EXHIBIT g.1
INVESTMENT MANAGEMENT AGREEMENT
XXXXXXXX-XXXXXXXXX CONVERTIBLE & INCOME FUND II
This Investment Management Agreement is executed as of July 16, 2003 by
and between XXXXXXXX-XXXXXXXXX CONVERTIBLE & INCOME FUND II, a Massachusetts
business trust (the "Fund"), and PIMCO ADVISORS 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 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
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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,
adhering to applicable investment objectives, policies and restrictions, and
placing all orders for the purchase and sale of portfolio securities for the
Fund. 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. 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
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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
0.70% 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 or other forms of
leverage of the Fund that may be outstanding) minus accrued liabilities (other
than liabilities representing leverage). 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 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.
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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 4) 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 than 50% of the outstanding shares of the Fund entitled to vote at such
meeting, whichever is less.
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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 "PIMCO Advisors Fund Management,"
"PIMCO Advisors," "Xxxxxxxx-Xxxxxxxxx Capital Management," "PIMCO",
"Xxxxxxxx-Xxxxxxxxx" and "NACM" 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, officers,
stockholders, creditors and all other persons claiming under or through it, and
shall survive the termination of this Agreement.
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10. COUNTERPARTS.
This Agreement may be executed in one or more counterparts, each of which
shall be deemed to be an original.
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IN WITNESS WHEREOF, XXXXXXXX-XXXXXXXXX CONVERTIBLE & INCOME FUND II and
PIMCO ADVISORS 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.
XXXXXXXX-XXXXXXXXX CONVERTIBLE & INCOME FUND II
By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxx X. Xxxxxxxx
Title: President and Chief Executive Officer
PIMCO ADVISORS FUND MANAGEMENT LLC
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: Managing Director
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