RESTATED
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the 7th day of April, 1995, and
restated on the 7th day of April, 1997, by and between PILGRIM AMERICA
INVESTMENT FUNDS, INC., (formerly 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 AMERICA HIGH YIELD FUND series
(formerly Pilgrim High Yield Fund) (the "Fund"), 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 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 Company's name was changed to Pilgrim America Investment
Funds, Inc. on July 13, 1995; and the Fund's name was changed to Pilgrim America
High Yield Fund on July 13, 1995; 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
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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 the following annual percentage of the
average daily net assets of the Fund:
.75% on the first $25 million of net assets; plus
.625% on the net assets from $25 million to $100 million; plus
.50% on net assets from $100 million to $500 million; plus
.40% on net assets in excess of $500 million
(b) The management fees shall be accrued daily by the Fund and
paid to the Manager at the end of each calendar month.
(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
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(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 remain in effect until April 7, 1998,
unless sooner terminated as hereinafter provided, and shall continue in
effect 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 AMERICA INVESTMENT FUNDS, INC.
(on behalf of its Pilgrim America High Yield
Fund series)
Attest: _____________________ By:____________________________________
Title: ______________________ Title: __________________________________
PILGRIM AMERICA INVESTMENTS, INC.
Attest: _____________________ By:____________________________________
Title: ______________________ Title: __________________________________
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