EXHIBIT 5(b)
PHOENIX-SENECA FUNDS
SUBADVISORY AGREEMENT
PHOENIX-SENECA FUNDS
SUBADVISORY AGREEMENT
February , 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
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 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 or the Trust, for the following:
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(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 "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
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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.
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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.
13. Seneca Name. 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
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"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.
14. 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 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.
15. 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 June 30, 2000, 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.
16. 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.
17. 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 State of Delaware.
18. 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.
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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.
