Xxxxxxxxx Capital Corporation
Form N-SAR
For Period Ending 12/31/01
File Number (c) 811-1641
Attachment Per Item 77q1
Sub-Item 77Q1(e) Interim Investment Management and Advisory Contract
of Registrant
INTERIM INVESTMENT MANAGEMENT AND ADVISORY AGREEMENT
THIS INTERIM AGREEMENT is entered into as of the 23rd day of July, 2001 by
and between Dresdner RCM Global Investors LLC, a Delaware limited liability
company (the "Adviser"), and Xxxxxxxxx Capital Corporation, a Delaware
corporation (the "Client"):
1. Subject to the supervision of the Board of Directors of the Client (the
"Board of Directors"), the Client hereby grants to the Adviser full
authority, and the Adviser hereby agrees, to manage the investment and
reinvestment of the cash and securities in the account of the Client (the
"Account") presently held by State Street Bank and Trust Company, 000
Xxxxxxxx Xxxxxx, Xxxxxx, Xxxxxxxxxxxxx 00000 (the "Custodian"), the
proceeds thereof, and any additions thereto, in the Adviser's discretion
but consistent with the investment objectives, policies and restrictions
of the Client as they may be amended from time to time. In this connection,
the Adviser shall not be required to take any action with respect to the
voting of proxies solicited by or with respect to the issuers of
securities in which Account assets may be invested.
2. In consideration of the services performed by the Adviser hereunder, the
Client will pay to the Adviser, as they become due and payable, management
fees determined in accordance with the attached Schedule of Fees.
3. Nothing contained herein shall be deemed to authorize the Adviser to take
or receive physical possession of any cash or securities held in the Account
by the Custodian, it being intended that sole responsibility for safekeeping
thereof (in such investments as the Adviser may direct), and the consummation
of all such purchases, sales, deliveries and investments made pursuant to the
Adviser's direction, shall rest upon the Custodian.
4. (a) Unless otherwise specified in writing to the Adviser by the Client, all
orders for the purchase and sale of securities for the Account shall be placed
in such markets and through such brokers as in the Adviser's best judgment shall
offer the most favorable price and market for the execution of each transaction.
The Client understands and agrees that the Adviser may effect securities
transactions which cause the account to pay an amount of commission in excess of
the amount of commission another broker or dealer would have charged. Provided,
however, that the Adviser determines in good faith that such amount of
commission is reasonable in relation to the value of brokerage and research
services provided by such broker or dealer, viewed in terms of either the
specific transaction or the Adviser's overall responsibilities to the accounts
for which the Adviser exercises investment discretion. The Client also
understands that the receipt and use of such services will not reduce the
Adviser's customary and normal research activities.
(b) The Client agrees that the Adviser may aggregate sales and purchase orders
of securities held in the Account with similar orders being made simultaneously
for other portfolios managed by the Adviser if, in the Adviser's reasonable
judgment, such aggregation shall result in an overall economic benefit to the
Account, taking into consideration the advantageous selling or purchase price
and brokerage commission. In accounting for such aggregated order, price and
commission shall be average on a per bond or share basis daily. The Client
acknowledges that the Adviser's determination of such economic benefit to the
Account is based on an evaluation that the Account is benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial
timing of transactions, or a combination of these and other factors.
5. The Adviser represents that it is duly registered as an investment adviser
under the Investment Advisers Act of 1940, as amended.
6. The Adviser agrees:
(a) to give the Client the benefit of the Adviser's best judgment and efforts in
rendering services to the Client as provided in this Agreement;
(b) to furnish the Client with monthly statements of the Account, valued, for
each security listed on any national securities exchange at the last quoted sale
price on the valuation date reported on the composite tape or, in the case of
securities not so reported, by the principal exchange on which the security is
traded, and for any other security or asset in a manner determined in good faith
by the Adviser to reflect its fair market value;
(c) to furnish the Client with statements evidencing any purchases and sales for
the Account as soon as practicable after such transaction has taken place;
(d) to maintain books and records with respect to the Client's portfolio
transactions and to surrender promptly to the Client any of such records upon
the Client's request;
(e) to render to the Board of Directors such periodic and special reports as the
Board may reasonably request from time to time;
(f) to perform its duties under this Agreement in conformity with the Client's
Certificate of Incorporation, By-Laws and Form N-2 Registration Statement, with
the requirements of applicable federal and state laws and regulations, with the
requirements of the Internal Revenue Code affecting the Client's status as a
regulated investment company, and with the instructions of the Board of
Directors, all as may be amended from time to time;
(g) to bear all expenses related to compensation of its employees and to its
overhead in connection with its duties under this Agreement;
(h) to maintain strict confidence in regard to the Account;
(i) to notify the Client of any change in ownership of the Adviser in advance,
if reasonable, and otherwise as soon as practicable after such change occurs,
and
(j) to indemnify the Client against any losses, claims, damages, liabilities or
expenses arising out of or based upon any untrue statement of any material fact
contained in any registration statement, prospectus, proxy statement, report or
other document, or any amendment or supplement thereto, or arising out of or
based upon any omission to state therein any material fact required to be stated
therein or necessary to make the statements therein not misleading, to the
extent that such untrue statement or omission was made in reliance upon and in
conformity with information furnished to the Client by the Adviser specifically
for use in the preparation thereof.
7. The Client agrees:
(a) to advise the Adviser of the investment objectives, policies and
restrictions of the Client as they apply to the Account and of any changes or
modifications therein and to notify the Adviser of any other changes in the
Account, including any amendments to the Client's Certificate of Incorporation
or By-Laws, of which the Adviser would not otherwise have knowledge and which
would be material to the Adviser;
(b) to give the Adviser written notice of any investments made for the Account
that the Client deems to be in violation of the investment objectives, policies
or restrictions of the Client;
(c) to maintain in strict confidence and for use only with respect to the Client
all investment advice given by the Adviser; and
(d) not to hold the Adviser, or any of its managers, officers or employees,
liable under any circumstances for any error of judgment or other action taken
or omitted by the Adviser in the good faith exercise of its powers hereunder,
or arising out of an act or omission of the Custodian or of any broker or agent
selected by the Adviser in good faith and in a commercially reasonable manner,
excepting matters as to which the Adviser shall be finally adjudged to have been
guilty of willful misfeasance, bad faith, gross negligence, reckless disregard
of duty or breach of fiduciary duty involving personal misconduct (all as used
in the Investment Company Act of 1940, as amended (the "1940 Act")).
8. The Client understands and agrees:
(a) that the Adviser performs investment management services for various clients
and that the Adviser may take action with respect to any of its other clients
which may differ from action taken or from the timing or nature of action taken
with respect to the Account, so long as it is the Adviser's policy, to the
extent practical, to allocate investment opportunities to the Account over a
period of time on a fair and equitable basis relative to other clients; and
(b) that the Adviser shall have no obligation to purchase or sell for the
Account any security which the Adviser, or its directors, officers or
employees, may purchase or sell for its or their own accounts or the account
of any other client, if in the opinion of the Adviser such transaction or
investment appears unsuitable, impractical or undesirable for the Account.
9. This Agreement shall remain in effect until a new investment advisory
agreement is approved by a vote of a majority of the outstanding voting
securities of the Client, but in no event shall this Agreement remain in
effect beyond 150 days from the date hereof. The Board of Directors or
a majority of the Client's outstanding voting securities may terminate
this Agreement at any time, without the payment of any penalty, on not
more than 10 calendar day's written notice to the Adviser. The
Adviser may at any time terminate this Agreement without payment of any
penalty on sixty days' written notice to the Client. This Agreement
shall immediately terminate in the event of its assignment (as used
in the 1940 Act).
10. This Agreement shall be construed in accordance with the laws of
the State of California and the applicable provisions of the 1940 Act.
To the extent applicable law of the State of California, or any of the
provisions herein, conflict with applicable provisions of the 1940 Act,
the latter shall control.
11. Each of the individuals whose signature appears below warrants that he has
full authority to execute this Agreement on behalf of the party on whose behalf
he has affixed his signature to the Agreement.
Dated: July 23, 2001.
DRESDNER RCM GLOBAL INVESTORS LLC XXXXXXXXX CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx XxXxxxx
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx XxXxxxx
Title: General Counsel Title: President
SCHEDULE OF FEES
Effective Date: July 23, 2001.
(a) The fee for the period from the effective date referred to above to the
end of the calendar quarter shall be obtained by multiplying the market value
of cash and securities in the Account as of the close of business on the last
day of the calendar quarter by one-fourth of the applicable annual fee rate(s)
indicated below, prorated for the percentage of the calendar quarter which the
Account is under management.
(b) The fee for subsequent calendar quarters shall be obtained by multiplying
the market value of cash and securities in the Account as of the close of
business on the last day of the calendar quarter by one-fourth of the applicable
annual fee rate(s) indicated below.
(c) If the Investment Management and Advisory Agreement terminates prior to the
end of a calendar quarter, the fee for the period from the beginning of such
calendar quarter to the date of termination shall be obtained by multiplying
the market value of cash and securities in the Account as of the close of
business on the date of termination by one-fourth of the applicable annual fee
rate(s) indicated below, prorated for the percentage of the calendar quarter
which the Account is under management.
(d) Shares of any investment company advised by the Adviser or any affiliate
of the Adviser shall not be considered securities in the Account for purposes
of the foregoing calculations.
(e) All fees earned under this Interim Agreement shall be held in an interest
bearing escrow account with the Client's Custodian.
VALUE OF SECURITIE AND CASH FEE
On the first $10,000,000 or fraction thereof... . 70% annually
On the next $10,000,000 or fraction thereof... . 60% annually
On the next $20,000,000 or fraction thereof... . 50% annually
On the next $20,000,000 or fraction thereof... . 35% annually
On the next $40,000,000 or fraction thereof... . 30% annually
On sums exceeding $100,000,000... . 25% annually
(f) If a majority of the Client's outstanding voting securities approve a new
investment advisory agreement within the 150-day period from the effective date
hereof, the fees held in the escrow account will be paid to the Adviser.
(g) If a majority of the Client's outstanding voting securities do not approve
a new investment advisory agreement with the Adviser, the Adviser will be paid,
out of the escrow account, the lesser of:
(1) Any costs incurred in performing this Interim Agreement (plus interest
earned on that amount while in escrow); or
(2) The total amount in the escrow account (plus interest earned).
Dated: July 23, 2001.
DRESDNER RCM GLOBAL INVESTORS LLC XXXXXXXXX CAPITAL CORPORATION
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx XxXxxxx
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx XxXxxxx
Title: General Counsel Title: President
