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EXHIBIT 2(k)(i)
ADMINISTRATION AGREEMENT
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AMENDED AND RESTATED
ADMINISTRATION AGREEMENT
THIS ADMINISTRATION AGREEMENT made as of the 20th day of October, 1992, amended
and restated as of the 17th day of February, 1995, and the 7th day of April,
1995, by and between PILGRIM PRIME RATE TRUST, a Massachusetts Business Trust
(hereinafter referred to as the "Trust"), and PILGRIM AMERICA GROUP, INC., a
corporation organized and existing under the laws of Delaware (hereinafter
called the "Administrator").
W I T N E S S E 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 Administrator is engaged in the business of providing management
and administrative services, as an independent contractor; and
WHEREAS, the Trust desires to retain the Administrator to furnish management and
administrative services to the Trust pursuant to the terms and provisions of
this Agreement, and the Administrator is interested in providing said 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 Administrator and the Administrator hereby
accepts such employment, to render management and administrative services to the
Trust, subject to the supervision and direction of the Trust's Board of
Trustees. The Administrator shall furnish to the Trust the services of executive
and administrative personnel to supervise the performance of all administrative
functions concerning the operation of the Trust, other than the investment
management function. The Administrator shall, as part of its duties hereunder
(i) administer the Trust's corporate affairs including preparing and filing all
reports required by the Commonwealth of Massachusetts, (ii) furnish the Trust
such office space, equipment, and personnel as is needed by the Trust, (iii)
furnish clerical and bookkeeping services as are needed by the Trust, (iv)
prepare and furnish annual and other reports to shareholders, the Securities and
Exchange Commission, the New York Stock Exchange and to any appropriate
governmental body, (v) prepare and file any federal, state and local income tax
returns as requested by the Trust; (vi) provide shareholder services as are
needed by the Trust; (vii) permit its officers and employees to serve without
compensation as trustees or officers of the Trust if elected to such positions,
and (vii) in general, supervise the performance of all administrative functions
of the Trust, subject to the ultimate supervision and direction of the Trust's
Board of Trustees.
2. The Administrator 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 Administrator to the Trust under
the provisions of this Agreement are not to be deemed exclusive, and the
Administrator 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.
3. The Administrator agrees to use its best judgment and efforts in performing
the services to the Trust as contemplated hereunder, and for this purpose the
Administrator 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.
4. In performing the administrative services hereunder, the Administrator shall
at all times comply with the applicable provisions of the Investment Company Act
of 1940 and any other federal or state securities laws.
5. The Administrator shall bear and pay the costs of rendering the services to
be performed by it under this Agreement. Without limiting the generality of the
foregoing, the Administrator shall bear the following expenses: the salaries and
expenses of all personnel of the Trust and the Administrator, except for the
fees and
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expenses of Trustees not affiliated with the Trust or the Administrator; costs
to prepare information for determination of net asset value by the Trust's
recordkeeping and accounting agent; expenses to maintain the Trust's books and
records that are not maintained by the Trust's Manager, Custodian or Transfer
Agent; costs incurred to assist in the preparation of financial information for
the Trust's income tax returns, proxy statements, quarterly and annual
shareholder reports; expenses to provide shareholder services in connection with
the Trust's dividend reinvestment and cash purchase plans; expenses to provide
shareholder services in preparation of tender offers, if any, or to shareholders
proposing to transfer their shares to a third party; and all expenses incurred
by the Administrator or by the Trust in rendering the administrative services
pursuant to the terms of this Agreement.
6. The Trust shall bear and pay for all other expenses of its operation, except
for those expenses expressly assumed by the Manager to the Trust pursuant to an
Investment Management Agreement between the Manager and the Trust, including,
but not limited to, the fees payable to the Manager; the fees and expenses of
Trustees who are not affiliated with the Manager or the Administrator; the fees
and certain expenses of the Trust's Custodian and Transfer Agent, including the
cost of providing records to the Administrator in connection with its obligation
of maintaining required records of the Trust; the charges and expenses of the
Trust's legal counsel and independent accountants; commissions and any issue or
transfer taxes chargeable to the Trust in connection with its transactions; all
taxes and corporate fees payable by the Trust to governmental agencies; the fees
of any trade association of which the Trust is a member; the cost of share
certificates representing shares of the Trust; organizational and offering
expenses of the Trust and the fees and expenses involved in registering and
maintaining registration of the Trust and of its shares with the Securities and
Exchange Commission, the New York Stock Exchange and qualifying its shares under
applicable state securities laws including the preparation and printing of the
Trust's registration statements and prospectuses for such purposes; allocable
communications expenses, with respect to investor services and all expenses of
stockholders and Trustees' meetings and of preparing, printing and mailing
reports, proxy statements and prospectuses to stockholders; the cost of
insurance; and litigation and indemnification expenses and extraordinary
expenses not incurred in the ordinary course of the Trust's business.
7. To the extent the Administrator incurs any costs or performs any services
which are an obligation of the Trust, as set forth herein, the Trust shall
promptly reimburse the Administrator for such costs and expenses. To the extent
the services for which the Trust is obligated to pay are performed by the
Administrator, the Administrator 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 Administrator, and the Administrator
agrees to accept, as full compensation for all administrative services furnished
or provided to the Trust and as full reimbursement for all expenses assumed by
the Administrator, an administration fee computed at the annual rate of .15% of
the average daily net assets of the Trust up to $800 million and at an annual
rate of .10% of the Trust's average daily net assets over $800 million.
(b) The administration fee shall be accrued daily by the Trust and paid to the
Administrator at the end of each calendar month.
9. The Administrator 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 Administrator 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 any 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
Administrator, the Administrator 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 security by the Trust.
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(b) Notwithstanding the foregoing, the Administrator 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 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
Administrator 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
Administrator or its affiliates (or litigation relates 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 Administrator or any of
its affiliates or any of their officers, directors, employees or
shareholders. The Administrator 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 Administrator
or any of its affiliates from the sale of his shares of the Administrator,
or similar matters. So long as this Agreement is in effect, the
Administrator 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
Administrator or others or costs, expenses, or damages heretofore incurred
by the Trust for costs, expenses, or damages by the Trust may hereafter
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 Administrator, from liability in violation of
Section 17(h) and (i) of the Investment Company Act of 1940, as amended.
12. (a) This Agreement shall become effective at the close of business on the
date hereof and shall continue in effect from year to year thereafter so long as
such continuation is specifically approved at least annually by (i) the Board of
Trustees 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.
(b) This Agreement may be terminated at any time, without penalty, by the Trust
by giving 60 days' written notice of such termination to the Administrator
at its principal place of business, or may be terminated at any time by the
Administrator by giving 60 days' written notice of such termination to the
Trust at its principal place of business.
13. 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.
14. This Agreement may be amended only by written instrument signed by the
parties hereto.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
in duplicate by their respective officers on the day and year first above
written.
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PILGRIM PRIME RATE TRUST
Attest: By:
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Senior Vice President
and Assistant Secretary
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Assistant Vice President
PILGRIM AMERICA GROUP, INC.
Attest: By:
Senior Vice President
and Secretary
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Assistant Vice President
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