Exhibit (5)(b)
HERITAGE INCOME TRUST
SUBADVISORY AGREEMENT
Agreement made as of _______________________, 1989 between
Heritage Asset Management, Inc., a Florida corporation (the "Manager"),
and Eagle Asset Management, 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 Income Trust
("Trust"), a Massachusetts business trust registered under the Investment
Company Act of 1940 ("1940 Act") as an opened diversified management
investment company consisting of several series (portfolios) of shares,
each having its own 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 certain
investment series (portfolios) and such other investment series
(portfolios) as the Trust and the Manager may agree upon and so specify in
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 SUBADVISER TO THE TRUST
(a) Subject always to the control of the Trustees and Manager
of Heritage Income Trust (the "Trust"), the Subadviser, at its expense and
at the request of the Manager, will furnish continuously to the Manager
and for the Trust an investment program for such portion, if any, of the
Portfolios' assets as is designated by the Manager from time to time. The
Subadviser, with respect to the portion of the Portfolios' investments for
which the Subadviser has been delegated responsibility under this
Agreement, will make investment decisions on behalf of the Portfolios and
will place all orders for the purchase and sale of portfolio securities.
In the performance of its duties, the Subadviser will comply with the
provisions of this Agreement and the Trust's Declaration of Trust, Bylaws
and Registration Statement as from time to time amended, any relevant
undertakings provided to State securities regulators, and the stated
investment objective, policies and restrictions of the Trust, and will use
its best efforts to safeguard and promote the welfare of the Trust, and to
comply with other policies which the Trustees or the Manager, as the case
may be, may from time to time determine, and shall exercise the same care
and diligence as are expected of the Trustees.
(b) The Subadviser, at its expense, will make available its
officers and advisory and other personnel, particularly portfolio managers
and research analysts, to the Trustees and Manager at reasonable times, to
review investment policies of the Trust and to consult with the Trustees
and Manager regarding the investment affairs of the Trust and 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) The Subadviser, at its expense, will pay for all salaries
of personnel and facilities required for it to execute its duties under
this Agreement faithfully.
(d) The Subadviser, at its expense, also will provide the
Manager with compliance reports relating to the investment operations of
the Portfolios for which the Subadviser has responsibility, including
periodic reports which monitor investment restrictions and other
guidelines of the Trust's prospectus and statement of additional
information, and such other compliance reports as may be agreed upon from
time to time.
(e) The Subadviser, at its expense, also will provide the
Trust's custodian bank with market price information relating to the
portfolio instruments of those Portfolios for which the Subadviser has
responsibility, on a daily basis, unless such information is, as decided
by the Manager, provided by the Manager.
(f) In the selection of brokers or dealers 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 or dealer involved and the quality
of service rendered by the broker or dealer in other transactions.
Subject to such policies as the Trustees of the Trust 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 or dealer 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 or dealer would have charged for effecting
that transaction if the Subadviser determines in good faith that such
amount of commission was reasonable in relation to the value of the
brokerage and research services provided by such broker or dealer, viewed
in terms of either that particular transaction or the Subadviser's overall
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responsibilities with respect to the Trust and to other clients of the
Subadviser as to which the Subadviser exercises investment discretion.
As provided in the Investment Advisory and Administration Agreement
between the Manager and the Trust referred to in Section 4 below, the
Trust agrees that any entity or person associated with the Manager 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 (the "1934 Act"), and Rule 11a2-2(T) thereunder, and the Trust has
consented to the retention of compensation for such transactions in
accordance with Rule 11a2-2(T)(a)(2)(iv).
(g) The Subadviser shall not be obligated to pay any expenses
of or for the Trust not expressly assumed by the Subadviser pursuant to
this Section 1 and Section 2 hereafter.
2. BOOKS AND RECORDS
In compliance with the requirements of Rule 31a-3 under the
Investment Company Act of 1940 (the "1940 Act"), the Subadviser agrees
that all records it maintains for the Trust are the property of the Trust
and further agrees to surrender promptly to the Trust or Manager any such
records upon the Trust's or Manager's request. The Subadviser further
agrees to maintain for the Trust the records the Trust is required to
maintain under Rule 31a-l(b) insofar as such records relate to the
investment affairs of the Trust for which the Subadviser has
responsibility under this Agreement. The Subadviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the
records it maintains for the Trust.
3. OTHER AGREEMENTS
Any of the shareholders, Trustees, officers and employees of the
Trust may be a shareholder, director, officer or employee of, or be
otherwise interested in the Subadviser and in any person controlled by or
under common control with the Subadviser, and the Subadviser and any
person controlled by or under common control with the Subadviser may have
an interest in the Trust. The Subadviser and persons controlled by or
under common control with the Subadviser have and may have advisory,
management service or other contracts with other organizations and
persons, and may have other interests and businesses.
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4. COMPENSATION TO BE PAID BY THE MANAGER TO THE SUBADVISER
The Manager will pay to the Subadviser as compensation for the
Subadvisers' services rendered and for the expenses borne by the
Subadviser pursuant to Sections 1 and 2, a subadvisory fee, as specified
in Schedule A attached hereto and made part of this Agreement.
For services provided and the expenses assumed pursuant to this
Agreement with respect to any Portfolio hereafter established, the
Subadviser shall receive from the Manager a fee to be agreed upon and
described in additional Schedules to this Agreement.
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 10 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.
5. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENT OF THIS AGREEMENT
This Agreement shall automatically terminate, without the payment
of any penalty, in the event of its assignment or in the event that the
Investment Advisory and Administration Agreement between the Manager and
the Trust shall have terminated for any reason; and this Agreement shall
not be materially amended unless such amendment be approved at a meeting
by the affirmative vote of a majority of the outstanding shares of any and
all Portfolios which are affected by the amendment, and by the vote, cast
in person at a meeting called for the purpose of voting on such approval,
of a majority of the Trustees of the Trust who are not interested persons
of the Trust or of the Manager or of the Subadviser.
6. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective upon its execution;
provided, that with respect to any Portfolio now existing or hereafter
created for which the subadviser performs investment advisory services
under this Agreement, this Agreement shall not take effect unless it has
first been approved (i) by a vote of the majority of those Trustees of the
Trust who are not parties to this Agreement or interested persons of such
party, cast in person at a meeting called for the purpose of voting on
such approval, and (ii) by a vote of a majority of that Portfolio's
outstanding voting securities. This Agreement shall remain in full force
and effect continuously thereafter (unless terminated automatically as set
forth in Section 5) until terminated as follows:
(a) 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; or
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(b) With respect to any Portfolio, if (i) the
Trustees of the Trust or the shareholders of a Portfolio by the
affirmative vote of a majority of the outstanding shares of such
Portfolio, and (ii) a majority of the Trustees of the Trust who
are not interested persons of the Trust or of the Manager or of
the Subadviser, by vote cast in person at a meeting called for
the purpose of voting on such approval, do not specifically
approve at least annually the continuance of this Agreement, then
this Agreement shall automatically terminate at the close of
business on the second anniversary of its execution, or upon the
expiration of one year from the effective date of the last such
continuance, whichever is later; provided, however, that 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 of this Agreement as provided herein,
the Subadviser may continue to serve hereunder in a manner
consistent with the 1940 Act and the rules and regulations
thereunder with respect to that Portfolio; or
(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
Portfolios by not less than 90 days' written notice delivered or
mailed by registered mail, postage prepaid, to the Manager.
Action by the Trust under paragraph (a) above with respect to any
Portfolio may be taken either (i) by vote of a majority of its Trustees,
or (ii) by the affirmative vote of a majority of the outstanding Shares of
such Portfolio.
Termination of this Agreement pursuant to this Section 6 shall be
without the payment of any penalty. Upon termination of this Agreement,
the duties of the Manager delegated to the Subadviser under this Agreement
automatically revert to the Manager.
7. CERTAIN INFORMATION
The Subadviser shall promptly 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 1940 Act, as amended from time to
time, 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,
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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. CERTAIN DEFINITIONS
For the purposes of this Agreement, the "affirmative vote of a
majority of the outstanding Shares" means the affirmative vote, at a duly
called and held meeting of shareholders of the Trust or of a Portfolio, as
applicable, of the lesser of: (a) the holders of 67% or more of the Shares
present (in person or by proxy) and entitled to vote at such meeting if
the holders of more than 50% of the Shares entitled to vote at such
meeting are present in person or by proxy, or (b) the holders of more than
50% of Shares entitled to vote at such meeting.
For the purposes of this Agreement, the terms "affiliated
person," "control," "interested person" and "assignment" shall have their
respective meanings 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; the term "specifically
approve at least annually" shall be construed in a manner consistent with
the 1940 Act and the rules and regulations thereunder; and the term
"brokerage and research services" shall have the meaning given in the 1934
Act and the rules and regulations thereunder.
9. NONLIABILITY OF SUBADVISER
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Subadviser, or reckless disregard of its
obligations and duties hereunder, the Subadviser shall not be subject to
any liability to the Trust, or to any of its Shareholders, for any act or
omission in the course of, or connected with, rendering services
hereunder.
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IN WITNESS WHEREOF, Heritage Asset Management, Inc. and Eagle
Asset Management Company, 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:____________________________
Attest: EAGLE ASSET MANAGEMENT, INC.
By:______________________ By:____________________________
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SCHEDULE A
TO THE
SUBADVISORY AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
EAGLE ASSET MANAGEMENT, INC.
As compensation pursuant to section 4 of the Subadvisory
Agreement between Heritage Asset Management, Inc. (the "Manager") and
Eagle Asset Management, Inc. (the "Subadvisor"), the Manager shall pay the
Subadvisor a Subadvisory Fee, computed and paid monthly, at the following
rates as percentages of the Advisory Fee received by the Manager from
Heritage Income Trust (the "Trust") for each Portfolio under the
Investment Advisory and Administration Agreement between the Trust and the
Manager:
(1) For the Diversified Portfolio: 25%
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