AMENDED AND RESTATED INVESTMENT
ADVISORY AGREEMENT
THIS AGREEMENT is made and executed this 30th day of April, 1999, between SAFECO
COMMON STOCK TRUST ("Trust"), a Delaware business trust and SAFECO ASSET
MANAGEMENT COMPANY ("Adviser"), a Washington corporation.
WHEREAS, the Trust is registered with the Securities and 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 ( "1933 Act"); 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 Adviser to provide investment
advisory services to the Trust and each Series as now exists and as hereafter
may be established which are listed in Exhibit 1 to this Agreement as amended
from time to time; and
WHEREAS, the Adviser is willing to furnish such services on the terms
and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the promises and mutual covenants
hereinafter contained, it is agreed as follows:
1. APPOINTMENT OF ADVISER. The Trust hereby appoints the Adviser as
investment adviser 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 Adviser 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
Adviser 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 Adviser
fully informed with regard to the securities owned by it, its funds available or
to become available for investment, and generally as to the condition of its
affairs. It shall furnish the Adviser with such other documents and information
with regard to its affairs as the Adviser may from time to time reasonably
request.
3. DUTIES OF ADVISER.
(a) GENERAL. The Adviser shall furnish to the Trust space in
the offices of the Adviser 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 of
the Trust. Subject to the supervision of the Trust's Board of Trustees, the
Adviser shall regularly provide each Series with investment research and advice
and shall furnish a continuous investment program for each Series' portfolio of
securities consistent with each Series' investment objectives and policies. The
Adviser 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 Adviser 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 Adviser will attempt to obtain the best net price and the most
favorable execution of its orders. The Adviser 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 relating to the
management and supervision of each Series' investments as may be directed by the
Board of Trustees of the Trust.
(b) REPORTS. The Adviser 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 Adviser.
4. ALLOCATION OF EXPENSES.
(a) Adviser shall be responsible for the compensation (if any)
paid to officers of the Trust for serving in that capacity and all expenses of
preparing, printing and distributing advertising and sales literature other than
expenses covered by a plan of distribution adopted pursuant to Rule 12b-1 under
the 0000 Xxx.
(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 Adviser as provided in this Agreement. In particular, but without
limiting the generality of the foregoing, the Trust and each Series shall pay:
(1) ADMINISTRATIVE AND ACCOUNTING SERVICES. All expenses
related to the performance of administration and accounting
services on behalf of the Trust and each Series;
(2) CUSTODY 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;
(3) 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;
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(4) SHAREHOLDER COMMUNICATIONS. All expenses of preparing,
printing, and distributing reports and certain other
communications to shareholders of the Trust and each Series, if
any;
(5) 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;
(6) 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;
(7) COMMUNICATION EQUIPMENT. All charges for equipment or
services used for communication between the Adviser, the Trust or
each Series and the custodian, transfer agent or any other agent
selected by the Trust;
(8) LEGAL AND AUDITING FEES AND EXPENSES. All charges for
expenses of the Trust's outside legal counsel and independent
auditors;
(9) TRUSTEES' FEES AND EXPENSES. All compensation of trustees,
other than those affiliated with the Adviser, and all expenses
incurred in connection with their service;
(10) 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;
(11) BROKERAGE COMMISSIONS. All brokers, commissions and other
charges incident to the purchase, sale, or lending of portfolio
securities of the Trust and each Series;
(12) 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;
(13) FEDERAL AND STATE REGISTRATION FEES. Federal and State
registration/qualification fees for the Trust and each Series;
(14) INSURANCE. All costs relating to fidelity bond and any
other insurance coverage for the Trust and each Series; and
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(15) NON-RECURRING AND EXTRAORDINARY EXPENSES. Such
non-recurring 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.
5. NON-EXCLUSIVE SERVICES. The services of the Adviser to the Trust
and each Series hereunder are not to be deemed exclusive, and the Adviser 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
Adviser, each existing Series shall pay the Adviser 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 2 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 approved by the Trust's Board of Trustees and set
forth in the Trust's Registration Statement.
(b) For the services and facilities to be furnished by the
Adviser, any new Series of the Trust which is issued on a future date will pay
the Adviser a fee according to a Schedule which will be set forth in an amended
Exhibit 2 to this Agreement.
(c) If SAFECO Securities, Inc., receives portfolio brokerage
commissions resulting from transactions in the portfolio of any series
("Commissions"), any advisory fee earned by the Adviser will be reduced by the
amount of such commissions so received by SAFECO Securities, Inc.
(d) The Trust and the Adviser 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 Adviser.
(e) If the Adviser shall serve for less than the whole of any
month, the monthly advisory fee payable by each Series shall be prorated.
7. LIABILITY OF ADVISER. The Adviser 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 Adviser; provided, that nothing in this Agreement shall protect the Adviser
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.
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8. 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.
9. AFFILIATION.
(a) It is understood that trustees, officers, shareholders and
agents of the Trust and each Series are or may be interested in the Adviser (or
any successor thereof) as directors, officers, shareholders or otherwise, and
that the Adviser (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 trustee,
officer or employee while he or she is at the same time a director, officer, or
employee of the Adviser or any affiliated company of the Adviser. This Paragraph
shall not apply to trustees or other persons who are not regular members of the
Adviser's or any affiliated company's staff.
10. UNRESTRICTED ACTIVITIES. Nothing in this Agreement shall limit
or restrict the right of any director, officer, or employee of the Adviser 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 Adviser 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.
11. USE OF NAME. In the event this Agreement is terminated by either
party or upon written notice from the Adviser 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 Adviser may elect to permit the
Trust to continue to use the name "SAFECO" under such terms and conditions as
the Adviser shall set forth in writing.
12. 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 1, 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, 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
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persons (as defined in the 0000 Xxx) of the Trust or the Adviser by vote cast at
a meeting called for the purpose of voting on such continuance.
13. 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 the outstanding voting securities of that Series at a duly called
meeting of the shareholders. In either case, a majority of the trustees who are
neither interested persons of the Trust or the Adviser must approve the
amendment.
14. 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 Adviser, on not less than 60 days'
written notice to the other party and will be terminated upon the mutual written
consent of the Adviser and the Trust. This Agreement shall terminate
automatically in the event of its assignment.
15. LIMITATION OF LIABILITY. Adviser 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. Adviser 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. Adviser 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.
16. 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 1940
Act when such terms are used in reference to the Trust and the Series.
17. ENTIRE AGREEMENT/ENFORCEMENT OF RIGHTS. This Agreement embodies
the entire agreement between the Adviser and the Trust with respect to the
services to be provided by the Adviser 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,
18. 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. The Adviser 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.
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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
------------------------------ ---------------------------------------------
Xxxx X. Xxxxxx Xxxxx X. Xxxx
Assistant Secretary President
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
------------------------------ ---------------------------------------------
Xxxx X. Xxxxxx Xxxxxxx X. Xxxxx
Assistant Secretary President
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Exhibit 1
LIST OF SERIES
SAFECO GROWTH FUND
SAFECO EQUITY FUND
SAFECO INCOME FUND
SAFECO NORTHWEST FUND
SAFECO BALANCED FUND
SAFECO INTERNATIONAL STOCK FUND
SAFECO SMALL COMPANY STOCK FUND
SAFECO U.S. VALUE FUND
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Exhibit 2
FEES TO BE PAID TO THE ADVISER
FUND NAME NET ASSETS AMOUNT OF
--------- ---------- ANNUAL FEE
----------
Growth, Equity and Income Funds $0-$250,000,000 .70 of 1%
$250,000,001-$750,000,000 .65 of 1%
$750,000,001-$1,250,000,000 .60 of 1%
Over $1,250,000,000 .55 of 1%
Northwest Fund $0-$250,000,000 .70 of 1%
$250,000,001-$750,000,000 .65 of 1%
$750,000,001-$1,250,000,000 .60 of 1%
Over $1,250,000,000 .55 of 1%
International Stock Fund (**) $0-$250,000,000 1.00 of 1%
$250,000,001-$750,000,000 .90 of 1%
Over $750,000,000 .80 of 1%
Balanced and U.S. Value Funds $0-$250,000,000 .70 of 1%
$250,000,001-$750,000,000 .65 of 1%
$750,000,001-$1,250,000,000 .60 of 1%
Over $1,250,000,000 .55 of 1%
Small Company Stock Fund $0-$250,000,000 .75 of 1%
$250,000,001-$750,000,000 .70 of 1%
$750,000,001-$1,250,000,000 .65 of 1%
Over $1,250,000,000 .60 of 1%
-------------------------
(**) Under the sub-advisory agreement between XXX and the sub-adviser, the
sub-adviser is responsible for providing investment research and advice used to
manage the investment portfolio of the International Fund. In return, XXX (and
not the International Fund) pays the sub-adviser a fee in accordance with the
schedule below:
NET ASSETS ANNUAL FEE
---------- ----------
$0-$50,000,000 .60 of 1%
$50,000,001-$100,000,000 .50 of 1%
Over $100,000,000 .40 of 1%
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