Xxxxxxxxx Capital Corporation
Form N-SAR
For Period Ending 12/31/96
File Number (c) 811-1641
Attachment Per Item 77
Sub-Item 77Q1(e)
INVESTMENT MANAGEMENT AND ADVISORY AGREEMENT
THIS AGREEMENT is entered into as of the 14th day
of June, 1996 by and between RCM Capital
Management, L.L.C., a Delaware limited liability company
("RCM"), and Xxxxxxxxx Advisers, Inc., a Delaware corporation
(the "Adviser"):
1. Subject to any express provisions or
limitations set forth in writing, a copy of which is attached
hereto or has been previously furnished to RCM, the Adviser
hereby grants to RCM full authority to manage the investment
and reinvestment of the cash and securities in the account of
Xxxxxxxxx Capital Corporation, a Delaware corporation (the
"Client"), Account No. B2Y8 (the "Portfolio"), 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 RCM's discretion but
consistent with the investment objectives, policies and
restrictions of the Client. In this connection, RCM is
empowered, through any of its officers or employees:
(a) to invest and reinvest in shares, stocks,
bonds, notes, and other obligations of every description
issued or incurred by governmental bodies, corporations,
mutual funds, trusts, associations or firms, in trade
acceptances and other commercial paper, and in deposits at
interest on call or on time, whether or not secured by
collateral;
(b) to buy, sell, or exercise rights and
warrants to subscribe for stock or securities; and
(c) to take such other action, or direct the
Custodian to take such other action, as may be necessary or
desirable to carry out the purpose and intent of the
foregoing, except that RCM 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 Portfolio
assets may be invested.
Upon 24 hours' notice to RCM, the Adviser is authorized to
transfer cash and securities of the Client into and out of
he Portfolio in its discretion.
2. In consideration of the services performed by
RCM hereunder, the Adviser will pay to RCM, 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 RCM to take or receive physical possession of any
cash or securities held in the Portfolio by the Custodian, it
being intended that sole responsibility for safekeeping
thereof (in such investments as RCM may direct), and the
consummation of all such purchases, sales, deliveries and
investments made pursuant to RCM's direction, shall rest upon
the Custodian.
4. (a) Unless otherwise specified in writing to
RCM by the Adviser, all orders for the purchase and sale of
securities for the Portfolio shall be placed in such markets
and through such brokers as in RCM's best judgment shall
offer the most favorable price and market for the execution
of each transaction. The Adviser understands and agrees that
RCM may effect securities transactions which cause the
ccount to pay an amount of commission in excess of the
amount of commission another broker or dealer would have
charged. Provided, however, that RCM 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 RCM's overall responsibilities to
the accounts for which RCM exercises investment discretion.
The Adviser also understands that the receipt and use of such
services will not reduce RCM's customary and normal research
activities.
(b) The Adviser agrees that RCM may aggregate
sales and purchase orders of securities held in the Portfolio
with similar orders being made simultaneously for other
portfolios managed by RCM if, in RCM's reasonable judgment,
such aggregation shall result in an overall economic benefit
to the Portfolio, taking into consideration the advantageous
selling or purchase price and brokerage commission. In
accounting for such aggregated order, price and commission
shall be averaged on a per bond or share basis daily. The
Adviser acknowledges that RCM's determination of such
economic benefit to the Portfolio is based on an evaluation
that the Portfolio 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. RCM represents that it is duly registered as
an investment adviser under the Investment Advisers Act of
1940, as amended.
6. RCM agrees:
(a) to give the Adviser and the Client the
benefit of RCM's best judgment and efforts in rendering
services to the Adviser and the Client as provided in this
Agreement;
(b) to furnish the Adviser and the Client
with monthly statements of the Portfolio, 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 RCM to reflect its fair market value;
(c) to furnish to the Adviser and the Client
statements evidencing any purchases and sales for the
Portfolio as soon as practicable after such transaction has
taken place;
(d) to maintain strict confidence in regard
to the Portfolio;
(e) to notify the Adviser and the Client of
any change in ownership of RCM in advance, if reasonable, and
otherwise as soon as practicable after such change occurs;
and
(f) to indemnify the Adviser and 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 Adviser or the
Client by RCM specifically for use in the preparation
thereof.
7. The Adviser agrees:
(a) to advise RCM of the investment
objectives, policies and restrictions of the Client as they
apply to the Portfolio and of any changes or modifications
therein and to notify RCM of any other changes in the
Portfolio of which RCM would not otherwise have knowledge and
which would be material to RCM;
(b) to give RCM written notice of any
investments made for the Portfolio that the Adviser 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 RCM; and
(d) not to hold RCM, or any of its directors,
officers or employees, liable under any circumstances for any
error of judgment or other action taken or omitted by RCM 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 RCM in good faith and in a commercially
reasonable manner, excepting matters as to which RCM 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 Adviser understands and agrees:
(a) that RCM performs investment management
services for various clients and that RCM 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 Portfolio, so long as it is RCM's
policy, to the extent practical, to allocate investment
opportunities to the Portfolio over a period of time on a
fair and equitable basis relative to other clients; and
(b) that RCM shall have no obligation to
purchase or sell for the Portfolio any security which RCM, 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 RCM such transaction or
investment appears unsuitable, impractical or undesirable for
the Portfolio.
9. This Agreement shall remain in effect until
November 6, 1997 and thereafter shall continue automatically
for successive annual periods, provided that such continuance
is specifically approved at least annually by vote of a
majority of outstanding voting securities (as used in the
1940 Act) of the Client or by the Board of Directors of the
Client, together with, in each instance, the vote of a
majority of those directors of the Client who are not
interested persons (as used in the 1940 Act) of the Client,
the Adviser or RCM cast in person at a meeting called for the
purpose of voting on such continuance. The Client may, at
any time and without the payment of any penalty, terminate
this Agreement upon sixty days' written notice to RCM and to
the Adviser either by majority vote of the Board of Directors
of the Client or by the vote of a majority of the outstanding
voting securities (as used in the 1940 Act) of the Client.
With the prior approval of the Board of Directors of the
Client, the Adviser may at any time terminate this Agreement
without the payment of any penalty upon sixty days' written
notice to RCM. RCM may at any time terminate this Agreement
without payment of penalty on sixty days' written notice to
the Adviser and to the Client. This Agreement shall
immediately terminate in the event of its assignment (as used
in the 1940 Act) or upon termination of the Investment
Management and Advisory Agreement, dated as of March 27,
1989, between the Adviser and the Client.
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 this Agreement.
Dated: _June 14, 1996.
RCM CAPITAL MANAGEMENT, L.L.C. XXXXXXXXX ADVISERS, INC.
By: ____________________________ By: _______________________
Name: _____________________ Xxxx X. Xxxxxxxxx,
Title: ____________________ President
SCHEDULE OF FEES
Effective Date: June 14, 1996.
(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 Portfolio 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 Portfolio is under management.
(b) The fee for subsequent calendar quarters shall be
obtained by multiplying the market value of cash and securities
in the Portfolio 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 Portfolio 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 Portfolio is under
management.
(d) Shares of the RCM Growth Equity Fund, Inc., any
successor thereto, and any other investment company advised by
RCM shall not be considered securities in the Portfolio for
purposes of the foregoing calculations.
(e) All fees shall be payable upon receipt of a fee
statement.
Value of Securities 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
Dated: June 14, 1996.
RCM CAPITAL MANAGEMENT, L.L.C. XXXXXXXXX ADVISERS, INC.
By: ___________________________ By: ___________________________
Name: ____________________ Xxxx X. Xxxxxxxxx
Title: ___________________ President
