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SUBADVISORY AGREEMENT
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August 4, 1999
Seneca Capital Management LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: SUBADVISORY AGREEMENT
Gentlemen:
The Phoenix Edge Series Fund (the "Trust") is a diversified open-end investment
company of the series type registered under the Investment Company Act of 1940
(the "Act"), and is subject to the rules and regulations promulgated thereunder.
The shares of the Trust are offered or may be offered in several series,
including the Phoenix-Seneca Strategic Theme Series (hereafter referred to as
the "Series").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and recommends series
advisers for the Trust and is responsible for the day-to-day management of the
Series.
1. Employment as a Subadviser. The Adviser, being duly authorized, hereby
employs Seneca Capital Management LLC (the "Subadviser") as a subadviser to
invest and reinvest the assets of the Series on the terms and conditions
set forth herein. The services of the Subadviser hereunder are not to be
deemed exclusive; the Subadviser may render services to others and engage
in other activities which do not conflict in any material manner in the
Subadviser's performance hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadviser accepts
its employment as a subadviser to the Adviser and agrees to use its best
professional judgment to make investment decisions for the Series in
accordance with the provisions of this Agreement.
3. Services of Subadviser. The Subadviser shall provide the services set forth
herein and in Schedule A attached hereto and made a part hereof. In
providing management services to the Series, the Subadviser shall be
subject to the investment objectives, policies and restrictions of the
Trust as they apply to the Series and as set forth in the Trust's then
current Prospectus and Statement of Additional Information (as the same may
be modified from time to time), and to the Trust's Agreement and
Declaration of Trust and By-Laws, to the investment and other restrictions
set forth in the Act, the Securities Act of 1933 and the Internal Revenue
Code and the rules and regulations thereunder, and to the supervision and
control of the Trustees of the Trust (the "Trustees"). The Subadviser shall
not, without the Adviser's prior approval, effect any transactions which
would cause the Series at the time of the transaction to be out of
compliance with any of such restrictions or policies.
4. Expenses. The Subadviser shall furnish at its own expense, or pay the
expenses of the Adviser, for the following:
(a) Office facilities, including office space, furniture and equipment utilized
by its employees, in the fulfillment of Subadviser's responsibilities
hereunder;
(b) Personnel necessary to perform the functions required to manage the
investment and reinvestment of each Series' assets (including those
required for research, statistical and investment work), and to fulfill the
other functions of the Subadviser hereunder;
(c) Personnel to serve without salaries for the Trust as officers or agents of
the Trust. The Subadviser need not provide personnel to perform, or pay the
expenses of the Adviser for, services customarily performed for an open-end
management investment company by its national distributor, custodian,
financial agent, transfer agent, auditors and legal counsel; and
(d) Compensation and expenses, if any, of the Trustees who are also full-time
employees of the Subadviser.
5. Transaction Procedures. All transactions for the Series will be consummated
by payment to, or delivery by, the Custodian(s) from time to time
designated by the Trust (the "Custodian"), or such depositories or agents
as may be designated by the Custodian pursuant to its agreement with the
Trust (the "Custodian Agreement"), of all cash and/or securities due to or
from the Series. The Subadviser shall not have possession or custody of
such cash and/or securities or any responsibility or liability with respect
to such custody. The Subadviser shall advise the Custodian and confirm in
writing to the Trust all investment orders for the Series placed by it with
brokers and dealers at the time and in the manner set forth in the
Custodian Agreement and in Schedule B hereto (as amended from time to
time). The Trust shall issue to the Custodian such instructions as may be
appropriate in connection with the settlement of any transaction initiated
by the Subadviser. The Trust shall be responsible for all custodial
arrangements and the payment of all custodial charges and fees, and, upon
giving proper instructions to the Custodian, the Subadviser shall have no
responsibility or liability with respect to custodial arrangements or the
acts, omissions or other conduct of the Custodian.
6. Allocation of Brokerage. The Subadviser shall have authority and discretion
to select brokers and dealers to execute Series transactions initiated by
the Subadviser, and to select the markets on or in which the transactions
will be executed.
A. In placing orders for the sale and purchase of Series securities for
the Trust, the Subadviser's primary responsibility shall be to seek the
best execution of orders at the most favorable prices. However, this
responsibility shall not obligate the Subadviser to solicit competitive
bids for each transaction or to seek the lowest available commission
cost to the Trust, so long as the Subadviser reasonably believes that
the broker or dealer selected by it can be expected to obtain "best
execution" on the particular transaction and determines in good faith
that the commission cost is reasonable in relation to the value of the
brokerage and research services (as defined in Section 28(e)(3) of the
Securities Exchange Act of 1934) provided by such broker or dealer to
the Subadviser, viewed in terms of either that particular transaction
or of the Subadviser's overall responsibilities with respect to its
clients, including the Trust, as to which the Subadviser exercises
investment discretion, notwithstanding that the Trust may not be the
direct or exclusive beneficiary of any such services or that another
broker may be willing to charge the Trust a lower commission on the
particular transaction.
B. Subject to the requirements of paragraph A above, the Adviser shall
have the right to require that transactions giving rise to brokerage
commissions, in an amount to be agreed upon by the Adviser and the
Subadviser, shall be executed by brokers and dealers that provide
brokerage or research services to the Trust or that will be of value to
the Trust in the management of its assets, which services and
relationship may, but need not, be of direct benefit to the Series. In
addition, subject to paragraph A above, the applicable Conduct Rules of
the National Association of Securities Dealers, Inc. and other
applicable law, the Trust shall have the right to request that
transactions be executed by brokers and dealers by or through whom
sales of shares of the Trust are made.
C. The Subadviser shall not execute any transactions for the Series with a
broker or dealer that is an "affiliated person" (as defined in the Act)
of the Trust, the Subadviser or the Adviser without the prior written
approval of the Trust.
7. Fees for Services. The compensation of the Subadviser for its services
under this Agreement shall be calculated and paid by the Adviser in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Trust and the Adviser, the Adviser is solely
responsible for the payment of fees to the Subadviser.
8. Limitation of Liability. The Subadviser shall not be liable for any action
taken, omitted or suffered to be taken by it in its best professional
judgment, in good faith and believed by it to be authorized or within the
discretion or rights or powers conferred upon it by this Agreement, or in
accordance with specific directions or instructions from the Trust,
provided, however, that such acts or omissions shall not have constituted a
breach of the investment objectives, policies and restrictions applicable
to the Series and that such acts or omissions shall not have resulted from
the Subadviser's willful misfeasance, bad faith or gross negligence, a
violation of the standard of care established by and applicable to the
Subadviser in its actions under this Agreement or a breach of its duty or
of its obligations hereunder (provided, however, that the foregoing shall
not be construed to protect the Subadviser from liability under the Act,
other federal or state securities laws or common law).
9. Confidentiality. Subject to the duty of the Subadviser to comply with
applicable law, including any demand of any regulatory or taxing authority
having jurisdiction, the parties hereto shall treat as confidential all
information pertaining to the Series and the actions of the Subadviser and
the Trust in respect thereof.
10. Assignment. This Agreement shall terminate automatically in the event of
its assignment, as that term is defined in Section 2(a)(4) of the Act. The
Subadviser shall notify the Adviser in writing sufficiently in advance of
any proposed change of control, as defined in Section 2(a)(9) of the Act,
as will enable the Adviser to consider whether an assignment as defined in
Section 2(a)(4) of the Act will occur, and to take the steps it deems
necessary.
11. Representations, Warranties and Agreements of the Subadviser. The
Subadviser represents, warrants and agrees that:
A. It is registered as an "investment adviser" under the Investment
Advisers Act of 1940 ("Advisers Act").
B. It will maintain, keep current and preserve on behalf of the Trust, in
the manner required or permitted by the Act and the Rules thereunder,
the records identified in Schedule D (as amended from time to time).
The Subadviser agrees that such records are the property of the Trust,
and will be surrendered to the Trust or to Adviser as agent of the
Trust promptly upon request of either.
C. It has a written code of ethics complying with the requirements of
Rule 17j-l under the Act and will provide the Adviser with a copy of the
code of ethics and evidence of its adoption. Subadviser acknowledges
receipt of the written code of ethics adopted by and on behalf of the
Trust (the "Code of Ethics"). Within 10 days of the end of each calendar
quarter while this Agreement is in effect, a duly authorized compliance
officer of the Subadviser shall certify to the Trust and to the Adviser
that the Subadviser has complied with the requirements of Rule 17j-l
during the previous calendar quarter and that there has been no
violation of its code of ethics, or the Code of Ethics, or if such a
violation has occurred, that appropriate action was taken in
response to such violation. The Subadviser shall permit the Trust and
Adviser to examine the reports required to be made by the Subadviser
under Rule 17j-l(c)(1) and this subparagraph.
D. Reference is hereby made to the Declaration of Trust dated February 18,
1986, establishing the Trust, a copy of which has been filed with the
Secretary of the Commonwealth of Massachusetts and elsewhere as required
by law, and to any and all amendments thereto so filed or hereafter
filed with the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law. The name "The Phoenix Edge Series Fund"
refers to the Trustees under said Declaration of Trust, as Trustees and
not personally, and no Trustee, shareholder, officer, agent or employee
of the Trust shall be held to any personal liability in connection with
the affairs of the Trust; only the trust estate under said Declaration
of Trust is liable. Without limiting the generality of the foregoing,
neither the Subadviser nor any of its officers, directors, partners,
shareholders or employees shall, under any circumstances, have recourse
or cause or willingly permit recourse to be had directly or indirectly
to any personal, statutory, or other liability of any shareholder,
Trustee, officer, agent or employee of the Trust or of any successor of
the Trust, whether such liability now exists or is hereafter incurred
for claims against the trust estate.
12. Amendment. This Agreement may be amended at any time, but only by written
agreement among the Subadviser, and the Adviser, which amendment, other
than amendments to Schedules B and D, is subject to the approval of the
Trustees and the Shareholders of the Trust as and to the extent required by
the Act.
13. Effective Date; Term. This Agreement shall become effective on the date set
forth on the first page of this Agreement. Unless terminated as hereinafter
provided, this Agreement shall remain in full force and effect until
December 31, 1999, and thereafter only so long as its continuance has been
specifically approved at least annually by the Trustees in accordance with
Section 15(a) of the Act, and by the majority vote of the disinterested
Trustees in accordance with the requirements of Section 15(c) thereof.
14. Termination. This Agreement may be terminated by any party, without
penalty, immediately upon written notice to the other parties in the event
of a breach of any provision thereof by a party so notified, or otherwise
upon sixty (60) days' written notice to the other parties, but any such
termination shall not affect the status, obligations or liabilities of any
party hereto to the other parties.
15. Applicable Law. To the extent that state law is not preempted by the
provisions of any law of the United States heretofore or hereafter enacted,
as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the
Commonwealth of Massachusetts.
16. Severability. If any term or condition of this Agreement shall be invalid
or unenforceable to any extent or in any application, then the remainder of
this Agreement shall not be affected thereby, and each and every term and
condition of this Agreement shall be valid and enforced to the fullest
extent permitted by law.
PHOENIX INVESTMENT COUNSEL, INC.
By:/s/ Xxxxxxx X. Xxxxxx
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Name: Xxxxxxx X. Xxxxxx
Title: President
ACCEPTED:
XXXXX XXXXXXXX & ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxxxxxxx
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Name: Xxxxxx X. Xxxxxxx
Title: Chief Operating Officer
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
SCHEDULE A
SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadviser shall provide, at its own expense:
(a) An investment program for the Series consistent with its investment
objectives based upon the development, review and adjustment of
buy/sell strategies approved from time to time by the Board of Trustees
and Adviser;
(b) Implementation of the investment program for the Series based upon the
foregoing criteria;
(c) Quarterly reports, in form and substance acceptable to the Adviser,
with respect to: i) compliance with the Code of Ethics and the
Subadviser's code of ethics; ii) compliance with procedures adopted
from time to time by the Trustees of the Trust relative to securities
eligible for resale under Rule 144A under the Securities Act of 1933,
as amended; iii) diversification of Series assets in accordance with
the then prevailing prospectus and statement of additional information
pertaining to the Series and governing laws; iv) compliance with
governing restrictions relating to the fair valuation of securities for
which market quotations are not readily available or considered
"illiquid" for the purposes of complying with the Series limitation on
acquisition of illiquid securities; v) any and all other reports
reasonably requested in accordance with or described in this Agreement;
and, vi) the implementation of the Series investment program,
including, without limitation, analysis of Series performance;
(d) Attendance by appropriate representatives of the Subadviser at meetings
requested by the Adviser or Trustees at such time(s) and location(s) as
reasonably requested by the Adviser or Trustees; and
(e) Participation, overall assistance and support in marketing the Series,
including, without limitation, meetings with pension fund
representatives, broker/dealers who have a sales agreement with Phoenix
Equity Planning Corporation, and other parties requested by the
Adviser.
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SCHEDULE B
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank and Trust Company (the
"Custodian"), the custodian for the Trust. The Subadviser must furnish the
Custodian with daily information as to executed trades, or, if no trades are
executed, with a report to that effect, no later than 5 p.m. (Eastern Standard
time) on the day of the trade (confirmation received from broker). The necessary
information can be sent via facsimile machine to the Custodian. Information
provided to the Custodian shall include the following:
1. Purchase or sale;
2. Security name;
3. CUSIP number (if applicable);
4. Number of shares and sales price per share;
5. Executing broker;
6. Settlement agent;
7. Trade date;
8. Settlement date;
9. Aggregate commission or if a net trade;
10. Interest purchased or sold from interest bearing security;
11. Other fees;
12. Net proceeds of the transaction;
13. Exchange where trade was executed; and
14. Identified tax lot (if applicable).
When opening accounts with brokers for, and in the name of, the Trust, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Trust. Delivery instructions are as specified by the Custodian. The
Custodian will supply the Subadviser daily with a cash availability report. This
will normally be done by telex so that the Subadviser will know the amount
available for investment purposes.
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SCHEDULE C
SUBADVISORY FEE
For services provided to the Trust pursuant to paragraph 3 hereof, the
Adviser will pay to the Subadviser, on or before the 10th day of each month, a
fee, payable in arrears, at the annual rate of 0.10% of the average daily net
assets of the Phoenix-Seneca Strategic Theme Series up to $201million and 0.375%
of such value in excess of $201 million and $1 billion, 0.350% of such value
between $1 billion and $2 billion, and 0.325% of such value in excess of $2
billion. The fees shall be prorated for any month during which this agreement is
in effect for only a portion of the month. In computing the fee to be paid to
the Subadviser, the net asset value of the Trust and each Series shall be valued
as set forth in the then current registration statement of the Trust.
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SCHEDULE D
RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all other series
purchases and sales, given by the Subadviser on behalf of the Trust for, or
in connection with, the purchase or sale of securities, whether executed or
unexecuted. Such records shall include:
A. The name of the broker;
B. The terms and conditions of the order and of any modifications or
cancellations thereof;
C. The time of entry or cancellation;
D. The price at which executed;
E. The time of receipt of a report of execution; and
F. The name of the person who placed the order on behalf of the Trust.
2. (Rule 31a-1(b)(9)) A record for each fiscal quarter, completed within ten
(10) days after the end of the quarter, showing specifically the basis or
bases upon which the allocation of orders for the purchase and sale of
series securities to named brokers or dealers was effected, and the
division of brokerage commissions or other compensation on such purchase
and sale orders. Such record:
A. Shall include the consideration given to:
(i) The sale of shares of the Trust by brokers or dealers.
(ii) The supplying of services or benefits by brokers or dealers to:
(a) The Trust,
(b) The Adviser (Phoenix Investment Counsel, Inc.)
(c) The Subadviser, and
(d) Any person other than the foregoing.
(iii) Any other consideration other than the technical qualifications
of the brokers and dealers as such.
B. Shall show the nature of the services or benefits made available.
C. Shall describe in detail the application of any general or specific
formula or other determinant used in arriving at such
allocation of purchase and sale orders and such division of brokerage
commissions or other compensation.
D. The name of the person responsible for making the determination of such
allocation and such division of brokerage commissions or other
compensation.
3. (Rule 31a-(b)(10)) A record in the form of an appropriate memorandum
identifying the person or persons, committees or groups authorizing the
purchase or sale of series securities. Where an authorization is made by a
committee or group, a record shall be kept of the names of its members who
participate in the authorization. There shall be retained as part of this
record: any memorandum, recommendation or instruction supporting or
authorizing the purchase or sale of series securities and such other
information as is appropriate to support the authorization.*
4. (Rule 31a-1(f)) Such accounts, books and other documents as are required to
be maintained by registered investment advisers by rule adopted under
Section 204 of the Investment Advisers Act of 1940, to the extent such
records are necessary or appropriate to record the Subadviser's
transactions for the Trust.
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* Such information might include: current financial information, annual and
quarterly reports, press releases, reports by analysts and from brokerage firms
(including their recommendation; i.e., buy, sell, hold) or any internal reports
or subadviser review.
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