Exhibit A
INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
RETIREMENT SYSTEM INVESTORS INC.
AND
BATTERYMARCH FINANCIAL MANAGEMENT, INC.
THIS AGREEMENT effective as of October 2, 2002 between Retirement
System Investors Inc., a Delaware corporation (the "Manager"), and Batterymarch
Financial Management, Inc., Boston, Massachusetts (the "Sub-Adviser").
W I T N E S S E T H :
WHEREAS, RSI Retirement Trust ("Trust"), a trust organized and existing
pursuant to an Agreement and Declaration of Trust, made as of October 22, 1940,
as amended from time to time ("Agreement and Declaration of Trust") provides
benefits for the employees (and their beneficiaries) of savings institutions,
related organizations and other corporate entities which have established plans
of participation and individual retirement accounts ("Unitholders") in the
Trust;
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trustees of the Trust ("Trustees") are vested with
authority for the management and control of the assets of the Trust in
accordance with the provisions of the Agreement and Declaration of Trust and in
furtherance of such authority are vested with the power to designate an
investment manager or managers (as defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) to manage (including the power to
acquire and dispose of) the assets of any of the Investment Funds (as defined in
the Agreement and Declaration of Trust) of the Trust; and
WHEREAS, the Trust and the Manager have entered into an Investment
Management Agreement dated August 1, 1993 and amended and restated May 1, 2000,
pursuant to which the Manager may designate Sub-Advisers to perform certain
investment advisory functions under the supervision of the Manager and the
Trustees; and
WHEREAS, the Manager wishes to appoint the Sub-Adviser to manage a
portion of the assets of an Investment Fund of the Trust, to act in such
capacity in the manner set forth in this Agreement, and the Sub-Adviser is
willing to act in such capacity in accordance with the provisions of this
Agreement;
NOW, THEREFORE, the Manager hereby agrees with the Sub-Adviser as
follows:
1. Appointment of the Sub-Adviser
A. The Manager hereby designates, appoints, engages and retains the
Sub-Adviser as investment manager of the assets comprising the Investment Fund
of the Trust referred to on Schedule A hereto ("Investment Fund"), or such
portion thereof as shall be designated by the Manager ("Account") with authority
to invest and reinvest in US small capitalization equity securities; the Account
will be evaluated relative to the ▇▇▇▇▇▇▇ 2000 Index.
B. The Sub-Adviser hereby accepts appointment to manage the assets of
the Account. The Sub-Adviser hereby represents and warrants that it is a
qualified investment manager, as defined in Section 3(38) of ERISA, without
regard to subpart (c) of said Section. The Sub-Adviser agrees that although it
may not be subject to the provisions of Title I of ERISA in carrying out its
duties and responsibilities under this Agreement, it shall act in accordance
with the requirements of Part 4 of ERISA as applicable to fiduciaries as defined
under ERISA. Notwithstanding anything contained herein to the contrary,
references to ERISA in this Agreement shall be deemed to contemplate all
judicial or administrative interpretations and all statutory and administrative
exemptions which would be applicable in the circumstances and to the parties in
question were this Agreement subject to ERISA.
C. The term of this Agreement shall commence on the date hereof and
shall remain in full force and effect until February 28, 2003, and, provided
that approval by a vote of the majority of the outstanding shares (as defined in
the Act) of the Investment Fund is obtained prior to February 28, 2003, shall
continue thereafter until October 2, 2004 and thereafter from year to year
provided that such continuance is specifically approved in the manner required
by the Act.
2. Assets of the Account
The Manager shall certify or cause to be certified to the Sub-Adviser
the assets comprising the Account as of the commencement of the term of this
Agreement. The Manager may add to the Account assets acceptable to the
Sub-Adviser or withdraw assets from the Account at any time or from time to time
by notification to the Sub-Adviser. The Account shall consist of the assets
certified to the Sub-Adviser as aforesaid, or any assets into which the same may
be converted from time to time, together with any income therefrom or any other
increment thereon and assets as aforesaid, less assets withdrawn as aforesaid.
3. Investment Powers
A. Subject to the provisions of paragraph B of this Section 3, the
Sub-Adviser shall have exclusive authority and discretion, subject to and
consistent with the investment objectives and policies of the Investment Fund as
set forth in the current Prospectus of the Trust delivered to the Sub-Adviser
("Prospectus") and as specified in writing from time to time by the Trustees or
the Manager and accepted by the Sub-Adviser, to manage (including the power to
acquire and dispose of) the assets of the Account, and, without limiting the
generality of the foregoing, to direct the Trustees in the exercise of the
powers relating to the Account which are specified in the Agreement and
Declaration of Trust as subject to such direction.
- 2 -
B. Notwithstanding the provisions of paragraph A of this Section 3, it
is understood and agreed that an investment manager other than the Sub-Adviser
may lend securities from the Account and may invest assets of the Account on a
temporary basis pending permanent investment or distribution, and, to the extent
not inconsistent with ERISA, the Sub-Adviser shall have no liability or
responsibility with respect to the exercise of such authority by such other
investment manager; provided, however, that the Sub-Adviser shall coordinate the
exercise of its authority hereunder which may be affected by the exercise of
such authority by the other investment manager in such manner appropriate to the
exercise of its authority as shall be agreed upon by the Sub-Adviser and such
other investment manager. The Trustees will advise the Manager, and the Manager
will advise the Sub-Adviser, of any arrangement with respect to any proposed
lending of securities from the Account.
C. The Sub-Adviser shall consult with the Manager or the Trustees at
such times as the Manager or the Trustees shall reasonably request with respect
to the overall investment policy of the Account.
4. Standard of Care
A. The Sub-Adviser shall invest the assets of the Account in the manner
provided herein and shall have no duty or responsibility with respect to the
diversification of the assets of the Trust, except with respect to the
diversification of the assets of the Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Sub-Adviser will be under no
liability or obligation to anyone with respect to any failure on the part of the
Manager or any other investment manager to perform any of their obligations
under any agreement affecting the Account or under the terms of this Agreement
or for any error or omission whatsoever on the part of the Manager or any other
investment manager.
C. The Sub-Adviser shall not be liable for the making, retention or
sale of any investment or reinvestment made by it as herein provided, nor for
any loss to or diminution of the value of the property of the Account; provided,
however, that the Sub-Adviser has acted in the premises with the care, skill,
prudence, and diligence under the circumstances then prevailing that a prudent
man acting in like capacity and familiar with such matters would use in the
conduct of any enterprise of a like character and with like aims and in
accordance with such other requirements of ERISA as applicable generally to
fiduciaries under ERISA; provided, further, however, that nothing in this
Agreement shall protect the Sub-Adviser against any liability to the Manager,
the Trust or Unitholders to which the Sub-Adviser would otherwise be subject by
reason of willful misfeasance, bad faith or negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and
duties hereunder. Nothing herein shall be construed to waive any liability that
the Sub-Adviser has under federal or state securities laws or any other
applicable laws which cannot be waived.
5. General Provisions
A. Compensation for the services of the Sub-Adviser will be as set
forth in Schedule A hereto.
- 3 -
B. With respect to securities in the Account, the Sub-Adviser shall
purchase such securities from or through and sell such securities to or through
such persons, brokers or dealers as the Sub-Adviser shall deem appropriate to
carry out the policy with respect to brokerage as set forth in the Prospectus or
as the Manager or the Trustees of the Trust may direct from time to time. The
Sub-Adviser shall not be responsible for any acts or omissions by any such
broker or brokers, or any third party not owned by the Sub-Adviser, provided
that the Sub-Adviser is not negligent in the selection of such broker or
brokers, or third parties. The Sub-Adviser is hereby authorized to combine
orders on behalf of the Account with orders on behalf of other clients of the
Sub-Adviser. It is understood that it is desirable for the Trust that the
Sub-Adviser have access to supplemental research and security and economic
analysis and statistical services and information with respect to the
availability of securities or purchasers or sellers of securities provided by
brokers and of use to the Trust although such access may require the allocation
of brokerage business to brokers who execute transactions at a higher cost to
the Trust than other brokers who provide only execution of portfolio
transactions. Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities with such brokers, subject to review by the
Manager from time to time with respect to the extent and continuation of this
practice. It is understood that the services provided by such brokers may be
useful to the Sub-Adviser in connection with its services to other clients.
C. This Agreement shall automatically terminate in the event of its
"assignment" (as that term is defined in the Act).
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto or by the Trust on not more than sixty (60)
days' nor less than thirty (30) days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party; any such termination on
behalf of the Trust to be pursuant to a vote of the Trustees or by a vote of a
majority of the outstanding voting securities of the Trust.
E. The Sub-Adviser may rely on the authenticity, truth and accuracy of,
and will be fully protected in acting upon:
(a) Any notice, direction, certification, approval or other writing of
the Manager, if evidenced by an instrument signed by the
President, a Vice President, the Treasurer or the Assistant
Treasurer of the Manager;
(b) Any copy of a resolution of the Trustees, if certified by the
Secretary of the Trust;
(c) Any notification or information provided by the custodian of the
assets in the Account, if evidenced by an instrument signed by an
officer of the custodian;
(d) Any oral notice or instruction reasonably believed to be genuine
and to be given by the Manager or the Trustees or its or their
authorized delegate or by the custodian or any other investment
manager.
- 4 -
F. The Sub-Adviser may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate delivered to the Sub-Adviser by the Manager or the
Trustees with respect to any matter concerning the Trust and the operation and
administration of the Account. The Sub-Adviser is expressly authorized to
consult with the Manager with respect to any matters arising in the
administration of the Account and to act on the advice of the Manager, provided
nothing herein shall limit the full responsibility of the Sub-Adviser for the
management of the assets of the Account as provided herein.
G. Communications from the Sub-Adviser to the Manager shall be
addressed to:
Retirement System Investors Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn.: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Executive Vice President, Counsel and Secretary
Communications to the Sub-Adviser from the Manager or the Trustees shall be
addressed to the address set forth in Schedule A hereto. In the event of a
change of address, communications shall be addressed to such new address as
designated in a written notice from the Manager, the Trustees or the
Sub-Adviser, as the case may be. All communications addressed in the above
manner and by ordinary mail, registered mail or delivered by hand shall be
sufficient under this Agreement.
H. Unless the Manager instructs the Sub-Adviser otherwise in writing,
the Sub-Adviser will vote proxies for securities held in the Account in
accordance with the Sub-Adviser's policies for proxy voting. The Manager agrees
to instruct the custodian to forward to the Sub-Adviser copies of all proxies
and shareholder communications relating to securities held in the Account. The
Manager agrees that the Sub-Adviser will not be liable for failing to vote any
proxies where it has not received such proxies or related shareholder
communications on a timely basis. The Sub-Adviser will not be responsible for
taking any action or rendering any advice with respect to any legal proceedings
or bankruptcies involving the issuers of securities held in the Account.
I. The Manager acknowledges (i) receipt of the written disclosure
statement required by Rule 204-3 of the Investment Advisers Act of 1940 at least
48 hours before execution of this Agreement; (ii) that services provided
hereunder by Sub-Adviser shall not be deemed exclusive and that Sub-Adviser
shall be free to render similar services to others; and (iii) that Sub-Adviser
may give advice and take action in the performance of duties to others which may
differ from the advice given, or the timing and nature of the action taken, with
respect to the Manager's Account.
J. All agreements hereunder will be governed by the laws of the State
of New York, without reference to such State's conflict of law rules.
- 5 -
K. No term or provision of this Agreement may be amended, modified or
waived without the affirmative vote or action by written consent of the Trustees
and the written agreement of the Manager and the Sub-Adviser and in accordance
with the Act.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have executed this
Agreement, effective as of the date of this Agreement first set forth above.
RETIREMENT SYSTEM INVESTORS INC.
By:
-----------------------------------------
Title: Executive Vice President, Counsel and
Secretary
BATTERYMARCH FINANCIAL MANAGEMENT, INC.
By:
-----------------------------------------
Title:
--------------------------------------
- 6 -
SCHEDULE A
RSI RETIREMENT TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
Name of Sub-Adviser: Batterymarch Financial Management, Inc.
Address: ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
President and Chief Financial Officer
Investment Fund: Emerging Growth Equity Fund
Compensation Terms:
Terms used herein shall have the meaning used in the Investment Sub-Advisory
Agreement between the Manager and the Sub-Adviser ("Agreement"). The Manager
agrees to pay to the Sub-Adviser, as full compensation and reimbursement for the
services to be rendered pursuant to the Agreement and any expenses incurred in
connection therewith, a fee at the end of each fiscal quarter of the Trust,
computed by applying the following rate to that portion of the assets of the RSI
Retirement Trust's Emerging Growth Equity Fund portfolio managed by the
Sub-Adviser:
Effective October 2, 2002, 0.85% of the first $25
million of assets, 0.70% of the next $75 million of
assets, and 0.60% of assets in excess of $100 million.
Billing is done for each quarter on the basis of services performed during that
particular quarter. The quarterly fee is calculated on the basis of the average
of the asset value as of the last day of each month of each calendar quarter,
equal to one-fourth of the annual rate.
If the Agreement commences on a date other than on the beginning of any such
quarterly period or terminates on a date other than the end of any such
quarterly period, the fee payable hereunder shall be proportionately reduced
according to the number of days during such period services were rendered by the
Sub-Adviser.
- 7 -
IN WITNESS WHEREOF, the parties to the Agreement, effective as of October 2,
2002, have executed this Schedule A, effective as of the same dates.
RETIREMENT SYSTEM INVESTORS INC.
By:
-----------------------------------------
Title: Executive Vice President, Counsel and
Secretary
BATTERYMARCH FINANCIAL MANAGEMENT, INC.
By:
-----------------------------------------
Title:
--------------------------------------
- 8 -