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 Global Small
Cap 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;
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(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
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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.
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(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
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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
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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.
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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 GLOBAL SMALL CAP
FUND
By: /s/Xxxxxxx X. Xxxxx By: /s/Xxxxxxx X. Xxxxxx
------------------- --------------------
ATTEST: ATTEST:
By:/s/Xxx Xxxxxx By: /s/Xxxxx Xxxxxxx-Xxxx
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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 GLOBAL SMALL CAP 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 1.00% annually
above $500 million and below $1 billion 0.95% annually
above $1 billion 0.90% 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 1.75% 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
DRESDNER RCM GLOBAL INVESTORS LLC DRESDNER RCM EQUITY FUNDS, INC.
ON BEHALF OF DRESDNER RCM GLOBAL
SMALL CAP FUND
By: /s/Xxxxxxx X. Xxxxx By: /s/Xxxxxxx X. Xxxxxx
------------------- --------------------
ATTEST: ATTEST:
By: /s/Xxx Xxxxxx By: /s/Xxxxx Xxxxxxx-Xxxx
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