PHOENIX-SENECA FUNDS
SUBADVISORY AGREEMENT
January , 1998
Seneca Capital Management LLC
000 Xxxxxxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
RE: Subadvisory Agreement
Ladies and Gentlemen:
Phoenix-Seneca Funds (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 Growth Fund, the Phoenix-Seneca Mid-Cap "EDGE(sm)" Fund, the
Phoenix-Seneca Bond Fund, and the Phoenix-Seneca Real Estate Securities Fund
(collectively sometimes hereafter referred to as the "Series").
Phoenix Investment Counsel, Inc. (the "Adviser") evaluates and recommends
subadvisers for the Series 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 discretionary
series adviser 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 of the Series 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 Trust'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 of the Trust, 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 from the Trust as officers or
agents of the Trust. The Subadviser need not provide personnel to
perform, or pay the expenses of the Trust 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 a "best execution" market price 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 or exclusive 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. Proxies. The Subadviser as the Trust's authorized agent, will vote all
proxies solicited by or with respect to the issuers of securities in which
assets of the Series may be invested.
8. 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.
9. 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).
10. Confidentiality. Subject to the duty of the Subadviser and the Trust 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.
11. 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 Trust 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 Trust 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.
12. 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 Trust and 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 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 Agreement and Declaration of Trust
dated December 18, 1995 establishing the Trust, to the Trust's
Certificate of Trust, also dated December 18, 1995, which is on file
with the Office of the Secretary of State of the State of Delaware,
and to any and all amendments thereto. The name Phoenix-Seneca Funds
refers to the Trustees under said Agreement and 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 Agreement and 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.
The Subadviser hereby grants the Trust a non-exclusive license to use
"Seneca" in its name and its business and warrants that it has the
right to grant such a license. In the event of termination of this
Agreement, or at the request of the Subadviser, the Trust will
eliminate all reference to "Seneca" from its name, and will not
thereafter transact business in a name using the word "Seneca" in any
form or combination whatsoever, or otherwise use the word " Seneca" as
part of its name. The Trust will thereafter in all prospectuses,
advertising materials, letterheads, and other material designed to be
read by investors and prospective investors delete from its name the
word " Seneca" or any approximation thereof. If the Subadviser chooses
to withdraw the Trust's right to use the word "Seneca", it agrees to
submit the question of continuing this Agreement to a vote of the
Trust's shareholders at the time of such withdrawal.
13. Amendment. This Agreement may be amended at any time, but only by written
agreement among the Subadviser, the Adviser and the Trust, which amendment,
other than amendments to Schedules A, B, and D, is subject to the approval
of the Trustees and the Shareholders of the Fund as and to the extent
required by the Act.
14. Effective Date; Term. This Agreement shall become effective on the date set
forth on the first page of this Agreement, and shall continue in effect
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.
15. 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.
16. 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 Delaware.
17. 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-SENECA FUNDS
By:
----------------------
Xxxx X. Seneca
President
PHOENIX INVESTMENT COUNSEL, INC.
By:
-----------------------
Xxxxxxx X. Xxxxxx
President
ACCEPTED:
SENECA CAPITAL MANAGEMENT LLC
By:
--------------------------
Xxxx X. Seneca
President
SCHEDULES: A. Subadviser Functions
B. Operational Procedures
C. Fee Schedule
D. Record Keeping Requirements
SCHEDULE A
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SUBADVISER FUNCTIONS
With respect to managing the investment and reinvestment of each
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 Trustees and the
Adviser;
(b) Implementation of the investment program for the Series;
(c) Quarterly reports, in form and substance acceptable to the Adviser and
the Trustees, 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; 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) the implementation of the
Series' investment program, including, without limitation, analysis of
Series performance; and, vi) any and all other reports reasonably
requested by the Adviser or the Trustees;
(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 the
Trust's Distributor, and other parties requested by the Adviser or the
Trustees.
SCHEDULE B
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OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to Investors Fiduciary Trust Company, currently the
custodian for the Trust, or any other person serving as custodian for the Trust
(the "Custodian").
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.
SCHEDULE C
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SUBADVISORY FEE
For services provided to the Trust, the Adviser will pay to the
Subadviser, on or before the 12th day of each month, a fee, payable in arrears,
at the following annual rates:
Phoenix-Seneca Growth Fund 0.35%
Phoenix-Seneca Mid-Cap "EDGE(sm)" Fund 0.40%
Phoenix-Seneca Bond Fund 0.25%
Phoenix-Seneca Real Estate Securities Fund 0.375%
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 Fund and each Series shall be valued
as set forth in the then current registration statement of the Fund.
SCHEDULE D
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RECORDS TO BE MAINTAINED BY THE SUBADVISER
1. (Rule 31a-1(b)(5)) A record of each brokerage order, and all 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 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,
(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 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 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.
