INVESTMENT ADVISORY AGREEMENT
BETWEEN
EMERGING GROWTH PORTFOLIO
AND
THE CHASE MANHATTAN BANK
AGREEMENT made as of the __th day of ________, 1996, by and between
Emerging Growth Portfolio, a New York business trust (hereinafter the "Trust"),
and The Chase Manhattan Bank, a New York State chartered bank (hereinafter the
"Adviser").
WHEREAS, the Trust is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trust desires to retain the Adviser to furnish investment
advisory services to the Trust, and the 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. Delivery of Documents. The Trust has delivered to the Adviser
copies of each of the following documents and will 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 this Agreement;
(d) The most recent Registration Statement under the Investment
Company Act of 1940, as amended (the "1940 Act"), on Form N-1A as
filed with the Securities and Exchange Commission (the
"Commission") (the "Registration Statement");
(e) Notification of Registration of the Trust under the 1940 Act on
Form N-8A as filed with the Commission.
2. Appointment.
(a) General. The Trust hereby appoints the Adviser to act as
investment adviser to the Trust for the period and on the terms
set forth in this Agreement. The
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Adviser accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided.
(b) Employees of Affiliates. The 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 adviser to the Trust under applicable laws and are
under the control of The Chase Manhattan Corporation, the parent
of the 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 Adviser.
(c) Sub-Advisers. It is understood and agreed that the Adviser may
from time to time employ or associate with such other entities or
persons as the Adviser believes appropriate to assist in the
performance of this Agreement with respect to the Trust (each a
"Sub-Adviser"), and that any such Sub-Adviser shall have all of
the rights and powers of the Adviser set forth in this Agreement;
provided that the Trust shall not pay any additional compensation
for any Sub- Adviser and the Adviser shall be as fully responsible
to the Trust for the acts and omissions of the Sub-Adviser as it
is for its own acts and omissions; and provided further that the
retention of any Sub-Adviser shall be approved in advance by (i)
the Board of Trustees of the Trust and (ii) the investors of the
Trust if required under any applicable provisions of the 1940 Act.
The Adviser will review, monitor and report to the Trust's Board
of Trustees regarding the performance and investment procedures of
any Sub-Adviser. In the event that the services of any Sub-Adviser
are terminated, the Adviser may provide investment advisory
services pursuant to this Agreement to the Trust without a
Sub-Adviser and without further investor approval, to the extent
consistent with the 1940 Act. A Sub-Adviser may be an affiliate of
the Adviser.
3. Investment Advisory Services.
(a) Management of the Trust. The Adviser hereby undertakes to act as
investment adviser to the Trust. The 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) supervise all aspects of the operations of the Trust;
(ii) 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 Adviser may deem desirable for
inclusion in the Trust's portfolio;
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(iii) determine which issuers and securities shall be included in
the portfolio of the Trust;
(iv) furnish a continuous investment program for the Trust;
(v) in its discretion and without prior consultation with the
Trust, buy, sell, lend and otherwise trade any stocks, bonds
and other securities and investment instruments on behalf of
the Trust; and
(vi) take, on behalf of the Trust, all actions the Adviser may
deem necessary in order to carry into effect such investment
program and the Adviser's functions as provided above,
including the making of appropriate periodic reports to the
Trust's Board of Trustees.
(b) Covenants. The Adviser shall carry out its investment advisory and
supervisory responsibilities in a manner consistent with the
investment objectives, policies, and restrictions provided in: (i)
the 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 and provided to the Adviser in writing. The
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 Adviser shall at all times be subject to the review
of the Trust's Board of Trustees.
(c) Books and Records. The Adviser shall keep the Trust's books and
records required by applicable law to be maintained by the Trust
with respect to advisory services. The 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 Adviser further agrees to
preserve for the periods prescribed by the 1940 Act any such
records of the Trust required to be preserved by such Rule.
(d) Reports, Evaluations and other services. The Adviser shall furnish
reports, evaluations, information or analyses to the Trust and in
connection with the Adviser's services hereunder as the Trust's
Board of Trustees may request from time to time or as the Adviser
may otherwise deem to be desirable. The Adviser shall make
recommendations to the Trust's Board of Trustees with respect to
Trust policies, and shall carry out such policies as are adopted
by the Board of Trustees. The Adviser shall, subject to review by
the Board of Trustees, furnish such other services as the Adviser
shall from time to time determine to be necessary or useful to
perform its obligations under this Agreement.
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(e) Purchase and Sale of Securities. The Adviser shall place all
orders for the purchase and sale of portfolio securities for the
Trust with brokers or dealers selected by the Adviser, which may
include brokers or dealers affiliated with the Adviser to the
extent permitted by the 1940 Act and the Trust's policies and
procedures. The 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 best overall terms
available for any transaction, the 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 Adviser, and the reasonableness of the
commission, if any, both for the specific transaction and on a
continuing basis. In no event shall the 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 Adviser be
under any duty to execute any order in a fashion either
preferential to the Trust Fund relative to other accounts managed
by the 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 Adviser, the Trust and/or the other
accounts over which the Adviser exercises investment discretion.
The 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 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 Adviser with
respect to accounts over which it exercises investment discretion.
The Adviser shall report to the Board of Trustees of the Trust
regarding overall commissions paid by the Trust and their
reasonableness in relation to the benefits to the Trust.
(g) Aggregation of Securities Transactions. In executing portfolio
transactions for the Trust, the 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 its other clients if, in the 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 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.
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4. Expenses. (a) The Adviser shall, at its expense, provide the Trust
with office space, furnishings and equipment and personnel required by it to
perform the services to be provided by the Adviser pursuant to this Agreement.
The Adviser also hereby agrees that it will supply to any sub-adviser or
administrator (the "Administrator") of the Trust all necessary financial
information in connection with the Administrator's duties under any Agreement
between the Administrator and the Trust.
(b) Except as provided in subparagraph (a), the Trust shall be
responsible for all its expenses and liabilities, including, but
not limited to, taxes; interest; fees (including fees paid to its
trustees who are not affiliated with the Adviser or any of its
affiliates); fees payable to the Securities and Exchange
Commission; state securities qualification fees, if any;
association membership dues; costs of preparing and printing
Registration Statements for regulatory purposes and for
distribution to existing investors; advisory and administration
fees; charges of the custodian and transfer agent; insurance
premiums; auditing and legal expenses; costs of investors' reports
and investors' meetings; any extraordinary expenses; and brokerage
fees and commissions, if any, in connection with the purchase or
sale of portfolio securities.
5. Compensation. (a) In consideration of the services to be rendered
by the Adviser under this Agreement, the Trust shall pay the Adviser monthly
fees on the first Business Day (as defined in the Prospectus) of each month
based upon the average daily net assets of the Trust during the preceding month
(as determined on the days and at the time set forth in the Registration
Statement for determining net asset value) at the annual rate of 0.65%. If the
fees payable to the Adviser pursuant to this paragraph begin to accrue before
the end of any month or if this Agreement terminates before the end of any
month, the fees for the period from such date to the end of such month or from
the beginning of such month to the date of termination, as the case may be,
shall be prorated according to the proportion which such period bears to the
full month in which such effectiveness or termination occurs. For purposes of
calculating each such monthly fee, the value of the Trust's net assets shall be
computed in the manner specified in the Registration Statement or the
Declaration of Trust and the Articles for the computation of the value of the
Trust's net assets in connection with the determination of the net asset value
of the Trust's shares of beneficial interest.
(b) 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 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 Adviser's fee shall be applicable. For the
purposes of this paragraph, the 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 Adviser for
such fiscal year were it not for this subsection 6(b) and the
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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.
(c) In consideration of the Adviser's undertaking to render the
services described in this Agreement, the Trust agrees that the
Adviser shall not be liable under this Agreement for any error of
judgment or mistake of law or for any act or omission or loss
suffered by the Trust in connection with the performance of this
Agreement, provided that nothing in this Agreement shall be deemed
to protect or purport to protect the Investment Adviser against
any liability to the Trust or its stockholders to which the
Adviser would otherwise be subject by reason of willful
misfeasance, bad faith or gross negligence in the performance of
the Adviser's duties under this Agreement or by reason of the
Adviser's reckless disregard of its obligations and duties
hereunder or breach of fiduciary duty with respect to receipt of
compensation.
6. Non-Exclusive Services. Except to the extent necessary to perform
the Investment Adviser's obligations under this Agreement, nothing herein shall
be deemed to limit or restrict the right of the Adviser, or any affiliate of the
Adviser, including any employee of the Adviser, to engage in any other business
or to devote time and attention to the management or other aspects of any other
business, whether of a similar or dissimilar nature, or to render services of
any kind to any other corporation, firm, individual or association.
7. Interested Persons. It is understood that, to the extent consistent
with applicable laws, the Trustees, officers and investors of the Trust are or
may be or become interested in the Adviser as directors, officers or otherwise
and that directors, officers and shareholders of the Adviser are or may be or
become similarly interested in the Trust.
8. 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.
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(c) Notwithstanding the foregoing provisions of this Paragraph 8,
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 this Agreement on behalf
of the Trust may be effected 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.
9. Board of Trustees Meetings. The Trust agrees that notice of each
meeting of the Board of Trustees of the Trust will be sent to the Adviser and
that the Trust will make appropriate arrangements for the attendance (as persons
present by invitation) of such person or persons as the Adviser may designate.
10. Limitation of Liability of Trustees and Investors. The 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 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.
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15. Notices. Notices of any kind to be given to the Adviser hereunder
by the Trust 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
Trust. Notices of any kind to be given to the Trust hereunder by the Adviser
shall be in writing and shall be duly given if mailed or delivered to the Trust
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 Trust to the Adviser. Notices shall
be effective upon delivery.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be
executed by their respective officers thereunto duly authorized, and their
respective seals to be hereunto affixed, all as of the date written above.
THE CHASE MANHATTAN BANK EMERGING GROWTH PORTFOLIO
By: ________________________ By: ________________________
Name: Name:
Title: Title:
