Exhibit d
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT is made as of the __th day of September
2000, by and between PILGRIM BANK AND THRIFT FUND, INC., a Maryland corporation
(the "Fund"), and PILGRIM INVESTMENTS, INC., a Delaware corporation (the
"Manager"), with respect to the following recital of fact.
WITNESSETH:
WHEREAS, the Fund is registered as a 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 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. INVESTMENT MANAGEMENT. The Manager shall manage the Fund's affairs and
shall supervise all aspects of the Fund's operations, including the
investment and reinvestment of the cash, securities or other properties
comprising the Fund's assets, subject at all times to the policies and
control of the Fund's Board of Directors. The Manager shall give the Fund
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 Fund's operations;
(b) provide the Fund with such executive, administrative and clerical
services as are deemed advisable by the Fund'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 Fund's shareholders and reports to and filings with the
Securities and Exchange Commission and state Blue Sky authorities;
<PAGE>
(d) provide the Fund 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 Fund's
principal office;
(e) provide the Board of Directors of the Fund on a regular basis with
financial reports and analyses on the Fund'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 Fund, and whether concerning the individual issuers
whose securities are included in the Fund's portfolio or the
activities in which they engage, or with respect to securities which
the Manager considers desirable for inclusion in the Fund's portfolio;
(g) determine what issuers and securities shall be represented in the
Fund's portfolio and regularly report them to the Fund'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 Fund's Board of Directors; and
(i) take, on behalf of the Fund, 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 Fund 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 Fund, 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 Fund 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 Fund 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 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
2
<PAGE>
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.
The Manager is further authorized to allocate the orders placed by it on
behalf of the Fund to such brokers and dealers who also provide research or
statistical material, or other services to the Fund 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 Fund 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 Fund pursuant
thereto, shall at all times be subject to any directives of the Board of
Directors of the Fund.
5. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out is obligations
under this Agreement, the Manager shall at all times conform to:
(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 Fund 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 Fund, as
amended; and
(d) the provisions of the By-laws of the Fund, as amended; and
(e) any other applicable provisions of state and Federal law.
6. EXPENSES. The expenses connected with the Fund shall be allocable between
the Fund and the Manager as follows:
(a) The Manager shall furnish at its expense and without cost to the Fund,
the services of a President, Secretary and one or more Vice Presidents
of the Fund, to the extent that such additional officers may be
required by the Fund 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 Fund 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 Fund to bear the expense of the items referred to
above, the Manager may pay the salaries, including any applicable
3
<PAGE>
employment or payroll taxes and other salary costs, of the personnel
carrying out such functions and the Fund shall reimburse the Manager
therefor upon proper accounting;
(c) The Manager shall bear the cost of the portion allocable to the Fund
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 Fund shall pay or cause to be paid all expenses of the stock
transfer or dividend agent or agents appointed by the Fund;
(e) The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including, without limitation: the charges and expenses
of the registrar, any custodian or depository appointed by the Fund
for the safekeeping of its cash, portfolio securities and other
property, and any accounting agent appointed by the Fund; broker's
commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes,
including securities issuance and transfer taxes, and corporate fees
payable by the Fund to Federal, state or other governmental agencies;
the cost and expense of engraving or printing of stock certificates
representing shares of the Fund; all costs and expenses in connection
with the registration and maintenance of registration of the Fund 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 in connection
with the listing, and maintenance of such listing, of the Fund's
shares on any securities exchange; the costs and expenses of preparing
(including typesetting) prospectuses (including supplements thereto)
of the Fund, proxy statements and reports to shareholders; and of
printing and distributing such items to the Fund'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 Fund's shares;
charges and expenses of legal counsel, including counsel to the
directors of the Fund who are not interested persons (as defined in
the Investment Company Act of 1940, as amended) of the Fund, and of
independent accountants, in connection with any matter relating to the
Fund; membership dues of industry associations; interest payable on
Fund borrowings; postage; insurance premiums on property or personnel
(including officers and directors) of the Fund 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 Fund'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 Fund which are not required by
this Agreement upon the request of the Fund's Board of Directors. Such
services will be performed on behalf of the Fund and the Manager's charge
in rendering such services may be billed monthly to the Fund, subject to
examination by the Fund's independent accountants. Payment or assumption by
4
<PAGE>
the Manager of any Fund 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 Fund nor obligate the Manager to pay or assume any
similar Fund expense on any subsequent occasions.
8. COMPENSATION. For the services to be rendered and the expenses assumed by
the Manager, the Fund shall pay to the Manager monthly compensation of the
sum of the amounts determined by applying the following annual rates to the
Fund's average daily net assets: 1.0% of the first $30 million of the
Fund's average daily net assets, .75% of the Fund'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 Fund 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 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 1940 Act) 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, provided that such continuance is
specifically approved at least annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote of a majority
of the Fund'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 Fund directors), by votes cast in person at a
meeting specifically called for such purpose.
5
<PAGE>
11. TERMINATION. This Agreement may be terminated at any time, without the
payment of any penalty, by vote of the Fund's Board of Directors or by vote
of a majority of the Fund'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 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 Fund or to any
shareholder of the Fund 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 Fund for this purpose shall be 40 N. Central
Avenue, Suite 1200, Phoenix, Arizona 85004.
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 BANK AND THRIFT FUND, INC.
----------------------------------------
Senior Vice President
PILGRIM INVESTMENTS, INC.
----------------------------------------
Senior Executive Vice President
6
