AMENDED AND RESTATED INVESTMENT
ADVISORY AGREEMENT
THIS AGREEMENT is made and executed this ___th day of ________, 2001, 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;
(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 services and expenses of the Trust's
internal and outside legal counsel and internal 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
(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.
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 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.
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
------------------------- ------------------------------------------
Xxxxx X. Xxxxxxxxx Xxxxx X. Xxxx
Secretary President
ATTEST: SAFECO ASSET MANAGEMENT COMPANY
------------------------- ------------------------------------------
Xxxxx X. Xxxxxxxxx Xxxxxxx X. Xxxxx
Secretary President
Exhibit 1
LIST OF SERIES
SAFECO GROWTH OPPORTUNITIES FUND
SAFECO EQUITY FUND
SAFECO DIVIDEND INCOME FUND
SAFECO NORTHWEST FUND
SAFECO BALANCED FUND
SAFECO INTERNATIONAL STOCK FUND
SAFECO SMALL COMPANY VALUE FUND
SAFECO U.S. VALUE FUND
SAFECO SMALL COMPANY GROWTH FUND
SAFECO U.S. GROWTH FUND
Exhibit 2
FEES TO BE PAID TO THE ADVISER
FUND NAME NET ASSETS AMOUNT OF ANNUAL FEE
Growth Opportunities, $0-$250,000,000 .70 of 1%
Equity and Dividend Income Funds $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 Value 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%
Small Company Growth Fund ** $0-$250,000,000 1.00 of 1%
Over $250,000,000 .80 of 1%
U.S. Growth Fund *** $0-$250,000,000 .80 of 1%
$250,000,001-$750,000,000 .75 of 1%
$750,000,001-$1,250,000,000 .70 of 1%
Over $1,250,000,000 .65 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%
** 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 Small Company Growth Fund. In return, XXX
(and not the Small Company Growth Fund) pays the sub-adviser a fee in accordance
with the schedule below:
Net Assets Annual Fee
---------- ----------
$0-$50,000,000 .75 of 1%
$50,000,001-$100,000,000 .55 of 1%
Over $100,000,000 .40 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 U.S. Growth Fund. In return, XXX (and not
the U.S. Growth Fund) pays the sub-adviser a fee in accordance with the schedule
below:
Net Assets Annual Fee
---------- ----------
$0-$100,000,000 .35 of 1%
$100,000,001-$250,000,000 .25 of 1%
Over $250,000,000 .20 of 1%
