EXHIBIT (g)(i)
INVESTMENT MANAGEMENT AGREEMENT
THIS INVESTMENT MANAGEMENT AGREEMENT is made as of the 26th
day of August 2003 by and between XXXXXXX RREEF REAL ESTATE FUND II, INC., a
Maryland corporation (the "Fund"), and DEUTSCHE ASSET MANAGEMENT, INC., a
Delaware corporation (the "Manager").
WHEREAS, the Fund is registered as a closed-end,
non-diversified management investment company under the Investment Company Act
of 1940, as amended (the "1940 Act"); and
WHEREAS, the Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended, and engages in the
business of acting as an investment adviser; and
WHEREAS, the Fund and the Manager desire to enter into an
agreement to provide investment management and administrative services for the
Fund on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the mutual covenants herein
contained and other good and valuable consideration, the receipt whereof is
hereby acknowledged, the parties hereto agree as follows:
1. APPOINTMENT OF MANAGER. The Fund hereby appoints the Manager
to act as the Fund's investment manager. The Manager shall manage the Fund's
affairs and shall supervise all aspects of the Fund's operations (except as
otherwise set forth herein), including the investment and reinvestment of the
cash, securities or other properties comprising the Fund's assets, subject at
all times to the policies and control of the Fund's Board of Directors. The
Manager shall give the Fund the benefit of its best judgment, efforts and
facilities in rendering its services as Manager.
2. DELIVERY OF DOCUMENTS. The Fund has furnished the Manager with
copies properly certified or authenticated of each of the following:
(a) The Fund's Articles of Incorporation, filed with the State
of Maryland on May 5, 2003 and all amendments thereto (such Articles of
Incorporation, as presently in effect and as they shall from time to
time be amended, are herein called the "Articles");
(b) The Fund's By-Laws and all amendments thereto (such
By-Laws, as presently in effect and as they shall from time to time be
amended, are herein called the "By-Laws");
(c) Resolutions of the Fund's Board of Directors and
shareholders authorizing the appointment of the Manager and approving
this Agreement;
(d) The Fund's Notification of Registration filed pursuant to
Section 8(a) of the 1940 Act on Form N-8A under the 1940 Act as filed
with the Securities and Exchange Commission (the 'SEC') on May 6, 2003;
(e) The Fund's Registration Statement on Form N-2 under the
Securities Act of 1933, as amended (the "1933 Act") (File No.
333-97717) and under the 1940 Act as filed with the SEC on May 6, 2003
relating to the shares of the Fund, and all amendments thereto; and
(f) The Fund's most recent prospectus and statement of
additional information (such prospectus and statement of additional
information, as presently in effect, and all amendments and supplements
thereto are herein together called the "Prospectus"). The Fund will
furnish the Manager from time to time with copies, properly certified
or authenticated, of all amendments or supplements to the foregoing, if
any, and all documents, notices and reports filed with the SEC.
3. DUTIES OF MANAGER. In carrying out its obligations under
Section 1 hereof, the Manager shall:
(a) supervise and manage all aspects of the Fund's operations,
except for distribution services;
(b) formulate and implement continuing programs for the
purchases and sales of securities, consistent with the investment
objective and policies of the Fund;
(c) provide the Fund with such executive, administrative and
clerical services as are deemed advisable by the Fund's Board of
Directors;
(d) provide the Fund with, or obtain for it, adequate office
space and all necessary office equipment and services, including
telephone service, utilities, stationery, supplies and similar items
for the Fund's principal office;
(e) obtain and evaluate pertinent information about
significant developments and economic, statistical and financial data,
domestic, foreign or otherwise, whether affecting the economy generally
or the Fund, and whether concerning the individual issuers whose
securities are included in the Fund's portfolio or the activities in
which they engage, or with respect to securities which the Manager
considers desirable for inclusion in the Fund's portfolio;
(f) determine which issuers and securities shall be
represented in the Fund's portfolio and regularly report thereon to the
Fund's Board of Directors; and
(g) take all actions necessary to carry into effect the Fund's
purchase and sale programs; and
(h) supervise the operations of the Fund's transfer and
dividend disbursing agent;
(i) provide the Fund with such administrative and clerical
services for the maintenance of certain shareholder records, as are
deemed advisable by the Fund's Board of Directors;
- 2 -
(j) arrange, but not pay for, the periodic updating of
prospectuses and supplements thereto (as required), proxy material, tax
returns, reports to the shareholders of the Fund and reports to and
filings with the SEC and state Blue Sky authorities; and
(k) establish, but not pay for, a toll-free "800" number for
the Fund to respond to telephone inquiries from shareholders and others
about the Fund and, if requested by the Fund, provide, but not pay for,
certain information via an audio response system.
4. BROKER-DEALER RELATIONSHIPS. In the event that the Manager is
responsible for decisions to buy and sell securities for the Fund, broker-dealer
selection, and negotiation of its brokerage commission rates, the Manager's
primary consideration in effecting securities transactions will be to obtain the
best price and execution on an overall basis. In performing this function the
Manager shall comply with applicable policies established by the Board of
Directors and shall provide the Board of Directors with such reports as the
Board of Directors may require in order to monitor the Fund's portfolio
transaction activities. In certain instances the Manager may make purchases of
underwritten issues at prices which include underwriting fees. In selecting a
broker-dealer to execute each particular transaction, the Manager will take the
following into consideration: the best net price available; the reliability,
integrity and financial condition of the broker-dealer; the size of and
difficulty in executing the order; and the value of the expected contribution of
the broker-dealer to the investment performance of the Fund on a continuing
basis. Accordingly, the price to the Fund in any transaction may be less
favorable than that available from another broker-dealer if the difference is
reasonably justified by other aspects of the portfolio execution services
offered. Subject to such policies as the Board of Directors may determine, the
Manager shall not be deemed to have acted unlawfully or to have breached any
duty created by this Agreement or otherwise solely by reason of its having
caused the Fund to pay a broker-dealer that provides brokerage and research
services to the Manager an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker-dealer would have charged for effecting transaction, if the Manager
determines in good faith that such amount of commission was reasonable in
relation to the value of the brokerage and research services provided by such
broker-dealer, viewed in terms of either that particular transaction or the
Manager's overall responsibilities with respect to the Fund. The Manager is
further authorized to allocate the orders placed by it on behalf of the Fund to
such broker-dealers who also provide research or statistical material or other
services to the Fund or the Manager. Such allocation shall be in such amounts
and proportions as the Manager shall determine and the Manager will report on
said allocation regularly to the Board of Directors of the Fund, indicating the
broker-dealers to whom such allocations have been made and the basis therefor.
Consistent with the Conduct Rules of the National Association
of Securities Dealers, Inc., and subject to seeking the most favorable price and
execution available and such other policies as the Directors may determine, the
Manager may consider services in connection with the sale of shares of the Fund
as a factor in the selection of broker-dealers to execute portfolio transactions
for the Fund.
Subject to the policies established by the Board of Directors
in compliance with applicable law, the Manager may direct Deutsche Bank
Securities Inc. or its affiliates ("DB Securities") to execute portfolio
transactions for the Fund on an agency basis. The commissions
- 3 -
paid to DB Securities must be, as required by Rule 17e-1 under the 1940 Act,
"reasonable and fair compared to the commission, fee or other remuneration
received or to be received by other brokers in connection with comparable
transactions involving similar securities during a comparable period of time."
If the purchase or sale of securities consistent with the investment policies of
the Fund or one or more other accounts of the Manager is considered at or about
the same time, transactions in such securities will be allocated among the
accounts in a manner deemed equitable by the Manager. DB Securities and the
Manager may combine such transactions, in accordance with applicable laws and
regulations, in order to obtain the best net price and most favorable execution.
The Fund will not deal with the Manager or DB Securities in
any transaction in which the Manager or DB Securities acts as a principal with
respect to any part of the Fund's order. If DB Securities is participating in an
underwriting or selling group, the Fund may not buy portfolio securities from
the group except in accordance with policies established by the Board of
Directors in compliance with the rules of the SEC.
5. CONTROL BY BOARD OF DIRECTORS. Any management or supervisory
activities undertaken by the Manager pursuant to this Agreement, as well as any
other activities undertaken by the Manager on behalf of the Fund pursuant
thereto, shall at all times be subject to any applicable directives of the Board
of Directors of the Fund.
6. COMPLIANCE WITH APPLICABLE REQUIREMENTS. In carrying out its
obligations under this Agreement, the Manager shall at all times conform to:
(a) all applicable provisions of the 1940 Act and any rules
and regulations adopted thereunder;
(b) the provisions of the Registration Statement of the Fund
under the Securities Act of 1933 and 1940 Act;
(c) the provisions of the Articles;
(d) the provisions of the By-Laws; and
(e) any other applicable provisions of Federal and State law.
7. EXPENSES. The expenses connected with the Fund shall be
allocable between the Fund and the Manager as follows:
(a) The Manager shall, subject to compliance with applicable
banking regulations, furnish, at its expense and without cost to the
Fund, the services of one or more officers of the Fund, to the extent
that such officers may be required by the Fund, for the proper conduct
of its affairs.
(b) The Fund assumes and shall pay or cause to be paid all
other expenses of the Fund, including, without limitation: payments to
the Fund's underwriters; the charges and expenses of any registrar, any
custodian or depository appointed by the Fund for the safekeeping of
its cash, portfolio securities and other property, and any transfer,
dividend
- 4 -
or accounting agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio
securities transactions to which the Fund is a party; all taxes,
including securities issuance and transfer taxes, and fees payable by
the Fund to Federal, State or other governmental agencies; the costs
and expenses of engraving or printing of 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 SEC, securities exchanges and various states and other
jurisdictions (including filing fees, exchange listing fees, legal fees
and disbursements of counsel); the costs and expenses 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 of proxy statements and
reports to shareholders; fees and travel expenses of directors or
director members of any advisory board or committee; all expenses
incident to the payment of any dividend, distribution 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 0000 Xxx) of the Fund 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.
8. DELEGATION OF MANAGEMENT SERVICES.
(a) Subject to the approval of the Board of Directors
including a majority of the Fund's Directors who are not "interested
persons" (as defined in the 0000 Xxx) of the Fund and shareholders of
the Fund, the Manager may delegate to an unaffiliated sub-adviser its
duties enumerated in Section 3, hereof. The Manager shall continue to
supervise the activities of any such sub-adviser and shall report
regularly thereon to the Fund's Board of Directors, but shall not be
responsible for the sub-adviser's performance under the sub-advisory
agreement.
(b) Subject to the prior approval of a majority of the members
of the Fund's Board of Directors, including a majority of the Directors
who are not "interested persons," as defined in the 1940 Act, the
Manager may, through a sub-advisory agreement or other arrangement,
delegate to any other company that the Manager controls, is controlled
by, or is under common control with, or to specified employees of any
such companies, or to more than one such company, to the extent
permitted by applicable law, certain of the Manager's duties enumerated
in Section 3 hereof, and may adjust the duties of such entity, the
portion of portfolio assets of the Fund that such entity shall manage
and the fees to be paid to such who are not "interested persons," as
defined in the 1940 Act; provided, that the Manager shall continue to
supervise the services provided by such company or employees and any
such delegation shall not relieve the Manager of any of its obligations
hereunder.
- 5 -
(c) The Manager may, but shall not be under any duty to,
perform services on behalf of the Fund which are not required by this
Agreement upon the request of the Fund's Board of Directors. Such
services will be performed on behalf of the Fund and the Manager's
charge in rendering such services may be billed monthly to the Fund,
subject to examination by the Fund's independent accountants. Payment
or assumption by the Manager of any Fund expense that the Manager is
not required to pay or assume under this Agreement shall not relieve
the Manager of any of its obligations to the Fund nor obligate the
Manager to pay or assume any similar Fund expense on any subsequent
occasions.
9. COMPENSATION. For the services to be rendered and the expenses
assumed by the Manager, the Fund shall pay to the Manager monthly compensation
at an annual rate of 0.85% of the Fund's average daily managed assets (i.e., the
net asset value of Fund Common Shares plus the liquidation preference of any
Fund preferred shares and the principal amount of any borrowings used for
leverage). The Manager agrees to waive investment management fees in the amount
of 0.25% of the Fund's average daily total managed assets until August 29, 2008,
such waiver declining by 0.05% for each subsequent twelve-month period until
August 29, 2012.
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. 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. Payment of the Manager's compensation for the preceding month shall be
made as promptly as possible.
10. NON-EXCLUSIVITY. The services of the Manager to the Fund are
not to be deemed to be exclusive, and the Manager shall be free to render
investment management and corporate administrative or other services to others
(including other investment companies) and to engage in other activities, so
long as its services under this Agreement are not impaired thereby. It is
understood and agreed that officers or directors of the Manager may serve as
officers or Directors of the Fund, and that officers or Directors of the Fund
may serve as officers or directors of the Manager to the extent permitted by
law; and that the officers and directors of the Manager are not prohibited from
engaging in any other business activity or from rendering services to any other
person, or from serving as partners, officers, trustees or directors of any
other firm, trust or corporation, including other investment companies.
11. TERM AND RENEWAL. This Agreement shall become effective as of
the date hereof and shall continue in force and effect, subject to Section 12
hereof, for two years from the date hereof. Following the expiration of its
initial two-year term, this Agreement shall continue in force and effect from
year to year, provided that such continuance is specifically approved at least
annually:
(a) (i) by the Fund's Board of Directors or (ii) by the vote
of a majority of the outstanding voting securities (as defined in the
1940 Act), and
(b) by the affirmative vote of a majority of the Directors who
are not parties to this Agreement or 'interested persons' (as defined
in the 0000 Xxx) of a party to this
- 6 -
Agreement (other than as Directors of the Fund) by votes cast in person
at a meeting specifically called for such purpose.
12. TERMINATION. This Agreement may be terminated without the
payment of any penalty, by the Fund upon vote of the Fund's Board of Directors
or a vote of a majority of the Fund's outstanding voting securities (as defined
in the 1940 Act), or by the Manager, upon sixty (60) days' written notice to the
other party. This Agreement shall automatically terminate in the event of its
assignment (as defined in the 1940 Act).
13. LIABILITY OF MANAGER. In the performance of its duties
hereunder, the Manager shall be obligated to exercise care and diligence and to
act in good faith and to use its best efforts within reasonable limits to ensure
the accuracy of all services performed under this Agreement, but the Manager
shall not be liable for any act or omission which does not constitute willful
misfeasance, bad faith or gross negligence on the part of the Manager or its
officers, directors or employees, or reckless disregard by the Manager of its
duties under this Agreement.
14. NON-LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of
the Fund hereunder shall be binding only upon the assets of the Fund or the
applicable series thereof, and shall not be binding upon any Director, officer,
employee, agent, or shareholder of the Fund. Neither the authorization of any
action by the Directors or the shareholders of the Fund nor the execution of
this Agreement on behalf of the Fund shall impose any liability upon any
Director or shareholder.
15. NOTICES. Any notices under this Agreement shall be in writing,
addressed and delivered or mailed postage paid to the other party at such
address as such other party may designate for the receipt of such notice. Until
further notice to the other party, it is agreed that the address of the Fund for
this purpose shall be 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 and the address
of the Manager for this purpose shall be 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000.
16. QUESTIONS OF INTERPRETATION. Any question of interpretation of
any term or provision of this Agreement having a counterpart in or otherwise
derived from a term or provision of the 1940 Act shall be resolved by reference
to such term or provision of the 1940 Act and to interpretations thereof, if
any, by the United States courts or in the absence of any controlling decision
of any such court, by rules, regulations or orders of the SEC issued pursuant to
the 1940 Act. In addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, such provision shall be deemed to incorporate the effect of
such rule, regulation or order. Otherwise the provisions of this Agreement shall
be interpreted in accordance with the laws of Maryland.
- 7 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year
first above written.
[SEAL] XXXXXXX RREEF REAL ESTATE FUND II,
INC.
Attest: /s/ Xxxxx Xxxxxxxxx
---------------------
Name: Xxxxx Xxxxxxxxx By: /s/ Xxxxxx Xxxxxxxx
----------------------
Name: Xxxxxx Xxxxxxxx
Title: Vice President
[SEAL] DEUTSCHE ASSET MANAGEMENT, INC.
Attest: /s/ Xxxxx Xxxxxxxxx
-------------------
By: /s/ Xxxxxx X. Xxxxxx
--------------------
Name: /s/ Xxxxx Xxxxxxxxx
Name: Xxxxxx X. Xxxxxx
Title: Vice President
- 8 -
