HERITAGE SERIES TRUST
INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
Agreement made as of this 29th day of March, 1993 between
Heritage Series Trust, a Massachusetts business trust (the "Trust"), and
Heritage Asset Management, Inc. (the "Manager"), a Florida corporation.
WHEREAS, the Trust is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management investment
company consisting of one or more series (portfolios) of shares, each
having its own investment policies; and
WHEREAS, the Manager is an investment adviser under the
Investment Advisers Act of 1940, as amended; and
WHEREAS, the Trust desires to retain the Manager as investment
adviser and administrator to furnish administrative, investment advisory
and portfolio management services to the Trust with respect to its
existing portfolio and such other portfolios as the Trust and the Manager
shall agree upon (collectively, the "Portfolios"), and the Manager is
willing to furnish such services;
NOW, THEREFORE, in consideration of the premises and mutual
covenants herein contained, it is agreed between the parties hereto as
follows:
1. APPOINTMENT. The Trust hereby appoints Heritage Asset
Management, Inc. as investment adviser and administrator of the Trust and
each Portfolio listed on Schedule A of this Agreement (as such schedule
may be amended from time to time) for the period and on the terms set
forth in this Agreement. Heritage Asset Management, Inc. accepts such
appointment and agrees to render the services herein set forth for the
compensation as set forth on Schedule A. In the performance of its
duties, the Manager will act in the best interests of the Trust and each
Portfolio and will comply with (a) applicable laws and regulations,
including, but not limited to, the 1940 Act, (b) the terms of this
Agreement, (c) the Trust's Declaration of Trust, By-Laws and currently
effective registration statement under the Securities Act of 1933, as
amended, and the 1940 Act, and any amendments thereto, (d) relevant
undertakings to state securities regulators which also have been provided
to the Manager, (e) the stated investment objective, policies and
restrictions of each applicable Portfolio, and (f) such other guidelines
as the Board of Trustees of the Trust ("Board of Trustees") reasonably may
establish.
2. DUTIES AS INVESTMENT ADVISER.
(a) Subject to the supervision of the Board of Trustees, the
Manager will provide a continuous investment program for each Portfolio,
including investment research and management with respect to all
securities, investments and cash equivalents in each Portfolio. The
Manager will determine from time to time what securities and other
investments will be purchased, retained or sold by each Portfolio. The
Manager will exercise full discretion and act for each Portfolio in the
same manner and with the same force and effect as such Portfolio itself
might or could do with respect to purchases, sales, or other transactions,
as well as with respect to all other things necessary or incidental to the
furtherance or conduct of such purchases, sales or other transactions.
(b) The Manager 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 Manager 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
Manager, 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 Manager 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
Manager 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 Manager 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,
viewed in terms of either that particular transaction or the Manager's
overall responsibilities with respect to the Trust and to other clients of
the Manager as to which the Manager exercises investment discretion. In
no instance will portfolio securities of any Portfolio be purchased from
or sold to the Manager or any affiliated person of the Manager. 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, 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).
(c) The Manager will provide the Board of Trustees on a
regular basis with economic and investment analyses and reports and make
available to the Board upon request any economic, statistical and
investment services normally available to institutional or other customers
of the Manager.
- 2 -
(d) Any of the foregoing functions with respect to any or all
Portfolios may be delegated by the Manager, at the Manager's expense, to
another appropriate party (including an affiliated party), subject to such
approval by the Board of Trustees and shareholders of each affected
Portfolio as may be required by the 1940 Act. The Manager shall oversee
the performance of delegated functions by any such party and shall furnish
to the Trust with quarterly evaluations and analyses concerning the
performance of delegated responsibilities by those parties.
3. DUTIES AS ADMINISTRATOR. The Manager will assist in
administering the affairs of the Trust subject to the supervision of the
Board of Trustees and the following understandings:
(a) The Manager will supervise all aspects of the operations of
the Trust except as hereinafter set forth; provided, however, that nothing
herein contained shall be deemed to relieve or deprive the Board of
Trustees of its responsibility for and control of the conduct of the
Trust's affairs.
(b) The Manager will investigate and, with appropriate approval
of the Board of Trustees, select necessary service companies to conduct
certain operations of the Trust, including the Trust's custodian, transfer
agent, dividend disbursing agent, independent public accountant and
attorney.
(c) The Manager will provide the Trust with such administrative
and clerical services as are deemed necessary or advisable by the Board of
Trustees, including the maintenance of certain books and records of the
Trust and each Portfolio which are not maintained by the Trust's custodian
or any subadviser.
(d) The Manager will arrange, but not pay, for the periodic
updating of Prospectuses and supplements thereto, proxy material, tax
returns and reports to Shareholders and the Securities and Exchange
Commission.
(e) The Manager will provide the Trust with, or obtain for it,
adequate office space and all necessary office equipment and services,
including telephone service, heat, utilities, stationery supplies and
similar items.
(f) The Manager will hold itself available to respond to
Shareholder inquiries.
4. SERVICES NOT EXCLUSIVE. The services furnished by the
Manager hereunder are not to be deemed exclusive and the Manager shall be
free to furnish similar services to others so long as its services under
this Agreement are not impaired thereby.
5. BOOKS AND RECORDS. In compliance with the requirements of
Rule 3la-3 under the 1940 Act, the Manager hereby agrees that all records
- 3 -
which it maintains for the Trust are the property of the Trust and further
agrees to surrender promptly to the Trust any of such records upon the
Trust's request. The Manager further agrees to preserve for the periods
prescribed by Rule 3la-2 under the 1940 Act the records required to be
maintained by Rule 3la-1 under the 1940 Act.
6. EXPENSES. During the term of this Agreement, the Trust will
bear all expenses not specifically assumed by the Manager incurred in its
operations and the offering of its shares. Expenses borne by the Trust
will include, but not be limited to, the following (or each Portfolio's
proportionate share of the following): (a) brokerage commissions relating
to securities purchased or sold by the Trust or any losses incurred in
connection therewith; (b) fees payable to and expenses incurred on behalf
of the Trust by the Manager; (c) expenses of organizing the Trust and the
Portfolios; (d) filing fees and expenses relating to the registration and
qualification of the Trust's shares and the Trust under federal or state
securities laws and maintaining such registrations and qualifications; (e)
distribution fees; (f) fees and salaries payable to the members of the
Board of Trustees and officers who are not officers or employees of the
Manager or interested persons (as defined in the 0000 Xxx) of any
investment adviser or distributor of the Trust; (g) taxes (including any
income or franchise taxes) and governmental fees; (h) costs of any
liability, uncollectible items of deposit and other insurance or fidelity
bonds; (i) any costs, expenses or losses arising out of any liability of
or claim for damage or other relief asserted against the Trust for
violation of any law; (j) legal, accounting and auditing expenses,
including legal fees of special counsel for the independent trustees; (k)
charges of custodians, transfer agents and other agents; (l) costs of
preparing share certificates; (m) expenses of setting in type and printing
Prospectuses and supplements thereto for existing shareholders, reports
and statements to shareholders and proxy material; (n) any extraordinary
expenses (including fees and disbursements of counsel) incurred by the
Trust; and (o) fees and other expenses incurred in connection with
membership in investment company organizations.
The Trust may pay directly any expense incurred by it in its
normal operations and, if any such payment is consented to by the Manager
and acknowledged as otherwise payable by the Manager pursuant to this
Agreement, the Trust may reduce the fee payable to the Manager pursuant to
paragraph 7 hereof by such amount. To the extent that such deductions
exceed the fee payable to the Manager on any monthly payment date, such
excess shall be carried forward and deducted in the same manner from the
fee payable on succeeding monthly payment dates.
In addition, if the expenses borne by the Trust or any Portfolio
in any fiscal year exceed the applicable expense limitations imposed by
the securities regulations of any state in which shares are registered or
qualified for sale to the public, the Manager will reimburse the Trust or
Portfolio for any excess up to the amount of the fee payable to it during
that fiscal year pursuant to paragraph 7 hereof. However, the Manager may
recover any expenses reimbursed in the two previous years if the recovery
- 4 -
does not cause the Trust or any Portfolio to exceed applicable state
expense limitations.
7. COMPENSATION. For the services provided and the expenses
assumed pursuant to this Agreement with respect to each Portfolio, the
Trust will pay the Manager, effective from the date of this Agreement, a
fee which is computed daily and paid monthly from each Portfolio's assets
at the annual rates as percentages of that Portfolio's average daily net
assets as set forth in the attached 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 the terms of this Agreement,
subject to appropriate approvals required by the 1940 Act. If this
Agreement becomes effective or terminates with respect to any Portfolio
before the end of any month, the fee for the period from the effective
date to the end of the month or from the beginning of such month to the
date of termination, as the case may be, shall be prorated according to
the proportion that such period bears to the full month in which such
effectiveness or termination occurs.
8. LIMITATION OF LIABILITY OF THE MANAGER. The Manager shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Trust or any Portfolio in connection with the matters to
which this Agreement relate except a loss resulting from the willful
misfeasance, bad faith or gross negligence on its part in the performance
of its duties or from reckless disregard by it of its obligations and
duties under this Agreement. Any person, even though also an officer,
partner, employee, or agent of the Manager, who may be or become an
officer, trustee, employee or agent of the Trust shall be deemed, when
rendering services to the Trust or acting in any business of the Trust, to
be rendering such services to or acting solely for the Trust and not as an
officer, partner, employee, or agent or one under the control or direction
of the Manager even though paid by it.
9. DURATION AND TERMINATION. This Agreement shall become
effective upon its execution; provided, that with respect to any Portfolio
now existing or hereafter created, this agreement shall not take effect
unless it first has 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 vote of a majority of that
Portfolio's outstanding voting securities. This Agreement shall remain in
full force and effect continuously thereafter until terminated without the
payment of any penalty as follows:
(a) By vote of a majority of its trustees, or by the affirmative
vote of a majority of the outstanding Shares of such Portfolio, 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 at its
principal offices; or
- 5 -
(b) With respect to any Portfolio, if (i) the trustees or the
shareholders of that Portfolio by the affirmative vote of a majority of
the outstanding shares of such Portfolio, and (ii) a majority of the
trustees who are not interested persons of the Trust or of the Manager or
of any 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 a Portfolio for their approval and such shareholders fail to approve
such continuance of this Agreement as provided herein, the Manager 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 Trust.
(d) This Agreement automatically and immediately will
terminate in the event of its assignment.
10. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement
may be changed, waived, discharged or terminated orally, but only by an
instrument in writing signed by the party against which enforcement of the
change, waiver, discharge or termination is sought, and no material
amendment of this Agreement with respect to any Portfolio shall be
effective until approved by vote of the holders of a majority of that
Portfolio's outstanding voting securities.
11. NAME OF TRUST. The Trust may use the name "Heritage" or
"Heritage Series Trust" only for so long as this Agreement or any
extension, renewal or amendment hereof remains in effect, including any
similar agreement with any organization which shall have succeeded to the
business of the Manager. At such time as such an agreement shall no
longer be in effect, the Trust will (to the extent that it lawfully can)
cease to use any name derived from Heritage Series Trust, Xxxxxxx Xxxxx &
Associates, Inc., or Heritage Asset Management, Inc., or any successor
organization.
12. 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.
13. DEFINITIONS. As used in this Agreement, the terms
"majority of the outstanding voting securities," "interested person," and
- 6 -
"assignment" shall have the same meanings as such terms have in the 1940
Act.
14. 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.
15. 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, the parties hereto have caused this
instrument to be executed by their officers designated below as of the day
and year first above written.
Attest: HERITAGE SERIES TRUST
By: ________________________ By: ______________________________
Attest: HERITAGE ASSET MANAGEMENT, INC.
By: ________________________ By: ______________________________
- 7 -
Schedule A
to the
Investment Advisory and
Administration Agreement
between
Heritage Asset Management, Inc.
and
Heritage Series Trust
As compensation pursuant to section 7 of the Investment Advisory
and Administrative Agreement between Heritage Asset Management, Inc. (the
"Manager") and Heritage Series Trust (the "Trust"), the Trust shall pay to
the Manager a fee, computed daily and paid monthly, at the following
annual rates as percentages of each Portfolio's average daily net assets:
(1) For the Heritage Small Cap Stock Fund:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
Up to and including $50 million 1.00%
In excess of $50 million .75%
Dated: March 29, 1993
- 8 -
