THE TRAVELERS SERIES TRUST
SUBADVISORY AGREEMENT
STRATEGIC EQUITY 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"), The Travelers Series Trust (the "Fund") and Fidelity
Management & Research Company (the "Subadviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated July 1,
2005 (the "Advisory Agreement") with the Fund pursuant to which the Manager
provides portfolio management and administrative services to the Strategic
Equity Portfolio of the Fund (the "Portfolio");
WHEREAS, the Advisory Agreement provides that the Manager may delegate any
or all of its portfolio management responsibilities under the Advisory
Agreement to one or more subadvisers;
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.
____________________
a. The Subadviser shall, subject to the supervision of the Manager and in
cooperation with the Manager, as administrator, or with any other administrator
appointed by the Manager (the "Administrator"), manage the investment and
reinvestment of the assets of the Portfolio. Subject to the provisions of
subparagraph (b) of this Section 1, the Subadviser agrees to 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"), as provided to
the Subadviser, (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, as amended
(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), 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
1
might otherwise make ("Insurance Restrictions"), and to inform the Subadviser
promptly of any changes in such Insurance Restrictions. In advising the
Portfolio, the Subadviser shall use reasonable efforts to comply with
Subchapters L and M of the Internal Revenue Code of 1986, as amended (the
"Code"). 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.
b. Notwithstanding anything to the contrary herein, the Manager acknowledges
that Subadviser is not the compliance agent for the Fund or for the Manager,
and does not have access to all of the Fund's books and records necessary to
perform certain compliance testing. The Subadviser's agreement to perform the
services specified in this Section hereof in accordance with applicable law
(including sub-chapters L and M of the Code, and the 1940 Act, as amended
("Applicable Law")) and any additional policies or guidelines established by
the Manager or by the Fund's trustees that have been furnished in writing to
the Subadviser (collectively, the "Charter Requirements"), is subject to the
understanding that the Subadviser shall perform such services based upon its
books and records with respect to the Portfolio, which comprise a portion of
the Portfolio's books and records, and shall not be held responsible under this
Agreement so long as it performs such services in accordance with this
Agreement, the Charter Requirements and Applicable Law based upon such books
and records.
c. The Subadviser shall furnish the Manager and the Administrator with
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 make a senior
portfolio manager of the Portfolio or an appropriate investment professional
available for presentations to the Trustees at a meeting of the Board of
Trustees annually, as well as other meetings as may reasonably be requested.
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 prior written
notice. The Subadviser shall furnish the Manager (which may also provide it to
the Fund's Board of Trustees) with a summary of all material comments relating
to the Portfolio received from the SEC following routine or special SEC
examinations or inspections.
d. Upon request of Fund's Manager and/or Fund, the Subadviser shall provide
assistance in connection with the determination of the fair value of securities
in the
2
Portfolio for which market quotations are not readily available and the parties
to this Agreement agree that the Subadviser shall not bear responsibility or
liability for the determination or accuracy of the valuation of any portfolio
securities and other assets of the Portfolio.
e. 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.
f. Unless the Manager gives the Subadviser written instructions to the
contrary 30 days in advance, 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 the Portfolio to
promptly forward misdirected proxy materials to the Subadviser. The Subadviser
shall provide the Fund in a timely manner with such records of its proxy voting
on behalf of the Portfolio for the Portfolio as necessary for the Fund to
comply with the requirements of Form N-PX, or any successor law, rule,
regulation, or SEC Position.
2. Obligations of the Manager.
__________________________
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 all Registration
Statements and Amendments thereto, including the Prospectus and Statement of
Additional Information, and agrees during the continuance of this Agreement to
furnish the Subadviser copies of any revisions or supplements thereto within a
reasonable time period before the time the revisions or supplements become
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 and SEC exemptive orders relating to the Portfolio.
3
c. The Manager shall provide to the Subadviser a copy of the Manager's Form
ADV as filed with the SEC and any amendments or restatements thereof in the
future.
d. The Fund and the Manager will furnish to the Subadviser such information
relating to either of them or the business affairs of the Fund as the
Subadviser shall from time to time request in order to discharge its
obligations hereunder.
3. Custodian. The Manager shall provide the Subadviser with a copy of the
_________
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 Custodian, in the manner and form agreed upon by the Manager,
the Subadviser and the Custodian, as necessary to effect the investment and
reinvestment of the Portfolio's assets. The Subadviser shall have no liability
for the acts or omissions of the Custodian.
4. Expenses. Except for expenses specifically assumed or agreed to be
________
paid 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. 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 Section 17 and
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 agrees that, in executing portfolio transactions and selecting
brokers or dealers, if any, it shall use its best efforts to seek on behalf of
the Portfolio the best overall terms available. In assessing the best overall
terms available for any transaction, the Subadviser shall consider all factors
it deems relevant, including the breadth of the market in and the price of the
security, the financial condition and execution capability of the broker or
dealer, and the reasonableness of the commission, if any, with respect to the
specific transaction and on a continuing basis. In evaluating the best overall
terms available, and in selecting the broker or dealer, if any, to execute a
particular transaction, Subadviser may also consider the brokerage and research
services (as those terms are defined in Section 28(e) of the Securities
Exchange Act of 1934, as amended ("1934 Act")) provided to the Subadviser with
respect to the Portfolio and/or other accounts over which the Subadviser
exercises investment discretion. The Subadviser may, in its discretion,
4
agree to pay a broker or dealer that furnishes such brokerage or research
services a higher commission than that which might have been charged by another
broker-dealer for effecting the same transactions, if the Subadviser determines
in good faith that such commission is reasonable in relation to the brokerage
and research services provided by the broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities of the
Subadviser with respect to the accounts as to which it exercises investment
discretion (as such term is defined in Section 3(a)(35) of the 1934 Act).
6. Compensation of the Subadviser. As full compensation for all services
______________________________
rendered, facilities furnished and expenses borne by the Subadviser hereunder,
the Manager shall pay the Subadviser compensation at the following rate, based
on the average daily net assets of the Portfolio determined at the close of the
New York Stock Exchange on each day the exchange is open for trading: at the
annual rate of 0.45% of the first $250 million of the average daily net assets
of the Portfolio, 0.40% of the next $500 million of such assets and 0.35% of
such assets in excess of $750 million. 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. The Manager shall pay the Subadviser not later than the tenth
(10) business day immediately following the end of the relevant payment period.
7. Non-Exclusivity. The Manager and the Fund agree that the services of the
_______________
Subadviser 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. 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 and the Fund recognize
and agree 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,
in any way or otherwise be deemed an agent of the Fund or the Manager except in
connection with the portfolio management services provided by the Subadviser
hereunder.
5
8. Liability and Indemnification. Except as may otherwise be provided by
_____________________________
the 1940 Act or other federal securities laws, neither the Subadviser nor any
of its officers, partners, directors, employees, affiliates or agents (the
"Indemnified Parties") shall be subject to any liability to the Manager, the
Fund, the Portfolio or any shareholder of the Portfolio for any error of
judgment, or any loss, liability, cost, damage or expense (including reasonable
attorneys fees and costs) 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 Indemnified Party's duties
or by reason of reckless disregard by any Indemnified Party of its obligations
and duties. The Manager and the Fund hold harmless and indemnify any
Indemnified Party for any loss, liability, cost, damage or expense (including
reasonable attorneys fees and costs) arising (i) from any claim or demand by
any past or present shareholder of the Portfolio that is not based upon the
obligations of the Subadviser with respect to the Portfolio under this
Agreement or (ii) resulting from the failure of the Manager to inform the
Subadviser of any applicable Insurance Restrictions or any changes therein or
of any policies and guidelines as established by the Manager or the Trustees.
The Manager and the Fund acknowledge and agree 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
______________________________
of the date of its execution, and
a. unless otherwise terminated, this Agreement shall continue in effect for
two years from the date of execution, 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 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,
6
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
_________
of the Manager and the Subadviser, provided that, if required by law (as may be
modified by any exemptions received by the Manager from the SEC, or any rules
or regulations adopted by, or interpretative releases of, the SEC), 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
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
___________________
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. Confidentiality. All information furnished by the Manager and the Fund
_______________
to the Subadviser or by the Subadviser to the Manager or the Fund (including
their respective agents, employees and representatives) hereunder shall be
treated as confidential and shall not be disclosed to third parties, except if
it is otherwise in the public domain or, with notice to the other party, as may
be necessary to comply with applicable laws, rules, regulations, subpoenas or
court orders. Without limiting the foregoing, Manager and the Fund acknowledge
that the securities holdings of the Portfolio(s) constitute information of
value to the Subadviser, and agrees (1) not to use for any purpose, other than
for Manager or the Fund, or their agents, to supervise or monitor the
Subadviser, the holdings or trade-related information of the Fund; and (2) not
to disclose the Portfolio(s)' holdings, except: (a) as required by applicable
law or regulation; (b) as required by state or federal regulatory authorities;
(c) to the Board, counsel to the Board, counsel to the Fund, the Administrator
or any sub-administrator, the independent accountants and any other agent of
the Fund; or (d) as otherwise agreed to by the parties in writing. Further,
Manager and the Fund agree that information supplied by the Subadviser,
including approved lists, internal procedures, compliance procedures and any
board materials, is valuable to the Subadviser, and Manager and the Fund agree
not to disclose any of the information contained in such materials, except:
(i) as required by applicable law or regulation; (ii) as required by state or
federal regulatory authorities; (iii) to the Board, counsel to the Board,
counsel to the Fund, the Administrator or any sub-administrator, the
independent accountants and any other agent of the Fund; or (iv) as otherwise
agreed to by the parties in writing.
13. General.
_______
7
a. The Subadviser may perform its services through any employee, officer or
agent of the Subadviser, and the Manager and the Fund shall not be entitled to
the advice, recommendation or judgment of any specific person; provided,
however, that the Subadviser shall promptly notify the Manager and the Fund of
any change in the persons identified in the Prospectus of the Portfolio as
performing the portfolio management duties described therein.
b. The Subadviser may, at its own expense, delegate any or all of its duties
and responsibilities under this Agreement to its wholly-owned subsidiary, FMR
Co., Inc., provided that the Subadviser remains responsible to the Manager and
the Fund for the performance of all of its responsibilities and duties
hereunder. The Subadviser will compensate FMR Co., Inc. for its services to the
Fund. Subject to prior notice to the Manager, the Subadviser may terminate the
services of FMR Co., Inc. for the Portfolio and shall, at such time, assume the
responsibilities of FMR Co., Inc. with respect to the Fund.
c. During the term of this Agreement, Manager shall furnish to the
Subadviser at its principal office all prospectuses, proxy statements, reports
to shareholders, sales literature or other material prepared for distribution
to shareholders of the Fund or the public, which refer to the Subadviser or its
clients in any way, prior to the use thereof, and Manager shall not use any
such materials if the Subadviser reasonably objects in writing in ten (10) days
(or such other time as may be mutually agreed, which would include longer time
periods for review of the Fund's prospectus and other parts of the registration
statement) after receipt thereof.
d. 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 may be
enforced to the fullest extent permitted by law.
e. Any notice under this Agreement shall be in writing, addressed and
delivered and mailed, postage prepaid, to the other party, with a copy to the
Fund, at the addressed below or such other address as such other party may
designate for the receipt of such notice.
If to Manager: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Forget
President
If to Subadviser: Fidelity Management & Research Company
00 Xxxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: General Counsel
8
If to Fund: 000 Xxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxxxx Forget
President
f. This Agreement shall be governed by and interpreted in accordance with
the laws of The Commonwealth of Massachusetts.
14. Use of Name.
___________
a. The parties agree that the name of the Subadviser, the names of any
affiliates of the Subadviser and any derivative, logo, trademark, service xxxx
or trade name are the valuable property of the Subadviser and its affiliates.
Manager and the Fund shall have the right to use such name(s), derivatives,
logos, trademarks or service marks or trade names only with the prior written
approval of the Subadviser, which approval shall not be unreasonably withheld
or delayed so long as this Agreement is in effect.
b. Upon termination of this Agreement, the Manager and the Fund shall
forthwith cease to use such name(s), derivatives, logos, trademarks, service
marks or trade names. The Manager and the Fund agree they will review with the
Subadviser any advertisement, sales literature, or notice prior to its use that
makes reference to the Subadviser or its affiliates or any such name(s),
derivatives, logos, trademarks, service marks or trade names, it being
understood that the Subadviser shall have no responsibility to ensure of the
adequacy of the form or content of such materials for purposes of the 1940 Act
or other applicable laws and regulations. If Manager or the Fund makes an
unauthorized use of the Subadviser's names, derivatives, logos, trademarks,
service marks or trade names, the parties acknowledge that the Subadviser shall
suffer irreparable hardship for which monetary damages are inadequate and thus,
the Subadviser will be entitled to injunctive relief.
9
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
TRAVELERS INVESTMENT ADVISER, INC.
By /s/ Xxxxxxxxx Forget
---------------------------------------
Xxxxxxxxx Forget
President
FIDELITY MANAGEMENT & RESEARCH COMPANY
By: /s/ Xxxxxx Xxxxxx
---------------------------------------
Xxxxxx Xxxxxx
Senior Vice President
THE TRAVELERS SERIES TRUST
By /s/ Xxxxxxxxx Forget
---------------------------------------
Xxxxxxxxx Forget
President and Chairman of the Board
10
