EXHIBIT g.1
INVESTMENT MANAGEMENT AGREEMENT
NFJ Dividend, Interest & Premium Strategy Fund
This Investment Management Agreement is executed as of February 15, 2005
by and between NFJ DIVIDEND, INTEREST & PREMIUM STRATEGY FUND, a Massachusetts
business trust (the "Fund"), and PA FUND MANAGEMENT LLC, a Delaware limited
liability company (the "Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE MANAGER TO THE FUND.
(a) Subject always to the control of the Trustees of the Fund and to
such policies as the Trustees may determine, the Manager will, at its expense,
(i) furnish continuously an investment program for the Fund and will make
investment decisions on behalf of the Fund and place all orders for the purchase
and sale of portfolio securities and (ii) furnish office space and equipment,
provide bookkeeping and clerical services (excluding determination of net asset
value and shareholder accounting services) and pay all salaries, fees and
expenses of officers and Trustees of the Fund who are affiliated with the
Manager. In the performance of its duties, the Manager will comply with the
provisions of the Agreement and Declaration of Trust and By-laws of the Fund,
each as amended from time to time, and the Fund's stated investment objectives,
policies and restrictions.
(b) In the selection of brokers or dealers and the placing of orders
for the purchase and sale of portfolio investments for the Fund, the Manager
shall seek to obtain for the Fund the most favorable price and execution
available, except to the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described below. In using its
best efforts to obtain for the Fund the most favorable price and execution
available, the Manager, bearing in mind the Fund's best interests at all times,
shall consider all factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for the security,
the amount of the commission, the timing of the transaction taking into account
market prices and trends, the reputation, experience and financial stability of
the broker or dealer involved and the quality of service rendered by the broker
or dealer in other transactions. Subject to such policies as the Trustees may
determine, the Manager shall not be deemed to have
-1-
acted unlawfully or to have breached any duty created by this Agreement or
otherwise solely by reason of its having caused the Fund 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 Fund and to other clients of the Manager as to which the Manager exercises
investment discretion. The Fund hereby agrees with the Manager and with any
Portfolio Manager selected by the Manager as provided in Section 1(c) hereof
that any entity or person associated with the Manager which is a member of a
national securities exchange is authorized to effect any transaction on such
exchange for the account of the Fund which is permitted by Section 11(a) of the
Securities Exchange Act of 1934 (the "1934 Act").
(c) Subject to the provisions of the Agreement and Declaration of
Trust of the Fund and the Investment Company Act of 1940 and the rules and
regulations thereunder, as amended from time to time (the "1940 Act"), the
Manager, at its expense, may select and contract with investment advisers (the
"Portfolio Managers") for the Fund. The Manager shall retain any Portfolio
Manager pursuant to a portfolio management agreement the terms and conditions of
which are acceptable to the Fund. If the Manager retains a Portfolio Manager
hereunder, then unless otherwise provided in the applicable portfolio management
agreement, the obligation of the Manager under this Agreement with respect to
the Fund shall be, subject in any event to the control of the Trustees of the
Fund, to determine and review with the Portfolio Manager the investment policies
of the Fund, and the Portfolio Manager shall have the obligation of furnishing
continuously an investment program and making investment decisions for the Fund
(or with respect to a portion of the Fund's assets managed by such Portfolio
Manager), adhering to applicable investment objectives, policies and
restrictions, and placing all orders for the purchase and sale of portfolio
securities for the Fund (or with respect to a portion of the Fund's assets
managed by such Portfolio Manager), as applicable. The Manager (and not the
Fund) will compensate any Portfolio Manager for its services to the Fund.
Subject to the provisions of the applicable portfolio management agreement with
the Portfolio Manager, the Manager may terminate the services of any Portfolio
Manager at any time in its sole discretion, and shall at such time assume the
responsibilities of such Portfolio Manager unless and until a successor
Portfolio Manager is selected.
(d) The Manager shall not be obligated to pay any expenses of or for
the Fund not expressly assumed by the Manager pursuant to this Section 1 other
than as provided in Section 3.
-2-
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, partner, director, officer or
employee of, or be otherwise interested in, the Manager, and in any person
controlled by or under common control with the Manager, and that the Manager and
any person controlled by or under common control with the Manager may have an
interest in the Fund. It is also understood that the Manager and persons
controlled by or under common control with the Manager have and may have
advisory, management service, distribution or other contracts with other
organizations and persons, and may have other interests and businesses.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the Manager's
services rendered, for the facilities furnished and for the expenses borne by
the Manager pursuant to Section 1, a fee, computed and paid monthly at the
annual rate of 0.90% of the average daily total managed assets of the Fund. For
purposes of this Section 3, "total managed assets" means the total assets of the
Fund (including any assets attributable to any preferred shares and borrowings
that may be outstanding) minus accrued liabilities (other than liabilities
representing borrowings). The average daily total managed assets of the Fund
shall be determined by taking an average of all of the determinations of such
amount during such month at the close of business on each business day during
such month while this Agreement is in effect. Such fee shall be payable for each
month within five (5) business days after the end of such month.
In the event that the Manager has agreed to a fee waiver or an expense
limitation or reimbursement arrangement with the Fund, subject to such terms and
conditions as the Manager and the Fund may set forth in such agreement, the
compensation due the Manager hereunder shall be reduced, and, if necessary, the
Manager shall bear expenses with respect to the Fund, to the extent required by
such fee waiver or expense limitation or reimbursement arrangement.
If the Manager shall serve for less than the whole of a month, the
foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment; and this Agreement shall not be amended
as to the Fund unless such amendment is approved at a meeting by the affirmative
vote of a majority of the outstanding
-3-
shares of the Fund, and by the vote, cast in person at a meeting called for the
purpose of voting on such approval, of a majority of the Trustees of the Fund
who are not interested persons of the Fund or of the Manager or of any Portfolio
Manager of the Fund.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall
remain in full force and effect as to the Fund continuously thereafter (unless
terminated automatically as set forth in Section 5) until terminated as follows:
(a) Either party hereto may at any time terminate this
Agreement by not more than sixty days' written notice delivered or
mailed by registered mail, postage prepaid, to the other party, or
(b) If (i) the Trustees of the Fund or the shareholders by
the affirmative vote of a majority of the outstanding shares of the
Fund, and (ii) a majority of the Trustees of the Fund who are not
interested persons of the Fund or of the Manager or any Portfolio
Manager, by vote cast in person at a meeting called for the purpose of
voting on such approval, do not specifically approve at least annually
the continuance of this Agreement, then this Agreement shall
automatically terminate at the close of business on the second
anniversary of its execution, or upon the expiration of one year from
the effective date of the last such continuance, whichever is later;
provided, however, that if the continuance of this Agreement is
submitted to the shareholders of the Fund for their approval and such
shareholders fail to approve such continuance of this Agreement as
provided herein, the Manager may continue to serve hereunder in a manner
consistent with the 1940 Act.
Action by the Fund under (a) above may be taken either (i) by vote of a
majority of its Trustees, or (ii) by the affirmative vote of a majority of the
outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority
of the outstanding shares" means the affirmative vote, at a duly called and held
meeting of shareholders, (a) of the holders of 67% or more of the shares of the
Fund present (in person or by proxy) and entitled to vote at such meeting, if
the holders of more than 50% of the outstanding shares of the Fund entitled to
vote at such meeting are present in person or by proxy, or (b) of the holders of
more
-4-
than 50% of the outstanding shares of the Fund entitled to vote at such meeting,
whichever is less.
For the purposes of this Agreement, the terms "affiliated person",
"control", "interested person" and "assignment" shall have their respective
meanings defined in the 1940 Act, subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act; the term
"specifically approve at least annually" shall be construed in a manner
consistent with the 1940 Act; and the term "brokerage and research services"
shall have the meaning given in the 1934 Act and the rules and regulations
thereunder.
7. NONLIABILITY OF MANAGER.
Notwithstanding any other provisions of this Agreement, in the absence
of willful misfeasance, bad faith or gross negligence on the part of the
Manager, or reckless disregard of its obligations and duties hereunder, the
Manager, including its officers, directors and partners, shall not be subject to
any liability to the Fund, or to any shareholder, officer, director, partner or
Trustee thereof, for any act or omission in the course of, or connected with,
rendering services hereunder.
8. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of State of The Commonwealth of Massachusetts, and notice is
hereby given that this instrument is executed on behalf of the Trustees of the
Fund as Trustees and not individually and that the obligations of this
instrument are not binding upon any of the Trustees or shareholders individually
but are binding only upon the assets and property of the Fund.
9. USE OF NAMES AND LOGOS.
It is expressly understood that the names "PA Fund Management," "NFJ,"
"NFJ Investment Group L.P.," "PEA," "PEA Capital LLC," "Xxxxxxxx-Xxxxxxxxx" and
"Xxxxxxxx-Xxxxxxxxx Capital Management LLC" or any derivation thereof, or any
logo associated with those names, are the valuable property of the Manager and
its affiliates, and that the Fund shall have the limited right to use such names
(or derivations thereof or associated logos) only so long as the Manager shall
consent and this Agreement shall remain in effect. Upon reasonable notice from
the Manager to the Fund or upon termination of this Agreement, the Fund shall
forthwith cease to use such names (or derivations thereof or associated logos)
and shall promptly amend its Agreement and Declaration of Trust and other public
documents to change its name accordingly. The covenants on the part of the Fund
in this Section 9 shall be binding upon it, its Trustees,
-5-
officers, stockholders, creditors and all other persons claiming under or
through it, and shall survive the termination of this Agreement.
10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
-6-
IN WITNESS WHEREOF, NFJ DIVIDEND, INTEREST & PREMIUM STRATEGY FUND and
PA FUND MANAGEMENT LLC have each caused this instrument to be signed in its
behalf by its duly authorized representative, all as of the day and year first
above written.
NFJ DIVIDEND, INTEREST & PREMIUM
STRATEGY FUND
By: XXXXX XXXXXXXX
-----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President and Chief Executive
Officer
PA FUND MANAGEMENT LLC
By: XXXXXX XXXXXX
-----------------------------
Name: Xxxxxx Xxxxxx
Title: Managing Director
