Exhibit (g)
FORM OF INVESTMENT ADVISORY AGREEMENT
August __, 2003
Xxxxxxxx & Xxxxxxxx Incorporated
000 X. Xxxxxxxx Xxxxxxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Xxxxxxxx & Xxxxxxxx/Claymore Total Return 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
ongoing 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 and
related 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. In providing these services, the Adviser will provide investment
research and supervision of the Company's investments and conduct a continual
program of investment, 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 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
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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
In consideration of the services rendered pursuant to this Agreement,
the Company will pay the Adviser after the end of the calendar month during
which the Closing Date (as defined below) occurs and after the end of each
calendar month thereafter a fee for the previous month computed monthly at the
annual rate of 0.575 of 1.00% on the first $200 million of the Company's average
weekly total managed assets, 0.50 of 1.00% on the next $300 million of the
Company's average weekly total managed assets and 0.45 of 1.00% on the Company's
average weekly total managed assets above $500 million. 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 auction rate preferred stock
is not treated as a liability. The fee payable to the Adviser for the period
from the date of the closing of the offering contemplated by the Company's
initial registration statement (the "Closing Date") to the end of the first
calendar month during which the Closing Date occurs shall be prorated according
to the proportion that such period bears to the full monthly period.
Upon any termination of this 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 and office space
for its officers and employees connected with investment research, trading and
investment advice to 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 or 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
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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, fees to the Company's shareholder servicing agent, 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 businesses or to render services of 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 Act).
10. Entire Agreement
This Agreement constitutes the entire agreement between the parties
hereto.
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11. Miscellaneous
The Company recognizes that directors, officers and employees of the
Adviser may from time to time serve as directors, trustees, officers and
employees of corporations and business trusts (including other investment
companies) and that such other corporations and trusts may include the name
"F&C" and "Xxxxxxxx & Xxxxxxxx" as part of their names, and that the Adviser may
enter into advisory or other agreements with such other corporations and trusts.
If the Adviser ceases to act as the investment adviser of the Company, the
Company agrees that, at the Adviser's request, the Company's license to use the
words "F&C" and "Xxxxxxxx & Xxxxxxxx" will terminate and that the Company will
take all necessary action to change the name of the Company to a name not
including the words "F&C" or "Xxxxxxxx & Xxxxxxxx".
12. 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/CLAYMORE TOTAL RETURN
FUND INCORPORATED
By:
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Name:
Title:
Accepted:
XXXXXXXX & XXXXXXXX INCORPORATED
By:
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Name:
Title:
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