1
EXHIBIT NO. 99.5
INVESTMENT ADVISORY AND MANAGEMENT CONTRACT
FORM OF SUBADVISORY CONTRACT
2
INVESTMENT ADVISORY AND MANAGEMENT CONTRACT
THIS AGREEMENT is made and executed this 30th day of September, 1993, between
SAFECO COMMON STOCK TRUST ("Trust"), a Delaware business trust and SAFECO ASSET
MANAGEMENT COMPANY ("Manager"), a Washington corporation.
WHEREAS, the Trust is registered with the Securities & Exchange
Commission as a series type, open-end, management investment company under the
Investment Company Act of 1940, as amended ("1940 Act"), and has caused its
shares of beneficial interest to be registered for sale to the public under the
Securities Act of 1933 (the "1933 Act") and various state securities laws; and
WHEREAS, the Trust intends to offer for public sale distinct series of
shares of beneficial interest ("Series"), each Series corresponding to a
distinct portfolio; and
WHEREAS, the Trust wishes to retain the Manager to provide investment
advisory, management, and administrative services to the Trust and each Series
as now exists and as hereafter may be established which are listed in Exhibit A
to this Agreement as amended from time to time; and
WHEREAS, the Manager is willing to furnish such services on
the terms and conditions hereinafter set forth; and
NOW THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, it is agreed as follows:
1. Appointment of Manager. The Trust hereby appoints the Manager as
investment adviser and manager of each Series to administer its affairs, subject
to the supervision of the Trust's Board of Trustees, for the period and on the
terms set forth in this Agreement. The Manager hereby accepts such appointment
and agrees to render the services required by this Agreement for the
compensation and upon such other terms and conditions as are set forth in this
Agreement. The Manager shall for all purposes herein be deemed an independent
contractor and, unless otherwise expressly provided or authorized, shall have no
authority to act for or represent the Trust in any way or otherwise be deemed an
agent of the Trust.
2. Duties of Series. Each Series shall at all times keep the Manager
fully informed with regard to the securities owned by it, its funds available or
to become available for investment,
3
and generally as to the condition of its affairs. It shall furnish the Manager
with such other documents and information with regard to its affairs as the
Manager may from time to time reasonably request.
3. Duties of Manager.
(a) General. The Manager shall furnish to the Trust space in the
offices of the Manager or in such other place as may be agreed upon from time to
time and all necessary office facilities, equipment and personnel for managing
the affairs and investments and keeping the books of the Trust. Subject to the
supervision of the Trust's Board of Trustees, the Manager shall regularly
provide each Series with investment research, advice, management and supervision
and shall furnish a continuous investment program for each Series' portfolio of
securities consistent with each Series' investment objectives and policies. The
Manager shall determine from time to time what securities will be purchased,
retained or sold by each Series, and shall implement those decisions, all
subject to the provisions of the Trust's Trust Instrument and Bylaws, the 1940
Act, the applicable rules and regulations of the Securities and Exchange
Commission, and other applicable federal and state law, as well as the
investment objectives and policies of each Series. The Manager will place orders
pursuant to its investment determinations for each Series either directly with
the issuer or with any broker or dealer. In placing orders with brokers and
dealers the Manager will attempt to obtain the best net price and the most
favorable execution of its orders. The Manager shall also provide advice and
recommendations with respect to other aspects of the business and affairs of the
Trust and each Series, and shall perform such other functions of management and
supervision as may be directed by the Board of Trustees of the Trust.
(b) Reports and Records. The Manager, at its expense, shall supply the
Trust's Board of Trustees and officers with all statistical information and
reports reasonably requested by them and reasonably available to the Manager.
The Manager shall oversee the maintenance of all books and records with respect
to the Trust's and each Series' securities transactions and the keeping of the
Trust's and each Series' books of account in accordance with all applicable
federal and state laws and regulations. In compliance with the requirements of
Rule 31a-3 under the 1940 Act, the Manager hereby agrees that any records which
it maintains for the Trust or any Series are the property of the Trust, and
further agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Manager further agrees to arrange for the preservation of
the records required to be maintained by Rule 31a-1 under the 1940 Act for the
periods prescribed by Rule 31a-2 under the 1940 Act. The Manager shall authorize
and permit any of its directors, officers and employees, who may be elected as
directors or officers of the Trust, to serve in the capacities in which they are
elected.
4. Allocation of Expenses.
(a) (1) Manager shall pay the organizational expenses of the Trust,
which the Trust shall reimburse to Manager over a sixty-month period commencing
after the date of the Trust's initial public offering of its shares. If the
Trust shall not be obligated to reimburse the Manager for aggregate
organizational expenses of a Series in excess of a specified amount, such amount
shall be set forth in Exhibit A as amended from time to time. (2) The Manager
shall be responsible for the compensation (if any) paid to officers of the Trust
for serving in that capacity; the expenses of computing the net asset value per
share of the Trust and each Series; federal and state registration fees for the
Trust and each Series, other than the initial fees to be reimbursed pursuant to
Section 4(a)(1); all expenses of preparing, printing and distributing
advertising and sales literature
51
4
for the Trust and each Series; and the cost of fidelity bond and other insurance
for the Trust and each Series.
(b) The Trust and each Series shall bear all expenses of their
organization, operations and business not specifically assumed or agreed to be
paid by the Manager as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Trust and each Series shall pay:
(1) Custody and Accounting Services. All expenses of the transfer,
receipt, safekeeping, servicing and accounting for the cash,
securities, and other property of the Trust and each Series, including
all charges of depositories, custodians, and other agents, if any;
(2) Shareholder Servicing. All expenses of maintaining and servicing
shareholder accounts, including all charges of the transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other
agents of the Trust and each Series, if any;
(3) Shareholder Communications. All expenses of preparing, printing,
and distributing reports and certain other communications to
shareholders of the Trust and each Series;
52
5
(4) Shareholder Meetings. All expenses incidental to holding meetings
of shareholders of the Trust and each Series, including the printing of
notices and proxy materials and the expenses of any proxy solicitation;
(5) Prospectuses And Statements of Additional Information. All expenses
of preparing, printing and mailing to shareholders of annual or more
frequent revisions of the Prospectus and Statement of Additional
Information for the Trust and each Series;
(6) Communication Equipment. All charges for equipment or services used
for communication between the Manager, the Trust or each Series and the
custodian, transfer agent or any other agent selected by the Trust;
(7) Legal and Accounting Fees and Expenses. All charges for services
and expenses of the Trust's legal counsel and independent auditors;
(8) Trustees' Fees and Expenses. All compensation of trustees, other
than those affiliated with the Manager, and all expenses incurred in
connection with their service;
(9) Issue and Redemption of Fund Shares. All expenses incurred in
connection with the issue, redemption, and transfer of shares of the
Trust and each Series, including the expense of confirming all share
transactions, and of preparing and transmitting the Trust's stock
certificates, if certificates are issued;
(10) Brokerage Commissions. All brokers' commissions and other charges
incident to the purchase, sale, or lending of portfolio securities of
the Trust and Series;
(11) Taxes. All taxes or governmental fees payable by or with respect
to the Trust and each Series to federal, state, or other governmental
agencies, domestic or foreign, including stamp or other transfer taxes;
(12) Nonrecurring and Extraordinary Expenses. Such nonrecurring
expenses as may arise, including the costs of actions, suits, or
proceedings to which the Trust or any Series is a party and the
expenses the Trust or any Series may incur as a result of its legal
obligation to provide indemnification to its trustees, officers, and
agents.
53
6
5. Non-Exclusive Services. The services of the Manager to the Trust and
each Series hereunder are not to be deemed exclusive, and the Manager shall be
free to render similar services to others so long as its services hereunder are
not impaired thereby.
6. Compensation for Services.
(a) For the services and facilities to be furnished by the Manager,
each existing Series shall pay the Manager an annual fee computed on the basis
of the average net asset value of the Series as ascertained each business day
and paid monthly in accordance with the schedule set forth in Exhibit A to this
Agreement. For purposes of computing the annual fee, the net asset value of the
Series shall be equal to the difference between its total assets and its total
liabilities (excluding from such liabilities its capital stock and surplus) with
its assets and its liabilities to be valued in accordance with the procedures
set forth in the Trust's Registration Statement.
(b) For the services and facilities to be furnished by the Manager, any
new Series of the Trust which is issued on a future date will pay the Manager a
fee according to a Schedule which will be set forth in an amended Exhibit A to
this Agreement.
(c) If SAFECO Securities, Inc., receives portfolio brokerage
commissions resulting from transactions in the portfolio of any Series
("commissions"), any management fee earned by Manager will be reduced by the
amount of such commissions so received by SAFECO Securities, Inc.
(d) The Trust and the Manager may mutually agree to reduce the fees
payable by any Series if the reduction is in the best long-range interest of the
Trust and the Manager.
(e) If the Manager shall serve for less than the whole of any month,
the monthly management fee payable by each Series shall be prorated.
7. Reimbursements by Manager. The Manager agrees to reimburse a Series
for the amount by which the Series' expenses in any full fiscal year (excluding
taxes and interest expense, brokerage expenses and extraordinary expenses)
exceed the limits prescribed by any state in which the Series shares are
qualified for sale. For the purpose of this calculation, the costs of acquiring
and disposing of portfolio securities shall be charged to the cost of or amount
realized from such securities and shall not be deemed expenses of the Series.
For purposes of determining whether the Series is entitled to reimbursement, the
expenses of the Series are calculated on a monthly basis. If a Series is
entitled to a reimbursement, that month's advisory fee will be reduced or
postponed, with any adjustments made at the end of the fiscal year.
8. Liability of Manager. The Manager assumes no responsibility under
this Agreement other than to render the services called for hereunder, in good
faith, and shall not be responsible for any action of the Trust's Board of
Trustees in following or declining to follow any advice or recommendations of
the Manager; provided, that nothing in this Agreement shall protect the Manager
against any liability to the Trust or its shareholders to which it would
otherwise be subject by reason of willful misfeasance, bad faith, or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties hereunder.
54
7
9. Books and Records. The Trust shall cause its books and accounts to
be audited at least once each year by a reputable, independent public accountant
or organization of public accountants who shall render a report to the Trust.
10. Affiliation.
(a) It is understood that trustees, officers, shareholders and agents
of the Trust and each Series are or may be interested in the Manager (or any
successor thereof) as directors, officers, shareholders or otherwise, and that
the Manager (or any such successor) is or may be interested in the Trust as a
shareholder or otherwise.
(b) No trustee, officer or employee of the Trust and each Series shall
receive from the Trust any salary or other compensation as such director,
officer or employee while he or she is at the same time a director, officer, or
employee of the Manager or any affiliated company of the Manager. This paragraph
shall not apply to directors or other persons who are not regular members of the
Manager's or any affiliated company's staff.
11. Unrestricted Activities. Nothing in this Agreement shall limit or
restrict the right of any director, officer, or employee of the Manager who may
also be a trustee, officer, or employee of the Trust or any Series, to engage in
any other business or to devote his or her time and attention in part to the
management or other aspects of any other business, whether of a similar nature
or a dissimilar nature, or limit or restrict the right of the Manager to engage
in any other business or to render services of any kind, including investment
advisory and management services, to any other corporation, firm, individual or
association.
12. Use of Name. In the event this Agreement is terminated by either
party or upon written notice from the Manager at any time, the Trust hereby
agrees that it will eliminate from its corporate name any reference to the name
of "SAFECO." The Trust shall have the non-exclusive use of the name "SAFECO" in
whole or in part only so long as this Agreement is effective or until such
notice is given. Notwithstanding the foregoing and in the event that this
Agreement is terminated by either party, the Manager may elect to permit the
Trust to continue to use the name "SAFECO" under such terms and conditions as
the Manager shall set forth in writing.
13. Effectiveness Date/Renewal. This Agreement will become effective
with respect to each Series on the date first written above or such later date
as indicated on Exhibit A, provided that it shall have been approved by the
Trust's Board of Trustees and by the shareholders of that Series in accordance
with the requirements of the 1940 Act and, unless sooner terminated as provided
herein, will continue in effect for two years from the above written date.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to each Series for successive annual periods ending on the same date of
each year, provided that such continuance is specifically approved at least
annually (i) by the Trust's Board of Trustees or (ii) with respect to any
Series, by a vote of a majority of the outstanding voting securities of that
Series, provided that in either event the continuance is also approved by a
majority of the Trust's trustees who are neither interested persons (as defined
in the ▇▇▇▇ ▇▇▇) of the Trust or the Manager by vote cast at a meeting called
for the purpose of voting on such continuance.
14. Amendment. This Agreement may be amended by the parties only if the
terms of the amendment are approved by either (i) a majority of the Trust's
Board of Trustees or, (ii) with respect to any given Series, by a vote of a
majority of
55
8
the outstanding voting securities of that Series at a duly called meeting of the
shareholders. In either case, the majority of the trustees, who are neither
interested persons of the Trust or the Manager, must approve the amendment.
15. Termination. This Agreement is terminable with respect to any
Series or in its entirety without penalty by the Trust's Board of Trustees, by
vote of a majority of the outstanding voting securities of each affected Series
(as defined in the 1940 Act), or by the Manager, on not less than 60 days'
notice to the other party and will be terminated upon the mutual written consent
of the Manager and the Trust. This Agreement shall terminate automatically in
the event of its assignment by the Manager and shall not be assignable by the
Trust without the consent of the Manager.
16. Limitation of Liability. Manager is hereby expressly put on notice of
(i) the limitation of shareholder, officer and trustee liability as set forth in
the Trust Instrument of the Trust and (ii) of the provisions in the Trust
Instrument permitting the establishment of separate Series and limiting the
liability of each Series to obligations of that Series. Manager hereby agrees
that obligations assumed by the Trust pursuant to this Agreement are in all
cases assumed on behalf of a particular Series and each such obligation shall be
limited in all cases to that Series and its assets. Manager agrees that it shall
not seek satisfaction of any such obligation from the shareholders or any
individual shareholder of the Trust nor from the officers or trustees of any
individual officer or trustee of the Trust.
17. Defined Terms. For the purpose of this Agreement, the terms "vote of a
majority of the outstanding voting securities," "assignment," and "interested
persons," shall have the respective meanings specified in the Investment Company
Act of 1940 when such terms are used in reference to the Trust and the Series.
18. Entire Agreement/Enforcement of Rights. This Agreement embodies the
entire agreement between the Manager and the Trust with respect to the services
to be provided by the Manager to the Trust and each Series and supersedes any
prior written or oral agreement between those parties. In the event that either
party should be required to take legal action in order to enforce its rights
under this Agreement, the prevailing party in any such action or proceeding
shall be entitled to recover from the other party costs and reasonable
attorneys' fees.
19. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in counterparts, each of which taken together shall
constitute one and the same instrument. Manager understands that the rights and
obligations of each Series under the Trust Instrument are separate and distinct
from those of any and all other Series.
19. Governing Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Washington and, to the extent it
involves any United States statute, in accordance with the laws of the United
States.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their duly authorized officers as of the day and year first above written.
ATTEST: SAFECO COMMON STOCK TRUST
56
9
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------- ------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇. ▇▇▇▇
Secretary President
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- ------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Secretary President
57
10
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO GROWTH FUND
FEE SCHEDULE
Net Assets Annual Fee
---------- ----------
For assets up to and including $100,000,000 .75 of 1%
For assets in excess of $100,000,000 and
up to and including $250,000,000 .65 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .55 of 1%
For assets over $500,000,000 .45 of 1%
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO Growth Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------- -------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- ----------------------
Secretary Secretary
As of 9-30-93
58
11
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO EQUITY FUND
FEE SCHEDULE
Net Assets Annual Fee
---------- ----------
For assets up to and including $100,000,000 .75 of 1%
For assets in excess of $100,000,000 and
up to and including $250,000,000 .65 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .55 of 1%
For assets over $500,000,000 .45 of 1%
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO Equity Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------------ ------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------- --------------------
Secretary Secretary
As of 9-30-93
59
12
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO INCOME FUND
FEE SCHEDULE
Net Assets Annual Fee
---------- ----------
For assets up to and including $100,000,000 .75 of 1%
For assets in excess of $100,000,000 and
up to and including $250,000,000 .65 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .55 of 1%
For assets over $500,000,000 .45 of 1%
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO Income Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
----------------------------- ------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------- --------------------
Secretary Secretary
As of 9-30-93
60
13
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO NORTHWEST FUND
FEE SCHEDULE
Net Assets Annual Fee
---------- ----------
For assets up to and including $250,000,000 .75 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .65 of 1%
For assets in excess of $500,000,000 and
up to and including $750,000,000 .55 of 1%
For assets over $750,000,000 .45 of 1%
ORGANIZATIONAL EXPENSES
The Trust shall not be obligated to reimburse the Manager for aggregate
organizational expenses in excess of $30,000 for the SAFECO Northwest Fund.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO Northwest Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
--------------------------- -------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
----------------------- ---------------------
Secretary Secretary
As of 9-30-93
61
14
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO BALANCED FUND
The SAFECO Common Stock Trust consists of the following additional Series, which
is made a party to this Agreement pursuant to Section 13 of the Agreement:
1. SAFECO Balanced Fund
As provided in Section 6 of this Agreement, for the services and facilities to
be furnished by the Manager, SAFECO Balanced Fund shall pay the Manager an
annual fee computed on the basis of the average net asset value of SAFECO
Balanced Fund as ascertained each business day and paid monthly in accordance
with the following schedule:
Net Assets Annual Fee
---------- ----------
For assets up to and including $250,000,000 .75 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .65 of 1%
For assets over $500,000,000 .55 of 1%
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO Balanced Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------ -------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------- ---------------------
Secretary Assistant
Secretary
As of 11-10-95
62
15
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO INTERNATIONAL STOCK FUND
The SAFECO Common Stock Trust consists of the following additional Series, which
is made a party to this Agreement pursuant to Section 13 of the Agreement:
1. SAFECO International Stock Fund
As provided in Section 6 of this Agreement, for the services and facilities to
be furnished by the Manager, SAFECO International Stock Fund shall pay the
Manager an annual fee computed on the basis of the average net asset value of
SAFECO International Stock Fund as ascertained each business day and paid
monthly in accordance with the following schedule:
Net Assets Annual Fee
---------- ----------
For assets up to and including $250,000,000 1.10 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 1.00 of 1%
For assets over $500,000,000 .90 of 1%
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO International Stock Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------- ------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------- --------------------
Secretary Assistant
Secretary
As of 11-10-95
63
16
EXHIBIT A
SAFECO COMMON STOCK TRUST
SAFECO SMALL COMPANY STOCK FUND
The SAFECO Common Stock Trust consists of the following additional Series, which
is made a party to this Agreement pursuant to Section 13 of the Agreement:
1. SAFECO Small Company Stock Fund
As provided in Section 6 of this Agreement, for the services and facilities to
be furnished by the Manager, SAFECO Small Company Stock Fund shall pay the
Manager an annual fee computed on the basis of the average net asset value of
SAFECO Small Company Stock Fund as ascertained each business day and paid
monthly in accordance with the following schedule:
Net Assets Annual Fee
---------- ----------
For assets up to and including $250,000,000 .85 of 1%
For assets in excess of $250,000,000 and
up to and including $500,000,000 .75 of 1%
For assets over $500,000,000 .65 of 1%
ORGANIZATIONAL EXPENSES
Not applicable.
SAFECO Asset Management Company SAFECO Common Stock Trust
on behalf of
SAFECO Small Company Stock Fund
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇
------------------------- ------------------------
Its: President Its: President
Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ Attest: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
--------------------- --------------------
Secretary Assistant
Secretary
As of 11-10-95
64
17
SUB-INVESTMENT ADVISORY CONTRACT
Contract made as of ___________________, 1995, between SAFECO ASSET
MANAGEMENT COMPANY ("▇▇▇") a Washington corporation, and BANK OF IRELAND ASSET
MANAGEMENT (U.S.) LIMITED ("BIAM"), a Connecticut corporation.
WHEREAS, ▇▇▇ has entered into an Investment Advisory Contract dated as
of the date hereof ("Advisory Contract") with SAFECO Common Stock Trust (the
"Trust"), an open-end investment company registered under the Investment Company
Act of 1940, as amended ("1940 Act"); and
WHEREAS, ▇▇▇ wishes to retain BIAM as sub-investment adviser to furnish
certain investment advisory services to ▇▇▇ and the SAFECO International Fund
series ("Series") of the Trust, and BIAM is willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment. ▇▇▇ hereby appoints BIAM as its investment
sub-investment adviser with respect to the Series for the period and on the
terms set forth in this Contract. BIAM accepts such appointment and agrees to
render the services herein set forth, for the compensation herein provided.
2. Duties of BIAM.
(a) Subject to the supervision of the Trust's Board of Trustees
("Board") and ▇▇▇, BIAM will provide a continuous investment program for the
Series, including investment research and management. BIAM will determine from
time to time what investments will be purchased, retained or sold by the Series.
BIAM will be responsible for placing purchase and sell orders for investments
and for other related transactions. BIAM will provide services under this
Contract in accordance with the Series' investment objective, policies and
restrictions as stated in the Series' Prospectus.
(b) BIAM agrees that, in placing orders with brokers, it will attempt
to obtain the best net result in terms of price and execution; provided that, on
behalf of the Series, BIAM may, in its discretion, use brokers who provide the
Series with research, analysis, advice and similar services to execute portfolio
transactions on behalf of the Series, and BIAM may pay to those brokers in
return for brokerage and research services a higher commission than may be
charged by other brokers, subject to BIAM's determining in good faith that such
commission is reasonable in terms either of the particular transaction or of the
overall responsibility of BIAM and its affiliates to the Series and its other
clients and that the total commissions paid by the Series will be reasonable in
relation to the benefits to the Series over the long term. In no instance will
portfolio securities be purchased from or sold to BIAM, or any affiliated person
thereof, except in accordance with United States securities laws and the rules
and regulations thereunder. Whenever BIAM simultaneously places orders to
purchases or sell the same security on behalf of the Series and one or more
other accounts advised by BIAM, such orders will be allocated as to price and
amount among all such accounts in a manner
65
18
believed to be equitable to each account. ▇▇▇ recognizes that in some cases this
procedure may adversely affect the results obtained for the Series.
(c) BIAM will maintain all books and records required to be maintained
by BIAM pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to transactions on behalf of the Series, and will
furnish the Board and ▇▇▇ with such periodic and special reports as the Board of
▇▇▇ reasonably may request. In compliance with the requirements of Rule 31a-3
under the 1940 Act, BIAM hereby agrees that all records which it maintains for
the Series are the property of the Trust, agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any records which it maintains for
the Trust and which are required to be maintained by Rule 31a-1 under the 1940
Act, and further agrees to surrender promptly to the Trust any records which it
maintains for the Trust upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or ▇▇▇,
BIAM will provide the Board and ▇▇▇ with economic and investment analyses and
reports and make available to the Board and ▇▇▇ any economic, statistical and
investment services normally available to similar investment company customers
of BIAM.
3. Further Duties. In all matters relating to the performance of this
Contract, BIAM will act in conformity with the Trust's Declaration of Trust,
By-laws and currently effective registration statement under the 1940 Act and
any amendments or supplements thereto ("Registration Statement") and with the
written instructions and directions of the Board and ▇▇▇ and comply with the
requirements of the 1940 Act, the Investment Advisers Act of 1940 ("Advisers
Act"), the rules thereunder, and all other applicable federal and state laws and
regulations. ▇▇▇ agrees to provide to BIAM copies of the Trust's Declaration of
Trust, Bylaws, Registration Statement, written instructions and directions of
the Board and ▇▇▇, and any amendments or supplements to any of them as soon as
practicable after such materials become available.
66
19
4. Services Not Exclusive. The services furnished by BIAM hereunder are
not to be deemed exclusive, and BIAM shall be free to furnish similar services
to others so long as its services under this Contract are not impaired thereby.
Nothing in this Contract shall limit or restrict the right of any director,
officers or employee of BIAM to engage in any other business or to devote his or
her time and attention in part to the management or other aspects of any other
business, whether of a similar nature or a dissimilar nature.
5. Expenses. During the term of this Contract, BIAM will bear all
expenses incurred by it in connection with its services under this Contract.
6. Compensation.
(a) For the services provided and the expenses assumed by BIAM pursuant
to the Contract, ▇▇▇ will pay to BIAM a fee, computed daily and payable monthly,
at an annual rate specified below (in United States dollars) of the Advisory Fee
received by ▇▇▇ from the Trust with respect to the Series pursuant to the
Advisory Contract:
Net Assets Fee
---------- ---
For assets up to and including .45 of 1%
$50,000,000
For assets in excess of $50,000,000 .40 of 1%
and up to and including $100,000,000
For assets in excess of $100,000,000 .30 of 1%
(b) "Net assets" shall include the assets of the Series and the assets
of any other series of any other trust managed by ▇▇▇ and sub-managed by BIAM.
(c) The fee shall be accrued daily and payable monthly to BIAM on or
before the last business day of the next succeeding calendar month.
(d) If this Contract becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as the
case may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
67
20
7. Limitation of Liability. BIAM shall not be liable for any error of
judgment or mistake of law or for any loss suffered by the Series, the Trust or
its shareholders or by ▇▇▇ in connection with the matters to which this Contract
relates, except to the extent that such a loss results from willful misfeasance,
bad faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this Contract.
8. Representations of BIAM. BIAM represents, warrants and agrees as
follows:
(a) BIAM: (i) is registered as an investment adviser under the Advisers
Act and will continue to be so registered for so long as this Contract remains
in effect; (ii) is not prohibited by the 1940 Act or the Advisers Act from
performing the services contemplated by this Contract; (iii) has met, and will
continue to meet for so long as this Contract remains in effect, any other
applicable federal or state requirements, or the applicable requirements of any
regulatory or industry self-regulatory agency, necessary to be met in order to
perform the services contemplated by this Contract; (iv) has the authority to
enter into and perform the services contemplated by this Contract; and (v) will
immediately notify ▇▇▇ of the occurrence of any event that would disqualify BIAM
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
(b) BIAM has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide ▇▇▇ with a copy
of such code of ethics, together with evidence of its adoption. Within 45 days
after the end of the last calendar quarter of each year that this Contract is in
effect, the president or a vice president of BIAM shall certify to ▇▇▇ that BIAM
has complied with the requirements of Rule 17j-1 during the previous year and
that there has been no violation of BIAM's code of ethics or, if such a
violation has occurred, that appropriate action was taken in response to such
violation. Upon the written request of ▇▇▇, BIAM shall permit ▇▇▇, its employees
or its agents to examine the reports required to be made to BIAM by Rule
17j-1(c)(1) and all other records relevant to BIAM's code of ethics.
(c) BIAM has provided ▇▇▇ with a copy of its Form ADV as most recently
filed with the Securities and Exchange Commission ("SEC") and will, promptly
after filing any amendment to its Form ADV with the SEC, furnish a copy of such
amendment to ▇▇▇.
(d) BIAM will notify ▇▇▇ of any change in the identity or
control of its shareholders promptly after such change.
68
21
9. Duration and Termination.
(a) This Contract shall become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved (1) by a vote of a majority of those trustees of the Trust who are
not parties to this Contract or interested persons of any such party, cast in
person at a meeting called for the purpose of voting on such approval, and (ii)
by vote of a majority of the Series' outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Series.
(c) Notwithstanding the foregoing, this Contract may be terminated at
any time, without the payment of any penalty, by vote of the Board or by a vote
of a majority of the outstanding voting securities of the Series on 60 days'
written notice to BIAM. This Contract may also be terminated by ▇▇▇: (i) on 120
days' written notice to BIAM, without the payment of any penalty; (ii) upon
material breach by BIAM of any of the representations and warranties set forth
in Paragraph 8 of this Contract, if such breach shall not have been cured within
a 20 day period after notice of such breach; or (iii) if BIAM becomes unable to
discharge its duties and obligations under this Contract. BIAM may terminate
this Contract at any time, without the payment of any penalty, on 120 days'
notice to ▇▇▇. This Contract will terminate automatically in the event of its
assignment or upon termination of the Advisory Contract.
10. Amendment of this Contract. No provision of this Contract 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, and no amendment of this Contract shall be
effective until approved by vote of a majority of the Series' outstanding voting
securities.
11. Governing Law. This Contract shall be construed in accordance with
the laws of the State of Washington without giving effect to the conflicts of
laws principles thereof and the 1940 Act. To the extent that the applicable laws
of the State of Washington conflict with the applicable provisions of the 1940
Act, the latter shall control.
12. Miscellaneous. The captions in this Contract are included for
convenience of reference only and in no way define or delimit any of the
provisions thereof or otherwise affect their construction or effect. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities,"
69
22
"affiliated person," "control," "interested person," "assignment," "broker,"
"investment adviser," "net assets," "sale," "sell" and "security" shall have the
same meaning as such terms have in the 1940 Act, subject to such exemption as
may be granted by the SEC by any rule, regulation or order. Where the effect of
a requirement of the federal securities laws reflected in any provision of this
Contract is made less restrictive by a rule, regulation or order of the SEC,
whether of special or general application, such provision shall be deemed to
incorporate the effect of such rule, regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized signatories as of the date and year first
above written.
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
__________________________ By: ____________________________
▇▇▇▇ ▇. ▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
Secretary President
ATTEST: By: BANK OF IRELAND ASSET
MANAGEMENT (U.S.) LIMITED
___________________________ By: ____________________________
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
Senior Vice President President
70