INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT is made as of the _____ day of ________,
1997, by and between PILGRIM AMERICA BANK AND THRIFT FUND, INC. (formerly
Pilgrim Regional BankShares, Inc.), a Maryland corporation (the "Company"), and
PILGRIM AMERICA INVESTMENTS, INC., a Delaware corporation (the "Manager"), with
respect to the following recital of fact.
W I T N E S S E T H:
WHEREAS, the Company is registered as an open-end, diversified,
management investment company, under the Investment Company Act of 1940, as
amended; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Company desires to retain the Manager to render advice and
services to the Company 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. INVESTMENT MANAGEMENT. The Manager shall manage the
Company's affairs and shall supervise all aspects of the Company's
operations, including the investment and reinvestment of the cash,
securities or other properties comprising the Company's assets, subject
at all times to the policies and control of the Company's Board of
Directors. The Manager shall give the Company the benefit of its best
judgment, efforts and facilities in rendering its services as Manager.
2. DUTIES OF THE INVESTMENT MANAGER. In carrying out its
obligation under paragraph 1 hereof, the Manager shall:
(a) supervise and manage all aspects of the Company's
operations;
(b) provide the Company with such executive,
administrative and clerical services as are deemed
advisable by the Company's Board of Directors;
(c) arrange, but not pay for, the periodic updating
and filing of prospectuses and supplements thereto,
proxy material, tax returns, reports to the Company's
shareholders and reports to and filings with the
Securities and Exchange Commission and state Blue Sky
authorities;
(d) provide the Company with, or obtain for it,
adequate office space and all necessary office
equipment and service, including telephone service,
heat, utilities, stationery supplies and similar
items for the Company's principal office;
(e) provide the Board of Directors of the Company on
a regular basis with financial reports and analyses
on the Company's operations and the operations of
comparable investment companies;
(f) obtain and evaluate pertinent information about
significant developments and economic, statistical
and financial data, domestic, foreign and otherwise,
whether affecting the economy generally or the
portfolio of the Company, and whether concerning the
individual issuers whose securities are included in
the Company's portfolio or the activities in which
they engage, or with respect to securities which the
Manager considers desirable for inclusion in the
Company's portfolio;
(g) determine what issuers and securities shall be
represented in the Company's portfolio and regularly
report them to the Company's Board of Directors;
(h) formulate and implement continuing programs for
the purchases and sales of the securities of such
issuers and regularly report thereon to the Company's
Board of Directors; and
(I) take, on behalf of the Company, all actions which
appear necessary to carry into effect such purchase
and sale programs and supervisory functions as
aforesaid, including the placing of orders for the
purchase and sale of portfolio securities, it being
understood that the Company shall reimburse the
Manager for the costs of such actions upon proper
accounting.
3. BROKER-DEALER RELATIONSHIPS. The Manager is responsible
for decisions to buy and sell securities for the Company, broker-dealer
selection, and negotiation of its brokerage commission rates. The
Manager's primary consideration in effecting a security transaction
will be execution at the most favorable price.
In selecting a broker-dealer to execute each particular
transaction, the Manager will take the following into consideration:
the best net price available; the reliability, integrity and financial
condition of the broker-dealer; the size of and difficulty in executing
the order; the value of the expected contribution of the broker-dealer
to the investment performance of the Company on a continuing basis; and
other factors such as the broker-dealer's ability to engage in
transactions in shares of issuers which are typically not listed on an
organized stock exchange. Accordingly, the price to the Company in any
transaction may be less favorable than that available from another
broker-dealer if the difference is reasonably justified by other
aspects of the portfolio execution services offered. Subject to such
policies as the Board of Directors may determine, the Manager shall not
be deemed to have acted unlawfully or to have breached any duty created
by this Agreement or otherwise solely by reason of its having caused
the Company to pay a broker or dealer that provides brokerage and
research services to the Manager an amount of commission for effecting
a portfolio investment transaction in excess of the amount of
commission another broker or dealer would have charged for effecting
that transaction, if the Manager determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer,
viewed in terms of either that particular transaction or the Manager's
overall responsibilities with respect to the Company.
The Manager is further authorized to allocate the orders
placed by it on behalf of the Company to such brokers and dealers who
also provide research or statistical material, or other services to the
Company or the Manager. Such allocations shall be in such amounts and
proportions as the Manager shall determine and the Manager will report
on said allocations regularly to the Board of Directors of the Company
indicating the brokers to whom such allocations have been made and the
basis therefor.
4. CONTROL BY BOARD OF DIRECTORS. Any management or
supervisory activities undertaken by the Manager pursuant to this
Agreement, as well as other activities undertaken by the Manager on
behalf of the Company pursuant thereto, shall at all times be subject
to any directives of the Board of Directors of the Company.
5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out
is obligations under this Agreement, the Manager shall at all times
conform to:
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(a) all applicable provisions of the Investment Company
Act of 1940 and any rules and regulations adopted thereunder,
as amended; and
(b) the provisions of the Registration Statement of the
Company under the Securities Act of 1933 and the Investment
Company Act of 1940, as amended; and
(c) the provisions of the Articles of Incorporation of
the Company, as amended; and
(d) the provisions of the By-laws of the Company, as
amended; and
(d) any other applicable provisions of state and Federal
law.
6. EXPENSES. The expenses connected with the Company shall
be allocable between the Company and the Manager as follows:
(a) The Manager shall furnish at its expense and without cost
to the Company, the services of a President, Secretary and one
or more Vice Presidents of the Company, to the extent that
such additional officers may be required by the Company for
the proper conduct of its affairs;
(b) Nothing in Subparagraph (a) hereof shall be construed to
require the Manager to bear the portion allocable to the
Company of the salary of the Manager's portfolio trader and
the compensation paid to personnel working under his or her
direction to the extent such salary and compensation does not
exceed $15,000 per annum. Notwithstanding the obligation of
the Company to bear the expense of the items referred to
above, the Manager may pay the salaries, including any
applicable employment or payroll taxes and other salary costs,
of the personnel carrying out such functions and the Company
shall reimburse the Manager therefor upon proper accounting;
(c) The Manager shall bear the cost of the portion allocable
to the Company of the salary of the Manager's portfolio trader
and the compensation paid to personnel working under his or
her direction to the extent such salary and compensation
exceeds $15,000 per annum;
(d) The Company shall pay or cause to be paid all expenses of
the stock transfer or dividend agent or agents appointed by
the Company;
(e) The Company assumes and shall pay or cause to be paid all
other expenses of the Company, including, without limitation:
the charges and expenses of the registrar, any custodian or
depository appointed by the Company for the safekeeping of its
cash, portfolio securities and other property, and any
accounting agent appointed by the Company; broker's
commissions chargeable to the Company in connection with
portfolio securities transactions to which the Company is a
party; all taxes, including securities issuance and transfer
taxes, and corporate fees payable by the Company to Federal,
state or other governmental agencies; the cost and expense of
engraving or printing of stock certificates representing
shares of the Company; all costs and expenses in connection
with the registration and maintenance of registration of the
Company and its shares with the Securities and Exchange
Commission and various states and other jurisdictions
(including filing fees and legal fees and disbursements of
counsel); the costs and expenses of preparing (including
typesetting) prospectuses (including supplements thereto) of
the Company, proxy statements and reports to shareholders; and
of printing and distributing such items to the Company's
shareholders, all expenses of shareholders' and directors'
meetings; fees and travel expenses of directors or members of
any advisory board or committee; all expenses incident to the
payment of any dividend, distribution, withdrawal or
redemption, whether in shares or in cash; charges and expenses
of any outside service used for pricing of the Company's
shares; charges and expenses of legal counsel, including
counsel to the directors of the Company who are not interested
persons (as defined in the Investment Company Act of 1940, as
amended) of the
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Company, and of independent accountants, in
connection with any matter relating to the Company; membership
dues of industry associations; interest payable on Company
borrowings; postage; insurance premiums on property or
personnel (including officers and directors) of the Company
which inure to its benefit; extraordinary expenses (including,
but not limited to, legal claims and liabilities and
litigation costs and any indemnification related thereto); and
all other charges and costs of the Company's operation unless
otherwise explicitly provided therein.
7. DELEGATION OF RESPONSIBILITIES. The Manager may, but should
be under no duty to, perform services on behalf of the Company which
are not required by this Agreement upon the request of the Company's
Board of Directors. Such services will be performed on behalf of the
Company and the Manager's charge in rendering such services may be
billed monthly to the Company, subject to examination by the Company's
independent accountants. Payment or assumption by the Manager of any
Company expense that the Manager is not required to pay or assume under
this Agreement shall not relieve the Manager of any of its obligations
to the Company nor obligate the Manager to pay or assume any similar
Company expense on any subsequent occasions.
8. COMPENSATION. For the services to be rendered and the
expenses assumed by the Manager, the Company shall pay to the Manager
monthly compensation of the sum of the amounts determined by applying
the following annual rates to the Company's average daily net assets:
1.0% of the first $30 million of the Company's average daily net
assets, .75% of the Company's average daily net assets of the next $95
million of average daily net assets, and .70% of the average daily net
assets in excess of $125 million. Except as hereinafter set forth,
compensation under this Agreement shall be calculated and accrued daily
and the amounts of daily accruals shall be paid monthly. If this
Agreement becomes effective subsequent to the first day of a month or
shall terminate before the last day of a month, compensation for that
part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of fees set forth above. Payment
of the Manager's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated
above.
9. NON-EXCLUSIVITY. The services of the Manager to the Company
are not to be deemed to be exclusive, and the Manager shall be free to
render investment management and corporate administrative or other
services to others (including other investment companies) and to engage
in other activities, so long as its services under this Agreement are
not impaired thereby. It is understood and agreed that officers and
directors of the Manager may serve as officers or directors of the
Manager to the extent permitted by law; and that the officers and
directors of the Manager are not prohibited from engaging in any other
business activity or from rendering services to any other person, or
from serving as partners, officers or directors of any other firm or
corporation, including other investment companies.
10. TERM AND APPROVAL. This Agreement shall become effective
at the close of business on the date hereof and shall remain in force
and effect until April 7, 1999, unless sooner terminated as hereinafter
provided, and shall continue in force and effect from year to year,
provided that such continuance is specifically approved at least
annually:
(a) (i) by the Company's Board of Directors or (ii)
by the vote of a majority of the Company's
outstanding voting securities (as defined in Section
2(a)(42) of the Investment Company Act of 1940, as
amended), and
(b) by the affirmative vote of a majority of the
directors who are not parties to this Agreement or
interested persons of a party to this Agreement
(other than as Company directors), by votes cast in
person at a meeting specifically called for such
purpose.
11. TERMINATION. This Agreement may be terminated at any time,
without the payment of any penalty, by vote of the Company's Board of
Directors or by vote of a majority of the Company's outstanding
securities (as defined in Section 2(a)(42) of the Investment Company
Act of 1940, as amended), or by the Manager, on sixty (60) days'
written notice to the other party. This Agreement shall
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automatically terminate in the event of its assignment, the term
"assignment" having the meaning defined in Section 2(a)(4) of the
Investment Company Act of 1940, as amended.
12. LIABILITY OF THE MANAGER. In the absence of willful
misfeasance, bad faith or gross negligence on the part of the Manager
or any of its officers, directors or employees or reckless disregard by
the Manager of its duties under this Agreement, the Manager shall not
be liable to the Company or to any shareholder of the Company for any
act or omission in the course, or connected with, rendering services
hereunder or for any losses that may be sustained in the purchase,
holding or sale of any security.
13. NOTICES. Any notices under this Agreement shall be in
writing, addressed and delivered or mailed postage paid to the other
party at such address as such other party may designate for the receipt
of such notice. Until further notice to the other party, it is agreed
that the address of the Manager and that of the Company for this
purpose shall be Two Renaissance Square, 00 X. Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxxx, Xxxxxxx 00000.
14. QUESTIONS OF INTERPRETATION. Any question of
interpretation of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision of the
Investment Company Act of 1940, as amended, shall be resolved by
reference to such term or provision of the Act and to interpretations
thereof, if any, by the United States Courts or in the absence of any
controlling decision of any such court, by rules, regulations or orders
of the Securities and Exchange Commission issued pursuant to said Act.
In addition, where the effect of a requirement of the Investment
Company Act of 1940, as amended, reflected in any provision of this
Agreement is revised by rule, regulation or order of the Securities and
Exchange Commissions, such provisions shall be deemed to incorporate
the effect of such rule, regulation or order.
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
BANK AND THRIFT FUND, INC.
Attest: By:________________________________
Title: _______________________________ Title: ____________________________
PILGRIM AMERICA INVESTMENTS, INC.
Attest: By:________________________________
Title: _______________________________ Title: ____________________________
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