Exhibit d
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the __th day of September 2000,
by and between PILGRIM GOVERNMENT SECURITIES INCOME FUND, INC., a corporation
organized and existing under the laws of the State of California (hereinafter
called the "Fund") and PILGRIM INVESTMENTS, INC., a corporation organized and
existing under the laws of the State of Delaware (hereinafter called the
"Manager").
WITNESSETH:
WHEREAS, the Fund is 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 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 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 Fund's Board of Directors. 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
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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 a 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:
.50% on the first $500 million of net assets; plus
.45% on the net assets from $500 million to $1 billion; plus
.40% on net assets in excess of $1 billion
(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, amortization of
organization expenses, and, with the prior written approval of any
state securities commission requiring same, any extraordinary
expenses, such as litigation) exceed one and one-half percent (1.5%)
of the Fund's average net asset value on the first $40 million of net
assets and one percent (1%) on average net assets in excess of $40
million for any one fiscal year, the Manager shall reimburse the Fund
for the amount of such excess expenses.
(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.
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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 its Articles of Incorporation or any applicable statute
or regulation, or to relieve or deprive the Board of Directors of the Fund
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 Fund 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 Fund'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.
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(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 Fund'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 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 Fund 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 Fund 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 Fund or by vote of a majority of
the outstanding voting securities of the Fund, 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 Fund the right to use the name "Pilgrim" as part of its
corporate name. The Fund agrees that in the event this Agreement is
terminated, the Fund shall immediately take such steps as are necessary to
amend its corporate name 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,all on the day and
year first above written.
PILGRIM GOVERNMENT SECURITIES
INCOME FUND, INC.
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Senior Vice President
PILGRIM INVESTMENTS, INC.
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Senior Executive Vice President
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