<PAGE>
SCHEDULE 14A INFORMATION
Proxy Statement Pursuant to Section 14(a)
of the Securities Exchange Act of 1934
Filed by the Registrant [X]
Filed by a Party other than the Registrant [ ]
Check the appropriate box:
[X] Preliminary Proxy Statement
[ ] Confidential, for Use of the Commission Only (as permitted by Rule 14a-
6(e)(2))
[ ] Definitive Proxy Statement
[ ] Definitive Additional Materials
[ ] Soliciting Material Pursuant to Section 240.14a-11(c) or Section 240.14a-12
BERGSTROM CAPITAL CORPORATION
(Name of Registrant as Specified In Its Charter)
(Name of Person(s) Filing Proxy Statement, if other than Registrant)
Payment of Filing Fee (Check the appropriate box):
[X] $125 per Exchange Act Rules 0-11(c)(1)(ii), 14a-6(i)(1), 14a-6(i)(2) or
Item 22(a)(2) of Schedule 14A.
[ ] $500 per each party to the controversy pursuant to Exchange Act Rule 14a-
6(i)(3).
[ ] Fee computed on table below per Exchange Act Rules 14a-6(i)(4) and 0-11.
(1) Title of each class of securities to which transaction applies:
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(2) Aggregate number of securities to which transaction applies:
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(3) Per unit price or other underlying value of transaction computed
pursuant to Exchange Act Rule 0-11 (Set forth the amount on which the
filing fee is calculated and state how it was determined):
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(4) Proposed maximum aggregate value of transaction:
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(5) Total fee paid:
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[ ] Fee paid previously with preliminary materials.
[ ] Check box if any part of the fee is offset as provided by Exchange Act Rule
0-11(a)(2) and identify the filing for which the offsetting fee was paid
previously. Identify the previous filing by registration statement number,
or the Form or Schedule and the date of its filing.
(1) Amount Previously Paid:
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(2) Form, Schedule or Registration Statement No.:
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(3) Filing Party:
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(4) Date Filed:
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<PAGE>
BERGSTROM CAPITAL CORPORATION
505 MADISON STREET, SUITE 220
SEATTLE, WASHINGTON 98104
----------------
NOTICE OF SPECIAL MEETING OF STOCKHOLDERS
TO BE HELD MAY 13, 1996
To the Stockholders of
BERGSTROM CAPITAL CORPORATION
NOTICE IS HEREBY GIVEN that, by order of the Board of Directors, a Special
Meeting of Stockholders of Bergstrom Capital Corporation, a Delaware corporation
(the "Company"), will be held in the Cutter Room, The Rainier Club, Fourth
Avenue and Marion Street, Seattle, Washington, on May 13, 1996, at 11:00 a.m.,
Seattle time, for the following purposes, all as more fully described in the
accompanying Proxy Statement:
1. To approve or disapprove a new Investment Management and Advisory
Agreement (the "New RCM Agreement") between Bergstrom Advisers, Inc. and
RCM Capital Management, L.L.C., a wholly owned subsidiary of Dresdner Bank
AG.
2. To transact any other business which may properly come before the
meeting or any adjournment thereof.
The Board of Directors has fixed the close of business on March 15, 1996,
as the record date for the determination of stockholders entitled to notice of
and to vote at the meeting or any adjournment thereof, and only stockholders of
record at the close of business on such date are entitled to so vote. The stock
transfer books of the Company will not be closed. A complete alphabetical
listing of stockholders entitled to vote at the meeting or any adjournment
thereof, including their addresses and number of shares registered in the name
of each such stockholder, will be open to the examination of any stockholder,
for any purpose germane to the meeting, during ordinary business hours for the
ten days prior to the meeting, at the office of the Company in Seattle,
Washington, specified above, and will be available for inspection by any
stockholder at the time of the meeting, at the place thereof.
THE BOARD OF DIRECTORS OF THE COMPANY HAS APPROVED THE NEW RCM AGREEMENT
AND RECOMMENDS THAT STOCKHOLDERS ALSO APPROVE THE NEW RCM AGREEMENT BY VOTING
FOR PROPOSAL 1 IN THE ENCLOSED PROXY.
Please execute and return the enclosed Proxy promptly in the enclosed
envelope, whether or not you intend to be present at the meeting. You are urged
to attend and vote in person. If you are not able to attend, it is important
that your shares be represented by Proxy. You may revoke your Proxy at any time
before it is voted.
By Order of the Board of Directors
Pamela A. Fiorini
SECRETARY
Seattle, Washington
April 22, 1996
<PAGE>
BERGSTROM CAPITAL CORPORATION
505 MADISON STREET, SUITE 220
SEATTLE, WASHINGTON 98104
--------------------
PROXY STATEMENT
This Proxy Statement is furnished in connection with the solicitation by
the Board of Directors of Bergstrom Capital Corporation, a Delaware corporation
(the "Company"), of Proxies to be used at the Special Meeting of Stockholders of
the Company, to be held on May 13, 1996, and any adjournment thereof, for action
upon the matters set forth in the foregoing Notice of Special Meeting of
Stockholders.
All shares represented by each properly signed Proxy received prior to the
meeting will be voted at the meeting. If a stockholder specifies how the Proxy
is to be voted on any of the business to come before the meeting, it will be
voted in accordance with such specification. If no specification is made, the
Proxy will be voted FOR the approval of a new Investment Management and Advisory
Agreement between Bergstrom Advisers, Inc. and RCM Capital Management, L.L.C.
(Proposal 1). The Proxy may be revoked by a stockholder, at any time prior to
its use, by written notice to the Company, by submission of a subsequent Proxy
or by voting in person at the meeting.
In the event that sufficient votes in favor of Proposal 1 are not received
by the time scheduled for the meeting, the persons voting the Proxies may
propose one or more adjournments of the meeting to permit further solicitation.
The time and place of any adjourned meeting will be announced at the meeting at
which the adjournment is taken. If a vote is taken on adjournment of the
meeting, or on any other procedural matters, Proxies will be voted at the
discretion of the persons voting the Proxies so as to facilitate the approval of
Proposal 1. Accordingly, absent contrary instructions on the Proxy card,
Proxies voting against or abstaining on Proposal 1 may be voted on procedural
matters, such as adjournment, to facilitate an opposite result.
The representation in person or by proxy of at least one-third of the
shares of Capital Stock entitled to vote is necessary to constitute a quorum
for transacting business at the meeting. For purposes of determining the
presence of a quorum, abstentions and broker "non-votes" will be counted as
present. Broker "non-votes" occur when the Company receives a Proxy from a
broker or nominee who does not have discretionary power to vote on a particular
matter and has not received instructions from the beneficial owner or other
person entitled to vote the shares represented by the Proxy. Abstentions and
broker non-votes will have the effect of a vote against Proposal 1.
The cost of solicitation, including postage, printing and handling, and the
expenses incurred by brokerage houses, custodians, nominees and fiduciaries in
forwarding proxy material to beneficial owners, will be borne by the Company,
subject to reimbursement in accordance with the reimbursement agreement
described under the caption "The New RCM Agreement--Terms of the New RCM
Agreement" below. The solicitation is to be made primarily by mail, but may be
supplemented by telephone calls, telegrams and personal interviews. This Proxy
Statement and the enclosed form of Proxy were first mailed to stockholders on or
about April 22, 1996.
At the close of business on March 15, 1996, the record date for the
determination of stockholders entitled to vote at the meeting, there were
outstanding 1,158,700 shares of Capital Stock. Each share is entitled to one
vote.
The following table sets forth information as of March 31, 1996 with
respect to all persons known by the Company to be the beneficial owners of more
than 5% of the Company's Capital Stock and with respect to the beneficial
ownership of the Company's Capital Stock by all directors and the executive
officer of the Company as a group:
-1-
<PAGE>
<TABLE>
<CAPTION>
Amount and Nature of Percent
Beneficial Ownership(1) of Class
Name ----------------------- --------
-----
<S> <C> <C>
Erik E. Bergstrom 222,460 (2) 19.20%
P.O. Box 126
Palo Alto, CA 94302
William L. McQueen 110 (3) .01%
Norman R. Nielsen 6,840 (4) .59%
George Cole Scott 570 (5) .05%
Clayton H. Williams 1,100 .09%
Directors and executive officer as a 231,080 19.94%
group (5 persons)
</TABLE>
- ----------------------
(1) Sole voting and investment power unless otherwise indicated in the notes
below.
(2) Includes 65,781 shares owned by Federal United Corporation and 6,779 shares
owned by Bergstrom Advisers, Inc., corporations controlled by
Mr. Bergstrom, but does not include 24,000 shares beneficially owned by
Mr. Bergstrom's wife, 79,700 shares owned by Erik E. and Edith H. Bergstrom
Foundation, Inc., 14,305 shares owed by Sharon's Trust, of which
Mr. Bergstrom is one of three trustees, and 800 shares owned by the
Survivors' Trust, of which Mr. Bergstrom is one of three trustees, as to
all of which Mr. Bergstrom disclaims any beneficial interest.
(3) These shares are held in an individual retirement account for the benefit
of Mr. McQueen.
(4) Includes 6,400 shares owned by the Nielsen Family Trust, of which
Mr. Nielsen is a trustee, and 440 shares owned by the Lenore Nielsen Trust,
of which Mr. Nielsen is also a trustee, but does not include 1,550 shares
owned by Mr. Nielsen's daughter, as to all of which Mr. Nielsen disclaims
any beneficial interest.
(5) Includes 100 shares held in a Keogh plan for the benefit of Mr. Scott.
Does not include 1,500 shares owned by Mr. Scott's wife, 1,000 shares held
by Mr. Scott's son, 400 shares held by Mr. Scott's daughter, 2,000 shares
owned by Mr. Scott's mother, and 1,468 shares owned by Mr. Scott's sister,
as to all of which Mr. Scott disclaims any beneficial interest.
So far as is known to management of the Company, on March 31, 1996 no other
person owned beneficially more than 5% of the Capital Stock of the Company,
although on such date Cede & Co., a nominee of Depository Trust Company ("DTC"),
owned of record 807,086 shares of Capital Stock of the Company, including a
portion of the shares beneficially owned by Mr. Bergstrom, or approximately 70%
of the number of shares entitled to vote at the meeting. DTC is a depository of
securities for brokers, dealers and other institutional investors. Securities
are so deposited for the purpose of permitting book entry transfers of
securities among such investors. Except as otherwise indicated above, the
Company does not know the names of beneficial owners of Capital Stock which is
on deposit with DTC.
THE COMPANY WILL FURNISH, WITHOUT CHARGE, A COPY OF ITS 1995 ANNUAL REPORT
TO ANY STOCKHOLDER UPON REQUEST BY TELEPHONE AT 1-800-426-5523 OR IN WRITING
DIRECTED TO: STATE STREET BANK AND TRUST COMPANY, P.O. BOX 8200, BOSTON,
MASSACHUSETTS, 02266-8200.
State Street Bank and Trust Company is the custodian, accounting agent,
transfer agent and dividend paying agent for the Company. William L. McQueen &
Associates, whose address is the same
-2-
<PAGE>
as that of the Company, provides fund administration services and related office
facilities to the Company. William L. McQueen & Associates is an accounting
firm whose sole proprietor is William L. McQueen, the President and Treasurer
and one of the directors of the Company. In the fiscal year ended December 31,
1995, the Adviser paid $76,837 to Mr. McQueen's firm for services and facilities
provided by the firm to the Company and reimbursed the Company $50,000 for
Mr. McQueen's salary as the Company's President and Treasurer.
APPROVAL OF THE NEW RCM AGREEMENT
(Proposal 1)
Stockholders of the Company are being asked to approve a new subadvisory
agreement (the "New RCM Agreement") between Bergstrom Advisers, Inc., the
Company's investment adviser, and RCM Capital Management, L.L.C., a Delaware
limited liability company ("New RCM"). New RCM, a newly formed, wholly owned
subsidiary of Dresdner Bank AG ("Dresdner"), is acquiring one of the Company's
current subadvisers, RCM Capital Management, a California Limited Partnership
("RCM"). A new subadvisory agreement is necessary because, as required under
the Investment Company Act of 1940 (the "Investment Company Act"), the existing
subadvisory agreement with RCM provides for its automatic termination in the
event of its assignment. New RCM's acquisition of RCM may constitute an
assignment of the existing subadvisory agreement with RCM.
EXISTING INVESTMENT ADVISORY ARRANGEMENTS
INFORMATION ABOUT BERGSTROM ADVISERS, INC. Bergstrom Advisers, Inc., a
Delaware corporation (the "Adviser"), the sole stockholder, director, officer
and investment management employee of which is Erik E. Bergstrom, is the
Company's investment adviser. Mr. Bergstrom's address and that of the Adviser
is P.O. Box 126, Palo Alto, California 94302. Mr. Bergstrom has been engaged
professionally in securities investments since 1967. In addition to his
services as President of the Adviser, Mr. Bergstrom is a private investor and
serves as President and Treasurer of Federal United Corporation, a personal
holding company which is controlled by Mr. Bergstrom. The Adviser provides
investment advisory or management services only to the Company. The Adviser has
been the Company's investment adviser since 1976.
TERMS OF THE INVESTMENT MANAGEMENT AND ADVISORY AGREEMENT WITH THE ADVISER.
The Investment Management and Advisory Agreement between the Company and the
Adviser (the "Advisory Agreement") continues automatically for successive annual
periods, provided that such continuance is specifically approved at least
annually by vote of a majority of the outstanding voting securities of the
Company or by the Board of Directors of the Company, together with, in each
instance, the vote of a majority of those directors who are not "interested
persons" of the Company or the Adviser. On August 28, 1995, the Board of
Directors of the Company unanimously approved the continuance of the Advisory
Agreement for the annual period beginning November 6, 1996. The Advisory
Agreement may be terminated at any time without penalty by vote of the majority
of the outstanding voting securities of the Company or by a vote of a majority
of the entire Board of Directors of the Company on sixty days' written notice to
the Adviser or by the Adviser on sixty days' written notice to the Company. The
Advisory Agreement automatically terminates upon its assignment.
Under the Advisory Agreement, the Adviser provides investment management,
advisory and research services to the Company, advising the Company on the
composition of its portfolio and determining, subject to overall supervision by
the Company's Board of Directors, which securities may be bought and sold. In
addition, the Adviser furnishes to the Company office facilities and simple
business equipment and pays the cost of keeping the Company's books and records.
It also pays the fees and expenses of any director of the Company who is an
"affiliated person" of the Adviser (the only such person being Mr. Bergstrom)
and reimburses the Company for compensation paid to any officer of the Company.
-3-
<PAGE>
The Advisory Agreement provides that the services to be performed by the
Adviser also may be performed by any organization with which the Adviser may
contract, subject to approval by the Company's Board of Directors and compliance
with applicable law, without relieving the Adviser of any responsibilities to
the Company it would have if it performed such services directly. Pursuant to
this provision, the Adviser has entered into two subadvisory agreements which
are described below.
The Advisory Agreement provides for the Company to pay the Adviser an
advisory fee which, on an annual basis, amounts to 3/4 of 1%, which rate is
higher than rates charged most other investment companies, of the first
$50,000,000 of the Company's average net assets, plus 1/2 of 1% of the value of
the average net assets in excess of $50,000,000, all in consideration of
providing the services described above. Such fee is to be computed weekly and
paid monthly. During the fiscal year ended December 31, 1995, the Company paid
the Adviser $800,692 in fees pursuant to the Advisory Agreement.
The Advisory Agreement also provides that the Company will generally pay
all of its operating expenses subject to the following limitation on expenses:
if in any fiscal year of the Company the sum of the fee paid and payable to the
Adviser for such year plus the operating expenses of the Company for such year
exceeds 1-1/2% of the first $50,000,000 of the Company's average net assets,
plus 1% of the Company's average net assets in excess of $50,000,000, the
Adviser will reimburse the Company for such excess, up to the amount of the fee
received by the Adviser for such year. In the event the excess operating
expenses are greater than the fee for such year, the maximum amount payable by
the Adviser would be the amount of the fee received, and there would be no
carry-forward or carry-back of the unrecovered portion to any other period. The
Advisory Agreement provides for quarterly reviews of the operating expenses and
for interim reductions in the amount of the fee then payable to the Adviser for
the balance of the year (subject to later adjustment) if it appears likely that
the operating expense limitation for the year will be exceeded. During the 1995
fiscal year, there were no fee reductions nor reimbursements for excess
expenses.
Mr. Bergstrom has licensed to the Company, on a royalty-free, non-exclusive
basis, the word Bergstrom for use in the Company's name in connection with its
business as an investment company. Mr. Bergstrom has the right to terminate
this license upon the termination of the Advisory Agreement. Mr. Bergstrom may
use or license the word Bergstrom in connection with the Adviser, other
investment companies and other business enterprises.
EXISTING INVESTMENT RESEARCH AND SUBADVISORY ARRANGEMENTS
GENERAL INFORMATION. At present, the Adviser has investment research and
subadvisory arrangements with RCM and Frank A. Branson, Inc. ("Branson") with
respect to certain portions of the marketable securities held or to be acquired
by the Company. Pursuant to such arrangements, the Adviser has given RCM and
Branson authority, in varying degrees, to effect purchases and sales of
portfolio securities on behalf of the Company. At March 31, 1996, RCM and
Branson had subadvisory responsibilities for approximately $62.2 million and
$31.3 million, or 40.4% and 20.4%, respectively, of the net assets of the
Company. The balance of the assets of the Company was under the direct
investment management responsibility of the Adviser. During 1995, the Adviser
paid RCM and Branson aggregate fees of $271,034 and $125,334, respectively, out
of the fees it received from the Company. Neither RCM nor any person affiliated
with RCM received any other fees from the Company or the Adviser for services
provided to the Company or the Adviser during 1995.
INFORMATION ABOUT RCM CAPITAL MANAGEMENT. RCM is a California limited
partnership whose general partner is RCM Limited L.P., a California limited
partnership ("RCM Limited"). RCM Limited is managed by its sole general
partner, RCM General Corporation, a California corporation ("RCM General"). The
business and affairs of RCM General are managed by its Board of Directors. The
directors of RCM General are William L. Price, Michael J. Apatoff, Jeffrey S.
Rudsten, Gary W. Schreyer and William S. Stack. At March 31, 1996, the only
persons who owned 10% or more of the outstanding
-4-
<PAGE>
voting securities of RCM General were Mr. Price, who owned 12.4% of the Common
Stock of RCM General, and Mr. Schreyer, who owned 11.1% of such stock.
The sole limited partner of RCM is RCM Acquisition, Inc., a wholly owned
indirect subsidiary of Travelers Group Inc. ("Travelers"). The business address
of Travelers is 388 Greenwich Street, New York, New York 10013. The business
address of RCM, RCM Limited, RCM General and each of the executive officers and
directors thereof is Four Embarcadero Center, Suite 3000, San Francisco,
California 94111. RCM was formed in April 1986 as the successor to Rosenberg
Capital Management, a California general partnership, which had been
continuously engaged in the business of providing investment advisory services
since August 1970. The Company has been advised by RCM that neither RCM
Acquisition, Inc. nor Travelers has the power to control the management or
operations of RCM. RCM Acquisition, Inc. has the right to become the sole owner
of RCM in the year 2000 (or on an earlier change of control of RCM Limited)
through acquisition of RCM Limited's general partnership interest in RCM at that
time. At March 31, 1996, RCM managed approximately $25 billion in assets at
market value, primarily invested in common stocks and fixed-income securities.
RCM has been a subadviser to the Company since 1986.
RCM also acts as investment manager for the portfolios of registered
investment companies other than the Company, which portfolios have investment
objectives that may be similar to those of the Company. Set forth below are the
name of each such portfolio, its net assets and information concerning the fees
paid by it to RCM.
<TABLE>
<CAPTION>
Net Assets as of Fee Waivers
Fund Name December 31, 1995 Annual Rate of Compensation or Reductions
- --------- ----------------- --------------------------- -------------
<S> <C> <C> <C>
RCM Growth Equity $1,325,290,486 0.75% of average quarterly net None
Fund assets
RCM Small Cap Fund $409,566,669 1.0% of average quarterly net None
assets
RCM International $34,346,808 0.75% of average monthly net (1)
Growth Equity Fund A assets
RCM Global Technology Fund $953,704 1.0% of average daily net (2)
assets
</TABLE>
_____________________
(1) RCM has voluntarily agreed, until at least May 21, 1996, to pay the RCM
International Growth Equity Fund A the amount, if any, by which certain
ordinary operating expenses of the Fund exceed 1% of the average monthly
net assets of the Fund on an annual basis.
(2) RCM has voluntarily agreed, until at least December 31, 1996, to pay the
RCM Global Technology Fund the amount, if any, by which certain ordinary
operating expenses of the Fund exceed 1.75% of the average daily net assets
of the Fund on an annual basis.
TERMS OF THE EXISTING INVESTMENT MANAGEMENT AND ADVISORY AGREEMENT BETWEEN
RCM AND THE ADVISER. The existing Investment Management and Advisory Agreement
(the "Existing RCM Agreement") between RCM and the Adviser was last submitted to
a vote of the stockholders of the Company on March 9, 1989. Stockholder
approval was sought in connection with the merger of the former parent of RCM
Acquisition, Inc. with a subsidiary of Travelers. The Existing RCM Agreement
continues automatically for successive annual periods, provided that such
continuance is specifically approved at least annually by vote of a majority of
the outstanding voting securities of the Company or by the Board of Directors of
the Company, together with, in each instance, the vote of a majority of those
directors
-5-
<PAGE>
who are not "interested persons" of the Company, the Adviser or RCM. On
November 6, 1995 the Board of Directors of the Company unanimously approved the
continuance of the Existing RCM Agreement for the annual period beginning
November 6, 1995. The Company may at any time terminate the Existing RCM
Agreement upon sixty days' written notice to RCM and to the Adviser either by
majority vote of the Board of Directors of the Company or by the vote of a
majority of the outstanding voting securities of the Company. With the prior
approval of the Board of Directors of the Company, the Adviser may at any time
terminate the Existing RCM Agreement upon sixty days' written notice to RCM.
RCM may at any time terminate the Existing RCM Agreement upon sixty days'
written notice to the Company and to the Adviser. The Existing RCM Agreement
automatically terminates upon its assignment or upon termination of the Advisory
Agreement.
Under the Existing RCM Agreement, the Adviser grants to RCM full authority
to manage the investment and reinvestment of a portion of the Company's assets
(the "RCM Portfolio"). Such investment and reinvestment are in RCM's discretion
but are required to be consistent with the investment objectives, policies and
restrictions of the Company as furnished to RCM by the Adviser. The Adviser has
the authority to vary the amount of assets in the RCM Portfolio in its
discretion. Under the Existing RCM Agreement, RCM is required to furnish the
Company and the Adviser with quarterly statements of the RCM Portfolio, as well
as statements evidencing any purchases and sales for the RCM Portfolio.
Set forth below is the schedule of annual fees payable by the Adviser to
RCM under the Existing RCM Agreement. The fee is calculated quarterly.
<TABLE>
<CAPTION>
Market Value of Securities and Cash Fee
----------------------------------- ---
<S> <C>
On the first $10,000,000 or fraction thereof.......... 0.70% annually
On the next $10,000,000 or fraction thereof........... 0.60% annually
On the next $20,000,000 or fraction thereof........... 0.50% annually
On the next $20,000,000 or fraction thereof........... 0.35% annually
On the next $40,000,000 or fraction thereof........... 0.30% annually
On sums exceeding $100,000,000........................ 0.25% annually
</TABLE>
RCM has authority to invest a portion of the Company's assets in the shares of
any investment company advised by RCM. Such shares are not included in the
calculation of the market value of securities and cash managed by RCM for
purposes of determining the fee paid by the Adviser to RCM, but are included in
such calculation for purposes of determining the fee paid by the Company to the
Adviser.
As of December 31, 1995, approximately $2.5 million of the Company's assets
were invested in the RCM Growth Equity Fund, a diversified series of the RCM
Capital Funds, Inc., an open-end investment company which is advised by RCM.
The RCM Growth Equity Fund pays RCM an annual fee of 0.75% of the average
quarterly net asset value of the RCM Growth Equity Fund. This fee is higher
than the fee that is paid by most investment companies; however, this fee is
comparable to the fees paid by other investment companies with similar
investment objectives. Although the Company does not pay this fee to RCM
directly, any return of the Company on its investment in the RCM Growth Equity
Fund, like any return of the Company on its investment in other investment
companies, is reduced by the amount of this fee. As of March 31, 1996,
approximately 9.8% of the Company's total assets was invested in investment
companies, including the RCM Growth Equity Fund. The RCM Growth Equity Fund
does not charge any sales load, redemption fee or distribution fee.
In purchasing and selling marketable securities, RCM seeks to place its
orders in such markets and through such brokers and dealers as, in RCM's best
judgment, offer the most favorable price and market for such transactions. In
reaching a judgment as to the reasonableness of a broker's or dealer's
commission, RCM may in good faith determine that an amount of commission is
reasonable in relation to the value of brokerage and research services provided
by such broker or dealer. The Existing RCM Agreement provides that in
allocating brokerage of the Company, RCM may take into account the value
-6-
<PAGE>
of any research services rendered by a particular broker or dealer for the
benefit of the Company, that such research services may be used by RCM in
servicing all of its accounts, and that not all such services must be used by
RCM in connection with the Company's portfolio. During 1995, RCM did not
execute any transactions relating to the Company's portfolio through any
"affiliated brokers," as defined by the rules under the Securities Exchange Act
of 1934.
INFORMATION ABOUT FRANK A. BRANSON, INC. Branson is a California
corporation with its business address at 555 Twin Dolphin Drive, Suite 185,
Redwood City, California 94065. Branson has been a subadviser to the Company
since 1986.
TERMS OF THE INVESTMENT RESEARCH AGREEMENT BETWEEN BRANSON AND THE ADVISER.
The Investment Research Agreement (the "Branson Agreement") between Branson and
the Adviser continues automatically for successive annual periods, provided that
such continuance is specifically approved at least annually by vote of a
majority of outstanding voting securities of the Company or by the Board of
Directors of the Company, together with, in each instance, the vote of a
majority of those directors of the Company who are not "interested persons" of
the Company, the Adviser or Branson. On August 28, 1995, the Board of Directors
of the Company unanimously approved the continuance of the Branson Agreement for
the annual period beginning November 6, 1996. The Branson Agreement may be
terminated at any time by vote of the majority of the outstanding voting
securities of the Company or by a vote of a majority of the entire Board of
Directors of the Company on sixty days' written notice to Branson and the
Adviser; or with the prior approval of the Board of Directors of the Company, by
the Adviser on sixty days' written notice to Branson; or by Branson on sixty
days' written notice to the Adviser and to the Company. The Branson Agreement
automatically terminates upon its assignment or upon termination of the Advisory
Agreement.
Under the Branson Agreement, Branson provides to the Adviser investment
research relating to marketable securities useful to the Adviser in the
performance of its activities under the Advisory Agreement. The Adviser from
time to time advises Branson as to the amount of the assets of the Company for
which Branson has subadvisory responsibility, and such responsibility is limited
to that amount and continues until modified by the Adviser. The Branson
Agreement provides that, except to the extent expressly authorized by the
Adviser, Branson has no authority to determine the nature or timing of changes
in the portfolio of the Company or the manner of effecting such changes or to
cause the purchase or sale of portfolio securities. The Adviser has delegated
and intends to continue to delegate to Branson discretionary authority in
varying degrees to purchase or sell portfolio securities for the Company,
typically with limitations on maximum amounts of securities which may be
purchased or sold and limitations on maximum purchase and minimum sale prices,
outside of which limitations Branson would be required to consult with the
Adviser.
The Adviser pays to Branson compensation at the annual rate of 3/8 of 1% of
the value of the assets of the Company for which Branson has investment or
advisory responsibility as of the date of such computation. Compensation under
the Branson Agreement is calculated and accrued quarterly.
THE NEW RCM AGREEMENT
BACKGROUND OF THE NEW RCM AGREEMENT. Under an Agreement of Purchase and
Sale dated as of December 13, 1995 (the "Purchase Agreement"), Travelers and RCM
Limited have agreed to sell their respective partnership interests in RCM to New
RCM, a wholly owned subsidiary of Dresdner. Upon such sale, RCM will cease to
exist and all of its assets and liabilities will become assets and liabilities
of New RCM. New RCM will also acquire from Travelers or its affiliates all of
the issued and outstanding shares of RCM Capital Trust Company, a California
limited purpose trust company (the "Trust Company"). The sale of RCM and the
Trust Company is referred to herein as the "Transaction." Subject to the terms
and conditions of the Purchase Agreement, Travelers will be paid an aggregate
purchase price of $297 million for its interests in RCM and the Trust Company,
and RCM Limited will be paid $3 million for its interest in RCM. The total
purchase price, $300 million, is subject to reduction at closing as provided in
the Purchase Agreement.
-7-
<PAGE>
In addition, New RCM will make aggregate payments of an estimated $100
million over approximately the next five years (collectively, the "Additional
Payments") to RCM Limited. Upon the closing of the Transaction, New RCM will
make the first Additional Payment of $33.3 million. On each of the first five
anniversaries of the first day of the calendar quarter next succeeding the
closing, New RCM will make an Additional Payment of $13.34 million, as adjusted
by certain income measurements. RCM General, as general partner of RCM Limited,
will be entitled (subject to consultation with the members of the New RCM
governing board designated by Dresdner) to determine the portion of the
Additional Payments, if any, to be distributed to each of the limited partners
of RCM Limited and certain other employees of New RCM who are parties to
employment agreements with New RCM.
Pursuant to an Agreement Regarding RCM Capital Management, dated April 1,
1990, Travelers has agreed, subject to certain conditions, to pay to RCM Limited
a fee equal to 30% of the net proceeds received by Travelers (the "Transition
Fee") upon the transfer by Travelers of its interests in RCM or the Trust
Company. RCM General, as general partner of RCM Limited, will be entitled to
determine the portion of the Transition Fee, if any, that is distributed to each
of the limited partners of RCM Limited.
There are a number of conditions precedent to the closing of the
Transaction. Such conditions include, among other things, the condition that
all regulatory filings and approvals have been properly made or obtained,
including the approval of the Board of Governors of the Federal Reserve System.
If the conditions to the Transaction are not met and the acquisition of RCM is
not completed, the Existing RCM Agreement will remain in effect.
INFORMATION REGARDING DRESDNER AND NEW RCM. Dresdner is an international
banking organization headquartered in Frankfurt, Germany, whose principal
executive offices are located at Gallusanlage 7, 60041 Frankfurt am Main. With
total consolidated assets as of December 31, 1994 of DM 400.1 billion, and
approximately 1,600 offices and 45,000 employees in over 60 countries around the
world, Dresdner is Germany's second largest bank. Dresdner provides a full
range of banking services, including traditional lending activities, mortgages,
securities, project finance and leasing, to private customers and financial and
institutional clients. It is one of a small number of global banking
organizations which has an "AAA" credit rating from Moody's Investors Service.
In the United States, Dresdner maintains branches in New York and Chicago and an
agency in Los Angeles, and its wholly owned subsidiary, Deutsch-Sudamerikanische
Bank AG, has an agency in Miami.
Pursuant to an agreement to be entered into upon the closing of the
Transaction (the "Governance Agreement"), the governing board of New RCM will
consist of nine members, six of whom are to be designated by RCM Limited and
three of whom are to be designated by Dresdner. New RCM may not reorganize,
change its line of business, sell or lease substantial assets, incur substantial
indebtedness, encumber substantial assets, issue or sell debt or equity
securities, or exceed certain budgeted expenses, among other actions, absent the
consent of a majority of the New RCM governing board, including a member
designated by Dresdner. Certain extraordinary events, including declines in New
RCM's assets under management, New RCM's poor investment management performance,
and the departure of certain limited partners of RCM Limited, will entitle
Dresdner to designate a majority of the governing board.
Listed below is certain information concerning each of the persons who are
expected to serve on the governing board of New RCM:
-8-
<PAGE>
<TABLE>
<CAPTION>
Name and Address Principal Occupation
- ---------------- --------------------
<S> <C>
William L. Price (1) Principal of RCM since 1979.
Michael J. Apatoff (1) Chief Operating Officer of RCM since 1991; Principal
since 1992.
Claude N. Rosenberg, Jr. (1) Principal of RCM since 1971.
Jeffrey S. Rudsten (1) Principal of RCM since 1981.
Gary W. Schreyer (1) Principal of RCM since 1977.
William S. Stack (1) Senior Vice President of RCM since 1994; Managing
Director of Lexington Management Corporation from
1985 to 1994.
Hans-Dieter Bauernfeind (2) General Manager and Head of the Institutional
Dresdner Bank AG Investment Advisory and Asset Management Division
Jurgen-Ponto-Plantz 1 of Dresdner since 1989.
60301 Frankurt am Main
Frankfurt, Germany
Gerhard Eberstadt (2) Board of Directors of Dresdner since 1988.
Dresdner Bank AG
Gallusanlage 7
60041 Frankfurt am Main
Frankfurt, Germany
George N. Fugelsang (2) President of Dresdner Securities (USA) Inc. and Senior
Dresdner Bank AG General Manager and Chief Executive North America of
75 Wall Street Dresdner since 1994; Managing Director of
New York, New York 10005-2889 Morgan Stanley & Co. Incorporated from 1986 to 1994.
</TABLE>
____________________
(1) To be designated by RCM Limited. The principal business address of each
will be RCM Capital Management, L.L.C., Four Embarcadero Center, Suite
3000, San Francisco, CA 94111.
(2) To be designated by Dresdner.
Mr. Price is expected to serve as the principal executive officer of New RCM.
While New RCM will succeed to the business and affairs of RCM upon the
closing of the Transaction, the Purchase Agreement provides that RCM Limited
will manage, operate and make all decisions regarding the day-to-day business
and affairs of New RCM, subject to the oversight of New RCM's Board of
Directors. A management agreement (the "Management Agreement") among RCM
Limited, Dresdner and New RCM will be entered into at the closing granting RCM
Limited the authority to take all actions on behalf of New RCM that may be
necessary or appropriate in the judgment of RCM Limited. It is not
contemplated, however, that RCM Limited will provide any advisory services. In
consideration for the services to be rendered by RCM Limited, New RCM will pay
RCM Limited an amount equal to 35% of the gross operating income of New RCM,
less the aggregate salary payments (the "RCM Contract Payments") made by New RCM
to its employees who are also limited partners of RCM Limited (the "Management
Fee"). The Management Fee will be no less than $25 million, minus the RCM
Contract Payments, for each of the first two years that the Management Agreement
is in place.
-9-
<PAGE>
RCM General, as general partner of RCM Limited, will be entitled (subject to
consultation with a member of the New RCM governing board designated by
Dresdner) to determine the portion of the Management Fee, if any, to be
distributed to each of the limited partners of RCM Limited.
Information concerning the management and ownership of RCM Limited and RCM
General is included under the caption "Existing Investment Research and
Subadvisory Arrangements--Information About RCM Capital Management" above.
The Company has been advised that RCM Limited and RCM General are not
registered as investment advisers under the Investment Advisers Act of 1940 and
will not be so registered upon the consummation of the Transaction. RCM has
taken the position that such registration is not required because neither RCM
Limited nor RCM General engage or will engage in any investment advisory
activities separate from the activities of RCM or New RCM. As a result, neither
the Governance Agreement nor the Management Agreement will be submitted for
approval by the Board of Directors or stockholders of the Company.
RCM has informed the Company that RCM contemplates no material changes in
the investment philosophy, policies or strategies of the RCM portion of the
Company's portfolio. After the Transaction, New RCM will continue to operate
from its offices in San Francisco, California, with substantially the same
personnel functioning in the same capacities as before the Transaction. The
same persons who are presently responsible for the investment strategies of RCM
are expected to direct New RCM's investment strategies following the
Transaction. In connection with the closing of the Transaction, certain key
personnel of RCM, including the principal portfolio manager of the RCM portion
of the Company's portfolio, are expected to enter into employment agreements
with New RCM.
TERMS OF THE NEW RCM AGREEMENT. The terms of the New RCM Agreement are
identical in all material respects to those of the Existing RCM Agreement, with
the exception of the effective date and termination date. A description of the
Existing RCM Agreement is included under the caption "Existing Investment
Research and Subadvisory Arrangements--Terms of the Existing Investment
Management and Advisory Agreement between RCM and the Adviser" above. The New
RCM Agreement will become effective upon the later of its approval by the
stockholders of the Company or the closing of the Transaction. The New RCM
Agreement will continue in effect until November 6, 1997, and thereafter from
year to year, subject to approval annually in accordance with its terms.
Stockholders should refer to Exhibit A attached hereto for the complete
terms of the New RCM Agreement. Exhibit A has been marked to show all changes
from the Existing RCM Agreement. The description of the Existing RCM Agreement
and the New RCM Agreement set forth herein are qualified in its entirety by the
provisions of Exhibit A.
Section 15(f) of the Investment Company Act provides that, when a change in
the control of an investment adviser to an investment company occurs, the
investment adviser or any of its affiliated persons may receive any amount or
benefit in connection therewith as long as two conditions are satisfied. First,
no "unfair burden" may be imposed on the investment company as a result of the
transaction relating to the change of control, or any express or implied terms,
conditions or understandings applicable thereto. As defined in the Investment
Company Act, the term "unfair burden" includes any arrangement during the two
year period after the change in control whereby the investment adviser (or
predecessor or successor adviser), or any interested person of any such adviser,
receives or is entitled to receive any compensation, directly or indirectly,
from the investment company or its security holders (other than fees for bona
fide investment advisory or other services), or from any person in connection
with the purchase or sale of securities or other property to, from, or on behalf
of the investment company (other than bona fide ordinary compensation as
principal underwriter for the investment company). No such compensation
arrangements are contemplated in the Transaction. In the Purchase Agreement,
RCM, RCM Limited, New RCM and Dresdner have agreed to use all commercially
reasonable efforts to ensure that the Transaction will not cause the imposition
of an unfair burden on the Company.
-10-
<PAGE>
The second condition in Section 15(f) is that, during the three year period
immediately following the change of control, at least 75% of an investment
company's Board of Directors must not be "interested persons" of the investment
adviser of the investment company or the predecessor investment adviser within
the meaning of the Investment Company Act. Upon consummation of the
Transaction, no members of the Company's Board of Directors will be "interested
persons" of RCM or New RCM.
The Company expects to enter into a reimbursement agreement ("the
Reimbursement Agreement") with RCM, RCM Limited, New RCM and Dresdner pursuant
to which RCM and RCM Limited will agree to reimburse the Company for any
expenses the Company reasonably incurs in connection with its consideration of
the New RCM Agreement. These include expenses associated with meetings of the
Company's Board of Directors, the solicitation of stockholder approval, the
preparation and negotiation of the Reimbursement Agreement and the New RCM
Agreement, and related legal, accounting, transfer agent and custodial services.
In connection with Section 15(f) of the Investment Company Act, RCM, RCM
Limited, New RCM and Dresdner will agree in the Reimbursement Agreement not to
take any action that would constitute an "unfair burden" on the Company and not
to cause more than 25% of the Board of Directors of the Company to become
"interested persons" of RCM or New RCM. RCM, RCM Limited, New RCM and Dresdner
will also make certain representations to the Company and agree to indemnify the
Company against certain liabilities, including those arising out of information
provided by them for use in this Proxy Statement.
Banking laws and regulations, including the Glass-Steagall Act as presently
interpreted by the Board of Governors of the Federal Reserve System, prohibit
certain banking entities, such as Dresdner, from sponsoring, organizing,
controlling or distributing the shares of a registered investment company
continuously engaged in the issuance of its shares, and prohibit banks generally
from underwriting securities. However, banks and their affiliates, generally,
can act as adviser to an investment company and can purchase shares of an
investment company as agent for and upon the order of customers. New RCM
believes that it may perform the services contemplated by the New RCM Agreement
without violating these banking laws or regulations. However, future changes in
legal requirements relating to the permissible activities of banks and their
affiliates, as well as future interpretations of current requirements, could
prevent New RCM from continuing to perform investment management services for
the Company. If New RCM were prohibited from performing investment management
services for the Company, it is expected that the Adviser or Branson would
assume responsibility for New RCM's portion of the Company's portfolio or the
Adviser and the Company would select another qualified subadviser. Any new
subadvisory agreement would be subject to approval in accordance with the
Investment Company Act.
RECOMMENDATION AND REQUIRED VOTE
The Board of Directors of the Company met on February 26, 1996 to consider
the effect of the Transaction on the Company and the New RCM Agreement. At the
meeting, the Board of Directors reviewed, among other information, written and
oral reports and compilations provided by RCM, including information concerning
the Transaction, New RCM and Dresdner and comparative data from independent
sources as to RCM's investment performance and advisory fees. In connection
with its review, the Board took into account a number of factors, including: the
historic performance of the RCM portion of the Company's portfolio; the quality
of past services rendered by RCM; the terms of the Existing RCM Agreement and
the New RCM Agreement, including the fees payable thereunder; the profitability
of RCM and the benefits accruing to it as a result of its affiliation with the
Company, including research services received in return for allocating brokerage
of the Company; assurances from RCM that there would be no material changes in
the investment strategies pursued for the Company or in the personnel providing
services to the Company; the fact that the principal portfolio manager for the
Company would enter into an employment agreement with New RCM; the proposed
arrangements among Dresdner, New RCM and RCM Limited, including the terms of the
Governance Agreement and the Management Agreement; the financial and other
resources of New RCM following the Transaction; the commitment of Dresdner to
the continuation of services of the nature and quality currently provided
-11-
<PAGE>
by RCM; the expected benefits of the Transaction to the Company, including the
expertise and reputation of Dresdner and its affiliates in global markets; the
agreement by RCM and RCM Limited to pay the expenses incurred by the Company in
connection with the Transaction; and the existing relationships of the Company
with the Adviser and Branson. Of particular significance to the Board was the
expectation that the services to be rendered by New RCM to the Company and the
Company's arrangements with the Adviser and Branson would remain substantially
unchanged after the Transaction.
As a result of its deliberations concerning the Transaction and the New RCM
Agreement, the Board of Directors, including all of the directors who are not
parties to the New RCM Agreement or "interested persons" of any such parties
under the Investment Company Act, unanimously approved the New RCM Agreement as
being in the best interests of the Company and its stockholders and recommended
it to the stockholders for their approval.
The affirmative vote of the holders of a majority of the outstanding shares
of the Company is required to approve the New RCM Agreement. "Majority" for
this purpose under the Investment Company Act means the lesser of (i) 67% or
more of the shares represented at the meeting if more than 50% of the shares are
represented or (ii) more than 50% of the outstanding shares of the Company. In
the event the New RCM Agreement is not approved by the Company's stockholders
and the Transaction is completed, the Board of Directors will take such action
as it deems to be in the best interests of the Company and its stockholders.
THE BOARD OF DIRECTORS RECOMMENDS THAT STOCKHOLDERS OF THE COMPANY VOTE FOR THE
NEW RCM AGREEMENT.
STOCKHOLDER PROPOSALS FOR 1996 ANNUAL MEETING
Proposals of stockholders intended to be presented at the Annual Meeting of
Stockholders to be held during 1996 must be received at the Company's principal
office on or before June 2, 1996 in order to be considered for inclusion in the
Company's Proxy Statement and form of Proxy for such meeting.
OTHER BUSINESS
As of the date of this Proxy Statement neither management of the Company
nor the Adviser knows of any business other than as set forth in the Notice of
Special Meeting of Stockholders to come before the meeting. If any other
business is properly brought before the meeting, or any adjournment thereof, all
Proxies will be voted in accordance with the best judgment of the persons voting
such Proxies as to such business.
April 22, 1996
-12-
<PAGE>
EXHIBIT A
INVESTMENT MANAGEMENT AND ADVISORY AGREEMENT
THIS AGREEMENT is entered into as of the ____ day of __________, 1996
by and between RCM Capital Management, L.L.C., a Delaware limited liability
company ("RCM"), and Bergstrom 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 Bergstrom Capital
Corporation, a Delaware corporation (the "Client"), Account No. _____ (the
"Portfolio"), presently held by State Street Bank and Trust Company, 225
Franklin Street, Boston, Massachusetts 02110 (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 the 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 account to pay an amount of commission in excess of the amount
of commission another broker or dealer would have charged. Provided,
-1-
<PAGE>
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.
-2-
<PAGE>
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)
-3-
<PAGE>
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: , 1996.
-------------------------------
RCM CAPITAL MANAGEMENT, L.L.C. BERGSTROM ADVISERS, INC.
By:
-----------------------------
Name: By:
---------------------- --------------------------
Title: Erik E. Bergstrom
--------------------- President
-4-
<PAGE>
SCHEDULE OF FEES
Effective Date: , 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.
<TABLE>
<CAPTION>
Value of Securities and Cash Fee
---------------------------- ---
<S> <C>
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
</TABLE>
Dated: , 1996.
-------------------
RCM CAPITAL MANAGEMENT, L.L.C. BERGSTROM ADVISERS, INC.
By: By:
-------------------------------- ---------------------------
Name: Erik E. Bergstrom,
------------------------------ President
Title:
-----------------------------
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<PAGE>
P R O X Y
BERGSTROM CAPITAL CORPORATION
PROXY
THIS PROXY IS SOLICITED ON BEHALF OF
THE BOARD OF DIRECTORS OF THE COMPANY
The undersigned hereby appoints WILLIAM L. McQUEEN and PAMELA A.
FIORINI, and each of them, with full power of substitution, as proxies for the
undersigned, to vote, act and consent with respect to any and all shares of the
Capital Stock, $1 par value, of Bergstrom Capital Corporation (the "Company"),
which the undersigned is entitled to vote at the Special Meeting of Stockholders
of the Company (the "Meeting") to be held in the Cutter Room, The Rainier Club,
Fourth Avenue and Marion Street, Seattle, Washington, at 11:00 a.m., Seattle
time, on May 13, 1996, and at any continuation or adjournment thereof, with all
powers the undersigned would possess if personally present, upon such business
as may properly come before the Meeting including the following:
1. Approval of a new Investment Management FOR AGAINST ABSTAIN
and Advisory Agreement between Bergstrom / / / / / /
Advisers, Inc. and RCM Capital Management,
L.L.C., a wholly owned subsidiary
of Dresdner Bank AG.
2. To vote in their discretion on such other matters as may properly come
before the Meeting or any adjournment thereof.
THIS PROXY WILL BE VOTED AS DIRECTED. IN THE ABSENCE OF DIRECTION, THIS PROXY
WILL BE VOTED FOR PROPOSAL 1.
The undersigned hereby acknowledges receipt of the Notice of the Special
Meeting and Proxy Statement.
DATED: , 1996
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(Please date and sign exactly as your name
appears at left. Joint owners should each
sign. If signing as executor, administrator,
attorney, trustee, or guardian, give title as
such. If a corporation, sign in full
corporate name by authorized officer. If a
partnership, sign in the name of authorized
person.)
This Proxy covers shares registered as
designated at left. Proxies for other forms
of registration must be voted separately.
STOCKHOLDERS ARE URGED TO MARK, SIGN AND RETURN
THIS PROXY PROMPTLY IN THE ENVELOPE PROVIDED.
PLEASE DO NOT FORGET TO DATE THIS PROXY.
