Exhibit No. 4(h)
SUB-ADVISORY CONTRACT
Contract made as of May 5, 2000 between XXXXXXXX XXXXXXXX ASSET MANAGEMENT
INC. ("Xxxxxxxx Xxxxxxxx"), a Delaware corporation, and PACIFIC INVESTMENT
MANAGEMENT COMPANY ("Sub-Adviser"), a Delaware limited liability company
(hereafter referred to as the "Contract").
RECITALS
(1) Xxxxxxxx Xxxxxxxx has entered into an Investment Advisory and
Administration Contract dated April 21, 1988, as supplemented by an Investment
Advisory and Administration Fee Agreement dated May 1, 1989, ("Advisory
Contract") with Xxxxxxxx Xxxxxxxx Series Trust (formerly named PaineWebber
Series Trust) ("Trust"), an open-end management investment company registered
under the Investment Company Act of 1940, as amended ("1940 Act");
(2) The Trust offers for public sale distinct series of shares of
beneficial interest, including a series of shares of the Trust known as
Strategic Fixed Income Portfolio (formerly named Government Portfolio)
("Portfolio");
(3) Under the Advisory Contract, Xxxxxxxx Xxxxxxxx has agreed to provide
certain investment advisory and administrative services to the Portfolio;
(4) The Advisory Contract permits Xxxxxxxx Xxxxxxxx to delegate certain of
it duties as investment adviser thereunder to a sub-adviser;
(5) Xxxxxxxx Xxxxxxxx wishes to retain the Sub-Adviser to furnish certain
investment advisory services to Xxxxxxxx Xxxxxxxx and the Portfolio; and
(6) The Sub-Adviser is willing to furnish those services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, Xxxxxxxx Xxxxxxxx and the Sub-Adviser agree as follows:
1. APPOINTMENT. Xxxxxxxx Xxxxxxxx hereby appoints the Sub-Adviser as an
investment sub-adviser with respect to the Portfolio for the period and on the
terms set forth in this Contract. The Sub-Adviser accepts such appointment and
agrees to render the services herein set forth, for the compensation herein
provided.
2. DUTIES AS SUB-ADVISER.
(a) Subject to the supervision and direction of the Trust's Board of
Trustees ("Board") and review by Xxxxxxxx Xxxxxxxx, and any written guidelines
adopted by the Board of Xxxxxxxx Xxxxxxxx, the Sub-Adviser will provide a
continuous investment program for the Portfolio, including investment research
and management. The Sub-Adviser may from time to time seek research assistance
and may rely upon resources available to it through its affiliated companies to
the extent such actions would not constitute an "assignment" for purposes of the
1940 Act but in no case shall such assistance and/or reliance relive the
Sub-Adviser of any if its
obligations hereunder, nor shall the Portfolio or Xxxxxxxx Xxxxxxxx be
responsible for any additional fees or expenses hereunder as a result. The
Sub-Adviser will determine from time to time what investments will be purchased,
retained or sold by the Portfolio. The Sub-Adviser will be responsible for
placing purchase and sell orders for investments and for other related
transactions. The Sub-Adviser will be responsible for voting proxies of issuers
of securities held by the Portfolio. The Sub-Adviser understands that the
Portfolio's assets need to be managed so as to permit the Portfolio to qualify
or to continue to qualify as a regulated investment company under Subchapter M
of the Internal Revenue Code, as amended ("Code"). The Sub-Adviser will provide
services under this Contract in accordance with the Portfolio's investment
objective, policies and restrictions as stated in the Fund's Prospectus and in
the Trust's currently effective registration statement under the 1940 Act, and
any amendments or supplements thereto ("Registration Statement").
(b) The Sub-Adviser agrees that, in placing orders with brokers, it
will attempt to obtain the best net result in terms of price and execution;
provided that, on behalf of the Portfolio, the Sub-Adviser may, in its
discretion, use brokers who provide the Sub-Adviser with research, analysis,
advice and similar services to execute portfolio transactions on behalf of
the Portfolio, and the Sub-Adviser may pay to those brokers in return for
brokerage and research services a higher commission than may be charged by
other brokers, subject to the Sub-Adviser's determination in good faith that
such commission is reasonable in terms erms either of the particular
transaction or of the overall responsibility of the Sub-Adviser to the
Portfolio and its other clients and that the total commissions paid by the
Portfolio will be reasonable in relation to the benefits to the Portfolio
over the long term. In no instance will portfolio securities be purchased
from or sold to Xxxxxxxx Xxxxxxxx or the Sub-Adviser, or any affiliated
person thereof, except in accordance with the federal securities laws and the
rules and regulations thereunder. The Sub-Adviser may aggregate sales and
purchase orders with respect to the assets of the Portfolio with similar
orders being made simultaneously for other accounts advised by the
Sub-Adviser or its affiliates. Whenever the Sub-Adviser simultaneously places
orders to purchase or sell the same security on behalf of the Portfolio and
one or more other accounts advised by the Sub-Adviser, the orders will be
allocated as t price and amount among all such accounts in a manner believed
to be equitable over time to each account. Xxxxxxxx Xxxxxxxx recognizes that
in some cases this procedure may adversely affect the results obtained for
the Portfolio.
(c) The Sub-Adviser will maintain all books and records required to be
maintained pursuant to the 1940 Act and the rules and regulations promulgated
thereunder with respect to transactions by the Sub-Adviser on behalf of the
Portfolio, and will furnish the Board and Xxxxxxxx Xxxxxxxx with such periodic
and special reports as the Board or Xxxxxxxx Xxxxxxxx reasonably may request. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records that it maintains for the Portfolio
are the property of the Trust, agrees to preserve for the periods prescribed by
Rule 31a-2 under the 1940 Act any records that it maintains for the Trust and
that are required to be maintained by Rule 31a-1 under the 1940 Act, and further
agrees to surrender promptly to the Trust any records which it maintains for the
Portfolio upon request by the Trust.
(d) At such times as shall be reasonably requested by the Board or
Xxxxxxxx Xxxxxxxx, the Sub-Adviser will provide the Board and Xxxxxxxx Xxxxxxxx
with economic and investment analyses and reports as well as quarterly reports
setting forth the Portfolio's performance and
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make available to the Board and Xxxxxxxx Xxxxxxxx any economic, statistical and
investment services that the Sub-Adviser normally makes available to its
institutional or other customers.
(e) In accordance with procedures adopted by the Board, as amended from
time to time, the Sub-Adviser is responsible for assisting in the fair valuation
of all portfolio securities and will use its reasonable efforts to arrange for
the provision of a price(s) from a party(ies) independent of the Sub-Adviser for
each portfolio security for which the custodian does not obtain prices in the
ordinary course of business from an automated pricing service.
3. FURTHER DUTIES. In all matter relating to the performance of this
Contract, the Sub-Adviser will act in conformity with the Trust's Declaration
of Trust, By-Laws and Registration Statement and with the written
instructions and written directions of the Board and Xxxxxxxx Xxxxxxxx; and
will comply with the requirement of the of the 1940 Act, and the Investment
Advisers Act of 1940, as amended ("Advisers Act") and the rules under under
each, Subchapter M of the Code as applicable to regulated investment
companies, the diversifications requirements application to the Portfolio
under Section 817(h) of the Code and all other federal and state laws and
regulations applicable to the Trust and the Portfolio. Xxxxxxxx Xxxxxxxx
agrees to provide to the Sub-Adviser copies of the Trust's Declaration of the
Trust, By-Laws, Registration Statement, written instructions and directions
of the Board and Xxxxxxxx Xxxxxxxx, and any amendments or supplements to any
of these materials as soon as practicable after such materials become with
any document, instruction, or guidelines produced by the Trust or Xxxxxxxx
Xxxxxxxx shall not arise until it has been delivered to the Sub-Adviser. Any
changes to the objectives, policies or restrictions will make due allowance
for time with which the Sub-Adviser shall have to come into compliance.
4. EXPENSES. During the term of this Contract, the Sub-Adviser will bear
all expenses incurred by it in connection with its service under this Contract.
The Sub-Adviser shall not be responsible for any expenses incurred by the Trust,
the Portfolio or Xxxxxxxx Xxxxxxxx.
5. COMPENSATION
(a) For the services provided and the expenses assumed by the Sub-Adviser
pursuant to this Contract, Xxxxxxxx Xxxxxxxx, and not the Portfolio, will pay
the Sub-Adviser a fee, computed daily and payable monthly, at an annual rate of
0.25% of the Portfolio's average daily net assets (computed in the manner
specified in the Advisory Contract), and will provide the Sub-Adviser with a
schedule showing the manner in which the fee was computed.
(b) The fee shall be accrued daily and payable monthly to the Sub-Adviser
on or before the last business day of the next succeeding calendar month.
(c) For those periods in which Xxxxxxxx Xxxxxxxx has agreed to waive all
or a portion of its management fee, Xxxxxxxx Xxxxxxxx may ask the Sub-Adviser to
waive the same proportion of its fees, but the Sub-Adviser is under no
obligation to do so.
(d) If this Contract becomes effective or terminates 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
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month to the date of termination, as the case may be, shall be pro-rated
according to the proportion that such period bears to the full month in which
such effectiveness or termination occurs.
6. LIMITATION OF LIABILITY. The Sub-Adviser shall not be liable for any
error of judgement or mistake of law or for any loss suffered by the Portfolio,
the Trust or its shareholders or by Xxxxxxxx Xxxxxxxx in connection with the
matters to which this Contract relates, except a loss resulting from 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
Contract. Nothing in this paragraph shall be deemed a limitation or waiver of
any obligation or duty that may not by law be limited or waived.
7. REPRESENTATION OF SUB-ADVISER. The Sub-Adviser represents, warrants
and agrees as follows:
(a) The Sub-Adviser (i) is registered as an investment adviser under
the Advisers Act and will continue to be so registered for so long as this
Contract remains in effect; (ii) is not prohibited by the 1940 Act or the
Advisers Act from performing the services contemplated by this Contract;
(iii) has met, and will seek to continue to meet for so long as this Contract
remains in effect, any other applicable federal or state requirements, or the
applicable requirements of any regulatory or industry self-regulatory agency,
necessary to be met in order to perform the services contemplated by this
Contract; (iv) has the authority to enter into and perform the services
contemplated by the Contract; and (v) will promptly notify Xxxxxxxx Xxxxxxxx
of the occurrance of any event that would disqualify the Sub-Adviser from
serving as an investment adviser of an investment company pursuant to Section
9(a) of the 1940 Act or otherwise.
(b) The Sub-Adviser has adopted a written code of ethics complying with
the requirements of Rule 17j-1 under the 1940 Act and will provide Xxxxxxxx
Xxxxxxxx and the Board with a copy of such code of ethics, together with
evidence of its adoption. Within fifteen days of the end of the last calendar
quarter of each year that this Contract is in effect, the president or a
vice-president of the Sub-Adviser shall certify to Xxxxxxxx Xxxxxxxx that the
Sub-Adviser has compiled with the requirements of Rule 17j-1 during the
previous year and that there has been no violation of the Sub-Adviser's code
of ethics or, if such violation has occurred, that appropriate action was
taken in response to such violation. Upon the written request of Xxxxxxxx
Xxxxxxxx, the Sub-Adviser shall permit Xxxxxxxx Xxxxxxxx, its employees or
its agents to examine the reports required to be made by the Sub-Adviser
pursuant to Rule 17j-1 and all other records relevent to the Sub-Adviser's
code of ethics.
(c) The Sub-Adviser has provided Xxxxxxxx Xxxxxxxx with a copy of its Form
ADV, as most recently filed with the Securities and Exchange Commission ("SEC"),
and promptly will furnish a copy of all amendments to Xxxxxxxx Xxxxxxxx at least
annually.
(d) The Sub-Adviser shall provide notice to Xxxxxxxx Xxxxxxxx within a
reasonable time after being informed or learning of the death or withdrawl of
any of its partners, upon the admission of any new partners or upon any other
change in its membership.
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(e) The Sub-Adviser will notify Xxxxxxxx Xxxxxxxx of any change of control
of the Sub-Adviser, including any change of its general partners or 25%
shareholders, as applicable, and any changes in the key personnel who are either
the portfolio manager(s) of the Portfolio or senior management of the
Sub-Adviser, in each case prior to, or promptly after, such change.
(f) The Sub-Adviser agrees that neither it, nor any of its affiliates,
will in any way refer directly or indirectly to its relationship with the Trust,
the Portfolio, Xxxxxxxx Xxxxxxxx or any of their respective affiliates in
offering, marketing or other promotional materials without the express written
consent of Xxxxxxxx Xxxxxxxx.
8. REPRESENTATION OF XXXXXXXX XXXXXXXX. Xxxxxxxx Xxxxxxxx represents that
(i) the Trust was duly organized as a Massachusetts business trust under the
laws of the Commonwealth of Massachusetts, (ii) the appointment of the
Sub-Adviser has been duly authorized and (iii) the Trust has acted and will
continue to act in conformity with the 1940 Act and other applicable laws.
9. SERVICES NOT EXCLUSIVE. The Sub-Adviser may act as an investment
adviser to any other person, firm or corporation and may perform management and
any other services for any other person, association, corporation, firm or other
entity pursuant to any contract or otherwise, and take any action or do anything
in connection therewith or related thereto, except as prohibited by applicable
law; and no such performance of management or other services or taking of any
such action or doing of any such thing shall be in any manner restricted or
otherwise affected by any aspect of any relationship of the Sub-Adviser to or
with the Trust, Portfolio or Xxxxxxxx Xxxxxxxx or deemed to violate or give rise
to any duty or obligation of the Sub-Adviser to the Trust, Portfolio or Xxxxxxxx
Xxxxxxxx except as otherwise imposed by law or by this Contract.
10. DURATION AND TERMINATION
(a) This Contract shall become effective upon the date first above
written, provided that this Contract shall not take effect unless it has first
been approved (i) by a vote of a majority of those trustees of the Trust who are
not parties to this Contract or interested persons of any 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 the Portfolio's outstanding voting securities.
(b) Unless sooner terminated as provided herein, this Contract shall
continue in effect for two years from its effective date. Thereafter, if not
terminated, this Contract shall continue automatically for successive periods of
twelve months each, provided that such continuance is specifically approved at
least annually: (i) by a vote of a majority of those trustees of the Trust who
are not parties to this Contract or interested persons of any such party, cast
in person at a meeting called for the purpose of voting on such approval, and
(ii) by the Board or by vote of a majority of the outstanding voting securities
of the Portfolio.
(c) Notwithstanding the foregoing, this Contract may be terminated at any
time, without the payment of any penalty, by vote of the Board or by a vote of a
majority of the outstanding voting securities of the Portfolio on 60 days'
written notice to the Sub-Adviser. This Contract may also be terminated, without
the payment of any penalty, by Xxxxxxxx Xxxxxxxx: (i) upon 120 days' written
notice to the Sub-Adviser; (ii) immediately upon material breach by the
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Sub-Adviser of any of the representations and warranties set forth in Paragraph
7 of this Contract; or (iii) immediately if, in the reasonable judgement of
Xxxxxxxx Xxxxxxxx, the Sub-Adviser becomes unable to discharge its duties and
obligations under this Contract, including circumstances such as financial
insolvency of the Sub-Adviser or other circumstances that could adversely affect
the Portfolio. The Sub-Adviser may terminate this Contract at any time, without
the payment of any penalty, on 120 days' written notice to Xxxxxxxx Xxxxxxxx.
This Contract will terminate automatically in the event of its assignment or
upon termination of the Advisory Contract as it relates to the Portfolio.
11. AMENDMENT OF THIS CONTRACT. No provision of this Contract may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the change, waiver,
discharge, or termination is sought. No amendment of this Contract shall be
effective until approved (i) by a vote of a majority of those trustees of the
Trust who are not parties to this Contract or interested persons of any such
party, and (ii) by a vote of a majority of the Portfolio's outstanding voting
securities (unless in the case of (ii), the Trust receives an SEC order or
no-action letter permitting it to modify the Contract without such vote).
12. GOVERNING LAW. This Contract shall be construed in accordance with the
1940 Act and the laws if the State of Delaware, without giving effect to the
conflicts of laws principles thereof. To the extent that the applicable laws of
the State of Delaware conflict with the applicable provisions of the 1940 Act,
the latter shall control.
13. MISCELLANEOUS. The captions in this Contract 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. If any
provision of this Contract shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Contract shall not be affected
thereby. This Contract shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors. As used in this Contract,
the terms "majority of the outstanding voting securities," "affiliate person,"
"interested person," "assignment," "broker," "investment adviser," "net assets,"
"sale," "sell" and "security" shall have the same meaning as such terms have in
the 1940 Act, subject exemption as may be granted by the SEC by any rule,
regulation or order. Where the effect of a requirement of the federal securities
laws reflected in any provision of this Contract is made less restrictive by a
rule, regulation or order of the SEC, whether of special or general application,
such provision shall be deemed to incorporate the effect if such rule,
regulation or order. This Contract may be signed in counterpart.
14. NOTICES. Any written notice herein required to be given the
Sub-Adviser or Xxxxxxxx Xxxxxxxx shall be deemed to have been given upon receipt
of the same at their respective addresses set forth below. All written notices
required or permitted to be given under this Contract will be delivered by
personal service, by postage mail - return receipt requested or by facsimile
machine or a similar means of same day delivery which provides evidence of
receipt (with a confirming copy by mail as set forth herein). All notices
provided to Xxxxxxxx Xxxxxxxx will be sent to the attention of Xxxxxx X.
X'Xxxxxxx, Deputy General Counsel. All notices provided to the Sub-Adviser will
be sent to the attention of Senior Counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized signatories as of the date and year first
above written.
Attest: XXXXXXXX XXXXXXXX ASSET MANAGEMENT INC.
00 Xxxx 00xx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
By: /s/ Xxxxxx X. Xxxxx By: /s/ Xxxxxx X. X'Xxxxxxx
------------------- -----------------------
Name: Xxxxxx X. Xxxxx Name: Xxxxxx X. X'Xxxxxxx
Title: Vice President Title: Senior Vice President
Attest: PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
By: /s/ Xxxxxxx Xxxxxxx By: /s/ Xxxxxxx X. Benz, II
------------------- -----------------------
Name: Xxxxxxx Xxxxxxx Name: Xxxxxxx X. Benz, II
Title: Senior Paralegal Title: Managing Director
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