Exhibit 5(b)
SUB-MANAGEMENT AGREEMENT
ASSET ALLOCATION PORTFOLIOS
Large Cap Value Portfolio
SUB-MANAGEMENT AGREEMENT, dated November 1, 1997, by and between Asset
Allocation Portfolios, a New York trust (the "Trust"), and Xxxxxx Xxxxxxxx &
Xxxxxxxx, LLP, a limited liability partnership (the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Adviser") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as Large Cap Value Portfolio (the "Portfolio"), and
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act"), and
WHEREAS, the Adviser has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Portfolio, and the
Subadviser is willing to provide such investment advisory services for the
Portfolio on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Adviser (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser with
respect to the Portfolio for the period and on the terms set forth in this
Agreement. The Subadviser accepts such appointment and agrees to provide an
investment program with respect to the Portfolio for the compensation provided
by this Agreement.
2. Duties of the Subadviser. The Subadviser shall provide the Portfolio
and the Adviser with such investment advice and supervision as the Adviser may
from time to time consider necessary for the proper supervision of such portion
of the Portfolio's investment assets as the Adviser may designate from time to
time. Notwithstanding any provision of this Agreement, the Adviser shall retain
all rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment advisory activities relating to the Trust. The Subadviser
shall furnish continuously an investment program and shall determine from time
to time what securities shall be purchased, sold or exchanged and what portion
of the assets of the Portfolio allocated by the Adviser to the Subadviser shall
be held uninvested, subject always to the restrictions of the Trust's
Declaration of Trust, dated December 14, 1995, and By-laws, as each may be
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
the provisions of the 1940 Act, the then-current Registration Statement of the
Trust with respect to the Portfolio, and subject, further, to the Subadviser
notifying the Adviser in advance of the Subadviser's intention to purchase any
securities except insofar as the requirement for such notification may be waived
or limited by the Adviser, it being understood that the Subadviser shall be
responsible for compliance with any restrictions imposed in writing by the
Adviser from time to time in order to facilitate compliance with the
above-mentioned restrictions and such other restrictions as the Adviser may
determine. Further, the Adviser or the Trustees of the Trust may at any time,
upon written notice to the Subadviser, suspend or restrict the right of the
Subadviser to determine what securities shall be purchased or sold on behalf of
the Portfolio and what portion, if any, of the assets of the Portfolio allocated
by the Adviser to the Subadviser shall be held uninvested. The Subadviser shall
also, as requested, make recommendations to the Adviser as to the manner in
which proxies, voting rights, rights to consent to corporate action and any
other rights pertaining to the Portfolio's portfolio securities shall be
exercised. Should the Board of Trustees of the Trust or the Adviser at any time,
however, make any definite determination as to investment policy applicable to
the Portfolio and notify the Subadviser thereof in writing, the Subadviser shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked.
The Subadviser shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Subadviser is authorized as the agent of the Trust to
give instructions to the custodian and any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
The Subadviser will advise the Adviser on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Subadviser or its affiliates exercise investment discretion. The
Subadviser is authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Subadviser and
its affiliates have with respect to accounts over which they exercise investment
discretion. In making purchases or sales of securities or other property for the
account of the Portfolio, the Subadviser may deal with itself or with the
Trustees of the Trust or the Trust's underwriter or distributor, to the extent
such actions are permitted by the 1940 Act. The Board of Trustees of the Trust,
in its discretion, may instruct the Subadviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Trust.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 2 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental officers
and commissions and to investors in the Portfolio; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Portfolio,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Portfolio
(including but not limited to the fees of independent pricing services);
expenses of meetings of the Portfolio's investors; expenses relating to the
issuance of beneficial interests in the Portfolio; and such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust on behalf of the Portfolio may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Portfolio an investment subadvisory fee, accrued daily and paid monthly, at
an annual rate equal to the percentages specified below of the aggregate assets
of the Portfolio allocated to the Subadviser:
0.625% on the first $25 million;
0.375% on the next $75 million;
0.250% on the next $400 million; and
0.20% on assets in excess of $500 million.
If the Subadviser serves as investment subadviser for less than the whole
of any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
5. Covenants of the Subadviser. The Subadviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests of the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to the
Subadviser and its partners, directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Subadviser" shall include directors, officers, partners and employees
of the Subadviser as well as the Subadviser itself. The Adviser is expressly
made a third party beneficiary of this Agreement, and may enforce any
obligations of the Subadviser under this Agreement and recover directly from the
Subadviser for any liability the Subadviser may have hereunder.
7. Activities of the Subadviser. The services of the Subadviser to the
Portfolio are not to be deemed to be exclusive, the Subadviser being free to
render investment advisory and/or other services to others, including accounts
or investment management companies with similar or identical investment
objectives to the Portfolio. It is understood that Trustees, officers, and
investors of the Trust or the Adviser are or may be or may become interested in
the Subadviser, as directors, officers, partners, employees, or otherwise and
that directors, officers, partners and employees of the Subadviser are or may
become similarly interested in the Trust or the Adviser and that the Subadviser
may be or may become interested in the Trust as an investor or otherwise.
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until May 9, 1999 on which date it will terminate unless its continuance
after May 9, 1999 is "specifically approved at least annually" (a) by the vote
of a majority of the Trustees of the Trust who are not "interested persons" of
the Trust or of the Adviser or of the Subadviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees, (ii) the "vote of a majority of the outstanding
voting securities" of the Portfolio, or (iii) the Adviser, in each case on not
more than 60 days' nor less than 30 days' written notice to the other party.
This Agreement may be terminated at any time without the payment of any penalty
by the Subadviser on not less than 90 days' written notice to the Adviser. This
Agreement shall automatically terminate in the event of its "assignment."
This Agreement constitutes the entire agreement between the parties and
may be amended only if such amendment is approved by the Subadviser and the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or holders of beneficial interests in the Trust
individually.
9. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
ASSET ALLOCATION XXXXXX XXXXXXXX &
PORTFOLIOS XXXXXXXX, LLP
on behalf of Large Cap
Value Portfolio
By: Xxxxx Xxxxxxxxx By: Xxxxxx Xxxxxx
-------------------------- --------------------------
Title: Assistant Secretary Title: Managing Director
The foregoing is acknowledged:
Citibank, N.A.
By: Xxxxxxxx Xxxxxxxx
--------------------------
Title: U.S. CIO
SUB-MANAGEMENT AGREEMENT
ASSET ALLOCATION PORTFOLIOS
Small Cap Value Portfolio
SUB-MANAGEMENT AGREEMENT, dated November 1, 1997, by and between Asset
Allocation Portfolios, a New York trust (the "Trust"), and Franklin Advisory
Services, Inc., a Delaware corporation (the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Adviser") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as Small Cap Value Portfolio (the "Portfolio"), and
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act"), and
WHEREAS, the Adviser has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Portfolio, and the
Subadviser is willing to provide such investment advisory services for the
Portfolio on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Adviser (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser with
respect to the Portfolio for the period and on the terms set forth in this
Agreement. The Subadviser accepts such appointment and agrees to manage the
Portfolio assets as are allocated to it by the Adviser for the compensation
provided by this Agreement.
2. Duties of the Subadviser. The Subadviser shall manage the Portfolio
assets as are allocated to it by the Adviser, except that the Subadviser shall
not be responsible for managing cash. Notwithstanding any provision of this
Agreement, the Adviser shall retain all rights and ultimate responsibilities to
supervise and, in its discretion, conduct investment advisory activities
relating to the Trust. The Subadviser shall determine from time to time what
securities shall be purchased, sold or exchanged and what portion of the assets
of the Portfolio allocated by the Adviser to the Subadviser shall be held
uninvested, subject always to the restrictions of the Trust's Declaration of
Trust, dated December 14, 1995, and By-laws, as each may be amended from time to
time (respectively, the "Declaration" and the "By-Laws"), the provisions of the
1940 Act, the then-current Registration Statement of the Trust with respect to
the Portfolio, it being understood that the Subadviser shall be responsible for
compliance with any restrictions imposed in writing by the Adviser from time to
time in order to facilitate compliance with the above-mentioned restrictions and
such other restrictions as the Adviser may determine. Further, the Adviser or
the Trustees of the Trust may at any time, upon written notice to the
Subadviser, suspend or restrict the right of the Subadviser to determine what
securities shall be purchased or sold on behalf of the Portfolio and what
portion, if any, of the assets of the Portfolio allocated by the Adviser to the
Subadviser shall be held uninvested. The Subadviser shall also, as requested,
make recommendations to the Adviser as to the manner in which proxies, voting
rights, rights to consent to corporate action and any other rights pertaining to
the Portfolio's portfolio securities shall be exercised. However, in no event
shall the Subadviser have the power to exercise proxies or voting rights or be
responsible for record-keeping relating to such items. Should the Board of
Trustees of the Trust or the Adviser at any time, however, make any definite
determination as to investment policy applicable to the Portfolio and notify the
Subadviser thereof in writing, the Subadviser shall be bound by such
determination for the period, if any, specified in such notice or until
similarly notified that such determination has been revoked.
The Subadviser shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Subadviser is authorized as the agent of the Trust to
give instructions to the custodian and any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
The Subadviser will advise the Adviser on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Subadviser or its affiliates exercise investment discretion. The
Subadviser is authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Subadviser and
its affiliates have with respect to accounts over which they exercise investment
discretion. In making purchases or sales of securities or other property for the
account of the Portfolio, the Subadviser may deal with affiliated brokers and/or
dealers as defined by the 1940 Act and to the extent such actions are permitted
by the 1940 Act. The Board of Trustees of the Trust, in its discretion, may
instruct the Subadviser to effect all or a portion of its securities
transactions with one or more brokers and/or dealers selected by the Board of
Trustees, if it determines that the use of such brokers and/or dealers is in the
best interest of the Trust. The Subadviser shall not be responsible for and
shall be held harmless with respect to any execution costs incurred by the Trust
relating to securities transactions conducted with brokers and/or dealers in
accordance with instructions given to the Subadviser by the Trust's Board of
Trustees. In particular, the Trust acknowledges that, to the extent the
Subadviser is directed to use a specific broker and/or dealer, it may not be
able to obtain best execution on all trades executed through that broker and/or
dealer.
Nothing herein shall preclude the "bunching" of orders for the sale or
purchase of securities in the Portfolio with other accounts managed by the
Subadviser. With respect to the allocation of trades, purchase or sale orders
executed contemporaneously shall be allocated in a manner it deems equitable
among the accounts involved and at a price which is approximately averaged.
However, the Subadviser or its affiliates may, based upon their trading
strategies or their accounts' investment objectives or investment restrictions,
restrict to certain accounts purchases and sales of securities acquired in
initial public offerings, including those that trade or are expected to trade at
a premium in the secondary market.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 2 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental officers
and commissions and to investors in the Portfolio; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Portfolio,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Portfolio
(including but not limited to the fees of independent pricing services);
expenses of meetings of the Portfolio's investors; expenses relating to the
issuance of beneficial interests in the Portfolio; and such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust on behalf of the Portfolio may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Portfolio an investment subadvisory fee, accrued daily and paid monthly, at
an annual rate equal to the percentages specified below of the aggregate assets
of the Portfolio allocated to the Subadviser:
0.55% on the first $250 million; and
0.50% on remaining assets.
If the Subadviser serves as investment subadviser for less than the whole
of any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
5. Covenants of the Subadviser. The Subadviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests of the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to the
Subadviser and its directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Subadviser" shall include directors, officers and employees of the
Subadviser as well as the Subadviser itself. The Adviser is expressly made a
third party beneficiary of this Agreement, and may enforce any obligations of
the Subadviser under this Agreement and recover directly from the Subadviser for
any liability the Subadviser may have hereunder.
7. Indemnification. The Trust and the Adviser agree to indemnify and hold
harmless the Subadviser against any and all losses, claims, damages, liabilities
or expenses (including reasonable counsel fees) arising out of or based upon any
untrue statement or alleged untrue statement of any material fact contained in
the registration statement, prospectus or statement of additional information
for the Trust or contained in the sales literature or other promotional material
for the Trust (or any statement or supplement to any of the foregoing), or arise
out of or are based upon the omission or the alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading provided that this agreement to indemnify shall not apply
as to the Subadviser if such statement or omission or such alleged statement or
omission was made in reasonable reliance upon and in conformity with information
furnished to the Trust or the Adviser by or on behalf of the Subadviser for use
in the registration statement, prospectus or statement of additional information
for the Portfolio or sales literature or other promotional material (or any
amendment or supplement) or otherwise for use in connection with the sale of
shares of the Trust.
The Subadviser agrees to indemnify and hold harmless the Trust and the
Adviser against any and all losses, claims, damages, liabilities or expenses
(including reasonable counsel fees) arising out of or based upon any untrue
statement or alleged untrue statement of any material fact contained in the
registration statement for the Trust or contained in the sales literature or
other promotional material for the Trust (or any statement or supplement to any
of the foregoing), or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, provided that this
agreement to indemnify shall apply as to the Trust and/or the Adviser only if
such statement or omission or such alleged statement or omission was made in
reasonable reliance upon and in conformity with information furnished to the
Trust or the Adviser by or on behalf of the Subadviser for use in the
registration statement for the Portfolio or sales literature or other
promotional material (or any amendment or supplement) or otherwise for use in
connection with the sale of beneficial interests in the Trust.
8. Activities of the Subadviser. The services of the Subadviser to the
Portfolio are not to be deemed to be exclusive, the Subadviser being free to
render investment advisory and/or other services to others, including accounts
or investment management companies with similar or identical investment
objectives to the Portfolio. The Subadviser may give advice and take action with
respect to any of its other clients or for its own account which may differ from
the timing or nature of action taken by the Subadviser with respect to the
Portfolio. Nothing in this Sub-Management Agreement shall impose upon the
Subadviser any obligation to purchase or sell or to recommend for purchase or
sale, with respect to the Portfolio, any security which the Subadviser, or its
shareholders, directors, officers, employees or affiliates may purchase or sell
for its or their own account(s) or for the account of any other client. It is
understood that Trustees, officers, and investors of the Trust or the Adviser
are or may be or may become interested in the Subadviser, as directors,
officers, employees, or otherwise and that directors, officers, and employees of
the Subadviser are or may become similarly interested in the Trust or the
Adviser and that the Subadviser may be or may become interested in the Trust as
an investor or otherwise.
9. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until May 9, 1999, on which date it will terminate unless its continuance
after May 9, 1999 is "specifically approved at least annually" (a) by the vote
of a majority of the Trustees of the Trust who are not "interested persons" of
the Trust or of the Adviser or of the Subadviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees, (ii) the "vote of a majority of the outstanding
voting securities" of the Portfolio, or (iii) the Adviser, in each case on not
more than 60 days' nor less than 30 days' written notice to the other party.
This Agreement may be terminated at any time without the payment of any penalty
by the Subadviser on not less than 90 days' written notice to the Adviser. This
Agreement shall automatically terminate in the event of its "assignment."
This Agreement constitutes the entire agreement between the parties and
may be amended only if such amendment is approved by the Subadviser and the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or holders of beneficial interests in the Trust
individually.
10. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
ASSET ALLOCATION FRANKLIN ADVISORY
PORTFOLIOS SERVICES, INC.
on behalf of Small Cap
Value Portfolio
By: Xxxxx Xxxxxxxxx By: Xxxxxxx X. Xxxxxxx
------------------------- -----------------------------
Title: Assistant Treasurer Title: President
The foregoing is acknowledged:
Citibank, N.A.
By: Xxxxxxxx Xxxxxxxx
--------------------------
Title: U.S. CIO
SUB-MANAGEMENT AGREEMENT
ASSET ALLOCATION PORTFOLIOS
International Portfolio
SUB-MANAGEMENT AGREEMENT, dated November 1, 1997, by and between Asset
Allocation Portfolios, a New York trust (the "Trust"), and Hotchkis and Wiley, a
division of the Capital Management Group of Xxxxxxx Xxxxx Asset Management, L.P.
(the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Manager") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as International Portfolio (the "Portfolio"), and
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act"), and
WHEREAS, the Manager has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Portfolio, and the
Subadviser is willing to provide such investment advisory services for the
Portfolio on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Manager (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser with
respect to the Portfolio for the period and on the terms set forth in this
Agreement. The Subadviser accepts such appointment and agrees to provide an
investment program with respect to the Portfolio for the compensation provided
by this Agreement.
2. Duties of the Subadviser. The Subadviser shall provide the Portfolio
and the Manager with such investment advice and supervision as the Manager may
from time to time consider necessary for the proper supervision of such portion
of the Portfolio's investment assets as the Manager may designate from time to
time. Notwithstanding any provision of this Agreement, the Manager shall retain
all rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment advisory activities relating to the Trust. The Subadviser
shall furnish continuously an investment program and shall determine from time
to time what securities shall be purchased, sold or exchanged and what portion
of the assets of the Portfolio allocated by the Manager to the Subadviser shall
be held uninvested, subject always to the restrictions of the Trust's
Declaration of Trust, dated December 14, 1995, and By-laws, as each may be
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
the provisions of the 1940 Act, the then-current Registration Statement of the
Trust with respect to the Portfolio, and subject, further, to the Subadviser
notifying the Manager in advance of the Subadviser's intention to purchase any
securities except insofar as the requirement for such notification may be waived
or limited by the Manager, it being understood that the Subadviser shall be
responsible for compliance with any restrictions imposed in writing by the
Manager from time to time in order to facilitate compliance with the
above-mentioned restrictions and such other restrictions as the Manager may
determine. Further, the Manager or the Trustees of the Trust may at any time,
upon written notice to the Subadviser, suspend or restrict the right of the
Subadviser to determine what securities shall be purchased or sold on behalf of
the Portfolio and what portion, if any, of the assets of the Portfolio allocated
by the Manager to the Subadviser shall be held uninvested. The Subadviser shall
also, as requested, make recommendations to the Manager as to the manner in
which proxies, voting rights, rights to consent to corporate action and any
other rights pertaining to the Portfolio's portfolio securities shall be
exercised. Should the Board of Trustees of the Trust or the Manager at any time,
however, make any definite determination as to investment policy applicable to
the Portfolio and notify the Subadviser thereof in writing, the Subadviser shall
be bound by such determination for the period, if any, specified in such notice
or until similarly notified that such determination has been revoked.
The Subadviser shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Subadviser is authorized as the agent of the Trust to
give instructions to the custodian and any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
The Subadviser will advise the Manager on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Subadviser or its affiliates exercise investment discretion. The
Subadviser is authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Subadviser and
its affiliates have with respect to accounts over which they exercise investment
discretion. In making purchases or sales of securities or other property for the
account of the Portfolio, the Subadviser may deal with itself or with the
Trustees of the Trust or the Trust's underwriter or distributor, to the extent
such actions are permitted by the 1940 Act. The Board of Trustees of the Trust,
in its discretion, may instruct the Subadviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Trust.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 2 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental officers
and commissions and to investors in the Portfolio; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Portfolio,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Portfolio
(including but not limited to the fees of independent pricing services);
expenses of meetings of the Portfolio's investors; expenses relating to the
issuance of beneficial interests in the Portfolio; and such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust on behalf of the Portfolio may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Portfolio an investment subadvisory fee, accrued daily and paid monthly, at
an annual rate equal to the percentages specified below of the aggregate assets
of the Portfolio allocated to the Subadviser:
0.60% on the first $10 million;
0.55% on the next $40 million;
0.45% on the next $100 million;
0.35% on the next $150 million; and
0.30% on remaining assets.
If the Subadviser serves as investment subadviser for less than the whole
of any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
If in any fiscal year the aggregate expenses of the Portfolio and any fund
investing its assets therein (including fees pursuant to the Management
Agreement, but excluding interest, taxes, brokerage and, with the prior written
consent of the necessary state securities commissions, extraordinary expenses)
exceed the expense limitation of any state having jurisdiction over the
Portfolio and any fund investing its assets therein, the Trust may deduct from
the fees to be paid hereunder, or the Subadviser will bear such excess expense
on a pro-rata basis with the Manager, in the proportion that the subadvisory fee
payable pursuant to this Agreement bears to the fee payable to the Manager
pursuant to the Management Agreement, to the extent required by state law. The
Subadviser's obligation pursuant hereto will be limited to the amount of its
fees hereunder. Such deduction or payment, if any, will be estimated daily, and
reconciled and effected or paid, as the case may be, on a monthly basis.
5. Covenants of the Subadviser. The Subadviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests of the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to the
Subadviser and its directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Portfolio, except for willful misfeasance, bad faith or
gross negligence in the performance of its duties, or by reason of reckless
disregard of its obligations and duties hereunder. As used in this Section 6,
the term "Subadviser" shall include directors, officers and employees of the
Subadviser as well as the Subadviser itself. The Manager is expressly made a
third party beneficiary of this Agreement, and may enforce any obligations of
the Subadviser under this Agreement and recover directly from the Subadviser for
any liability the Subadviser may have hereunder.
7. Activities of the Subadviser. The services of the Subadviser to the
Portfolio are not to be deemed to be exclusive, the Subadviser being free to
render investment advisory and/or other services to others, including accounts
or investment management companies with similar or identical investment
objectives to the Portfolio. It is understood that Trustees, officers, and
investors of the Trust or the Manager are or may be or may become interested in
the Subadviser, as directors, officers, employees, or otherwise and that
directors, officers, and employees of the Subadviser are or may become similarly
interested in the Trust or the Manager and that the Subadviser may be or may
become interested in the Trust as an investor or otherwise.
8. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until May 9, 1999, on which date it will terminate unless its continuance
after May 9, 1999 is "specifically approved at least annually" (a) by the vote
of a majority of the Trustees of the Trust who are not "interested persons" of
the Trust or of the Adviser or of the Subadviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees, (ii) the "vote of a majority of the outstanding
voting securities" of the Portfolio, or (iii) the Manager, in each case on not
more than 60 days' nor less than 30 days' written notice to the other party.
This Agreement may be terminated at any time without the payment of any penalty
by the Subadviser on not less than 90 days' written notice to the Manager. This
Agreement shall automatically terminate in the event of its "assignment."
This Agreement constitutes the entire agreement between the parties and
may be amended only if such amendment is approved by the Subadviser and the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or holders of beneficial interests in the Trust
individually.
9. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
ASSET ALLOCATION HOTCHKIS AND WILEY,
PORTFOLIOS a division of the Capital Management
on behalf of International Group of Xxxxxxx Xxxxx Asset
Portfolio Management, L.P.
By: Xxxxx Xxxxxxxxx By: Xxxxx Xxxxxx
-------------------------- --------------------------
Title: Assistant Secretary Title: CFO
The foregoing is acknowledged:
Citibank, N.A.
By: Xxxxxxxx Xxxxxxxx
--------------------------
Title: U.S. CIO
SUB-MANAGEMENT AGREEMENT
ASSET ALLOCATION PORTFOLIOS
Foreign Bond Portfolio
SUB-MANAGEMENT AGREEMENT, dated November 1, 1997, by and between Asset
Allocation Portfolios (the "Trust"), and Pacific Investment Management Company,
a Delaware general partnership (the "Subadviser").
W I T N E S S E T H:
WHEREAS, Citibank, N.A. (the "Adviser") has been retained by the Trust to
act as investment adviser to the Trust with respect to the series of the Trust
designated as Foreign Bond Portfolio (the "Portfolio"), and
WHEREAS, the Trust engages in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (collectively with the rules and regulations promulgated
thereunder, the "1940 Act"), and
WHEREAS, the Adviser has requested that the Trust engage the Subadviser to
provide certain investment advisory services for the Portfolio, and the
Subadviser is willing to provide such investment advisory services for the
Portfolio on the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements of
the parties hereto as herein set forth, the parties covenant and agree as
follows:
1. Appointment of the Subadviser. In accordance with and subject to the
Management Agreement between the Trust and the Adviser (the "Management
Agreement"), the Trust hereby appoints the Subadviser to act as subadviser with
respect to the Portfolio for the period and on the terms set forth in this
Agreement. The Subadviser accepts such appointment and agrees to provide an
investment program with respect to the Portfolio for the compensation provided
by this Agreement.
2. Duties of the Subadviser. The Subadviser shall provide the Portfolio
and the Adviser with such investment advice and supervision as the Adviser may
from time to time consider necessary for the proper supervision of such portion
of the Portfolio's investment assets as the Adviser may designate from time to
time. Notwithstanding any provision of this Agreement, the Adviser shall retain
all rights and ultimate responsibilities to supervise and, in its discretion,
conduct investment advisory activities relating to the Trust. The Subadviser
shall furnish continuously an investment program and shall determine from time
to time what securities shall be purchased, sold or exchanged and what portion
of the assets of the Portfolio allocated by the Adviser to the Subadviser shall
be held uninvested, subject always to the restrictions of the Trust's
Declaration of Trust, dated December 14, 1995, and By-laws, as each may be
amended from time to time (respectively, the "Declaration" and the "By-Laws"),
the provisions of the 1940 Act, the then-current Registration Statement of the
Trust with respect to the Portfolio, it being understood that the Subadviser
shall be responsible for compliance after a reasonable implementation period
with any restrictions imposed in writing by the Adviser from time to time in
order to facilitate compliance with the above-mentioned restrictions and such
other restrictions as the Adviser may determine. Further, the Adviser or the
Trustees of the Trust may at any time, upon written notice to the Subadviser,
suspend or restrict the right of the Subadviser to determine what securities
shall be purchased or sold on behalf of the Portfolio and what portion, if any,
of the assets of the Portfolio allocated by the Adviser to the Subadviser shall
be held uninvested. The Subadviser shall also, as requested, make
recommendations to the Adviser as to the manner in which proxies, voting rights,
rights to consent to corporate action and any other rights pertaining to the
Portfolio's portfolio securities shall be exercised. Should the Board of
Trustees of the Trust or the Adviser at any time, however, make any definite
determination as to investment policy applicable to the Portfolio and notify the
Subadviser thereof in writing, the Subadviser shall be bound by such
determination, following a reasonable implementation period, for the period, if
any, specified in such notice or until similarly notified that such
determination has been revoked.
The Subadviser shall take, on behalf of the Portfolio, all actions which
it deems necessary to implement the investment policies determined as provided
above, and in particular to place all orders for the purchase or sale of
securities for the Portfolio's account with the brokers or dealers selected by
it, and to that end the Subadviser is authorized as the agent of the Trust to
give instructions to the custodian and any subcustodian of the Portfolio as to
deliveries of securities and payments of cash for the account of the Portfolio.
The Subadviser will advise the Adviser on the same day it gives any such
instructions. In connection with the selection of such brokers or dealers and
the placing of such orders, brokers or dealers may be selected who also provide
brokerage and research services (as those terms are defined in Section 28(e) of
the Securities Exchange Act of 1934) to the Portfolio and/or the other accounts
over which the Subadviser or its affiliates exercise investment discretion. The
Subadviser is authorized to pay a broker or dealer who provides such brokerage
and research services a commission for executing a portfolio transaction for the
Portfolio which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the Subadviser
determines in good faith that such amount of commission is reasonable in
relation to the value of the brokerage and research services provided by such
broker or dealer. This determination may be viewed in terms of either that
particular transaction or the overall responsibilities which the Subadviser and
its affiliates have with respect to accounts over which they exercise investment
discretion. In making purchases or sales of securities or other property for the
account of the Portfolio, the Subadviser may deal with itself or with the
Trustees of the Trust or the Trust's underwriter or distributor to the extent
such actions are permitted by the 1940 Act. The Board of Trustees of the Trust,
in its discretion, may instruct the Subadviser to effect all or a portion of its
securities transactions with one or more brokers and/or dealers selected by the
Board of Trustees, if it determines that the use of such brokers and/or dealers
is in the best interest of the Trust. The Subadviser shall not be liable for any
actions or omissions of brokers and/or dealers selected by the Board of Trustees
or the Adviser.
3. Allocation of Charges and Expenses. The Subadviser shall furnish at its
own expense all necessary services, facilities and personnel in connection with
its responsibilities under Section 2 above. Except as provided in the foregoing
sentence, it is understood that the Trust will pay from the assets of the
Portfolio all of its own expenses allocable to the Portfolio including, without
limitation, organization costs of the Portfolio; compensation of Trustees who
are not "interested persons" of the Trust; governmental fees; interest charges;
loan commitment fees; taxes; membership dues in industry associations allocable
to the Trust; fees and expenses of independent auditors, legal counsel and any
transfer agent, distributor, registrar or dividend disbursing agent of the
Trust; expenses of issuing and redeeming beneficial interests and servicing
investor accounts; expenses of preparing, typesetting, printing and mailing
investor reports, notices, proxy statements and reports to governmental officers
and commissions and to investors in the Portfolio; expenses connected with the
execution, recording and settlement of security transactions; insurance
premiums; fees and expenses of the custodian for all services to the Portfolio,
including safekeeping of funds and securities and maintaining required books and
accounts; expenses of calculating the net asset value of the Portfolio
(including but not limited to the fees of independent pricing services);
expenses of meetings of the Portfolio's investors; expenses relating to the
issuance of beneficial interests in the Portfolio; and such non-recurring or
extraordinary expenses as may arise, including those relating to actions, suits
or proceedings to which the Trust on behalf of the Portfolio may be a party and
the legal obligation which the Trust may have to indemnify its Trustees and
officers, its Subadvisers and their employees with respect thereto.
4. Compensation of the Subadviser. For the services to be rendered by the
Subadviser hereunder, the Trust shall pay to the Subadviser from the assets of
the Portfolio an investment subadvisory fee, accrued daily and paid monthly, at
an annual rate equal to the percentages specified below of the aggregate assets
of the Portfolio allocated to the Subadviser:
0.35% on the first $200 million;
0.30% on remaining assets
If the Subadviser serves as investment subadviser for less than the whole
of any period specified in this Section 4, the compensation to the Subadviser
shall be prorated.
5. Covenants of the Subadviser. The Subadviser agrees that it will not
deal with itself, or with the Trustees of the Trust or the Trust's principal
underwriter or distributor, as principals in making purchases or sales of
securities or other property for the account of the Portfolio, except as
permitted by the 1940 Act, will not take a long or short position in beneficial
interests of the Portfolio except as permitted by the Declaration, and will
comply with all other provisions of the Declaration and By-Laws and the
then-current Registration Statement applicable to the Portfolio relative to the
Subadviser and its partners, directors and officers.
6. Limitation of Liability of the Subadviser. The Subadviser shall not be
liable for any error of judgment or mistake of law or for any loss arising out
of any investment or for any act or omission in the execution of securities
transactions for the Portfolio including, without limitation, acts or omissions
of any brokers, dealers and custodians, except for willful misfeasance, bad
faith or gross negligence in the performance of Subadviser's duties, or by
reason of reckless disregard of its obligations and duties hereunder. As used in
this Section 6, the term "Subadviser" shall include directors, officers,
partners and employees of the Subadviser as well as the Subadviser itself. The
Adviser is expressly made a third party beneficiary of this Agreement, and may
enforce any obligations of the Subadviser under this Agreement and recover
directly from the Subadviser for any liability the Subadviser may have
hereunder.
7. Activities of the Subadviser. The services of the Subadviser to the
Portfolio are not to be deemed to be exclusive, the Subadviser being free to
render investment advisory and/or other services to others, including accounts
or investment management companies with similar or identical investment
objectives to the Portfolio. It is understood that Trustees, officers, and
investors of the Trust or the Adviser are or may be or may become interested in
the Subadviser, as directors, officers, partners, employees, or otherwise and
that directors, officers, partners and employees of the Subadviser are or may
become similarly interested in the Trust or the Adviser and that the Subadviser
may be or may become interested in the Trust as an investor or otherwise.
8. Aggregation of Orders. The Subadviser may aggregate sales and purchase
orders of securities with similar orders being made simultaneously for other
accounts managed by the Subadviser or with accounts of the affiliates of the
Subadviser, if in the Subadviser's reasonable judgment such aggregation shall
result in an overall economic benefit to the Portfolio, taking into
consideration the advantageous selling or purchase price, brokerage commission
and other expenses. In accounting for such aggregated order price, commission
and other expenses shall be averaged on a per bond or share basis daily. Adviser
acknowledges that the determination of such economic benefit to the Portfolio by
the Subadviser is subjective and represents the Subadviser's evaluation that the
Portfolio is benefited by relatively better purchase or sales prices, lower
commission expenses and beneficial timing of transactions or a combination of
these and other factors.
9. All notices provided for in this Agreement shall be sent to:
If to the Subadviser:
Pacific Investment Management Company
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Attention: Xxxxx Xxxxx and Xxxx Xxxxxx
If to the Adviser:
Citibank Global Asset Management
Citibank, N.A.
000 X. 00xx Xxxxxx, 0xx Xxxxx, Xxxx 6
New York, New York 10043
Attention: Xxxxxx Xxxxx
If to the Trust:
Signature Financial Services, Inc.
0 Xx. Xxxxx Xxxxxx, 0xx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attention: Xxxxxx Xxxxxxxx
10. Special Termination Rights. Notwithstanding anything in this Agreement
to the contrary, the Trust may terminate this Agreement without penalty within
five (5) days of its execution of this Agreement by giving written notice to
such effect to the Subadviser within such five (5) day period.
11. Delivery of Part II of Form ADV. Concurrently with execution of this
Agreement, the Subadviser is delivering to the Trust a copy of Part II of its
Form ADV, as amended, on file with the Securities and Exchange Commission. The
Trust hereby acknowledges receipt of such copy.
12. Delivery of CFTC Disclosure Document. Upon the solicitation of the
Trust, the Subadviser delivered to the Trust a copy of its Disclosure Document,
dated July 3, 1997, on file with the Commodity Futures Trading Commission. The
Trust hereby acknowledges receipt of such copy.
13. Duration, Termination and Amendments of this Agreement. This Agreement
shall become effective as of the day and year first above written, and shall
govern the relations between the parties hereto thereafter and shall remain in
force until May 9, 1999, on which date it will terminate unless its continuance
after May 9, 1999 is "specifically approved at least annually" (a) by the vote
of a majority of the Trustees of the Trust who are not "interested persons" of
the Trust or of the Adviser or of the Subadviser at a meeting specifically
called for the purpose of voting on such approval, and (b) by the Board of
Trustees of the Trust or by "vote of a majority of the outstanding voting
securities" of the Portfolio.
This Agreement may be terminated at any time without the payment of any
penalty by (i) the Trustees, (ii) the "vote of a majority of the outstanding
voting securities" of the Portfolio, or (iii) the Adviser, in each case on not
more than 60 days' nor less than 30 days' written notice to the other party.
This Agreement may be terminated at any time without the payment of any penalty
by the Subadviser on not less than 90 days' written notice to the Adviser. This
Agreement shall automatically terminate in the event of its "assignment."
This Agreement constitutes the entire agreement between the parties and
may be amended only if such amendment is approved by the Subadviser and the
"vote of a majority of the outstanding voting securities" of the Portfolio
(except for any such amendment as may be effected in the absence of such
approval without violating the 1940 Act).
The terms "specifically approved at least annually," "vote of a majority
of the outstanding voting securities," "assignment," "affiliated person," and
"interested persons," when used in this Agreement, shall have the respective
meanings specified in, and shall be construed in a manner consistent with, the
1940 Act, subject, however, to such exemptions as may be granted by the
Securities and Exchange Commission under said Act.
Each party acknowledges and agrees that all obligations of the Trust under
this Agreement are binding only with respect to the Portfolio; that any
liability of the Trust under this Agreement, or in connection with the
transactions contemplated herein, shall be discharged only out of the assets of
the Portfolio; and that no other series of the Trust shall be liable with
respect to this Agreement or in connection with the transactions contemplated
herein.
The undersigned officer of the Trust has executed this Agreement not
individually but in his capacity as an officer of the Trust under the
Declaration, and the obligations of this Agreement are not binding upon any of
the Trustees, officers or holders of beneficial interests in the Trust
individually.
14. Governing Law. This Agreement shall be construed and the provisions
thereof interpreted under and in accordance with the laws of The Commonwealth of
Massachusetts provided, however, that nothing herein will be construed in a
manner inconsistent with the 1940 Act, the Investment Advisers Act of 1940 or
any rules or regulations of the Securities and Exchange Commission thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed and delivered in their names and on their behalf by the undersigned,
thereunto duly authorized, all as of the day and year first above written.
ASSET ALLOCATION PACIFIC INVESTMENT
PORTFOLIOS MANAGEMENT COMPANY
on behalf of Foreign
Bond Portfolio
By: Xxxxx Xxxxxxxxx By: Xxxxx X. Xxxxx
-------------------------- --------------------------
Title: Assistant Secretary Title: Managing Director
The foregoing is acknowledged:
Citibank, N.A.
By: Xxxxxxxx Xxxxxxxx
--------------------------
Title: U.S. CIO
