EXHIBIT 77Q1(e)
XXXXXXXX & XXXXXXXX PREFERRED INCOME OPPORTUNITY FUND INCORPORATED
(the "Fund")
AMENDED AND RESTATED INVESTMENT ADVISORY AGREEMENT
February 5, 1992
As amended and restated May 22, 2008
Xxxxxxxx & Xxxxxxxx Incorporated
000 X. Xxxxxxxx Xxxxxxxxx
Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Xxxxxxxx & Xxxxxxxx Preferred Income Opportunity Fund
Incorporated (the "Company"), a corporation organized under the
laws of the State of Maryland, herewith confirms its agreement
with Xxxxxxxx & Xxxxxxxx Incorporated (the "Adviser"), a
corporation organized under the laws of the State of California,
as follows:
1. Investment Description; Appointment
The Company desires to employ its capital by investing
and reinvesting in investments of the kind and in accordance
with the limitations specified in its Articles of Incorporation,
as the same may from time to time be amended, and in its
Registration Statement as from time to time in effect, and in
such manner and to such extent as may from time to time be
approved by the Board of Directors of the Company. Copies of
the Company's Registration Statement and Articles of
Incorporation, as amended, have been or will be submitted to the
Adviser. The Company agrees to provide copies of all amendments
to the Company's Registration Statement and Articles of
Incorporation to the Adviser on an on-going basis. The Company
desires to employ and hereby appoints the Adviser to act as
investment adviser to the Company. The Adviser accepts the
appointment and agrees to furnish the services described herein
for the compensation set forth below.
2. Services as Investment Adviser
Subject to the supervision and direction of the Board
of Directors of the Company, the Adviser will (a) act in
accordance with the Company's Articles of Incorporation, the
Investment Company Act of 1940, and the Investment Advisers Act
of 1940, as the same may from time to time be amended, (b)
manage the Company's portfolio on a discretionary basis in
accordance with its investment objective and policies as stated
in the Company's Registration Statement as from time to time in
effect, (c) make investment decisions and exercise voting rights
in respect of portfolio securities for the Company, (d) place
purchase and sale orders on behalf of the Company and (e) employ
professional portfolio managers and securities analysts to
provide research services to the Company. The Adviser is
authorized to retain the services of an economic consultant at
the expense of the Fund to provide such services with respect to
the Company as the parties to any agreement may agree upon. In
providing these services, the Adviser will provide investment
research and supervision of the Company's evaluation and, if
appropriate, sale and reinvestment of the Company's assets. In
addition, the Adviser will furnish the Company with whatever
statistical information the Company may reasonably request with
respect to the securities that the Company may hold or
contemplate purchasing.
3. Brokerage
In executing transactions for the Company and
selecting brokers or dealers, the Adviser will use its best
efforts to seek the best overall terms available. In assessing
the best overall terms available for any Company transaction,
the Adviser will consider all factors it deems relevant
including, but not limited to, breadth of the market in the
security, the price of the security, the financial condition and
execution capability of the broker or dealer and the
reasonableness of any commission for the specific transaction
and on a continuing basis. In selecting brokers or dealers to
execute any transaction and in evaluating the best overall terms
available, the Adviser may consider the brokerage and research
services (as those terms are defined in Section 28(e) of the
Securities and Exchange Act of 1934) provided to the Company
and/or other accounts over which the Adviser or an affiliate
exercises investment discretion.
4. Information Provided to the Company
The Adviser will use its best efforts to keep the
Company informed of developments materially affecting the
Company, and will, on its own initiative, furnish the Company
from time to time with whatever information the Adviser believes
is appropriate for this purpose.
5. Standard of Care
The Adviser shall exercise its best judgment in
rendering the services described in paragraphs 2, 3, and 4
above. The Adviser shall not be liable for any error of
judgment or mistake of law or for any act or omission or any
loss suffered by the Company in connection with the matters to
which this Agreement relates, provided that nothing herein shall
be deemed to protect or purport to protect the Adviser against
any liability to the Company or its shareholders to which the
Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence on its part in the
performance of its duties or from reckless disregard by it of
its obligations and duties under this Agreement ("disabling
conduct"). The Company will indemnify the Adviser against, and
hold it harmless from, any and all losses, claims, damages,
liabilities or expenses (including reasonable counsel fees and
expenses), including any amounts paid in satisfaction of
judgments, in compromise or as fines or penalties, not resulting
from disabling conduct by the Adviser. Indemnification shall be
made only following: (i) a final decision on the merits by a
court or other body before whom the proceeding was brought that
the Adviser was not liable by reason of disabling conduct or
(ii) in the absence of such a decision, a reasonable
determination, based upon a review of the facts, that the
Adviser was not liable by reason of disabling conduct by (a) the
vote of a majority of a quorum of directors of the Company who
are neither "interested persons" of the Company nor parties to
the proceeding ("disinterested non-party directors") or (b) an
independent legal counsel in a written opinion. The Adviser
shall be entitled to advances from the Company for payment of
the reasonable expenses incurred by it in connection with the
matter as to which it is seeking indemnification in the manner
and to the fullest extent permissible under the Maryland General
Corporation law. The Adviser shall provide to the Company a
written affirmation of its good faith belief that the standard
of conduct necessary for indemnification by the Company has been
met and a written undertaking to repay any such advance if it
should ultimately be determined that the standard of conduct has
not been met. In addition, at least one of the following
additional conditions shall be met: (a) the Adviser shall
provide a security in form and amount acceptable to the Company
for its undertaking; (b) the Company is insured against losses
arising by reason of the advance; or (c) a majority of a quorum
of disinterested non-party directors, or independent legal
counsel, in a written opinion, shall have determined, based on a
review of facts readily available to the Company at the time the
advance is proposed to be made, that there is reason to believe
that the Adviser will ultimately be found to be entitled to
indemnification.
6. Compensation
(a) In consideration of the services rendered pursuant
to this Agreement, the Company will pay the Adviser after the
end of each calendar month a fee for the previous month computed
monthly at the annual rate of .625 of 1.00% on the Company's
average monthly total managed assets up to $100 million and .50
of 1.00% on the Company's average monthly total managed assets
of $100 million or more. For purposes of calculating such fee,
the Company's total managed assets means the total assets of the
Company (including any assets attributable to any Company
auction rate preferred stock that may be outstanding or
otherwise attributable to the use of leverage) minus the sum of
accrued liabilities (other than debt, if any, representing
financial leverage). For purposes of determining total managed
assets, the liquidation preference of the Company preferred
stock is not treated as a liability.
(b) Upon any termination of the Agreement before the
end of a month, the fee for such part of that month shall be
prorated according to the proportion that such period bears to
the full monthly period and shall be payable upon the date of
termination of this Agreement. For the purpose of determining
fees payable to the Adviser, the value of the Company's average
monthly net assets shall be computed at the times and in the
manner specified in the Company's Registration Statement as from
time to time in effect.
7. Expenses
The Adviser will bear all expenses in connection with
the performance of its services under this Agreement, including
compensation of an office space for its officers and employees
connected with investment and economic research, trading and
investment management and administration of the Company, as well
as the fees of all directors of the Company who are affiliated
with the Adviser or any of its affiliates; provided that the
Company shall reimburse the Adviser for the travel and out-of-
pocket expenses or an appropriate portion thereof of directors,
officers and employees of the Adviser in connection with
attendance at meetings of the Board of Directors of the Fund of
any committee thereof. The Company will bear all other expenses
to be incurred in its operation other than those that other
parties have agreed to bear, including: organizational expenses;
taxes, interest, brokerage costs and commissions and stock
exchange fees; fees of directors of the Company who are not
officers, directors or employees of the Adviser; Securities and
Exchange Commission fees; state Blue Sky qualification fees;
charges of the custodian, any subcustodians and transfer and
dividend-paying agent; expenses in connection with the Company's
Dividend Reinvestment and Cash Purchase Plan; insurance
premiums; outside auditing and legal expenses; costs of
maintenance of the Company's existence; costs attributable to
investor services, including, without limitation, telephone and
personnel expenses; costs of printing stock certificates; costs
of shareholders' reports and meetings of the shareholders of the
Company and of the officers or Board of Directors of the
Company; membership fees in trade associations; stock exchange
listing fees and expenses; expenses in connection with auctions
of shares of auction rate preferred stock proposed to be issued
by the Company; litigation and other extraordinary or non-
recurring expenses.
8. Services to Other Companies or Accounts
The Company understands that the Adviser now acts,
will continue to act or may in the future act, as investment
adviser to fiduciary and other managed accounts or as investment
adviser to one or more other investment companies, and the
Company has no objection to the Adviser so acting, provided that
whenever the Company and one or more other accounts or
investment companies advised by the Adviser have available funds
for investment, investments suitable and appropriate for each
will be allocated in accordance with procedures believed by the
Adviser to be equitable to each entity. Similarly,
opportunities to sell securities will be allocated in an
equitable manner. The Company recognizes that in some cases
this procedure may adversely affect the size of the position
obtained for or disposed of by the Company. In addition, the
Company understands that the persons employed by the Adviser to
assist in the performance of the Adviser's duties hereunder will
not devote their full time to such service and nothing contained
herein shall be deemed to limit or restrict the right of the
Adviser or any affiliate of the Adviser to engage in and devote
time and attention to other business or to render services or
whatever kind or nature.
9. Term of Agreement
This Agreement shall become effective as of the date
the Company's Registration Statement is declared effective by
the Securities and Exchange Commission and shall continue for an
initial two-year term and shall continue thereafter so long as
such continuance is specifically approved at least annually by
(i) the Board of Directors of the Company or (ii) a vote of a
"majority" (as defined in the Investment Company Act of 1940, as
amended) of the Company's outstanding voting securities,
provided that in either event the continuance is also approved
by a majority of the Board of Directors who are not "interested
persons" (as defined in said Act) of any party to this
Agreement, by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is
terminable, without penalty, on 60 days' written notice, by the
Board of Directors of the Company or by vote of holders of a
majority of the Company's shares, or upon 60 days' written
notice, by the Adviser. This Agreement will also terminate
automatically in the event of its assignment (as defined in said
1940 Act).
10. Entire Agreement
This Agreement constitutes the entire agreement
between the parties hereto.
11. Governing Law
This Agreement shall be governed by and construed and
enforced in accordance with the laws of the State of New York
without giving effect to the conflicts of laws principles
thereof.
If the foregoing accurately sets forth our agreement,
kindly indicate your acceptance hereof by signing and returning
the enclosed copy hereof.
Very truly yours.
XXXXXXXX & XXXXXXXX PREFERRED
INCOME OPPORTUNITY FUND
INCORPORATED
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, President
Accepted:
XXXXXXXX & XXXXXXXX INCORPORATED
By:/s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx, Chairman of the Board
