PILGRIM AMERICA INVESTMENTS, INC.
Attest: By:_____________________________
Title: _______________________________ Title: ____________________________
