SUBADVISORY AGREEMENT
THE PHOENIX EDGE SERIES FUND
October 29, 2001
Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
WHEREAS, The Phoenix Edge Series Fund (the "Fund") is an 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;
WHEREAS, the shares of the Fund are offered or may be offered in
several series, including the following series: Phoenix-MFS Investors Growth
Stock Series, Phoenix-MFS Investors Trust Series, and, Phoenix-MFS Value Series
(hereafter collectively referred to as the "Series");
WHEREAS, Phoenix Variable Advisors, Inc. (the "Advisor") evaluates and
recommends series advisors for the Series and is responsible for the day-to-day
management of the Series; and
WHEREAS, the Advisor desires to retain Massachusetts Financial Services
Company, a company organized under the laws of the State of Delaware, doing
business as MFS Investment Management (the "Subadvisor"), to furnish portfolio
management services for the Series, and the Subadvisor is willing to furnish
such services.
NOW, THEREFORE, the Advisor and the Subadvisor agree as follows:
1. Employment as a Subadvisor. The Advisor, being duly authorized, hereby
employs the Subadvisor to invest and reinvest the assets of the Series
on the terms and conditions set forth herein. The services of the
Subadvisor hereunder are not to be deemed exclusive; the Subadvisor may
render services to others and engage in other activities that do not
conflict in any material manner with the Subadvisor's performance
hereunder.
2. Acceptance of Employment; Standard of Performance. The Subadvisor
accepts its employment as a subadvisor to the Advisor and agrees to
make investment decisions for the Series in accordance with the
provisions of this Agreement.
3. Services of Subadvisor.
(a) The Subadvisor 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 Subadvisor shall be subject to the
investment objectives, policies and restrictions of the
Fund as they apply to the Series and as set forth in
the Fund's then current Prospectus and Statement of
Additional Information (as the same may be modified
from time to time), and to the Fund's Agreement and
Declaration of Trust, to the investment and other
restrictions set forth in the Act, the Securities Act
of 1933, as amended; and to the supervision and
direction of the Advisor, who in turn is subject to the
supervision and direction of the Board of Trustees of
the Fund. The Subadvisor will keep the Fund and the
Advisor
informed of developments materially affecting the Fund,
and will, on its own initiative, furnish the Series and
the Advisor from time to time with whatever information
the Sub-Advisor believes is reasonably appropriate for
this purpose.
(b) Subject at all times to the limitations set forth in
subparagraph 3(a) above, the Subadvisor shall have full
authority at all times with respect to the management
of the Series, including, but not limited to, authority
to give written or oral instructions to various
broker/dealers, banks or other agents; to bind and
obligate the Series to and for the carrying out of
contracts, arrangements, or transactions which shall be
entered into by the Subadvisor on the Series' behalf
with or through such broker/dealers, banks or other
agents; to direct the purchase and sale of any
securities; and generally to do and take all action
necessary in connection with the Series, or considered
desirable by the Subadvisor with respect thereto. The
Subadvisor may maintain uninvested cash balances in the
Series as it shall deem reasonable without incurring
any liability for the payment of interest thereon.
4. Expenses. The Subadvisor shall furnish at its own expense for the following:
(a) Office facilities, including office space, furniture
and equipment utilized by its employees, in the
fulfillment of Subadvisor'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 Subadvisor hereunder; and,
(c) The Subadvisor need not provide personnel to perform,
or pay the expenses of the Advisor for, services
customarily performed for an open-end management
investment company by its national distributor,
custodian, financial agent, transfer agent, auditors
and legal counsel.
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 Fund (the "Custodian"), or such depositories
or agents as may be designated by the Custodian pursuant to its
agreement with the Fund (the "Custodian Agreement"), of all cash and/or
securities due to or from the Series. The Subadvisor shall not have
possession or custody of such cash and/or securities or any
responsibility or liability with respect to such custody. The
Subadvisor shall advise the Custodian and confirm in writing or by
confirmed electronic transmission to the Fund 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 Fund shall issue to the Custodian
such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Subadvisor. The Fund
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 Subadvisor shall have no responsibility or liability
with respect to custodial arrangements or the acts, omissions or other
conduct of the Custodian.
2
6. Allocation of Brokerage. The Subadvisor shall have authority and
discretion to select brokers and dealers to execute Series transactions
initiated by the Subadvisor, 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 Fund, the Subadvisor's primary responsibility shall be to seek
the best execution of orders at the most favorable prices. However,
this responsibility shall not obligate the Subadvisor to solicit
competitive bids for each transaction or to seek the lowest available
commission cost to the Fund, so long as the Subadvisor 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 Subadvisor, viewed in terms of either that
particular transaction or of the Subadvisor's overall responsibilities
with respect to its clients, including the Fund, as to which the
Subadvisor exercises investment discretion, notwithstanding that the
Fund may not be the direct or exclusive beneficiary of any such
services or that another broker may be willing to charge the Fund a
lower commission on the particular transaction.
B. Subject to the requirements of paragraph A above, the Advisor
shall have the right to request that transactions giving rise to
brokerage commissions, in an amount to be agreed upon by the Advisor
and the Subadvisor, shall be executed by brokers and dealers that
provide brokerage or research services to the Fund or that will be of
value to the Fund 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 Fund shall have the right to request that
transactions be executed by brokers and dealers by or through whom
sales of shares of the Fund are made.
C. On occasions when the Subadvisor deems the purchase or sale of a
security, commodity or other asset to be in the best interest of the
Series as well as other clients of the Subadvisor, the Subadvisor, to
the extent permitted by applicable law and regulations may, but shall
be under no obligation to, aggregate the securities, commodities or
other assets to be sold or purchased in order to obtain the most
favorable price or lower brokerage commissions and best execution. In
such event, allocation of the securities, commodities or other assets
so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Subadvisor in the manner the
Subadvisor considers to be the most equitable and consistent with its
fiduciary obligations to the Series and to such other clients.
7. Fees for Services. The compensation of the Subadvisor for its services
under this Agreement shall be calculated and paid by the Advisor in
accordance with the attached Schedule C. Pursuant to the Investment
Advisory Agreement between the Fund and the Advisor, the Advisor is
solely responsible for the payment of fees to the Subadvisor.
8. Limitation of Liability. The Subadvisor shall not be liable for any
error of judgment, mistake of law, or for any loss suffered by the
Advisor, the Fund, the Series or their shareholders, in connection with
the matters to which this Agreement relates, provided, however, that
such error, mistake or loss does not constitute a breach of the
investment objectives, policies and restrictions applicable to the
Series and that any such error, mistake or loss, shall not have
resulted from the
3
Subadvisor's willful misfeasance, bad faith or gross negligence in
the performance of, or from the reckless disregard of its obligations
hereunder.
9. Confidentiality. Subject to the duty of the Subadvisor 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 Subadvisor and the Fund in respect thereof.
10. 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 Subadvisor shall notify the Advisor 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 Advisor 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.
11. Representations, Warranties and Agreements of the Subadvisor. The
Subadvisor 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 the records and information required by Rule
31a-1 under the Act respecting its activities with respect to the
Series, and such other records with respect thereto relating to the
services the Subadvisor provides under this Agreement as may be
required in the future by applicable SEC rules, and shall retain such
information for such times and in such manner as required by applicable
rules, including Rule 31a-2 under the Act.
C. It has a written code of ethics complying with the requirements of
Rule 17j-l under the Act and will provide the Advisor with a copy of
the code of ethics and evidence of its adoption. Subadvisor
acknowledges receipt of the written code of ethics adopted by and on
behalf of the Fund (the "Code of Ethics"). The Subadvisor will not be
subject to the Code of Ethics of the Fund as long as its code of ethics
complies with the applicable regulatory requirements and the Board of
Trustees of the Trust approves its 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 Subadvisor shall certify to
the Fund and to the Advisor that the Subadvisor has complied with the
requirements of Rule 17j-l with respect to the Fund during the previous
calendar quarter and that there has been no violation of its code of
ethics with respect to the Fund, or if such a violation has occurred,
that appropriate action was taken in response to such violation. The
Subadvisor shall permit the Fund and Advisor to examine the reports
required to be made by the Subadvisor under Rule 17j-l(c)(1) and this
subparagraph.
D. It will use all necessary efforts to manage the Series so that the
Fund will qualify as a regulated investment company under the
provisions of Subchapter M of the Internal Revenue Code ("IRC"), will
satisfy the diversification requirements of Section 817(h) of the IRC,
the provisions of Subchapter M of the IRC applicable to regulated
investment companies, including those which underlie variable
annuities; and, the distribution requirements necessary to avoid
payment of any excise tax pursuant to Section 4982 of the IRC and the
rules and regulations adopted under each such provision.
4
E. It will furnish the Advisor a copy of its Form ADV as filed with
the Securities and Exchange Commission.
F. It will be responsible for the preparation and filing of Schedule
13G and Form 13F on behalf of the Series.
G. It will not, without the Advisor's prior approval, effect any
transactions that would cause the Series at the time of the transaction
to be out of compliance with any of such restrictions or policies.
H. Reference is hereby made to the Declaration of Trust dated
February 18, 1986, establishing the Fund, a copy of which has been
filed with the Secretary of the Commonwealth of Massachusetts and
elsewhere as required by law, and to any and all amendments thereto so
filed or hereafter so filed with the Secretary of the Commonwealth of
Massachusetts and elsewhere as required by law. The name The Phoenix
Edge Series Fund refers to the Trustees under said Declaration of
Trust, as Trustees and not personally, and no Trustee, shareholder,
officer, agent or employee of the Fund shall be held to any personal
liability in connection with the affairs of the Fund; only the Fund
estate under said Declaration of Trust is liable. Without limiting the
generality of the foregoing, neither the Subadvisor 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 Fund or of any successor of the Fund, whether such liability now
exists or is hereafter incurred for claims against the trust estate.
12. Representations, Warranties and Agreements of the Advisor. The Advisor
represents, warrants and agrees that:
A. It has the power and has taken all necessary action, and has
obtained all necessary licenses, authorizations and approvals, to
execute this Agreement, which constitutes its legal, valid and binding
obligation, enforceable in accordance with its terms.
B. It is registered as an "investment adviser" under the Advisers
Act.
C. Prior to commencement of the Subadvisor's services hereunder, it
will deliver to the Subadvisor true and complete copies of the
Prospectus, Statement of Additional Information, and such other
documents or instruments governing the investments and investment
policies and practices of the Series, and during the term of this
Agreement will promptly deliver to the Subadvisor true and complete
copies of all documents and instruments supplementing, amending, or
otherwise becoming such Fund Documents before or at the time they
become effective. The Advisor will also provide a list of companies the
securities of which are not to be bought or sold for the Series (such
list shall include each security name, CUSIP number, SEDOL and/or
applicable ticker, if applicable) and a list of affiliated brokers and
underwriters for reporting transactions under applicable provisions of
the Act. Subadvisor shall not be obligated to process or undertake any
actions in connection with the information described in this clause
until three business days following its receipt of notice thereof
pursuant to Section 19, below.
5
D. It will deliver to the Subadvisor any limitations imposed upon the
Fund as a result of relevant diversification requirements under the
provisions of Section 817(h) of the Internal Revenue Code of 1986, as
amended.
E. It will furnish or otherwise make available to the Subadvisor such
other information relating to the business affairs of the Fund as the
Subadvisor at any time, or from time to time, reasonably requests in
order to discharge its obligations hereunder.
13. Reports. The Subadvisor shall provide the Advisor such periodic and
special reports as the Advisor requests and the Subadvisor consents to
provide, which consent shall not be unreasonably withheld or delayed.
The Subadvisor agrees that such records are the property of the Fund,
and shall be made reasonably available for inspections, by the Fund or
to the Advisor as agent of the Fund, and promptly upon request
surrendered to either. The Subadvisor is authorized to supply the
Fund's independent accountants, PricewaterhouseCoopers LLP, or any
successor accountant for the Fund, any information that they may
request in connection with the Fund.
14. Proxies. Unless the Advisor or the Fund gives the Subadvisor written
instructions to the contrary, the Subadvisor shall vote and shall
comply with the Fund's proxy voting procedures then in effect to vote
or abstain from voting, all proxies solicited by or with respect to the
issuers of securities in which assets of Series may be invested.
Subadvisor agrees to provide the Advisor with annual proxy voting
reports in such form as the Advisor may reasonably request.
15. Recordkeeping. The Subadvisor will assist the recordkeeping agent for
the Fund in determining or confirming the value of any securities or
other assets in the Series for which the recordkeeping agent seeks
assistance from or identifies for review by the Advisor.
16. Amendment. This Agreement may be amended at any time, but only by
written agreement between the Subadvisor and the Advisor, which
amendment, other than amendments to Schedules A and B, is subject to
the approval of the Trustees and the Shareholders of the Fund as and to
the extent required by the Act.
17. 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 November 30, 2002, 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.
18. Use of Name. The Advisor and the Fund agree not to refer to any
designation comprised in whole or in part of the names or marks
"Massachusetts Financial Services, Company", "MFS Investment
Management" or any other trademark relating to MFS in any advertisement
or other document without the prior consent of the Subadvisor. Upon
termination of this Agreement, each party shall cease all use of the
others' name as soon as reasonably practicable.
19. Notices. Except as otherwise provided in this Agreement, all notices or
other communications required or permitted to be given hereunder shall
be in writing and shall be delivered or sent by confirmed facsimile or
by pre-paid first class letter post or overnight courier to the
following
6
addresses or to such other address as the relevant addressee shall
hereafter notify for such purpose to the others by notice in writing
and shall be deemed to have been given at the time of delivery.
If to the Advisor: PHOENIX VARIABLE ADVISORS, INC.
One American Row
Hartford, Connecticut
Attention: Xxxxxx Xxxxxx
If to the Subadvisor: Massachusetts Financial Services Company
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: Legal Department
20. Termination. This Agreement may be terminated by either party, without
penalty, immediately upon written notice to the other party in the
event of a breach of any provision thereof by the party so notified, or
otherwise, upon sixty (60) days' written notice to the other party, but
any such termination shall not affect the status, obligations or
liabilities of either party hereto to the other party.
21. 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 Massachusetts.
22. 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 VARIABLE ADVISORS, INC.
By: /s/ Xxxxx X. Xxx
--------------------------
Title: Xxxxx X. Xxx, President
7
ACCEPTED:
MASSACHUSETTS FINANCIAL SERVICES COMPANY
By: /s/ Xxxxxx X. Xxxxx
--------------------------------
Title: Xxxxxx X. Xxxxx, Senior Executive Vice President
SCHEDULES: A. Subadvisor Functions
B. Operational Procedures
C. Fee Schedule
8
SCHEDULE A
SUBADVISOR FUNCTIONS
With respect to managing the investment and reinvestment of the Series
assets, the Subadvisor 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 Board of Trustees and Advisor;
(b) Implementation of the investment program for the Series based
upon the foregoing criteria;
(c) Annual reports, in form and substance acceptable to the
Advisor and Subadvisor, with respect to foreign custody as
governed by Rule 17f-7 under the Act, and proxy voting
reports.
(d) Quarterly reports, in form and substance acceptable to the
Advisor, with respect to: i) compliance with the Subadvisor's
code of ethics; ii) compliance with procedures adopted from
time to time by the Trustees of the Fund relative to
securities eligible for resale under Rule 144A under the
Securities Act of 1933, as amended; 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) cross transactions conducted pursuant
to Rule 17a-7 under the Act; vi) any and all other reports as
the parties hereto mutually agree; and, vii) the
implementation of the Series investment program, including,
without limitation, analysis of Series performance;
(e) Attendance by appropriate representatives of the Subadvisor at
meetings requested by the Advisor or Trustees at such time(s)
and location(s) as mutually agreed upon; and
(f) 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 Phoenix Equity Planning Corporation, and other
parties reasonably requested by the Advisor.
(g) This Schedule A is subject to amendment from time to time to
require additional reports as contemplated by Paragraph 13 of
this Agreement.
9
SCHEDULE B
OPERATIONAL PROCEDURES
In order to minimize operational problems, it will be necessary for a flow of
information to be supplied to State Street Bank & Trust Company (the
"Custodian"), the custodian for the Fund.
The Subadvisor 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 Fund, the
account must be a cash account. No margin accounts are to be maintained in the
name of the Fund. Delivery instructions are as specified by the Custodian. The
Custodian and sub-accounting agent will supply the Subadvisor daily with a cash
availability report. This will normally be done by confirmed facsimile or
confirmed electronic transmission so that the Subadvisor will know the amount
available for investment purposes.
10
SCHEDULE C
SUBADVISORY FEE
For services provided to the Fund pursuant to paragraph 3 hereof, the Advisor
will pay to the Subadvisor, on or before the 10th day of each month, a fee,
payable in arrears, at the annual rates stated below, commencing ninety (90)
days following the effective date of the registration statement for the Series:
Rate(s) Breakpoint based on average
------- of all net assets of the three Series
under management
----------------
0.375% $0 - $500 million
0.350% next $400 million
0.325% next $600 million
0.250% Excess over $1.5 billion
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
Subadvisor, the net asset value of each Series shall be valued as set forth in
the then current registration statement of the Fund. Payment of the monthly
management fee will be accompanied by documentation that verifies the
calculation of such fee.
11