INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY
AND SERVICE AGREEMENT
THIS AGREEMENT is entered into this 27th day of December, 1996 by and
between RCM Equity Funds, Inc. (the "Company"), on behalf of RCM Large Cap
Growth Fund, a series of the Company (the "Fund") and RCM Capital Management,
L.L.C. (the "Investment Manager").
1. APPOINTMENT AND ACCEPTANCE OF APPOINTMENT OF THE INVESTMENT MANAGER
(a) Subject to express provisions and limitations set forth in the
Company's Articles of Incorporation, Bylaws, Form N-lA Registration
Statement under the Investment Company Act of 1940, as amended (the
"1940 Act") and under the Securities Act of 1933, as amended (the
"1933 Act"), and the Fund's prospectus as in use from time to time, as
well as to the factors affecting the Company's status as a regulated
investment company under the Internal Revenue Code of 1986, as
amended, the Company hereby grants to the Investment Manager and the
Investment Manager hereby accepts full discretionary authority to
manage the investment and reinvestment of the cash, securities, and
other assets of the Fund (the "Portfolio") presently held by State
Street Bank & Trust Company (the "Custodian"), any proceeds thereof,
and any additions thereto, in the Investment Manager's discretion. In
the performance of its duties hereunder, the Investment Manager shall
further be bound by any and all determinations by the Board of
Directors of the Company relating to the investment objectives
policies or restrictions of the Fund, which determinations shall be
communicated in writing to the Investment Manager. For all purposes
herein, the Investment Manager shall be deemed an independent
contractor of the Company.
2. POWERS OF THE INVESTMENT MANAGER
Subject to the limitations provided in Section 1 hereof, the
Investment Manager is empowered hereby, through any of its partners,
principals, or appropriate employees, for the benefit of the Fund:
(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 loans and
deposits at interest on call or on time, whether or not secured by
collateral;
1
(b) to purchase and sell commodities or commodities contracts and
investments in put, call, straddle, or spread options;
(c) to enter into forward, future, or swap contracts with respect to
the purchase and sale of securities, currencies, commodities, and
commodities contracts;
(d) to lend its portfolio securities to brokers, dealers and other
financial institutions;
(e) to buy, sell, or exercise options, rights and warrants to
subscribe for stock or securities;
(f) to engage in any other types of investment transactions described
in the Fund's Prospectus and Statement of Additional Information; and
(g) to take such other action, or to direct the Custodian to take
such other action, as may be necessary or desirable to carry out the
purpose and intent of the foregoing.
3. EXECUTION OF PORTFOLIO TRANSACTIONS
(a) The Investment Manager shall provide adequate facilities and
qualified personnel for the placement of, and shall place, orders for
the purchase, or other acquisition, and sale, or other disposition, of
portfolio securities or other portfolio assets for the Fund.
(b) Unless otherwise specified in writing to the Investment Manager
by the Fund, all orders for the purchase and sale of securities for
the Portfolio shall be placed in such markets and through such brokers
as in the Investment Manager's best judgment shall offer the most
favorable price and market for the execution of each transaction;
provided, however, that, subject to the above, the Investment Manager
may place orders with brokerage firms that have sold shares of the
Fund or that furnish statistical and other information to the
Investment Manager, taking into account the value and quality of the
brokerage services of such firms, including the availability and
quality of such statistical and other information. Receipt by the
Investment Manager of any such statistical and other information and
services shall not be deemed to give rise to any requirement for
abatement of the advisory fee payable to the Investment Manager
pursuant to Section 5 hereof and Appendix A hereto.
(c) The Fund understands and agrees that the Investment Manager may
effect securities transactions which cause the Fund to pay an amount
of commission in excess of the amount of commission another broker
would have charged, provided, however, that the Investment Manager
determines in good faith that such amount of commission is reasonable
in relation to the value of Fund share sales, statistical, brokerage
and other services provided by such broker, viewed in terms of either
the specific transaction or the
2
Investment Manager's overall responsibilities to the Fund and
other clients for which the Investment Manager exercises investment
discretion. The Fund also understands that the receipt and use of such
services will not reduce the Investment Manager's customary and normal
research activities.
(d) The Fund understands and agrees that:
(i) the Investment Manager performs investment management
services for various clients and that the Investment Manager 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 the Investment Manager'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;
(ii) the Investment Manager shall have no obligation to
purchase or sell for the Portfolio any security which the Investment
Manager, or its principals 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 Investment Manager such transaction or investment
appears unsuitable, impractical or undesirable for the Portfolio;
(iii) on occasions when the Investment Manager deems the
purchase or sale of a security to be in the best interests of the Fund
as well as other clients of the Investment Manager, the Investment
Manager, to the extent permitted by applicable laws and regulations,
may aggregate the securities to be so sold or purchased when the
Investment Manager believes that to do so will be in the best
interests of the Fund. In such event, allocation of the securities so
purchased or sold, as well as the expenses incurred in the
transaction, shall be made by the Investment Manager in the manner the
Investment Manager considers to be the most equitable and consistent
with its fiduciary obligations to the Fund and to such other clients;
and
(iv) the Investment Manager does not prohibit any of its
principals or employees from purchasing or selling for their own
accounts securities that may be recommended to or held by the
Investment Manager's clients, subject to the provisions of the
Investment Manager's Code of Ethics and that of the Company.
4. ALLOCATION OF EXPENSES OF THE COMPANY AND THE FUND
(a) The Investment Manager will bear all expenses related to salaries
of its employees and to the Investment Manager's overhead in
connection with its duties under this Agreement. The Investment
Manager also will pay all fees and salaries of the Company's directors
and officers who are affiliated persons (as such term is defined in
the 1940 Act) of the Investment Manager.
3
(b) Except for the expenses specifically assumed by the Investment
Manager, the Fund will pay all of its expenses, including, without
limitation, fees and expenses of the directors not affiliated with the
Investment Manager attributable to the Fund; fees of the Investment
Manager; fees of the Fund's administrator, custodian and subcustodians
for all services to the Fund (including safekeeping of funds and
securities and maintaining required books and accounts); transfer
agent, registrar and dividend reinvestment and disbursing agent
interest charges; taxes; charges and expenses of the Fund's legal
counsel and independent accountants; charges and expenses of legal
counsel provided to the non-interested directors of the Company;
expenses of repurchasing shares of the Fund; expenses of printing and
mailing share certificates, stockholder reports, notices, proxy
statements and reports to governmental agencies; brokerage and other
expenses connected with the execution, recording and settlement of
portfolio security transactions; expenses connected with negotiating,
or effecting purchases or sales of portfolio securities or registering
privately issued portfolio securities; expenses of calculating and
publishing the net asset value of the Fund's shares; expenses of
membership in investment company associations; premiums and other
costs associated with the acquisition of a mutual fund directors and
officers errors and omissions liability insurance policy; expenses of
fidelity bonding and other insurance premiums; expenses of
stockholders' meetings; and SEC and state blue sky registration fees.
(c) The expenses borne by the Fund pursuant to Section 4(b) shall
include the Fund's proportionate share of any such expenses of the
Company, which shall be allocated among the Fund and the other series
of the Company on such basis as the Company shall deem appropriate.
5. COMPENSATION OF THE INVESTMENT MANAGER
(a) In consideration of the services performed by the Investment
Manager hereunder, the Fund will pay or cause to be paid to the
Investment Manager, as they become due and payable, management fees
determined in accordance with the attached Schedule of Fees
(Appendix A). In the event of termination, any management fees paid in
advance pursuant to such fee schedule will be prorated as of the date
of termination and the unearned portion thereof will be returned to
the Fund.
(b) The net asset value of the Fund's portfolio used in fee
calculations shall be determined in the manner set forth in the
Articles of Incorporation and Bylaws of the Company and the Fund's
prospectus as of the close of regular trading on the New York Stock
Exchange on each business day the New York Stock Exchange is open.
(c) The Fund hereby authorizes the Investment Manager to charge the
Portfolio, subject to the provisions in Section 6 hereof, for the full
amount of fees as they become due and
4
payable pursuant to the attached schedule of fees; provided, however,
that a copy of a fee statement covering said payment shall be sent to
the Custodian and to the Company.
(d) The Investment Manager may from time to time voluntarily agree to
limit the aggregate operating expenses of the Fund for one or more
fiscal years of the Company, as set forth in Appendix A hereto or in
any other written agreement with the Company. If in any such fiscal
year the aggregate operating expenses of the Fund (as defined in
Appendix A or such other written agreement) exceed the applicable
percentage of the average daily net assets of the Fund for such fiscal
year, the Investment Manager shall reimburse the Fund for such excess
operating expenses. Such operating expense reimbursement, if any,
shall be estimated, reconciled and paid on a quarterly basis, or such
more frequent basis as the Investment Manager may agree in writing.
Any such reimbursement of the Fund shall be repaid to the Investment
Manager by the Fund, without interest, at such later time or times as
it may be repaid without causing the aggregating operating expenses of
the Fund to exceed the applicable percentage of the average daily net
assets of the Fund for the period in which it is repaid; provided,
however, that upon termination of this Agreement, the Fund shall have
no further obligation to repay any such reimbursements.
6. SERVICE TO OTHER CLIENTS
Nothing contained in this Agreement shall be construed to prohibit the
Investment Manager from performing investment advisory, management,
distribution or other services for other investment companies and
other persons, trusts or companies, or to prohibit affiliates of the
Investment Manager from engaging in such businesses or in other
related or unrelated businesses.
7. STANDARD OF CARE
The Investment Manager shall have no liability to the Fund, or its
stockholders, for any error of judgment, mistake of law, loss arising
out of any investment, or other act or omission in the performance of
its obligations to the Fund not involving willful misfeasance, bad
faith, gross negligence or reckless disregard of its obligations and
duties hereunder. The federal securities laws impose liabilities
under certain circumstances on persons who act in good faith, and
therefore nothing herein shall in any way constitute a waiver or
limitation of any rights which the undersigned may have under any
federal securities laws.
8. DURATION OF AGREEMENT
5
This Agreement shall continue in effect until the close of business on
December 27, 1998. This Agreement may thereafter be renewed from year
to year by mutual consent, provided that such renewal shall be
specifically approved at least annually by (i) the Board of Directors
of the Company, or by the vote of a majority (as defined in the 0000
Xxx) of the outstanding voting securities of the Company, and (ii) a
majority of those directors who are not parties to this Agreement or
interested persons (as defined in the 0000 Xxx) of any such party cast
in person at a meeting called for the purpose of voting on such
approval.
9. TERMINATION
This Agreement may be terminated at any time, without payment of any
penalty, by the Board of Directors of the Company or by the vote of a
majority (as defined in the 0000 Xxx) of the outstanding voting
securities of the Company on sixty (60) days' written notice to the
Investment Manager, or by the Investment Manager on like notice to the
Company. This Agreement shall automatically terminate in the event of
its assignment (as defined in the 1940 Act).
10. REPORTS, BOOKS AND RECORDS
The Investment Manager shall render to the Board of Directors of the
Company such periodic and other reports as the Board may from time to
time reasonably request. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Investment Manager hereby agrees that
all records which it maintains for the Company are property of the
Company. The Investment Manager shall surrender promptly to the
Company any of such records upon the Company's request, and shall
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act
the records required to be maintained by Rule 31a-1 under the 1940
Act.
11. REPRESENTATIONS AND WARRANTIES
The Investment Manager represents and warrants to the Company that the
Investment Manager is registered as an investment adviser under the
Investment Advisers Act of 1940. During the term of this Agreement,
the Investment Manager shall notify the Company of any change in the
membership of the Investment Manager's partnership within a reasonable
time after such change. The Company represents and warrants to the
Investment Manager that the company is registered as an open-end
management investment company under the 1940 Act. Each party further
represents and warrants to the other that this Agreement has been duly
authorized by such party and constitutes the legal, valid and binding
obligation of such party in accordance with its terms.
6
12. AMENDMENT OF THIS AGREEMENT
No provision of this Agreement may be changed, waived, discharged or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or
termination is sought.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed in duplicate originals by their officers thereunto duly
authorized as of the date first above written.
RCM CAPITAL MANAGEMENT, L.L.C. RCM EQUITY FUNDS, INC.
ON BEHALF OF RCM LARGE CAP GROWTH
FUND
By: /s/XXXXXXX X. XXXXX By: /s/XXXXXXX X. XXXXXX
------------------------ ------------------------
ATTEST: ATTEST:
By: /s/XXX XXXXXX By: /s/XXXXX XXXXXXX-XXXX
------------------------ ------------------------
7
APPENDIX A
INVESTMENT MANAGEMENT AGREEMENT, POWER OF ATTORNEY,
AND SERVICE AGREEMENT
BETWEEN DRESDNER RCM GLOBAL INVESTORS LLC (the "INVESTMENT MANAGER")
AND DRESDNER RCM EQUITY FUNDS, INC.
SCHEDULE OF FEES
FOR DRESDNER RCM LARGE CAP GROWTH FUND
Effective Date: January 1, 1997
The Fund will pay a monthly fee to the Investment Manager based on the
average daily net assets of the Fund. The fee shall be determined pursuant
to the following schedule:
VALUE OF SECURITIES AND CASH OF FUND FEE
------------------------------------ ---
the first $500 million 0.70% annually
above $500 million and below $1billion 0.65% annually
above $1 billion 0.60% annually
The Investment Manager, until at least December 31, 1998, shall pay the
Fund on a quarterly basis the amount, if any, by which ordinary operating
expenses of the Company attributable to the Fund for the quarter (except
interest, taxes and extraordinary expenses) exceed the annualized rate of
0.95% of the value of the average daily net assets of the Fund. In
subsequent years, the Fund will reimburse the Investment Manager for any
such payments to the extent that the Fund's operating expenses are
otherwise below this expense cap.
Dated: as of December 30, 1997
DRESNDER RCM GLOBAL INVESTORS LLC DRESDNER RCM EQUITY FUNDS, INC.
ON BEHALF OF DRESDNER RCM LARGE
CAP GROWTH FUND
By: /s/XXXXXXX X. XXXXX By: /s/XXXXXXX X. XXXXXX
--------------------- -----------------------
ATTEST: ATTEST:
By: /s/XXX XXXXXX By: /s/XXXXX XXXXXXX-XXXX
--------------------- -----------------------
8
