INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997, and amended as of April
30, 1998, and November 1, 1998, by and between Xxxxxx Xxxxxxx Xxxx
Xxxxxx Pacific Growth Fund Inc., a Maryland corporation (hereinafter called
the "Fund"), and Xxxxxx Xxxxxxx Xxxx Xxxxxx Advisors Inc., a Delaware
corporation (hereinafter called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Directors, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager
shall obtain and evaluate such information and advice relating to the
economy, securities and commodities markets and securities and commodities as
it deems necessary or useful to discharge its duties hereunder; shall
continuously supervise the management of the assets of the Fund in a manner
consistent with the investment objectives and policies of the Fund and
subject to such other limitations and directions as the Directors of the Fund
may from time to time prescribe; and shall take such further action as the
Investment Manager shall deem necessary or appropriate. The Investment
Manager shall also furnish to or place at the disposal of the Fund such of
the information, evaluations, analyses and opinions formulated or obtained by
the Investment Manager in the discharge of its duties as the Fund may, from
time to time, reasonably request.
2. The Investment Manager shall, at its own expense, enter into a
Sub-Advisory Agreement with a Sub-Advisor to make determinations as to the
securities and commodities to be purchased, sold or otherwise disposed of by
the Fund and the timing of such purchases, sales and dispositions and to take
such further action, including the placing of purchase and sale orders on
behalf of the Fund, as the Sub-Advisor, in consultation with the Investment
Manager, shall deem necessary or appropriate; provided that the Investment
Manager shall be responsible for monitoring compliance by such Sub-Advisor
with the investment policies and restrictions of the Fund and with such other
limitations or directions as the Directors of the Fund may from time to time
prescribe.
3. The Investment Manager 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 or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Investment
Manager shall be deemed to include persons employed or otherwise retained by
the Investment Manager to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to technical
and scientific developments, and such other information, advice and
assistance as the Investment Manager may desire. The Investment Manager
shall, as agent for the Fund, maintain the Fund's records and books of
account (other than those maintained by the Fund's transfer agent, registrar,
custodian and other agencies). All such books and records so maintained shall
be the property of the Fund and, upon request therefor, the Investment
Manager shall surrender to the Fund such of the books and records so
requested.
4. The Fund will, from time to time, furnish or otherwise make available
to the Investment Manager such financial reports, proxy statements and other
information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties
and obligations hereunder.
5. The Investment Manager shall bear the cost of rendering the
investment management and supervisory services to be performed by it under
this Agreement, and shall, at its own expense, pay the compensation of the
officers and employees, if any, of the Fund who are also directors, officers
or employees of the Investment Manager, and provide such office space,
facilities and equipment and such clerical help and bookkeeping services as
the Fund shall reasonably require in the conduct of its business. The
Investment Manager shall also bear the cost of telephone service, heat,
light, power and other utilities provided to the Fund.
6. The Fund assumes and shall pay or cause to be paid all other expenses
of the Fund, including without limitation: fees pursuant to any plan of
distribution that the Fund may adopt; the charges and expenses of any
registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities or commodities and other
property, and any stock transfer or dividend agent or agents appointed by the
Fund; brokers' commissions chargeable to the Fund in connection with
portfolio transactions to which the Fund is a party; all taxes, including
securities or commodities issuance and transfer taxes, and fees payable by
the Fund to federal, state or other governmental agencies; the cost and
expense of engraving or printing 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 cost and
expense of printing (including typesetting) and distributing prospectuses and
statements of additional information of the Fund and supplements thereto to
the Fund's shareholders; all expenses of shareholders' and Directors'
meetings and of preparing, printing and mailing proxy statements and reports
to shareholders; fees and travel expenses of Directors or members of any
advisory board or committee who are not employees of the Investment Manager
or any corporate affiliate of the Investment Manager; 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 Act) of the Fund or the Investment Manager, 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 herein.
7. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the
Investment Manager monthly compensation determined by applying the following
annual rates to the Fund's daily net assets: 0.95% of daily net assets up to
$1 billion; 0.90% of the next $1 billion; and 0.85% of daily net assets over
$2 billion. Except as hereinafter set forth, compensation under this
Agreement shall be calculated and accrued daily and the amounts of the daily
accruals shall be paid monthly. Such calculations shall be made by applying
1/365ths of the annual rates to the Fund's net assets each day determined as
of the close of business on that day or the last previous business day. 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 the fees as set forth above.
Subject to the provisions of paragraph 8 hereof, payment of the
Investment Manager's compensation for the preceding month shall be made as
promptly as possible after completion of the computations contemplated by
paragraph 8 hereof.
8. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 7 hereof, for any
fiscal year ending on a date on which this Agreement is in
2
effect, exceed the expense limitations applicable to the Fund imposed by
state securities laws or regulations thereunder, as such limitations may be
raised or lowered from time to time, the Investment Manager shall reduce its
management fee to the extent of such excess and, if required, pursuant to any
such laws or regulations, will reimburse the Fund for annual operating
expenses in excess of any expense limitation that may be applicable;
provided, however, there shall be excluded from such expenses the amount of
any interest, taxes, brokerage commissions, distribution fees and
extraordinary expenses (including but not limited to legal claims and
liabilities and litigation costs and any indemnification related thereto)
paid or payable by the Fund. Such reduction, if any, shall be computed and
accrued daily, shall be settled on a monthly basis, and shall be based upon
the expense limitation applicable to the Fund as at the end of the last
business day of the month. Should two or more such expense limitations be
applicable as at the end of the last business day of the month, that expense
limitation which results in the largest reduction in the Investment Manager's
fee shall be applicable.
For purposes of this provision, should any applicable expense limitation
be based upon the gross income of the Fund, such gross income shall include,
but not be limited to, interest on debt securities in the Fund's portfolio
accrued to and including the last day of the Fund's fiscal year, and
dividends declared on equity securities in the Fund's portfolio, the record
dates for which fall on or prior to the last day of such fiscal year, but
shall not include gains from the sale of securities.
9. The Investment Manager will use its best efforts in the supervision
and management of the investment activities of the Fund, but in the absence
of willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations hereunder, the Investment Manager shall not be liable to the
Fund or any of its investors for any error of judgment or mistake of law or
for any act or omission by the Investment Manager or for any losses sustained
by the Fund or its investors.
10. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom they
may be acting. Nothing in this Agreement shall limit or restrict the right of
any Director, officer or employee of the Investment Manager to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business whether of a similar or
dissimilar nature.
11. This Agreement shall remain in effect until April 30, 1999 and from
year to year thereafter provided such continuance is approved at least
annually by the vote of holders of a majority, as defined in the Investment
Company Act (the "Act"), of the outstanding voting securities of the Fund or
by the Directors of the Fund; provided that in either event such continuance
is also approved annually by the vote of a majority of the Directors of the
Fund who are not parties to this Agreement or "interested persons" (as
defined in the Act) of any such party, which vote must be cast in person at a
meeting called for the purpose of voting on such approval; provided, however,
that (a) the Fund may, at any time and without the payment of any penalty,
terminate this Agreement upon thirty days' written notice to the Investment
Manager, either by majority vote of the Directors of the Fund or by the vote
of a majority of the outstanding voting securities of the Fund; (b) this
Agreement shall immediately terminate in the event of its assignment (to the
extent required by the Act and the rules thereunder) unless such automatic
terminations shall be prevented by an exemptive order of the Securities and
Exchange Commission; and (c) the Investment Manager may terminate this
Agreement without payment of penalty on thirty days' written notice to the
Fund. Any notice under this Agreement shall be given in writing, addressed
and delivered, or mailed post-paid, to the other party at the principal
office of such party.
12. This Agreement may be amended by the parties without the vote or
consent of the shareholders of the Fund to supply any omission, to cure,
correct or supplement any ambiguous, defective or inconsistent provision
hereof, or if they deem it necessary to conform this Agreement to the
requirements of applicable federal laws or regulations, but neither the Fund
nor the Investment Manager shall be liable for failing to do so.
3
13. This Agreement shall be construed in accordance with the laws of the
State of New York and the applicable provisions of the Act. To the extent the
applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
14. The Investment Manager and the Fund each agree that the name "Xxxxxx
Xxxxxxx Xxxx Xxxxxx," which comprises a component of the Fund's name, is a
property right of Xxxxxx Xxxxxxx Xxxx Xxxxxx & Co. ("MSDW"), the parent of
the Investment Manager. The Fund agrees and consents that (i) it will only
use the name "Xxxxxx Xxxxxxx Xxxx Xxxxxx" as a component of its name and for
no other purpose, (ii) it will not purport to grant to any third party the
right to use the name "Xxxxxx Xxxxxxx Xxxx Xxxxxx" for any purpose. (iii)
MSDW, or any corporate affiliate of MSDW, may use or grant to others the right
to use the name "Xxxxxx Xxxxxxx Xxxx Xxxxxx," or any combination or
abbreviation thereof, as all or a portion of a corporate or business name or
for any commercial purpose, including a grant of such right to any other
investment company, (iv) at the request of MSDW or any corporate affiliate of
MSDW, the Fund will take such action as may be required to provide its
consent to the use of the name "Xxxxxx Xxxxxxx Xxxx Xxxxxx," or any
combination or abbreviation thereof, by MSDW or any corporate affiliate of
MSDW, or by any person to whom MSDW or a corporate affiliate of MSDW shall
have granted the right to such use, and (v) upon the termination of any
investment advisory agreement into which a corporate affiliate of MSDW and
the Fund may enter, or upon termination of affiliation of the Investment
Manager with its parent, the Fund shall, upon request of MSDW or any corporate
affiliate of MSDW, cease to use the name "Xxxxxx Xxxxxxx Xxxx Xxxxxx" as a
component of its name, and shall not use the name, or any combination or
abbreviation thereof, as a part of its name or for any other commercial
purpose, and shall cause its officers, trustees and shareholders to take any
and all actions which MSDW or any corporate affiliate of MSDW, may request to
effect the foregoing and to reconvey to MSDW any and all rights to such name
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement, as amended, on November 1, 1998 in New York, New York.
XXXXXX XXXXXXX XXXX XXXXXX
PACIFIC GROWTH FUND INC.
By:
-----------------------------
Attest:
------------------------------------
XXXXXX XXXXXXX XXXX XXXXXX
ADVISORS INC.
By:
-----------------------------
Attest:
------------------------------------
4
