INVESTMENT SUBADVISORY AGREEMENT
between
THE CHASE MANHATTAN BANK
and
CHASE ASSET MANAGEMENT, INC.
AGREEMENT made as of the __th day of ________, 1996, by and between
The Chase Manhattan Bank, a New York State chartered bank (the "Adviser"), and
Chase Asset Management, Inc., a Delaware Corporation (the "Sub-Adviser").
WHEREAS, the Adviser provides investment advisory services to the
Emerging Growth Portfolio, a New York business trust (the "Trust"), which is
registered as an open-end, non-diversified, management investment company under
the Investment Company Act of 1940, as amended (the "1940 Act"), pursuant to an
Investment Advisory Agreement dated ________ __, 1996 (the "Advisory
Agreement"); and
WHEREAS, the Sub-Adviser is a registered investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment subadvisory services in connection with the Trust and the Sub-Adviser
represents that it is willing and possesses legal authority to so furnish such
services;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. Appointment.
(a) General. The Adviser hereby appoints the Sub-Adviser to act as
investment subadviser to the Trust for the period and on the terms
set forth in this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services herein set forth
for the compensation herein provided.
(b) Employees of Affiliates. The Sub-Adviser may, in its discretion,
provide such services through its own employees or the employees
of one or more affiliated companies that are qualified to act as
an investment subadviser to the Trust under applicable laws and
are under the control of The Chase Manhattan Corporation, the
indirect parent of the Sub-Adviser; provided that (i) all persons,
when providing services hereunder, are functioning as part of an
organized group of persons, and (ii) such organized group of
persons is managed at all times by authorized officers of the
Sub-Adviser.
2. Delivery of Documents. The Adviser has delivered to the Sub-Adviser
copies of each of the following documents along with all amendments thereto
through the date hereof, and will promptly deliver to it all future amendments
and supplements thereto, if any:
(a) the Trust's Declaration of Trust;
(b) the By-Laws of the Trust;
(c) resolutions of the Board of Trustees of the Trust authorizing the
execution and delivery of the Advisory Agreement and this
Agreement;
(d) the most recent Post-Effective Amendment to the Trust's
Registration Statement under the 1940 Act, on Form N-1A as filed
with the Securities and Exchange Commission (the "Commission");
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission.
3. Investment Advisory Services.
(a) Management of the Trust. The Sub-Adviser hereby undertakes to act
as investment subadviser to the Trust. The Sub-Adviser shall
regularly provide investment advice to the Trust and continuously
supervise the investment and reinvestment of cash, securities and
other property composing the assets of the Trust and, in
furtherance thereof, shall:
(i) obtain and evaluate pertinent economic, statistical and
financial data, as well as other significant events and
developments, which affect the economy generally, the
Trust's investment programs, and the issuers of securities
included in the Trust's portfolio and the industries in
which they engage, or which may relate to securities or
other investments which the Sub-Adviser may deem desirable
for inclusion in the Trust's portfolio;
(ii) determine which issuers and securities shall be included in
the portfolio of the Trust;
(iii) furnish a continuous investment program for the Trust;
(iv) in its discretion, and without prior consultation, buy,
sell, lend and otherwise trade any stocks, bonds and other
securities and investment instruments on behalf of the
Trust, and
(v) take, on behalf of the Trust, all actions the Sub-Adviser
may deem necessary in order to carry into effect such
investment program and the Sub-Adviser's functions as
provided above, including the making of
- 2 -
appropriate periodic reports to the Adviser and the Trust's
Board of Trustees.
(b) Covenants. The Sub-Adviser shall carry out its investment
subadvisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in: (i)
the Trust's Registration Statement as revised and in effect from
time to time; (ii) the Trust's Declaration of Trust, By-Laws or
other governing instruments, as amended from time to time; (iii)
the 1940 Act; (iv) other applicable laws; and (v) such other
investment policies, procedures and/or limitations as may be
adopted by the Trust or the Adviser and provided to the
Sub-Adviser in writing. The Sub-Adviser agrees to use reasonable
efforts to manage the Trust so that each of its investors will
qualify, and continue to qualify, as a regulated investment
company under Subchapter M of the Internal Revenue Code of 1986,
as amended, and regulations issued thereunder (the "Code"), except
as may be authorized to the contrary by the Trust's Board of
Trustees. The management of the Trust by the Sub-Adviser shall at
all times be subject to the review of the Adviser and the Trust's
Board of Trustees.
(c) Books and Records. Pursuant to applicable law, the Sub-Adviser
shall keep the Trust's books and records required to be maintained
by, or on behalf of, the Trust with respect to subadvisory
services rendered hereunder. The Sub-Adviser agrees that all
records which it maintains for the Trust are the property of the
Trust and it will promptly surrender any of such records to the
Trust upon the Trust's request. The Sub-Adviser further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940
Act any such records of the Trust required to be preserved by such
Rule.
(d) Reports, Evaluations and other services. The Sub-Adviser shall
furnish reports, evaluations, information or analyses to the
Adviser and the Trust and in connection with the Sub-Adviser's
services hereunder as the Adviser and/or the Trust's Board of
Trustees may request from time to time or as the Sub-Adviser may
otherwise deem to be desirable. The Sub-Adviser shall make
recommendations to the Adviser and the Trust's Board of Trustees
with respect to the Trust's policies, and shall carry out such
policies as are adopted by the Board of Trustees. The Sub-Adviser
may, subject to review by the Adviser, furnish such other services
as the Sub-Adviser shall from time to time determine to be
necessary or useful to perform its obligations under this
Agreement.
(e) Purchase and Sale of Securities. The Sub-Adviser shall place all
orders for the purchase and sale of portfolio securities for the
Trust with brokers or dealers selected by the Sub-Adviser, which
may include brokers or dealers affiliated with the Adviser or the
Sub-Adviser to the extent permitted by the 1940 Act and the
Trust's policies and procedures. The Sub-Adviser shall use its
best efforts to seek to execute portfolio transactions at prices
which, under the circumstances, result in total costs or proceeds
being the most favorable to the Trust. In assessing the
- 3 -
best overall terms available for any transaction, the Sub-Adviser
shall consider all factors it deems relevant, including the
breadth of the market in the security, the price of the security,
the financial condition and execution capability of the broker or
dealer, research services provided to the Sub-Adviser, and the
reasonableness of the commission, if any, both for the specific
transaction and on a continuing basis. In no event shall the
Sub-Adviser be under any duty to obtain the lowest commission or
the best net price for the Trust on any particular transaction,
nor shall the Sub-Adviser be under any duty to execute any order
in a fashion either preferential to the Trust relative to other
accounts managed by the Sub-Adviser or otherwise materially
adverse to such other accounts.
(f) Selection of Brokers or Dealers. In selecting brokers or dealers
qualified to execute a particular transaction, 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 Sub-Adviser, the Trust and/or the
other accounts over which the Sub-Adviser exercises investment
discretion. The Sub-Adviser is authorized to pay a broker or
dealer who provides such brokerage and research services a
commission for executing a portfolio transaction for the Trust
which is in excess of the amount of commission another broker or
dealer would have charged for effecting that transaction if the
Sub-Adviser determines in good faith that the total commission is
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall responsibilities
of the Sub-Adviser with respect to accounts over which it
exercises investment discretion. The Sub-Adviser shall report to
the Board of Trustees of the Trust regarding overall commissions
paid by the Trust and their reasonableness in relation to their
benefits to the Trust.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for the Trust, the Sub-Adviser may, to the extent
permitted by applicable laws and regulations, but shall not be
obligated to, aggregate the securities to be sold or purchased
with those of other clients if, in the Sub-Adviser's reasonable
judgment, such aggregation (i) will result in an overall economic
benefit to the Trust, taking into consideration the advantageous
selling or purchase price, brokerage commission and other
expenses, and trading requirements, and (ii) is not inconsistent
with the policies set forth in the Trust's Registration Statement.
In such event, the Sub-Adviser will allocate the securities so
purchased or sold, and the expenses incurred in the transaction,
in an equitable manner, consistent with its fiduciary obligations
to the Trust and such other clients.
- 4 -
4. Representations and Warranties.
(a) The Sub-Adviser hereby represents and warrants to the Adviser as
follows:
(i) The Sub-Adviser is a corporation duly organized and in good
standing under the laws of the State of Delaware and is
fully authorized to enter into this Agreement and carry out
its duties and obligations hereunder.
(ii) The Sub-Adviser is registered as an investment adviser with
the Commission under the Advisers Act, and is registered or
licensed as an investment adviser under the laws of all
applicable jurisdictions. The Sub-Adviser shall maintain
such registrations or licenses in effect at all times during
the term of this Agreement.
(iii) The Sub-Adviser at all times shall provide its best judgment
and effort to the Adviser in carrying out the Sub-Adviser's
obligations hereunder.
(b) The Adviser hereby represents and warrants to the Sub-Adviser as
follows:
(i) The Adviser is a national banking association duly organized
and in good standing under the laws of the United States of
America and is fully authorized to enter into this Agreement
and carry out its duties and obligations hereunder.
(ii) The Trust has been duly organized as a business trust under
the laws of the State of New York.
(iii) The Trust is registered as an investment company with the
Commission under the 1940 Act. Such registration will be
kept in effect during the term of this Agreement.
5. Compensation. (a) As compensation for the services which the
Sub-Adviser is to provide or cause to be provided pursuant to Paragraph 3, the
Adviser shall pay to the Sub-Adviser (or cause to be paid by the Trust directly
to the Sub-Adviser) a fee, which shall be accrued daily and paid in arrears on
the first business day of each month, at an annual rate of 0.30% of the average
daily net assets of the Trust during the preceding month (computed in the manner
set forth in the Trust's Registration Statement). Average daily net assets shall
be based upon determinations of net assets made as of the close of business on
each business day throughout such month. The fee for any partial month shall be
calculated on a proportionate basis, based upon average daily net assets for
such partial month.
- 5 -
(b) The Sub-Adviser shall have the right, but not the obligation, to
voluntarily waive any portion of the sub-advisory fee from time to
time. Any such voluntary waiver will be irrevocable and determined
in advance of rendering sub-investment advisory services by the
Sub-Adviser, and shall be in writing and signed by the parties
hereto.
(c) If the aggregate expenses incurred by, or allocated to, the Trust
in any fiscal year shall exceed the lowest expense limitation, if
applicable to the Trust, imposed by state securities laws or
regulations thereunder, as such limitations may be raised or
lowered from time to time, the Sub-Adviser shall reduce its
investment advisory fee, but not below zero, to the extent of its
share of such excess expenses; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes,
brokerage commissions and extraordinary expenses (including but
not limited to legal claims and liabilities and litigation costs
and any indemnification related thereto) paid or payable by the
Trust. Such reduction, if any, shall be computed and accrued
daily, shall be settled on a monthly basis and shall be based upon
the expense limitation applicable to the Trust as at the end of
the last business day of the month. Should two or more of such
expense limitations be applicable at the end of the last business
day of the month, that expense limitation which results in the
largest reduction in the Sub-Adviser's fee shall be applicable.
For the purposes of this paragraph, the Sub-Adviser's share of any
excess expenses shall be computed by multiplying such excess
expenses by a fraction, the numerator of which is the amount of
the investment advisory fee which would otherwise be payable to
the Sub-Adviser for such fiscal year were it not for this
subsection 5(b) and the denominator of which is the sum of all
investment advisory and administrative fees which would otherwise
be payable by the Trust were it not for the expense limitation
provisions of any investment advisory or administrative agreement
to which the Trust is a party.
6. Interested Persons. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and investors of the Trust or the
Adviser are or may be or become interested in the Sub-Adviser as directors,
officers or otherwise and that directors, officers and shareholders of the
Sub-Adviser are or may be or become similarly interested in the Trust or the
Adviser.
7. Expenses. The Sub-Adviser will pay all expenses incurred by it in
connection with its activities under this Agreement other than the cost of
securities (including brokerage commissions) purchased for or sold by the Trust.
8. Non-Exclusive Services; Limitation of Sub-Adviser's Liability. The
services of the Sub-Adviser hereunder are not to be deemed exclusive, and the
Sub-Adviser may render similar services to others and engage in other
activities. The Sub-Adviser and its affiliates may enter into other agreements
with the Trust or the Adviser for providing additional services to the
- 6 -
Trust or the Adviser which are not covered by this Agreement, and to receive
additional compensation for such services. In the absence of willful
misfeasance, bad faith, gross negligence or reckless disregard of obligations or
duties hereunder on the part of the Sub-Adviser, or a breach of fiduciary duty
with respect to receipt of compensation, neither the Sub-Adviser nor any of its
directors, officers, shareholders, agents, or employees shall be liable or
responsible to the Adviser, the Trust or to any investor for any error of
judgment or mistake of law or for any act or omission in the course of, or
connected with, rendering services hereunder or for any loss suffered by the
Adviser, the Trust, or any investor in connection with the performance of this
Agreement.
9. Effective Date; Modifications; Termination. This Agreement shall
become effective on the date hereof (the "Effective Date") provided that it
shall have been approved by a majority of the outstanding voting securities of
the Trust, in accordance with the requirements of the 1940 Act, or such later
date as may be agreed by the parties following such shareholder approval.
(a) This Agreement shall continue in force for two years from the
Effective Date and shall continue in effect from year to year
thereafter for successive annual periods, provided such
continuance is specifically approved at least annually (i) by a
vote of the majority of the Trustees of the Trust who are not
parties to this Agreement or interested persons of any such
party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by a vote of the Board of
Trustees of the Trust or a majority of the outstanding voting
securities of the Trust.
(b) The modification of any of the non-material terms of this
Agreement may be approved by a vote of a majority of those
Trustees of the Trust who are not interested persons of any party
to this Agreement, cast in person at a meeting called for the
purpose of voting on such approval.
(c) Notwithstanding the foregoing provisions of this Paragraph 9,
either party hereto may terminate this Agreement at any time on
sixty (60) days' prior written notice to the other, without
payment of any penalty. A termination of the Sub-Adviser may be
effected by the Adviser, by a vote of the Trust's Board of
Trustees, or by vote of a majority of the outstanding voting
securities of the Trust. This Agreement shall terminate
automatically in the event of its assignment.
- 7 -
10. Limitation of Liability of Trustees and Investors. The Sub-Adviser
acknowledges the following limitation of liability:
The terms "Emerging Growth Portfolio" and "Trustees of Emerging Growth
Portfolio" refer, respectively, to the trust created and the Trustees, as
trustees but not individually or personally, acting from time to time under the
Declaration of Trust, to which reference is hereby made and a copy of which is
on file at the office of the Secretary of State of the State of New York, such
reference being inclusive of any and all amendments thereto so filed or
hereafter filed. The obligations of "Emerging Growth Portfolio" entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
are made not individually, but in such capacities and are not binding upon any
of the Trustees, investors or representatives of the Trust personally, but bind
only the assets of the Trust, and all persons dealing with the Trust must look
solely to the assets of the Trust for the enforcement of any claims against the
Trust.
11. Certain Definitions. The terms "vote of a majority of the
outstanding voting securities," "assignment," "control," and "interested
persons," when used herein, shall have the respective meanings specified in the
1940 Act. References in this Agreement to the 1940 Act and the Advisers Act
shall be construed as references to such laws as now in effect or as hereafter
amended, and shall be understood as inclusive of any applicable rules,
interpretations and/or orders adopted or issued thereunder by the Commission.
12. Independent Contractor. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, unless otherwise
expressly provided herein or authorized by the Board of Trustees of the Trust
from time to time, have no authority to act for or represent the Trust in any
way or otherwise be deemed an agent of the Trust.
13. Governing Law. This Agreement shall be governed by the laws of the
State of New York, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act or the Advisers Act.
14. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the remainder of
this Agreement shall not be affected thereby and, to this extent, the provisions
of this Agreement shall be deemed to be severable.
15. Notices. Notices of any kind to be given to the Adviser hereunder
by the Sub-Adviser shall be in writing and shall be duly given if mailed or
delivered to the Adviser at 000 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 or at such
other address or to such individual as shall be so specified by the Adviser to
the Sub-Adviser. Notices of any kind to be given to the Sub-Adviser hereunder by
the Adviser shall be in writing and shall be duly given if mailed or
- 8 -
delivered to the Sub-Adviser at 1211 Avenue of the Americas, Xxx Xxxx, Xxx Xxxx
00000 or at such other address or to such individual as shall be so specified by
the Sub-Adviser to the Adviser. Notices shall be effective upon delivery.
- 9 -
IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the date
written above.
THE CHASE MANHATTAN BANK CHASE ASSET MANAGEMENT, INC.
By: __________________________ By: _________________________
Name: Name:
Title: Title:
- 10 -
