Exhibit (d)(2)
INVESTMENT SUB-ADVISORY AGREEMENT
between
BOSTON MANAGEMENT AND RESEARCH
and
FOX ASSET MANAGEMENT, LLC
for
SMALL-CAP VALUE PORTFOLIO
AGREEMENT made this 18th day of March, 2002, between Boston Management and
Research, a Massachusetts business trust (the "Adviser"), and Fox Asset
Management, LLC, a Delaware limited liability corporation (the "Sub-Adviser").
WHEREAS, the Adviser has entered into an Investment Advisory Agreement (the
"Advisory Agreement") with Small-Cap Value Portfolio, a New York trust (the
"Trust"), relating to the provision of portfolio management services to the
Fund; and
WHEREAS, the Advisory Agreement provides that the Adviser may delegate any
or all of its portfolio management responsibilities under the Advisory Agreement
to one or more sub-investment advisers; and
WHEREAS, the Adviser and the Trustees of the Trust desire to retain the
Sub-Adviser to render portfolio management services to the Trust in the manner
and on the terms set forth in this Agreement;
NOW THEREFORE, in consideration of the mutual covenants and agreements set
forth herein, the Adviser and the Sub-Adviser agree as follows:
1. Duties of the Sub-Adviser. The Adviser hereby employs the Sub-Adviser to
act as investment adviser for and to manage the investment and reinvestment of
the assets of the Trust and to administer its investment affairs, subject to the
supervision of the Adviser and the Trustees of the Trust, for the period and on
the terms set forth in this Agreement.
(a) The Sub-Adviser hereby accepts such employment and undertakes to afford
to the Trust the advice and assistance of the Sub-Adviser's organization in the
choice of investments and in the purchase and sale of securities for the Trust
and to furnish, for the use of the Trust, office space and all necessary office
facilities, equipment and personnel for servicing the investments of the Trust
and for administering its affairs and to pay the salaries and fees of all
officers and Trustees of the Trust who are members of the Sub-Adviser's
organization and all personnel of the Sub-Adviser performing services relating
to research and investment activities. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, except as otherwise
expressly provided or authorized, have no authority to act for or represent the
Adviser or the Trust in any way or otherwise be deemed an agent of the Adviser
or the Trust.
(b) The Sub-Adviser shall provide the Trust with such investment management
and supervision as the Trust may, from time to time, consider necessary for the
proper supervision of the Trust. As investment adviser to the Trust, the
Sub-Adviser shall furnish continuously an investment program and shall
determine, from time to time, what securities and other investments shall be
acquired, disposed of or exchanged and what portion of the Trust's assets shall
be held uninvested, subject always to the applicable restrictions of the Trust's
Declaration of Trust, By-Laws and Registration Statement under the Investment
Company Act of 1940, all as from time to time amended. The Sub-Adviser is
authorized, in its discretion and without prior consultation with the Adviser or
the Trust, to buy, sell, and otherwise trade in any and all types of securities,
commodities and investment instruments on behalf of the Trust. Should the
Trustees of the Trust at any time, however, make any specific determination as
to investment policy for the Trust and notify the Sub-Adviser thereof in
writing, the Sub-Adviser 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 Sub-Adviser shall take, on behalf of the
Trust, all actions that it deems necessary or desirable to implement the
investment policies of the Trust.
(c) The Sub-Adviser shall place all orders for the purchase or sale of
portfolio securities for the account of the Trust either directly with the
issuer or with brokers or dealers selected by the Sub-Adviser, and, to that end,
the Sub-Adviser is authorized as the agent of the Trust to give instructions to
the custodian of the Trust as to deliveries of securities and payments of cash
for the account of the Trust. In connection with the selection of such brokers
or dealers and the placing of such orders, the Sub-Adviser shall use its best
efforts to seek to execute security transactions at prices that are advantageous
to the Trust and (when a disclosed commission is being charged) at reasonably
competitive commission rates. 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, and the
Sub-Adviser is expressly authorized to pay any broker or dealer who provides
such brokerage and research services a commission for executing a security
transaction that 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 such amount of 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 that the Sub-Adviser and its affiliates have with
respect to accounts over which they exercise investment discretion. Subject to
the requirement set forth in the second sentence of this paragraph, the
Sub-Adviser is authorized to consider, as a factor in the selection of any
broker or dealer with whom purchase or sale orders may be placed, the fact that
such broker or dealer has sold or is selling shares of the Trust, or of any one
or more investment companies sponsored by the Sub-Adviser, the Adviser, or their
affiliates.
(d) The Sub-Adviser shall furnish such reports, evaluations, information or
analyses to the Trust and the Adviser as the Trust's Board of Trustees or the
Adviser may reasonably request from time to time, or as the Sub-Adviser may deem
to be desirable.
2. Compensation of the Sub-Adviser. For the services, payments and
facilities to be furnished hereunder by the Sub-Adviser, to the extent the
Adviser receives at least such amount from the Trust pursuant to the Advisory
Agreement, the Sub-Adviser shall be entitled to receive from the Adviser
compensation in an amount equal to the following of the average daily net assets
of the Trust throughout each month:
Average Daily Net Annual Fee Rate
Assets for the Month (For Each Level)
-------------------- ----------------
Up to $500 million 0.75000%
$500 million but less than $1 billion 0.71875%
$1 billion but less than $2.5 billion 0.68750%
$2.5 billion but less than $5 billion 0.65625%
$5 billion and over 0.62500%
Such compensation shall be paid monthly in arrears on the last business day of
each month. The Trust's daily net assets shall be computed in accordance with
the Declaration of Trust of the Trust and any applicable votes and
determinations of the Trustees of the Trust. In case of initiation or
termination of the Agreement during any month with respect to the Fund, the fee
for that month shall be based on the number of calendar days during which it is
in effect.
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The Sub-Adviser may, from time to time, waive all or a part of the above
compensation.
3. Allocation of Charges and Expenses. It is understood that, pursuant to
the Advisory Agreement, the Trust will pay all expenses other than those
expressly stated to be payable by the Sub-Adviser hereunder or by the Adviser
under the Advisory Agreement, which expenses payable by the Trust shall include,
without limitation, (i) expenses of maintaining the Trust and continuing its
existence; (ii) registration of the Trust under the Investment Company Act of
1940; (iii) commissions, spreads, fees and other expenses connected with the
acquisition, holding and disposition of securities and other investments; (iv)
auditing, accounting and legal expenses; (v) taxes and interest; (vi)
governmental fees; (vii) expenses of issue, sale and redemption of Interests in
the Trust; (viii) expenses of registering and qualifying the Trust and Interests
in the Trust under federal and state securities laws and of preparing and
printing registration statements or other offering statements or memoranda for
such purposes and for distributing the same to Holders and investors, and fees
and expenses of registering and maintaining registrations of the Trust and of
the Trust's placement agent as broker-dealer or agent under state securities
laws; (ix) expenses of reports and notices to Holders and of meetings of Holders
and proxy solicitations therefor; (x) expenses of reports to governmental
officers and commissions; (xi) insurance expenses; (xii) association membership
dues; (xiii) fees, expenses and disbursements of custodians and subcustodians
for all services to the Trust (including without limitation safekeeping of
funds, securities and other investments, keeping of books, accounts and records,
and determination of net asset values, book capital account balances and tax
capital account balances); (xiv) fees, expenses and disbursements of transfer
agents, dividend disbursing agents, Holder servicing agents and registrars for
all services to the Trust; (xv) expenses for servicing Holder accounts; (xvi)
any direct charges to Holders approved by the Trustees of the Trust; (xvii)
compensation and expenses of Trustees of the Trust who are not members of the
Adviser's or the Sub-Adviser's organizations; and (xviii) such non-recurring
items as may arise, including expenses incurred in connection with litigation,
proceedings and claims and the obligation of the Trust to indemnify its
Trustees, officers, and Holders with respect thereto.
4. Other Interests. It is understood that Trustees and officers of the
Trust and Holders of the Trust are or may be or become interested in the
Sub-Adviser as trustees, officers, employees, shareholders or otherwise and that
trustees, officers, employees and shareholders of the Sub-Adviser are or may be
or become similarly interested in the Trust, and that the Sub-Adviser may be or
become interested in the Trust as a Holder or otherwise. It is also understood
that trustees, officers, employees and shareholders of the Sub-Adviser may be or
become interested (as directors, trustees, officers, employees, shareholders or
otherwise) in other companies or entities (including, without limitation, other
investment companies) that the Sub-Adviser may organize, sponsor, or acquire, or
with which it may merge or consolidate, and which may include the words "Fox
Asset" or any combination thereof as part of their name, and that the
Sub-Adviser or its subsidiaries or affiliates may enter into advisory or
management agreements or other contracts or relationships with such other
companies or entities.
5. Limitation of Liability of the Sub-Adviser. The services of the
Sub-Adviser to the Adviser for the benefit of the Trust are not to be deemed to
be exclusive, the Sub-Adviser being free to render services to others and engage
in other business activities. 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, the Sub-Adviser shall not be subject to liability to
the Adviser or the Trust or any Holder of Interest in the Trust for any act or
omission in the course of, or connected with, rendering services hereunder or
for any losses that may be sustained in the acquisition, holding, or disposition
of any security or other investment.
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6. Duration and Termination of this Agreement. This Agreement shall become
effective upon the date of its execution, and, unless terminated as herein
provided, shall remain in full force and effect through and including March 31,
2003 and shall continue in full force and effect indefinitely thereafter, but
only so long as such continuance after March 31, 2003 is specifically approved
at least annually (i) by the Board of Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Trust and (ii) by the vote
of a majority of those Trustees of the Trust who are not interested persons of
the Sub-Adviser, the Adviser, or the Trust cast in person at a meeting called
for the purpose of voting on such approval.
This Agreement may be terminated as to the Trust without the payment of any
penalty by (i) the Adviser, subject to the approval of the Trustees of the
Trust; (ii) the vote of the Trustees of the Trust; (iii) the vote of a majority
of the outstanding voting securities of the Trust at any annual or special
meeting; or (iv) the Sub-Adviser, in each case on sixty (60) days' written
notice. This Agreement shall terminate automatically in the event of its
assignment or in the event that the Advisory Agreement shall have terminated for
any reason.
7. Amendments of the Agreement. This Agreement may be amended by a writing
signed by both parties hereto, provided that no amendment to this Agreement
shall be effective until approved (i) by the vote of a majority of those
Trustees of the Trust who are not interested persons of the Sub-Adviser, the
Adviser, or the Trust cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by vote of a majority of the outstanding
voting securities of the Trust.
8. Limitation of Liability. The Sub-Adviser expressly acknowledges the
provision in the Declarations of Trust of the Trust and of the Adviser limiting
the personal liability of trustees, officers, Holders, and shareholders of the
Trust and the Adviser, respectively, and the Sub-Adviser hereby agrees that it
shall have recourse to the Trust or the Adviser, respectively, for payment of
claims or obligations as between the Trust or the Adviser, respectively, and the
Sub-Adviser arising out of this Agreement and shall not seek satisfaction from
the trustees, officers, Holders, or shareholders of the Trust or the Adviser.
9. Certain Definitions. The terms "assignment" and "interested persons"
when used herein shall have the respective meanings specified in the Investment
Company Act of 1940, as now in effect or as hereafter amended subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
by any rule, regulation or order. The term "vote of a majority of the
outstanding voting securities" shall mean the vote, at a meeting of Holders, of
the lesser of (a) 67 per centum or more of the Interests in the Trust present or
represented by proxy at the meeting if the holders of more than 50 per centum of
the outstanding Interests in the Trust are present or represented by proxy at
the meeting, or (b) more than 50 per centum of the outstanding Interests in the
Trust.
10. Miscellaneous.
(a) If any term or provision of this Agreement or the application thereof
to any person or circumstance is held to be invalid or unenforceable to any
extent, the remainder of this Agreement or the application of such provision to
other persons or circumstances shall not be affected thereby and shall be
enforced to the fullest extent permitted by law.
(b) This Agreement shall be governed by and interpreted in accordance with
the laws of the Commonwealth of Massachusetts.
(c) This Agreement may be executed by the parties hereto in any number of
counterparts, and all of said counterparts taken together shall be deemed to
constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day and year first above written.
BOSTON MANAGEMENT AND RESEARCH
By: /s/ Xxxx X. Xxxxxx
--------------------------------
Vice President
and not individually
FOX ASSET MANAGEMENT, LLC
By: /s/ Xxxx X. Xxxxxxxxxx
--------------------------------
Name: Xxxx X. Xxxxxxxxxx
-----------------------
Title: President
---------------------
Acknowledged and agreed to as of the day
and year first above written:
SMALL-CAP VALUE PORTFOLIO
By: /s/ Xxxxx X. Xxxxxx
-------------------------------
President
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