INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT, dated as of August __, 2001, by and between SAFECO Asset
Management Company, a Washington corporation (the "Adviser"), and Dresdner RCM
Global Investors LLC, a limited liability company organized under the laws of
the State of Delaware ("Subadviser").
WHEREAS, the Adviser has entered into an Investment Management
Agreement dated as of April 30, 1999 with SAFECO Common Stock Trust ("Trust") an
investment company registered under the Investment Company Act of 1940, as
amended ("Investment Company Act"), pursuant to which the Adviser is to act as
investment manager to the Trust;
WHEREAS, the SAFECO U.S. Growth Fund (Large Cap Select Mandate) and
SAFECO Small Company Growth Fund (Small Cap Mandate) are each a series of the
Trust (each a "Fund" or collectively, the "Funds");
WHEREAS, the Board of Trustees of the Trust and the Adviser desire that
the Adviser retain the Subadviser to render investment advisory and other
services to the Funds in the manner and on the terms hereinafter set forth;
WHEREAS, the Adviser has the authority under the Investment Management
Agreement with the Trust to select subadvisers for the Funds; and
WHEREAS, the Subadviser is willing to furnish such services to the
Adviser and the Funds;
NOW, THEREFORE, the Adviser and the Subadviser agree as follows:
1. APPOINTMENT OF SUBADVISER
The Adviser hereby appoints the Subadviser to act as an investment
subadviser for the Funds in accordance with the terms and conditions of this
Agreement. The Subadviser will be an independent contractor and will have no
authority to act for or represent the Trust or the Adviser in any way or
otherwise be deemed an agent of the Trust or the Adviser except as expressly
authorized in this Agreement or another writing by the Trust, the Adviser and
the Subadviser.
2. ACCEPTANCE OF APPOINTMENT
The Subadviser accepts that appointment and agrees to render the
services herein set forth, for the compensation herein provided. However, unless
otherwise agreed upon in writing, Subadviser will not accept contributions to
the SAFECO Small Company Growth Fund (Small Cap Mandate) in the aggregate, of
more than $750 Million.
The assets of the Funds will be maintained in the custody of a
custodian (who shall be identified by the Adviser in writing). Nothing contained
herein shall be deemed to authorize Subadviser to take or receive physical
possession of any cash or securities held in the Funds by the Custodian, it
being intended that sole responsibility for safekeeping thereof (in such
investments as Subadviser may direct) and the consummation of all such
purchases, sales, deliveries, and investments made pursuant to Subadviser's
direction shall rest upon the Custodian. The Adviser and the Trust shall not
hold Subadviser responsible for any loss incurred by reason of any act or
omission of the Custodian, and shall hold Subadviser harmless from any and all
loss, damage, or liability from any such act or omission.
3. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST
A. As investment subadviser to the Funds, the Subadviser will
coordinate the investment and reinvestment of the assets of the Funds and
determine the composition of the assets of the Funds.
B. As part of the services it will provide hereunder, the
Subadviser will:
(i) invest and reinvest in shares, stocks, bonds, notes, and
other obligations or instruments of every description issued or incurred by
governmental bodies, corporations, mutual funds, trusts, associations or firms,
in trade acceptances and other commercial paper, and in loans and deposits at
interest on call or on time, whether or not secured by collateral;
(ii) buy, sell, or exercise rights and warrants to
subscribe for stock or securities;
(iii) take such other action, or to direct the Custodian to
take such other action, as may be necessary or desirable to carry out the
purpose and intent of the foregoing.
C. In furnishing services hereunder, the Subadviser shall be subject
to, and shall perform in accordance with the following: (i) the Trust's
Agreement and Declaration of Trust, as the same may be hereafter modified and/or
amended from time to time ("Trust Declaration"); (ii) the By-Laws of the Trust,
as the same may be hereafter modified and/or amended from time to time
("By-Laws"); (iii) the currently effective Prospectus and Statement of
Additional Information of the Trust filed with the SEC and delivered to the
Subadviser, as the same may be hereafter modified, amended and/or supplemented
("Prospectus and SAI"); (iv) the Investment Company Act and the Investment
Advisers Act of 1940 ("Advisers Act") and the rules under each, and all other
federal and state laws or regulations applicable to the Trust and the Funds; and
(v) the written instructions of the Adviser. Prior to commencement of the
Subadviser's services hereunder, the Adviser shall provide the Subadviser with
current copies of the Trust Declaration, By-Laws, Prospectus and SAI, and other
relevant policies and procedures that are adopted by the Board of Trustees. The
Adviser undertakes to provide the Subadviser with copies or other written notice
of any amendments, modifications or supplements to any such above-mentioned
document.
D. The Subadviser, at its expense, will furnish: (i) all necessary
facilities and personnel, including salaries, expenses and fees of any personnel
required for them to faithfully perform their duties under this Agreement; and
(ii) administrative facilities, including bookkeeping, and all equipment
necessary for the efficient conduct of the Subadviser's duties under this
Agreement.
E. Unless otherwise specified in writing to Subadviser by Adviser, all
orders for the purchase and sale of securities for the Funds shall be placed in
such markets and through such broker-dealers as in Subadviser's best judgment
shall offer the most favorable price and market for the execution of each
transaction. The Adviser understands and agrees that Subadviser may effect
securities transactions which cause the account to pay an amount of commission
in excess of the amount of commission another broker-dealer would have charged,
provided, however, that Subadviser determines in good faith that such amount of
commission is reasonable in relation to the value of brokerage and research
services provided by such broker-dealer, viewed in terms of either the specific
transaction or Subadviser's overall responsibilities to the accounts for which
Adviser exercises investment discretion. The Adviser also understands that the
receipt and use of such services will not reduce Subadviser's customary and
normal research activities.
F. The Adviser and Trust agree not to hold Subadviser, and any of its
officers, directors, and employees, liable, under any circumstances for any
error arising out of an act or omission of any broker-dealer or agent selected
by Subadviser in good faith and in a commercially reasonable manner. The U.S.
Federal and state securities laws impose liabilities under certain circumstances
on persons who act in good faith, and therefore nothing herein shall in any way
constitute a waiver or limitation of any rights which the undersigned may have
under any U.S. Federal and state securities laws; and
G. Provided the investment objectives of the Funds are adhered to,
Adviser agrees that Subadviser may aggregate sales and purchase orders of
securities held in the Funds with similar orders being made simultaneously for
other portfolios managed by Subadviser if, in Subadviser's reasonable judgment,
such aggregation shall result in an overall economic benefit to the Funds,
taking into consideration the advantageous selling or purchase price and
brokerage commission. In accounting for such aggregated order, price and
commission shall be averaged on a per bond or share basis daily. The Adviser
acknowledges that Subadviser's determination of such economic benefit to the
Funds is based on an evaluation that the Funds are benefited by relatively
better purchase or sales prices, lower commission expenses and beneficial timing
of transactions, or a combination of these and other factors.
H. The Subadviser will, unless and until otherwise directed by the
Adviser, vote proxies with respect to the Funds' securities and exercise rights
in corporate actions or otherwise in accordance with the Subadviser's proxy
voting guidelines. The Subadviser will provide to the Adviser and the Trust,
upon request, a written report with respect to the voting of Proxies by
Subadviser on behalf of the Funds. The Subadviser shall provide such additional
reports to the Adviser and Trust concerning the voting of Proxies on behalf of
the Funds as shall be reasonably requested by the Adviser. The Adviser and the
Trust understand and agree that, notwithstanding such reporting, Subadviser
neither solicits nor shall it accept direction from the Adviser and/or the Trust
with respect to the voting of said Proxies.
4. COMPENSATION OF SUBADVISER
The Adviser will pay the Subadviser an Advisory fee with respect to the
Funds as specified in Appendix A to this Agreement. Payments shall be made to
the Subadviser with respect to each month during the term of this Agreement
within 30 days after the end of such month; however, the Advisory fee will be
calculated daily for the Funds based on the net assets of the Funds on each day
and accrued on a daily basis.
5. LIABILITY AND INDEMNIFICATION
Except as may otherwise be provided by the Investment Company Act or
any other federal securities law, the Adviser and the Trust agree not to hold
Subadviser, and any of its officers, directors, and employees, liable, under any
circumstances for any error (i) of judgment or other action taken or omitted by
Subadviser in good faith exercise of its powers hereunder, excepting matters as
to which it shall be finally adjudged to have been guilty of willful misconduct
or gross negligence, or (ii) arising out of an act or omission of the Custodian,
or of any broker-dealer or agent selected by Subadviser in the good faith and in
a commercially reasonable manner. The U.S. federal and state securities laws
impose liabilities under certain circumstances on persons who act in good faith,
and therefore nothing herein shall in any way constitute a waiver or limitation
of any rights which the undersigned may have under any U.S. federal and state
securities law.
6. REPRESENTATIONS OF ADVISER
The Adviser represents, warrants and agrees that:
A. The Adviser has been duly authorized by the Board of Trustees
and Stockholders of the Trust to delegate to the Subadviser the provision of
investment services to the Funds as contemplated hereby.
B. The Adviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the Investment Company Act and will provide the
Subadviser with a copy of such code of ethics.
C. The Adviser is currently in compliance and shall at all times
during the term of this Agreement continue to comply with the requirements
imposed upon the Adviser by applicable law and regulations.
D. The Adviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the Investment Company Act, the
Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) to the best of its knowledge has met, and
will seek to continue to meet for so long as this Agreement is 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 Agreement; and (iv) will
promptly notify Subadviser of the occurrence of any event that would disqualify
Adviser from serving as investment adviser of an investment company pursuant to
Section 9(a) of the Investment Company Act or otherwise. The Adviser will also
promptly notify the Subadviser if it is served or otherwise receives notice of
any action, suit, proceeding, inquiry or investigation, at law or in equity,
before or by any court, public board or body, involving the affairs of the
Funds, provided, however, that routine regulatory examinations shall not be
required by this provision to be so reported.
7. REPRESENTATIONS OF SUBADVISER
The Subadviser represents, warrants and agrees as follows:
A. The Subadviser (i) is registered as an investment adviser under the
Advisers Act and will continue to be so registered for so long as this Agreement
remains in effect; (ii) is not prohibited by the Investment Company Act, the
Advisers Act or other law, regulation or order from performing the services
contemplated by this Agreement; (iii) to the best of its knowledge has met, and
will seek to continue to meet for so long as this Agreement is 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 Agreement; and (iv) will
promptly notify Adviser of the occurrence of any event that would disqualify the
Subadviser from serving as an investment subadviser of an investment company
pursuant to Section 9(a) of the Investment Company Act or otherwise. The
Subadviser will also promptly notify the Adviser if it is served or otherwise
receives notice of any action, suit, proceeding, inquiry or investigation, at
law or in equity, before or by any court, public board or body, involving the
affairs of the Funds, provided, however, that routine regulatory examinations
shall not be required by this provision to be so reported.
B. The Subadviser has provided the Adviser and the Trust with a copy of
its Form ADV, Part II, which as of the date of this Agreement is its Form ADV as
most recently filed with the Securities and Exchange Commission and will furnish
a copy of all amendments to the Adviser and the Trust at least annually.
8. NON-EXCLUSIVITY
The Adviser and the Trust understand and agree that Subadviser performs
investment management services for various clients and that Subadviser may take
action with respect to any of its other clients which may differ from action
taken or from the timing or nature of action taken with respect to the Funds, so
long as it is Subadviser's policy, to the extent practical, to allocate
investment opportunities to the Funds over a period of time on a fair and
equitable basis relative to other clients; and that Subadviser shall have no
obligation to purchase or sell for the Funds any security which Subadviser or
its officers, directors, or employees, may purchase or sell for its or their own
accounts or the account of any other client, if in the opinion of Subadviser
such transaction or investment appears unsuitable, impractical, or undesirable
for the Funds.
9. DURATION OF AGREEMENT
This Agreement shall become effective upon the date first above
written, provided that this Agreement shall not take effect unless it has first
been approved: (i) by a vote of a majority of those trustees of the Trust who
are not "interested persons" (as defined in the Investment Company Act) of any
party to this Agreement ("Independent Trustees"), cast in person at a meeting
called for the purpose of voting on such approval, and (ii) by vote of a
majority of the Fund's outstanding securities (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff or unless the SEC has granted an exemption from such shareholder
approval requirement). This Agreement shall continue in force until August 1,
2003 and indefinitely thereafter, but only so long as the continuance after such
period as to a Fund shall be specifically approved at least annually by vote of
the majority of the Independent Trustees, cast in person at a meeting called for
the purpose of voting on such continuance or by vote of a majority of the
outstanding voting securities of the Fund.
10. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time, without the payment of
any penalty, by the Board of Trustees, including a majority of the Independent
Trustees, by the vote of a majority of the outstanding voting securities of the
Fund, on sixty (60) days' written notice to the Adviser and the Subadviser, or
by the Adviser or Subadviser on sixty (60) days' written notice to the Trust and
the other party. This Agreement will automatically terminate, without the
payment of any penalty, (i) in the event of its assignment (as defined in the
Investment Company Act), or (ii) in the event the Investment Management
Agreement between the Adviser and the Trust is assigned (as defined in the
Investment Company Act) or terminates for any other reason. This Agreement will
also terminate upon written notice to the other party that the other party is in
material breach of this Agreement, unless the party in breach cures such breach
to the reasonable satisfaction of the party alleging the breach within thirty
(30) days after written notice setting forth in reasonable detail the matters
comprising the breach.
11. AMENDMENTS TO THE AGREEMENT
Except to the extent permitted by the Investment Company Act or the
rules or regulations thereunder or pursuant to exemptive relief granted by the
SEC, this Agreement may be amended as to a Fund by the parties only if such
amendment, if material, is specifically approved by the vote of a majority of
the outstanding voting securities of such Fund (unless such approval is not
required by Section 15 of the Investment Company Act as interpreted by the SEC
or its staff or unless the SEC has granted an exemption from such approval
requirement) and by the vote of a majority of the Independent Trustees cast in
person at a meeting called for the purpose of voting on such approval. The
required shareholder approval shall be effective with respect to a Fund if a
majority of the outstanding voting securities of such Fund votes to approve the
amendment.
12. ASSIGNMENT
Any assignment (as that term is defined in the Investment Company Act)
of the Agreement made by the Subadviser without the prior written consent of the
Adviser and the Trust shall result in the automatic termination of this
Agreement, as provided in Section 10 hereof. Notwithstanding the foregoing, no
assignment shall be deemed to result from any changes in the directors, officers
or employees of the Subadviser, except as may be provided to the contrary in the
Investment Company Act or the rules or regulations thereunder. The Subadviser
agrees that it will notify the Adviser and the Trust of any material changes in
its directors, officers or employees within a reasonable time thereafter.
13. ENTIRE AGREEMENT
This Agreement contains the entire understanding and agreement of the
parties with respect to the provision of investment advisory and other services
to the Funds.
14. HEADINGS
The headings in the sections of this Agreement are inserted for
convenience of reference only and shall not constitute a part hereof.
15. SEVERABILITY
Should any portion of this Agreement for any reason be held to be void
in law or in equity, the Agreement shall be construed, insofar as is possible,
as if such portion had never been contained herein.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their duly authorized officers as of the date first mentioned above.
Each of the individuals whose signature appears below represents and
warrants that he or she has full authority to execute this Agreement on behalf
of the party on whose behalf he or she has affixed his or her signature to this
Agreement. Each party will deliver to the other such evidence of its authority
with respect to this Agreement as the other party may reasonably request.
SAFECO ASSET MANAGEMENT COMPANY DRESDNER RCM GLOBAL INVESTORS LLC
By: By:
---------------------------- -----------------------------
Name: Name:
Title: Title:
APPENDIX A
TO
INVESTMENT SUBADVISORY AGREEMENT
WITH
DRESDNER RCM GLOBAL INVESTORS LLC
FUND NAME NET ASSETS ANNUAL ADVISORY FEE
--------- ---------- -------------------
U.S. Growth Fund $0-$100,000,000 .35 of 1%
$100,000,001-$250,000,000 .25 of 1%
Over $250,000,001 .20 of 1%
Small Company Growth Fund $0-$50,000,000 .75 of 1%
$50,000,001-$100,000,000 .55 of 1%
Over $100,000,001 .40 of 1%
