INVESTMENT ADVISORY AND ADMINISTRATION AGREEMENT
OF HERITAGE INCOME TRUST
Agreement made as of this ____________ day of____________, 1989
between Heritage Income 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 several series (portfolios) of shares, each having
its own investment policies; 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 portfolios 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 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 herein provided. In all
matters relating to the performance of this Agreement, the Manager will
act in conformity with the Declaration of Trust, Bylaws and current
Prospectus and Statement of Additional Information of the Trust and with
the instructions and directions of the Trust's Board of Trustees and will
conform to and comply with the requirements of the 1940 Act and all other
applicable federal or state laws and regulations.
2. Duties as Investment Adviser. Subject to the supervision
of the Trust's 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 provide the services under this
Agreement in accordance with the investment objective, policies and
restrictions as stated in the Trust's current Prospectus and Statement of
Additional Information.
The Manager will place orders pursuant to its investment
determinations for each Portfolio either directly with the issuer or
through any brokers or dealers. In the selection of brokers or dealers 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
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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 or dealer involved and the quality
of service rendered by the broker or dealer in other transactions. Subject
to such policies as the Trustees of the Trust may determine, the 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 or dealer 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 or dealer 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 or dealer, 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 and Rule 11a2-2(T) thereunder, and
the Trust has consented to the retention of compensation for such
transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
The Manager will provide the Board of Trustees of the Trust 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.
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
Trust's 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
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of Trustees of the Trust 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 Trust's Board of Trustees, select necessary service
companies to conduct certain operations of the Trust, including the
Trust's custodian, transfer agent, dividend disbursing agent, accountant
and attorney.
(c) The Manager will provide the Trust with such
administrative and clerical services as are deemed necessary or advisable
by the Trust's 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 the Shareholders and to 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 make itself available to receive
redemption requests as the Trust's transfer agent and 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 31a-3 under the 1940 Act, the Manager hereby agrees that all
records 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 31a-2 under the 1940 Act the records required
to be maintained by Rule 31a-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
Trust; (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 Trust's Trustees
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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 underwriter 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 directors; (k) charges of custodians, transfer
agents and other agents; (1) 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.
7. Compensation. For the services provided and the expenses
assumed pursuant to this Agreement, effective from the date of this
Agreement, the Manager shall receive a fee as specified in Schedule A
attached and made part of this Agreement. For the services provided and
the expenses assumed pursuant to this Agreement with respect to any
Portfolio hereafter established, the Manager shall receive a fee to be
agreed upon and described in additional schedules to this Agreement.
8. Limitation of Liability of the Manager. The Manager
shall not be liable for any error of judgment or mistake of law for any
loss suffered by the Trust in connection with the matters to which this
Agreement 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
Agreement. Any person, even though also an officer, partner, employee, or
agent of the Manager, who may be or become an officer, director, 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.
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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 has first been approved (i) by a vote of the majority of those
Trustees of the Trust who are not parties to this Agreement or interested
persons of such party, cast in person at a meeting called for the purpose
of voting on such approval, and (ii) by vote of a majority of that
Portfolio's outstanding voting securities. This Agreement shall remain in
full force and effect continuously thereafter until terminated as follows:
(a) The Trust may at any time terminate this Agreement with
respect to any or all Portfolios by providing not more than 60 days'
written notice delivered or mailed by registered mail, postage prepaid, to
the Manager; or
(b) With respect to any Portfolio, if (i) the Trustees of the
Trust 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 of the Trust who are not interested persons of the Trust
or of the Manager or 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.
Action by the Trust under paragraph (a) above with respect to any
Portfolio may be taken either (i) by vote of a majority of its Trustees,
or (ii) by the affirmative vote of a majority of the outstanding Shares of
such Portfolio.
This Agreement will automatically and immediately terminate in
the event of its assignment. Termination of this Agreement pursuant to
this Section 9 shall be without the payment of any penalty. (As used in
this Agreement, the terms "majority of the outstanding voting securities,"
"interested person" and "assignment" shall have the same meanings as such
terms have in the 1940 Act.)
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
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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 Income 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 Income Trust, Xxxxxxx Xxxxx &
Associates, Inc., or Heritage Asset Management, Inc., or any successor
organization.
12. 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. 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.
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 INCOME TRUST
By:_____________________________ By:_____________________________
Attest: HERITAGE ASSET MANAGEMENT, INC.
By:_____________________________ By:_____________________________
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SCHEDULE A
TO THE
INVESTMENT ADVISORY AND
ADMINISTRATION AGREEMENT
BETWEEN
HERITAGE ASSET MANAGEMENT, INC.
AND
HERITAGE INCOME TRUST
As compensation pursuant to section 7 of the Investment Advisory
and Administrative Agreement between Heritage Asset Management, Inc. (the
"Manager") and Heritage Income 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 Government
Portfolio:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
------------- -------------------------
All 0.50%
(2) For the Diversified
Portfolio:
Average Daily Advisory Fee as % of
Net Assets Average Daily Net Assets
------------- -------------------------
First $100 million . . . . . . . . . . . 0.60%
Over $100 million . . . . . . . . . . . . 0.50%
