THE TRAVELERS SERIES TRUST
SUBADVISORY AGREEMENT
AIM CAPITAL APPRECIATION PORTFOLIO
This Subadvisory Agreement (this "Agreement") is entered into as of July 1,
2005 by and between Travelers Investment Adviser Inc., a Delaware corporation
(the "Manager"), and A I M Capital Management, Inc., a Texas corporation (the
"Subadviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated July 1,
2005 (the "Advisory Agreement") with The Travelers Series Trust (the "Fund"),
pursuant to which the Manager provides portfolio management services to the AIM
Capital Appreciation Portfolio (the "Portfolio");
WHEREAS, the Manager desires to retain the Subadviser to render portfolio
management services in the manner and on the terms set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set
forth in this Agreement, the Manager and the Subadviser agree as follows:
1. Subadvisory Services.
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a. The Subadviser shall, subject to the supervision of the Fund's Board of
Trustees and the Manager and in cooperation with the Manager, as administrator,
or with any other administrator appointed by the Manager or the Fund (the
"Administrator"), manage the investment and reinvestment of the assets of the
Portfolio. The Subadviser shall invest and reinvest the assets of the Portfolio
in conformity with (1) the investment objective, policies and restrictions of
the Portfolio set forth in the Fund's prospectus and statement of additional
information, as revised or supplemented from time to time, relating to the
Portfolio (the "Prospectus"), (2) any additional policies or guidelines
established by the Manager or by the Fund's Trustees that have been furnished
in writing to the Subadviser and (3) the provisions of the Internal Revenue
Code (the "Code") applicable to "regulated investment companies" (as defined in
Section 851 of the Code) and "segregated asset accounts" (as defined in
Section 817 of the Code) including, but not limited to, the diversification
requirements of Section 817(h) of the Code and the regulations thereunder, all
as from time to time in effect (collectively, the "Policies"), and with all
applicable provisions of law, including without limitation all applicable
provisions of the Investment Company Act of 1940 (the "1940 Act") the rules and
regulations thereunder and the interpretive opinions thereof of the staff of
the Securities and Exchange Commission ("SEC") ("SEC Positions"); provided,
however, that the Manager agrees to inform the Subadviser of any and all
applicable state insurance law restrictions that operate to limit or restrict
the investments the Portfolio might otherwise make ("Insurance Restrictions"),
and to inform the Subadviser promptly of any changes in such Insurance
Restrictions. Subject to the foregoing, the Subadviser is authorized, in its
discretion and without prior consultation with the Manager, to buy, sell, lend
and otherwise trade in any stocks, bonds and other securities and investment
instruments on behalf of the Portfolio, without regard to the length of time
the securities
have been held and the resulting rate of portfolio turnover or any tax
considerations; and the majority or the whole of the Portfolio may be invested
in such proportions of stocks, bonds, other securities or investment
instruments, or cash, as the Subadviser shall determine. Notwithstanding the
foregoing provisions of this Section 1.a, however, the Subadviser shall, upon
written instructions from the Manager, effect such portfolio transactions for
the Portfolio as the Manager shall determine are necessary in order for the
Portfolio to comply with the Policies.
b. The Subadviser shall furnish the Manager and the Administrator daily,
weekly, monthly, quarterly and/or annual reports concerning portfolio
transactions and the investment performance of the Portfolio in such form as
may be mutually agreed upon, and agrees to review the Portfolio and discuss the
management of the Portfolio with representatives or agents of the Manager, the
Administrator or the Fund at their reasonable request. The Subadviser shall, as
part of a complete portfolio compliance testing program, perform quarterly
diversification testing under Section 817 (h) of the Code. The Subadviser shall
provide timely notice each calendar quarter that such diversification was
satisfied, or if not satisfied, that corrections were made within 30 days of
the end of the calendar quarter. The Subadviser shall also provide the Manager,
the Administrator or the Fund with such other information and reports as may
reasonably be requested by the Manager, the Administrator or the Fund from time
to time, including without limitation (i) all material as reasonably may be
requested by the Trustees of the Fund pursuant to Section 15(c) of the
1940 Act; (ii) monthly or quarterly compliance checklists in the form
prescribed by the Manager; and (iii) such periodic reports as may be required
by the Fund's or the Manager's compliance program under Rule 38a-1 under the
1940 Act. The Subadviser shall furnish the Manager (which may also provide it
to the Fund's Board of Trustees) with copies of all material comments that are
directly related to the Portfolio and the services provided under this
Agreement received from the SEC following routine or special SEC examinations
or inspections.
If the Fund inadvertently fails the diversification requirements of
Section 817(h) of the Code, the Subadviser shall assist the Manager in the
preparation of any request for relief or argument to the Commissioner of the
Internal Revenue Service pursuant to Treas. Reg. Section 1-817-5(c)(2) and
Revenue Procedure 92-25 (or its successor).
c. The Subadviser shall provide to the Manager a copy of the Subadviser's
Form ADV as filed with the SEC and any amendments or restatements thereof in
the future and a list of the persons whom the Subadviser wishes to have
authorized to give written and/or oral instructions to custodians of assets of
the Portfolio.
d. Unless the Manager gives the Subadviser written instructions to the
contrary, the Subadviser shall use its good faith judgment in a manner which it
reasonably believes best serves the interest of the Portfolio's shareholders to
vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in which assets of the Portfolio are invested. The
Manager shall instruct the Fund's custodian, the Administrator, and other
parties providing services to a Portfolio to promptly forward misdirected proxy
statements to the Subadviser. The Subadviser shall provide the Fund in a timely
manner with such records of its proxy voting on behalf of each Portfolio as
necessary for the Fund to comply with the requirements of Form N-PX or any
successor law, rule, regulation or SEC Position.
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e. The Subadviser represents, warrants and agrees that it has adopted and
implemented, and throughout the term of this Agreement will maintain in effect
and implement, policies and procedures reasonably designed to prevent, detect
and correct violations by the Subadviser and its supervised persons, and, to
the extent the activities of the Subadviser could affect the Fund, by the Fund,
of "federal securities laws" (as defined in Rule 38a-1 under the 1940 Act), and
that the Subadviser has provided the Fund with true and complete copies of its
policies and procedures (or summaries thereof) and related information
requested by the Fund. The Subadviser agrees to cooperate with periodic reviews
by the Fund's compliance personnel of the Subadviser's policies and procedures,
their operation and implementation and other compliance matters and to provide
to the Fund from time to time such additional information and certifications in
respect of the Subadviser's policies and procedures, compliance by the
Subadviser with federal securities laws and related matters as the Fund's
compliance personnel may reasonably request. The Subadviser agrees to promptly
notify the Manager of any material compliance violations that affect a
Portfolio.
f. In accordance with Rule 17a-10 under the 1940 Act and any other
applicable law, the Subadviser shall not consult with any other subadviser to
the Portfolio or any subadviser to any other portfolio of the Trust or to any
other investment company or investment company series for which the Manager or
an affiliated person of the Manager serves as investment adviser concerning
transactions for the Portfolio in securities or other assets, other than for
purposes of complying with conditions of paragraphs (a) and (b) of Rule 12d3-1
under the 1940 Act.
g. The Subadviser shall assist the Manager and the Administrator in
determining or confirming the value of any portfolio securities or other assets
of the Fund for which the Manager or the Administrator seeks assistance from
the Subadviser or identifies for review by the Subadviser.
h. The Subadviser agrees that all books and records which it maintains for
the Fund are the Fund's property. The Subadviser also agrees upon request of
the Manager or the Fund, promptly to surrender the books and records to the
requester or make the books and records available for inspection by
representatives of regulatory authorities. The Subadviser shall permit all
books and records with respect to the Portfolio to be inspected and audited by
the Manager and the Administrator at all reasonable times during normal
business hours, upon reasonable notice. The Subadviser further agrees to
maintain and preserve the Fund's books and records in accordance with the
Investment Company Act and rules thereunder.
2. Obligations of the Manager.
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a. The Manager shall provide (or cause the Fund's custodian to provide)
information to the Subadviser in a timely manner regarding such matters as the
composition of assets in the Portfolio, cash requirements and cash available
for investment in the Portfolio, and all other information as may be reasonably
necessary for the Subadviser to perform its responsibilities hereunder.
b. The Manager has furnished the Subadviser a copy of the Prospectus and
agrees during the continuance of this Agreement to furnish the Subadviser
copies of any revisions or supplements thereto at, or, if practicable, before
the time the revisions or supplements become
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effective. The Manager agrees to furnish the Subadviser with relevant sections
of minutes of meetings of the Trustees of the Fund applicable to the Portfolio
to the extent they may affect the duties of the Subadviser, and with copies of
any financial statements or reports of the Fund with respect to the Portfolio
to its shareholders, and any further materials or information which the
Subadviser may reasonably request to enable it to perform its functions under
this Agreement, including, but not limited to, timely information relating to
any Insurance Restrictions.
3. Custodian. The Manager shall provide the Subadviser with a copy of the
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Portfolio's agreement with the custodian designated to hold the assets of the
Portfolio (the "Custodian") and any modifications thereto (the "Custody
Agreement"). The assets of the Portfolio shall be maintained in the custody of
the Custodian identified in, and in accordance with the terms and conditions
of, the Custody Agreement (or any sub-custodian properly appointed as provided
in the Custody Agreement). The Subadviser shall provide timely instructions
directly to the Fund's custodian, in the manner and form as required by the
Fund's Custody Agreement (including with respect to exchange offerings and
other corporate actions) necessary to effect the investment and reinvestment of
the Portfolio's assets. Any assets added to the Portfolio shall be delivered
directly to the Custodian.
4. Expenses. Except for expenses specifically assumed or agreed to be paid
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by the Subadviser pursuant hereto, the Subadviser shall not be liable for any
expenses of the Manager or the Fund including, without limitation, (a) interest
and taxes, (b) brokerage commissions and other costs in connection with the
purchase or sale of securities or other investment instruments with respect to
the Portfolio, and (c) custodian fees and expenses. The Subadviser will pay its
own expenses incurred in furnishing the services to be provided by it pursuant
to this Agreement.
5. Purchase and Sale of Assets. Absent instructions from the Manager to the
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contrary, the Subadviser shall place all orders for the purchase and sale of
securities for the Portfolio with brokers or dealers selected by the
Subadviser, which may include brokers or dealers affiliated with the Subadviser
provided such orders comply with Rule 17e-1 (or any successor or other relevant
regulations) under the 1940 Act in all respects. To the extent consistent with
applicable law and then-current SEC Positions, purchase or sell orders for the
Portfolio may be aggregated with contemporaneous purchase or sell orders of
other clients of the Subadviser. The Subadviser shall use its best efforts to
obtain Portfolio securities at prices which are advantageous to the Portfolio
and at commission rates that are reasonable in relation to the benefits
received. However, the Subadviser may select brokers or dealers on the basis
that they provide brokerage, research or other services or products to the
Portfolio and/or other accounts serviced by the Subadviser. Not all such
services or products need to be used by the Subadviser in managing the
Portfolio. The Subadviser agrees that securities are to be purchased through
brokers and dealers that, in the Subadviser's best judgment, offer the best
combination of price and execution. The Subadviser, in seeking to obtain best
execution of portfolio transactions for the Portfolio, may consider the quality
and reliability of brokerage services, as well as research and investment
information and other services provided by brokers or dealers. Accordingly, the
Subadviser's selection of a broker or dealer for transactions for the Portfolio
may take into account such relevant factors as (i) price, (ii) the broker's or
dealer's facilities, reliability and financial responsibility, (iii) when
relevant, the ability of the broker to effect securities transactions,
particularly with regard to such aspects as timing, order size and execution of
the order,
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(iv) the broker's or dealer's recordkeeping capabilities and (v) the research
and other services provided by such broker or dealer to the Subadviser which
are expected to enhance its general portfolio management capabilities
(collectively, "Research"), notwithstanding that the Portfolio may not be the
exclusive beneficiary of such Research. Commission rates, being a component of
price is one factor considered together with other factors. The Subadviser
shall not be obligated to seek in advance competitive bidding for the most
favorable commission rate applicable to any particular transaction for the
Portfolio or to select any broker-dealer on the basis of its purported posted
commission rate. Accordingly, in compliance with Section 28(e) of the
Securities Exchange Act of 1934, as amended, the Adviser, in its discretion,
may cause the Portfolio to pay a commission for effecting a transaction for the
Portfolio in excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, provided that the Subadviser has
determined in good faith that the commission is reasonable in relation to the
value of the brokerage and/or Research provided by the broker to the Subadviser
viewed in terms of that particular transaction or its overall responsibilities
with respect to the account as to which the Subadviser exercises investment
discretion. From time to time, when determined by the Subadviser in its
capacity of a fiduciary to be in the best interest of the Portfolio, the
Subadviser may purchase securities from or sell securities on behalf of the
Portfolio to another account managed by the Subadviser at prevailing market
levels in accordance with the procedures under Rule 17a-7 under the 1940 Act
and other applicable law.
6. Compensation of the Subadviser. As full compensation for all services
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rendered, facilities furnished and expenses borne by the Subadviser hereunder,
the Manager shall pay the Subadviser compensation at the annual rate of 0.375%.
Such compensation shall be payable monthly in arrears or at such other
intervals, not less frequently than quarterly, as the Manager is paid by the
Portfolio pursuant to the Advisory Agreement. If the Subadviser shall serve for
less than the whole of any month or other agreed-upon interval, the foregoing
compensation shall be prorated. The Manager may from time to time waive the
compensation it is entitled to receive from the Fund; however, any such waiver
will have no effect on the Manager's obligation to pay the Subadviser the
compensation provided for herein.
7. Non-Exclusivity. The Manager agrees that the services of the Subadviser
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are not to be deemed exclusive and that the Subadviser and its affiliates are
free to act as investment manager and provide other services to various
investment companies and other managed accounts, except as the Subadviser and
the Manager or the Administrator may otherwise agree from time to time in
writing before or after the date hereof. This Agreement shall not in any way
limit or restrict the Subadviser or any of its directors, officers, employees
or agents from buying, selling or trading any securities or other investment
instruments for its or their own account or for the account of others for whom
it or they may be acting, provided that such activities do not adversely affect
or otherwise impair the performance by the Subadviser of its duties and
obligations under this Agreement. The Manager recognizes and agrees that the
Subadviser may provide advice to or take action with respect to other clients,
which advice or action, including the timing and nature of such action, may
differ from or be identical to advice given or action taken with respect to the
Portfolio. The Subadviser shall for all purposes hereof be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to act for or represent the Fund or the Manager
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in any way or otherwise be deemed an agent of the Fund or the Manager except in
connection with the investment management services provided by the Subadviser
hereunder.
8. Liability. Except as may otherwise be provided by the 1940 Act or other
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federal securities laws, neither the Subadviser nor any of its officers,
partners, managing directors, employees, affiliates or agents shall be subject
to any liability to the Manager, the Fund, the Portfolio or any shareholder of
the Portfolio for any loss arising from any claim or demand based upon, any
error of judgment, or any loss arising out of any investment or other act or
omission in the course of, connected with, or arising out of any service to be
rendered under this Agreement, except by reason of willful misfeasance, bad
faith or gross negligence in the performance of any duties or by reason of
reckless disregard of its obligations and duties. The Manager acknowledges and
agrees that the Subadviser makes no representation or warranty, express or
implied, that any level of performance or investment results will be achieved
by the Portfolio or that the Portfolio will perform comparably with any
standard or index, including other clients of the Subadviser, whether public or
private.
9. Effective Date and Termination. This Agreement shall become effective as
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of July 1, 2005, and
a. unless otherwise terminated, this Agreement shall continue in effect
until June 30, 2007, and from year to year thereafter so long as such
continuance is specifically approved at least annually (i) by the Board of
Trustees of the Fund or by vote of a majority of the outstanding voting
securities of the Portfolio, and (ii) by vote of a majority of the Trustees of
the Fund who are not interested persons of the Fund, the Manager or the
Subadviser, cast in person at a meeting called for the purpose of voting on
such approval;
b. this Agreement may at any time be terminated on sixty days' written
notice to the Subadviser either by vote of the Board of Trustees of the Fund or
by vote of a majority of the outstanding voting securities of the Portfolio;
c. this Agreement shall automatically terminate in the event of its
assignment or upon the termination of the Advisory Agreement;
d. this Agreement may be terminated by the Subadviser on sixty days' written
notice to the Manager and the Fund, or, if approved by the Board of Trustees of
the Fund, by the Manager on sixty days' written notice to the Subadviser; and
Termination of this Agreement pursuant to this Section 9 shall be without
the payment of any penalty. In the event of termination of this Agreement, all
compensation due to the Subadviser through the date of termination will be
calculated on a pro rata basis through the date of termination and paid on the
first business day after the next succeeding month end.
10. Amendment. This Agreement may be amended at any time by mutual consent
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of the Manager and the Subadviser, provided that, if required by law (as may be
modified by any exemptions received by the Manager), such amendment shall also
have been approved by vote of a majority of the outstanding voting securities
of the Portfolio and by vote of a majority of the
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Trustees of the Fund who are not interested persons of the Fund, the Manager or
the Subadviser, cast in person at a meeting called for the purpose of voting on
such approval.
11. Certain Definitions. For the purpose of this Agreement, the terms "vote
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of a majority of the outstanding voting securities," "interested person,"
"affiliated person" and "assignment" shall have their respective meanings
defined in the 1940 Act, subject, however, to such exemptions as may be granted
by the SEC under the 1940 Act.
12. General.
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a. The Subadviser may perform its services through any employee, officer or
agent of the Subadviser, and the Manager shall not be entitled to the advice,
recommendation or judgment of any specific person; provided, however, that the
persons identified in the Prospectus of the Portfolio shall perform the
portfolio management duties described therein until the Subadviser notifies the
Manager that one or more other employees, officers or agents of the Subadviser,
identified in such notice, shall assume such duties as of a specific date. The
Subadviser shall use commercially reasonable efforts to inform the Manager of
any such events enough time prior to the event taking effect such that allows
the Manager sufficient time to prepare and file any necessary supplement to the
Prospectus.
b. If any term or provision of this Agreement or the application thereof to
any person or circumstances is held to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
c. This Agreement shall be governed by and interpreted in accordance with
the laws of the State of New York.
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13. Use of Name.
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It is understood that the phrase "AIM" and any derivative names or logos
associated with such name are the valuable property of the Subadviser, and that
the Fund has the right to include such phrases as a part of the names of its
series or for any other purpose only so long as this Agreement shall continue.
Upon termination of this Agreement the Fund shall forthwith cease to use such
phrases and logos.
TRAVELERS INVESTMENT ADVISER INC.
By /s/ Xxxxxxxxx Forget
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Name: Xxxxxxxxx Forget
Title: President
A I M CAPITAL MANAGEMENT INC.
By /s/ Xxxxxxxx X. Xxxx
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Name: Xxxxxxxx X. Xxxx
Title: Managing Director
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