RSI RETIREMENT TRUST
RETIREMENT SYSTEM INVESTORS INC.
INVESTMENT MANAGEMENT AGREEMENT
THIS AGREEMENT made as of July 29, 1997, between RSI Retirement
Trust (the "Trust"), a retirement fund organized and existing as a trust
pursuant to a certain Agreement and Declaration of Trust, as amended and
restated August 1, 1990 and as further amended from time to time (the
"Agreement and Declaration of Trust"), and Retirement System Investors Inc., a
Delaware corporation (the "Manager").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is an investment trust exempt from taxation
under Section 501(a) of the Internal Revenue Code of 1986, as amended (the
"Code"), which has been designed to effectuate pension or profit-sharing plans
which are qualified under Section 401(a) of the Code and individual retirement
accounts under Section 408(a) of the Code; and
WHEREAS, such pension and profit-sharing plans are eligible to
invest their assets in the Trust, and to become unitholders of the Trust (the
"Unitholders"); and
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, pursuant to an Investment Management Agreement dated
August 1, 1993, the Manager has served as the investment manager for all of
the investment funds of the Trust (the "Investment Funds"); and
WHEREAS, the Trust wishes to continue the Manager as the
investment manager of the assets of each of the Investment Funds (the
"Account"), with a modification to the terms and conditions under which the
Manager serves as investment manager of the assets comprising the Emerging
Growth Equity Fund, to act in such capacity in the manner set forth in this
Agreement, and the Manager is willing to act in such capacity in accordance
with the provisions of this Agreement;
NOW, THEREFORE, the Trust hereby agrees with the Manager as
follows:
1. Appointment of the Manager
--------------------------
A. The Trust hereby designates, appoints, engages and retains
the Manager as investment manager of the Account.
B. The Manager hereby accepts appointment as investment manager
to manage the Account. The Manager hereby represents and warrants that it is
a qualified investment adviser under the Investment Advisers Act of 1940, as
amended. The Manager agrees that, although it may not be subject to the
provisions of Title 1 of the Employee
Retirement Income Security Act of 1974, and amended ("ERISA"), in carrying out
its duties and responsibilities under this Agreement , it will conduct itself
as an investment manager (as defined in Section 3(38) of ERISA), and it will
act in accordance with the requirements of Part 4 of ERISA as applicable to
fiduciaries (as defined in Section 3(21) of ERISA). Notwithstanding anything
contained herein to the contrary, references to ERISA in this Agreement will
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 and the
Manager subject to ERISA.
C. The Manager will also perform such services as may be
requested from time to time by the Trust relating to the allocation of a
Plan's assets between equities and fixed income obligations and within
specified investment funds of the Trust, at no additional charge to the Trust.
D. Notwithstanding the foregoing, the Manager may, from time
to time subject to the approval of the Trust's Board of Trustees (the
"Trustees") and the Unitholders, retain a person or persons (a "Sub-Adviser")
to provide investment management services to one or more of the Investment
Funds. The Sub-Adviser shall agree to comply with all provisions applicable
to the Manager hereunder. If the Manager retains a Sub-Adviser, the Trust
will have no responsibility to compensate the Sub-Adviser, any such
compensation to be paid by the Manager from the amount paid to it pursuant to
Section 5 of the Agreement.
E. This Agreement is effective on the date hereof. This
Agreement will remain in full force and effect until July 29, 1999, unless
terminated earlier in accordance with its terms, 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 Trust will certify or cause to be certified to the Manager
the assets comprising the Account as of the commencement of the term of this
Agreement. The Trust may add to the Account assets acceptable to the Manager
or withdraw assets from the Account at any time or from time to time by
written notification to the Manager. The Account will consist of the assets
certified to the Manager 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 added as aforesaid, less assets withdrawn
as aforesaid.
3. Investment Powers
-----------------
A. Subject to the provisions of paragraphs B and C of this
Section 3, the Manager will have sole and complete authority and discretion,
subject to and consistent with the investment objectives and policies of the
Investment Funds as set forth in the prospectus of the Trust (the
"Prospectus"), the Agreement and Declaration of Trust, the Rules and
Procedures of the Trust and the Trust's Statement of Investment Objectives and
Guidelines, as the same may be amended from time to time, all as delivered to
the Manager (collectively, the "Controlling Documents"), or as specified in
writing form time to time by the Trust or otherwise accepted by the Manager,
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
Controlling Documents, and, subject to such direction.
B. The manager will also perform supervisory services
pertaining to the ongoing oversight and management of each Sub-Advisor
retained by the Manager. Such services include, but shall not be limited to,
supervising the compliance by such Sub-Adviser with the Act, reviewing such
Sub-Adviser's performance, analysis of the composition of such Sub-Adviser's
portfolio, and preparing reports relating to such supervisory activities for
the Trustees. In addition, the Manager will, at the request of the Trustees,
conduct a search to find a recommended replacement for any Sub-Adviser. The
Manager will prepare presentations to Unitholders analyzing the Trust's
overall performance based on analysis of each Sub-Adviser's performance.
C. The Manager will consult with the Trustees and their
representatives at such times as the Trustees may reasonably request with
respect to the overall investment policy of the Account, and the Manager will
cause one or more of its officers to attend such meetings with the Trustees
and their representatives and to furnish such oral or written reports to the
Trustees and their representatives, as the Trustees may reasonably request,
with respect to, among other matters, the decisions it has made with respect
to the Account and the purchase and sale of its portfolio securities
(including the reasons therefor) and the extent to which such decisions have
been implemented. In addition, the Manager also specifically agrees to (i)
give advance notice in writing to the Trustees of the taking on by the Manager
of new clients or ventures of material significance, including any related
information required in order to enable the Trustees to determine whether the
taking on of new business by the Manager will impair the Manager's ability to
carry out its obligations under this Agreement, and (ii) provide to the
Trustees such reports and other information as the Trustees may reasonably
request in order to enable the Trustees to perform a review of the Manager's
performance under this Agreement no less frequently than quarterly.
4. Standard of Care
----------------
A. The Manager will invest the Account in the manner provided
herein and will have no duty or responsibility with respect to the
diversification of the assets of the Trust, except with respect to the
diversification of the Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Manager will be under no
liability or obligation to anyone with respect to any failure on the part of
the Trustees or any other investment manager to perform any of their
obligations under the Controlling Documents or any agreement affecting the
Account, or under the terms of this Agreement, or for any error or omission
whatsoever on the part of the Trustees or any other investment manager.
C. The Manager will not be liable for the making, retention or
sale of any investment or reinvestment by it as herein provided, nor for any
loss to or diminution of the value of the Account; provided, however, that the
--------
Manager 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 are applicable generally to fiduciaries under
ERISA; provided further, however that nothing in
--------
this Agreement will protect the Manager against any liability to the Trust or
the Unitholders to which the Manager would otherwise be subject by reason of
willful misfeasance, bad faith or gross negligence in the performance of its
duties hereunder or by reason of its reckless disregard of its obligations and
duties hereunder.
5. Compensation
------------
A. The Trust agrees to pay to the Manager, as full compensation
and reimbursement for the services to be rendered by the Manager pursuant to
this Agreement and any expenses incurred by the Manager in connection
therewith (including the fees of a Sub-Adviser, if any), a fee on the last day
of each month in which this Agreement is in effect, at the rates set forth on
Schedule I attached hereto.
B. In the event that this Agreement commences on a date other
than on the beginning of any calendar month, or if this Agreement terminates
on a date other than the end of any calendar month,
the fee payable hereunder by the Trust shall be proportionately reduced
according to the number of days during such month that services were not
rendered hereunder by the Manager.
6. General Provisions
------------------
A. With respect to securities in the Account, the Manager will
purchase such securities from or through and sell such securities to or
through such persons, brokers or dealers as the Manager shall deem appropriate
to carry out the policy with respect to brokerage as set forth in the
Prospectus, or as the Trust may direct in writing from time to time. It is
understood that it is desirable for the Trust that the Manager have access to
supplemental research and securities 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 that other
brokers which provide only execution of portfolio transactions. Therefore,
the Manager is authorized to place orders for the purchase and sale of
securities with such brokers, subject to review by the Trustees 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
Manager in connection with its services to clients other than the Trust and
the Unitholders.
B. The Manager will pay all of its expenses incurred in the
performance of this Agreement, including but not limited to fees, if any, of
Sub-Advisers retained by the Manager, salaries and other compensation of its
officers and employees and all other costs of providing such advice, portfolio
management and information and reports to the Trustees as are required
hereunder.
C. Subject to the provision of paragraph B of Section 6 of
this Agreement with respect to advance notice of the Manager's taking on of
new clients or ventures of material significance, nothing herein contained
shall limit or restrict the right of the Manager to engage in any other
business or to render services of any kind to any other corporation, firm,
individual or association.
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto on not more than sixty (60) days' nor less
than thirty (30) days' written notice to the other party. Any termination by
the Trust shall be pursuant to a vote of a majority of the Trustees or by vote
of a majority of outstanding voting securities (as defined in the Act) of the
Trust.
E. This Agreement will automatically terminate in the event of
its "assignment" (as such term is defined in the Act).
F. The Manager may rely on the authenticity, truth and accuracy
of, and will be fully protected in acting upon:
(i) any notice, direction, certification, approval or
other writing of the Trust, if evidenced by an
instrument signed by the Chairman of the Board or any
other Trustee of the Trust or the President, any
Executive Vice President, Senior Vice President, any
Vice President or the Treasurer of the Trust;
(ii) any copy of a resolution of the Trustees, if
certified by the Chairman of the Board or any other
Trustee of the Trust, or the Secretary or any
Assistant Secretary of the Trust; and
(iii) 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.
G. The Manager may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate provided or delivered to the Manager by or on behalf
of the Trust with respect to any matter concerning the Trust and the operation
and administration of the Account. The Manager is expressly authorized to
consult with the Trust with respect to any matters arising in the
administration of the Account and to act on the advice of the Trust; provided,
--------
however, that nothing herein shall limit the full responsibility of the
Manager for the management of the Account as provided herein.
H. Communications from the Manager to the Trust or Trustees
will be addressed to:
RSI Retirement Trust
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx Xxxxxxxxx, President and Trustee
----------
Communications to the Manager from the Trust or the
Trustees will be addressed to:
Retirement System Investors Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxx X. Xxxxxxxx, President
---------
In the event of a change of address, communications will be
addressed to such new address as designated in a written notice from the
Trust, the Trustees or the Manager, as the case may be. All communications
addressed in the above manner and by registered mail or delivered by hand
shall be sufficient under this Agreement.
I. This Agreement is governed by the laws of the State of New
York (without reference to such State's conflict of law rules).
J. No term or provision of this Agreement may be amended,
modified or waived without the affirmative vote or action by written consent
of the Manager and the Trust and in accordance with the Act.
IN WITNESS WHEREOF, the Manager and the Trust have executed this
Agreement as of the date first written above.
RSI RETIREMENT TRUST
By:
----------------------------
Name: Xxxxxxx Xxxxxxxxx
Title: President and Trustee
RETIREMENT SYSTEM INVESTORS INC.
By:
----------------------------
Name: Xxxxx X. Xxxxxxxx
Title: President
NOTE: ANY AGREEMENT, OBLIGATION OR LIABILITY MADE,
ENTERED INTO OR INCURRED BY OR ON BEHALF OF RSI
RETIREMENT TRUST BINDS ONLY THE TRUST ESTATE,
AND NO TRUST PARTICIPANT, TRUSTEE, OFFICER OR
AGENT THEREOF ASSUMES OR SHALL BE HELD TO ANY
LIABILITY THEREFOR.
SCHEDULE I
Retirement System Investors Inc. shall act as the Manager for each of
the Investment Funds of the Trust. For its services, the Manager is entitled
to receive a fee, calculated daily and paid monthly, based on a percentage of
the average net assets of the
respective Investment Funds, The specific percentage for each Investment Fund
is set forth in the following table:
Fee (% of Average Daily Net Assets)
-----------------------------------
Actively Managed Bond Fund
--------------------------
First $50 Million .40%
Next $100 Million .30
Over $150 Million .20
Intermediate-Term Bond Fund
---------------------------
First $50 Million .40%
Next $150 Million .30
Over $200 Million .20
Short-Term Investment Fund
--------------------------
First $50 Million .25%
Over $50 Million .20
Dedicated Bond Fund
-------------------
First $5 Million .25%
Next $15 Million .20
Over $20 Million .15
Core Equity Fund
----------------
First $50 Million .60%
Next $150 Million .50
Over $200 Million .40
Value Equity Fund
-----------------
First $10 Million .80%
Next $10 Million .70
Next $20 Million .60
Next $20 Million .50
Next $40 Million .40
Next $50 Million .35
Over $150 Million .30
International Equity Fund
First $50 Million .80%
Over $50 Million .70
For the portion of the Emerging Growth Equity Fund, for
which Xxxxxx Associates, Inc. serves as Sub-Adviser, the fee is 1.20% of
average daily net assets. For the portion of the Emerging Growth Equity Fund
for which HLM Management Company Inc. serves as Sub-Adviser, the fee is 1.20%
of the average daily net assets under their management up to and including $25
million, 1.00% of average daily net assets for the next $25 million of average
daily net assets, and .80% of average daily net assets under their management
for amounts in excess of $50 million.
For any Investment Fund which currently employs a
Sub-Adviser (the International Equity Fund, Value Equity Fund and Emerging
Growth Equity Fund) the fee set forth above shall be reduced by 0.20% of
average daily net assets if and when such sub-advisory relationship is
terminated without the retention of a successor Sub-Adviser.
