HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
This Subadvisory Agreement is made as of March 29, 1993, between
Heritage Asset Management, Inc., a Florida corporation (the "Manager"),
and Xxxx & Associates, a division of Xxxxxxx Xxxxx & Associates, Inc., a
Florida corporation (the "Subadviser").
WHEREAS, the Manager has by separate contract agreed to serve as
the investment adviser and administrator to the Heritage Series Trust
("Trust"), a Massachusetts business trust registered under the Investment
Company Act of 1940, as amended ("1940 Act"), as an open-end diversified
management investment company consisting of one or more investment series
of shares, each having its own assets and investment policies;
WHEREAS, the Manager's contract with the Trust allows it to
delegate certain investment advisory services for the Trust to other
parties; and
WHEREAS, the Manager desires to retain the Subadviser to perform
certain investment advisory services for the Trust with respect to its
existing portfolio and such other portfolios as the Trust and the Manager
shall agree upon and so specify from time to time in one or more Schedules
attached hereto (collectively, the "Portfolios"), and the Subadviser is
willing to perform such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. SERVICES TO BE RENDERED BY THE SUBADVISER TO THE TRUST.
(a) Investment Program. Subject to the control and
supervision of the Board of Trustees of the Trust and the
Manager, the Subadviser shall, at its expense, continuously
furnish to the Portfolios an investment program for such portion,
if any, of Portfolio assets which is allocated to it by the
Manager from time to time. With respect to such assets, the
Subadviser will make investment decisions and will place all
orders for the purchase and sale of portfolio securities. In the
performance of its duties, the Subadviser will act in the best
interests of the Portfolios and will comply with (i) applicable
laws and regulations, including, but not limited to, the 1940
Act, (ii) the terms of this Agreement, (iii) the stated
investment objective, policies and restrictions of the
Portfolios, and (iv) such other guidelines as the Trustees or
Manager may establish. The Manager shall be responsible for
providing the Subadviser with current copies of the materials
specified in Subsections (a)(iii) and (iv) of this Section 1.
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(b) Availability of Personnel. The Subadviser, at
its expense, will make available to the Trustees and the Manager
at reasonable times its portfolio managers and other appropriate
personnel in order to review investment policies of the
Portfolios and to consult with the Trustees and the Manager
regarding the investment affairs of the Portfolios, including
economic, statistical and investment matters relevant to the
Subadviser's duties hereunder, and will provide periodic reports
to the Manager relating to the portfolio strategies it employs.
(c) Salaries and Facilities. The Subadviser, at its
expense, will pay for all salaries of personnel and facilities
required for it to execute its duties under this Agreement.
(d) Compliance Reports. The Subadviser, at its
expense will, provide the Manager with such compliance reports
relating to its duties under this Agreement as may be agreed upon
by such parties from time to time.
(e) Valuation. The Subadviser, at its expense, will
provide the Trust's custodian with market price information
relating to the assets of the Portfolios for which the Subadviser
has responsibility at such times as the parties hereto may agree
upon from time to time.
(f) Executing Portfolio Transactions. The Subadviser
will place orders pursuant to its investment determinations for
each Portfolio either directly with the issuer or through other
brokers. In the selection of brokers and the placement of orders
for the purchase and sale of portfolio investments for the
Portfolios, the Subadviser shall use its best efforts to obtain
for the Portfolios the most favorable price and execution
available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services as
described below. In using its best efforts to obtain the most
favorable price and execution available, the Subadviser, bearing
in mind the Trust's best interests at all times, shall consider
all factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing of the
transaction taking into account market prices and trends, the
reputation, experience and financial stability of the broker
involved and the quality of service rendered by the broker in
other transactions. Subject to such policies as the Board of
Trustees may determine, the Subadviser shall not be deemed to
have acted unlawfully or to have breached any duty created by
this Agreement or otherwise solely by reason of its having caused
a Portfolio to pay a broker that provides brokerage and research
services to the Subadviser an amount of commission for effecting
a portfolio investment transaction in excess of the amount of
commission another broker would have charged for effecting that
transaction if the Subadviser determines in good faith that such
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amount of commission was reasonable in relation to the value of
the brokerage and research services provided by such broker,
viewed in terms of either that particular transaction or the
Subadviser's overall responsibilities with respect to the Trust
and to other clients of the Subadviser as to which the Subadviser
exercises investment discretion. In no instance will portfolio
securities of any Portfolio be purchased from or sold to the
Subadviser or any affiliated person of the Subadviser. The Trust
agrees that any entity or person associated with the Manager or
the Subadviser which is a member of a national securities
exchange is authorized to effect any transaction on such exchange
for the account of the Trust which is permitted by Section 11(a)
of the Securities Exchange Act of 1934, as amended, and Rule
lla2-2(T) thereunder, and the Trust has consented to the
retention of compensation for such transactions in accordance
with Rule lla2-2(T)(a)(2)(iv).
(g) Expenses. The Subadviser shall not be obligated
to pay any expenses of or for the Trust not expressly assumed by
the Subadviser pursuant to this Agreement.
2. Books and Records. Pursuant to Rule 31a-3 under the 1940
Act, the Subadviser agrees that: (a) all records it maintains for the
Trust are the property of the Trust; (b) it will surrender promptly to the
Trust or the Manager any such records upon the Trust's or Manager's
request; (c) it will maintain for the Trust the records that the Trust is
required to maintain pursuant to Rule 31a-1 insofar as such records relate
to the investment affairs of the Portfolios for which the Subadviser has
responsibility under this Agreement; and (d) it will preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records it
maintains for the Trust.
3. Other Agreements. The Subadviser and persons controlled
by or under common control with the Subadviser have and may have advisory,
management service or other agreements with other organizations and
persons, and may have other interests and businesses. Nothing in this
Agreement is intended to preclude such other business relationships.
4. Compensation. The Manager will pay to the Subadviser as
compensation for the Subadviser's services rendered pursuant to this
Agreement a subadvisory fee as set forth in Schedule A, which schedule can
be modified from time to time to reflect changes in annual rates or the
addition or deletion of a Portfolio from this Agreement, subject to
appropriate approvals required by the 1940 Act. Such fees shall be paid
by the Manager (and not by the Trust) without regard to any reduction in
the fees paid to the Manager as a result of any statutory or regulatory
limitation on investment company expenses. Such fees shall be payable for
each month within 15 business days after the end of such month. If the
Subadviser shall serve for less than the whole of a month, the
compensation as specified shall be prorated.
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5. Assignment and Amendment of Agreement. This Agreement
automatically shall terminate without the payment of any penalty in the
event of its assignment or if the Investment Advisory and Administration
Agreement between the Manager and the Trust shall terminate for any
reason. This Agreement shall not be materially amended unless such
amendment is approved by the affirmative vote of a majority of the
outstanding shares of each applicable Portfolio, and by the vote, cast in
person at a meeting called for the purpose of voting on such approval, of
a majority of the members of the Board of Trustees who are not interested
persons of the Trust, the Manager or the Subadviser (the "Independent
Trustees"). The Subadviser agrees to notify the Manager of any change in
control of the Subadviser within a reasonable time after such change.
6. Duration and Termination of the Agreement. This
Agreement shall become effective upon its execution; provided, however,
that this Agreement shall not become effective with respect to any
Portfolio now existing or hereafter created unless it has first been
approved (a) by a vote of the Independent Trustees, cast in person at a
meeting called for the purpose of voting on such approval, and (b) by an
affirmative vote of a majority of the outstanding voting shares of that
Portfolio. This Agreement shall remain in full force and effect
continuously thereafter without the payment of any penalty as follows:
(a) By vote of a majority of the (i) Independent
Trustees, or (ii) outstanding voting shares of the applicable
Portfolios, the Trust may at any time terminate this Agreement
with respect to any or all Portfolios by providing not more than
60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Manager and the Subadviser.
(b) This Agreement will terminate automatically with
respect to a Portfolio unless, within two years after its initial
effectiveness with respect to such Portfolio and at least
annually thereafter, the continuance of the Agreement is
specifically approved by (i) the Board of Trustees or the
shareholders of such Portfolio by the affirmative vote of a
majority of the outstanding shares of such Portfolio, and (ii) a
majority of the Independent Trustees, by vote cast in person at a
meeting called for the purpose of voting on such approval. If
the continuance of this Agreement is submitted to the
shareholders of any Portfolio for their approval and such
shareholders fail to approve such continuance as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder.
(c) The Manager may at any time terminate this
Agreement with respect to any or all Portfolios by not less than
60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Subadviser, and the Subadviser may at any
time terminate this Agreement with respect to any or all
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Portfolios by not less than 90 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager.
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
Upon termination of this Agreement with respect to any Portfolio,
the duties of the Manager delegated to the Subadviser under this Agreement
with respect to such Portfolio automatically shall revert to the Manager.
7. Notification of the Manager. The Subadviser promptly
shall notify the Manager in writing of the occurrence of any of the
following events:
(a) the Subadviser shall fail to be registered as an
investment adviser under the Investment Advisers Act of 1940, as
amended, and under the laws of any jurisdiction in which the
Subadviser is required to be registered as an investment adviser
in order to perform its obligations under this Agreement;
(b) the Subadviser shall have been served or
otherwise have 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 Trust or any
Portfolio; or
(c) any other occurrence that might affect the
ability of the Subadviser to provide the services provided for
under this Agreement.
8. Definitions. For the purposes of this Agreement, the
terms "vote of a majority of the outstanding shares," "affiliated person,"
"control," "interested person" and "assignment" shall have their
respective meanings as defined in the 1940 Act and the rules and
regulations thereunder subject, however, to such exemptions as may be
granted by the Securities and Exchange Commission under said Act; and
references to annual approvals by the Board of Trustees shall be construed
in a manner consistent with the 1940 Act and the rules and regulations
thereunder.
9. Liability of the Subadviser. In the absence of its
willful misfeasance, bad faith, gross negligence or reckless disregard of
its obligations and duties hereunder, the Subadviser shall not be subject
to any liability to the Manager, the Trust or their directors, Trustees,
officers or shareholders, for any act or omission in the course of, or
connected with, rendering services hereunder. However, the Subadviser
shall indemnify and hold harmless such parties from any and all claims,
losses, expenses, obligations and liabilities (including reasonable
attorneys fees) which arise or result from Subadviser's willful
misfeasance, bad faith, gross negligence or reckless disregard of its
duties hereunder.
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10. Governing Law. This Agreement shall be construed in
accordance with the laws of the State of Florida, without giving effect to
the conflicts of laws principles thereof, and in accordance with the 1940
Act. To the extent that the applicable laws of the State of Florida
conflict with the applicable provisions of the 1940 Act, the latter shall
control.
11. Massachusetts Business Trust. Subadviser hereby
acknowledges that, although this Agreement is executed by an officer
and/or trustee of the Trust, the obligations of this Agreement are not
binding upon any of them individually or upon the Trust's shareholders
individually; rather, these obligations are binding only upon the assets
and property of the Trust.
12. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This Agreement
shall be binding upon and shall inure to the benefit of the parties hereto
and their respective successors.
13. 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.
IN WITNESS WHEREOF, Heritage Asset Management, Inc. and Xxxxxxx
Xxxxx & Associated, Inc. have each caused this instrument to be signed in
duplicate on its behalf by its duly authorized representative, all as of
the day and year first above written.
Attest: HERITAGE ASSET MANAGEMENT, INC.
By:__________________________ By______________________________
XXXX & ASSOCIATES, A DIVISION OF
Attest: XXXXXXX XXXXX & ASSOCIATES, INC.
By:__________________________ By_____________________________
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SCHEDULE A
TO THE
HERITAGE SERIES TRUST
SUBADVISORY AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
XXXX & ASSOCIATES, A DIVISION OF
XXXXXXX XXXXX & ASSOCIATES, INC.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and Xxxx
& Associates, a division of Xxxxxxx Xxxxx & Associates, Inc. (the
"Subadviser"), the Manager shall pay the Subadviser a subadvisory fee,
computed and paid monthly, at the following percentage rates of each
Portfolio's average daily net assets under management by the Subadviser:
(1) For the Heritage Small Cap Stock Fund:
Advisory Fee as % of
Average Daily Net Assets Average Daily Net
of the Entire Portfolio: Assets Under Management
________________________ _______________________
Up to and including $50 million .500%
In excess of $50 million .375%
Dated: March 29, 1993, as amended on August 7, 1995
