INVESTMENT SUB-ADVISORY AGREEMENT
BETWEEN
RETIREMENT SYSTEM INVESTORS INC.
AND
HLM MANAGEMENT COMPANY, INC.
THIS AGREEMENT effective as of April 1, 1997 and modified effective as of
July 29, 1997, between Retirement System Investors Inc., a Delaware corporation
(the "Manager"), and HLM Management Company, Inc., Boston, Massachusetts (the
"Sub-Adviser").
W I T N E S S E T H :
WHEREAS, RSI Retirement Trust ("Trust"), a trust organized and
existing pursuant to an Agreement and Declaration of Trust, made as of October
22, 1940, as amended from time to time ("Agreement and Declaration of Trust")
provides benefits for the employees (and their beneficiaries) of savings
institutions, related organizations and other corporate entities which have
established plans of participation and individual retirement accounts
("Unitholders") in the Trust;
WHEREAS, the Trust is an investment company registered under the
Investment Company Act of 1940, as amended (the "Act"); and
WHEREAS, the Trustees of the Trust ("Trustees") are vested with
authority for the management and control of the assets of the Trust in
accordance with the provisions of the Agreement and Declaration of Trust and in
furtherance of such authority are vested with the power to designate an
investment manager or managers (as defined in the Employee Retirement Income
Security Act of 1974, as amended ("ERISA")) to manage (including the power to
acquire and dispose of) the assets of any of the Investment Funds (as defined in
the Agreement and Declaration of Trust) of the Trust; and
WHEREAS, the Trust and the Manager have entered into an Investment
Management Agreement dated August 1, 1993 and amended and restated July 29,
1997, pursuant to which the Manager may designate Sub-Advisers to perform
certain investment advisory functions under the supervision of the Manager and
the Trustees; and
WHEREAS, the Manager wishes to appoint the Sub-Adviser to manage a
portion of the assets of certain Investment Funds of the Trust, to act in such
capacity in the manner set forth in this Agreement, and the Sub-Adviser is
willing to act in such capacity in accordance with the provisions of this
Agreement;
NOW, THEREFORE, the Manager hereby agrees with the Sub-Adviser as
follows:
1. APPOINTMENT OF THE SUB-ADVISER
A. The Manager hereby designates, appoints, engages and retains the
Sub-Adviser as investment manager of the assets comprising the Investment Fund
of the Trust referred to on Schedule A hereto ("Investment Fund"), or such
portion thereof as shall be designated by the Manager ("Account").
B. The Sub-Adviser hereby accepts appointment to manage the assets
of the Account. The Sub-Adviser hereby represents and warrants that it is a
qualified investment manager, as defined in Section 3(38) of ERISA, without
regard to subpart (c) of said Section. The Sub-Adviser agrees that although it
may not be subject to the provisions of Title I of ERISA in carrying out its
duties and responsibilities under this Agreement, it shall act in accordance
with the requirements of Part 4 of ERISA as applicable to fiduciaries as defined
under ERISA. Notwithstanding anything contained herein to the contrary,
references to ERISA in this Agreement shall 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 subject to ERISA.
C. The term of this Agreement shall commence on the date hereof and
shall remain in full force and effect until July 29, 1999 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 Manager shall certify or cause to be certified to the Sub-Adviser
the assets comprising the Account as of the commencement of the term of this
Agreement. The Manager may add to the Account assets acceptable to the
Sub-Adviser or withdraw assets from the Account at any time or from time to time
by notification to the Sub-Adviser. The Account shall consist of the assets
certified to the Sub-Adviser 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 as aforesaid, less assets withdrawn as aforesaid.
3. INVESTMENT POWERS
A. Subject to the provisions of paragraph B of this Section 3, the
Sub-Adviser shall have exclusive authority and discretion, subject to and
consistent with the investment objectives and policies of the Investment Fund as
set forth in the current Prospectus of the Trust delivered to the Sub-Adviser
("Prospectus") and as specified in writing from time to time by the Trustees or
the Manager and accepted by the Sub-Adviser, 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 Agreement and
Declaration of Trust as subject to such direction.
B. Notwithstanding the provisions of paragraph A of this Section 3,
it is understood and agreed that an investment manager other than the
Sub-Adviser may lend securities from the Account and may invest assets of the
Account on a temporary basis pending
-2-
permanent investment or distribution, and, to the extent not inconsistent with
ERISA, the Sub-Adviser shall have no liability or responsibility with respect to
the exercise of such authority by such other investment manager; provided,
however, that the Sub-Adviser shall coordinate the exercise of its authority
hereunder which may be affected by the exercise of such authority by the other
investment manager in such manner appropriate to the exercise of its authority
as shall be agreed upon by the Sub-Adviser and such other investment manager.
The Trustees will advise the Manager, and the Manager will advise the
Sub-Adviser, of any arrangement with respect to any proposed lending of
securities from the Account.
C. The Sub-Adviser shall consult with the Manager or the Trustees at
such times as the Manager or the Trustees shall reasonably request with respect
to the overall investment policy of the Account.
4. STANDARD OF CARE
A. The Sub-Adviser shall invest the assets of the Account in the
manner provided herein and shall have no duty or responsibility with respect to
the diversification of the assets of the Trust, except with respect to the
diversification of the assets of the Account as contemplated by the Prospectus.
B. Except as provided in ERISA, the Sub-Adviser will be under no
liability or obligation to anyone with respect to any failure on the part of the
Manager or any other investment manager to perform any of their obligations
under any agreement affecting the Account or under the terms of this Agreement
or for any error or omission whatsoever on the part of the Manager or any other
investment manager.
C. The Sub-Adviser shall not be liable for the making, retention or
sale of any investment or reinvestment made by it as herein provided, nor for
any loss to or diminution of the value of the property of the Account; provided,
however, that the Sub-Adviser 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 applicable generally to
fiduciaries under ERISA; provided, further, however, that nothing in this
Agreement shall protect the Sub-Adviser against any liability to the Manager,
the Trust or Unitholders to which the Sub-Adviser 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. GENERAL PROVISIONS
A. Compensation for the services of the Sub-Adviser will be as set
forth in Schedule A hereto.
B. With respect to securities in the Account, the Sub-Adviser shall
purchase such securities from or through and sell such securities to or through
such persons, brokers or dealers as the Sub-Adviser shall deem appropriate to
carry out the policy with respect to
-3-
brokerage as set forth in the Prospectus or as the Manager or the Trustees of
the Trust may direct from time to time. It is understood that it is desirable
for the Trust that the Sub-Adviser have access to supplemental research and
security 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 than other brokers who provide only execution of portfolio
transactions. Therefore, the Sub-Adviser is authorized to place orders for the
purchase and sale of securities with such brokers, subject to review by the
Manager 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 Sub-Adviser in connection with its services to other clients.
C. This Agreement shall automatically terminate in the event of its
"assignment" (as that term is defined in the Act).
D. This Agreement may be terminated, without the payment of any
penalty, by either party hereto or by the Trust on not more than sixty (60)
days' nor less than thirty (30) days' written notice delivered or mailed by
registered mail, postage prepaid, to the other party; any such termination on
behalf of the Trust to be pursuant to a vote of the Trustees or by a vote of a
majority of the outstanding voting securities of the Trust.
E. The Sub-Adviser may rely on the authenticity, truth and accuracy
of, and will be fully protected in acting upon:
(a) Any notice, direction, certification, approval or other writing
of the Manager, if evidenced by an instrument signed by the
President, a Vice President, the Treasurer or the Assistant
Treasurer of the Manager;
(b) Any copy of a resolution of the Trustees, if certified by the
Secretary of the Trust;
(c) 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;
(d) Any oral notice or instruction reasonably believed to be genuine
and to be given by the Manager or the Trustees or its or their
authorized delegate or by the custodian or any other investment
manager.
F. The Sub-Adviser may rely on, and will be fully protected with
respect to any action taken or omitted in reliance on, any information,
statement or certificate delivered to the Sub-Adviser by the Manager or the
Trustees with respect to any matter concerning the Trust and the operation and
administration of the Account. The Sub-Adviser is expressly authorized to
consult with the Manager with respect to any matters arising in the
administration of the Account and to act on the advice of the Manager, provided
nothing herein shall limit the full responsibility of the Sub-Adviser for the
management of the assets of the Account as provided herein.
-4-
G. Communications from the Sub-Adviser to the Manager shall be
addressed to:
Retirement System Investors Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Attn.: President
Communications to the Sub-Adviser from the Manager or the Trustees shall be
addressed to the address set forth in Schedule A hereto. In the event of a
change of address, communications shall be addressed to such new address as
designated in a written notice from the Manager, the Trustees or the
Sub-Adviser, as the case may be. All communications addressed in the above
manner and by ordinary mail, registered mail or delivered by hand shall be
sufficient under this Agreement.
H. All agreements hereunder will be governed by the laws of the
State of New York, without reference to such State's conflict of law rules.
I. No term or provision of this Agreement may be amended, modified
or waived without the affirmative vote or action by written consent of the
Trustees and the written agreement of the Manager and the Sub-Adviser and in
accordance with the Act.
IN WITNESS WHEREOF, the Manager and the Sub-Adviser have executed this
Agreement, effective as of the date of this Agreement first set forth above.
RETIREMENT SYSTEM INVESTORS INC.
By /s/ Xxxxx Xxxxxxxx
-----------------------------
President
HLM MANAGEMENT COMPANY INC.
By /s/ Xxxxxx X. Xxxxxx
-----------------------------
Title Chairman
-----------------------------
-5-
7/29/97
SCHEDULE A
RSI RETIREMENT TRUST
INVESTMENT SUB-ADVISORY AGREEMENT
Name of Sub-Adviser: HLM Management Company, Inc.
Address: 000 Xxxxxxxx Xxxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xx. Xxxxx X. Xxxxxxx, Xx.
Investment Fund: Emerging Growth Equity Fund
Compensation Terms:
Terms used herein shall have the meaning used in the Investment Sub-Advisory
Agreement between the Manager and the Sub-Adviser ("Agreement"). The Manager
agrees to pay to the Sub-Adviser, as full compensation and reimbursement for the
services to be rendered pursuant to the Agreement and any expenses incurred in
connection therewith, a fee at the end of each fiscal quarter of the Trust,
computed by applying the following rate to that portion of the assets of the RSI
Retirement Trust's Emerging Growth Equity Fund portfolio managed by the
Sub-Adviser:
Effective April 1, 1997, 1% of the first $25 million of
assets and .75% of assets in excess of $25 million,
modified, effective July 29, 1997, to 1% of the first $25
million of assets, .80% of the next $25 million of assets,
and .60% of assets in excess of $50 million.
Billing is done for each quarter on the basis of services performed during that
particular quarter. The quarterly fee is calculated on the basis of the average
of the asset value as of the last day of each month of each calendar quarter,
equal to one-fourth of the annual rate.
If the Agreement commences on a date other than on the beginning of any such
quarterly period or terminates on a date other than the end of any such
quarterly period, the fee payable hereunder shall be proportionately reduced
according to the number of days during such period services were rendered by the
Sub-Adviser.
IN WITNESS WHEREOF, the parties to the Agreement, effective as of April 1, 1997
and modified effective as of July 29, 1997, have executed this Schedule A,
effective as of the same dates.
RETIREMENT SYSTEM INVESTORS INC.
BY: /s/ Xxxxx Xxxxxxxx
-----------------------------
President
HLM MANAGEMENT COMPANY, INC.
BY: /s/ Xxxxxx X. Xxxxxx
-----------------------------
TITLE: Chairman
-----------------------------
