SUB-ADVISORY AGREEMENT
DRAYCOTT INTERNATIONAL EQUITY SERIES
This Sub-Advisory Agreement (this "Agreement") is
entered into as of February 29,
1996 by and among TNE Advisers, Inc., a Massachusetts
corporation (the "Manager"), and
Draycott Partners, Ltd., a Massachusetts corporation (the
"Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory
Agreement dated October 31,
1994 (the "Advisory Agreement") with New England Zenith Fund
(the "Trust"), pursuant to
which the Manager provides portfolio management and
administrative services to the
Draycott International Equity Series of the Trust (the
"Series");
WHEREAS, the Advisory Agreement provides that the
Manager may delegate any or
all of its portfolio management responsibilities under the
Advisory Agreement to one or more
sub-advisers;
WHEREAS, the Manager desires to retain the Sub-Adviser
to render portfolio
management services in the manner and on the terms set forth
in this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set
forth in this Agreement, the Manager and the Sub-Adviser
agree as follows:
1. Sub-Advisory Services.
a. The Sub-Adviser shall, subject to the
supervision of the Manager and in
cooperation with any administrator appointed by the Manager
(the "Administrator"), manage
the investment and reinvestment of the assets of the Series.
The Sub-Adviser shall manage the
Series in conformity with (1) the investment objective,
policies and restrictions of the Series
set forth in the Trust's prospectus and statement of
additional information relating to the
Series, (2) any additional policies or guidelines
established by the Manager or by the Trust's
trustees that have been furnished in writing to the Sub-
Adviser and (3) the provisions of the
Internal Revenue Code (the "Code") applicable to "regulated
investment companies" (as
defined in Section 851 of the Code) and Section 817 of the
Code, all as from time to time in
effect (collectively, the "Policies"), and with all
applicable provisions of law, including without
limitation all applicable provisions of the Investment
Company Act of 1940 (the "1940 Act")
and the rules and regulations thereunder. Subject to the
foregoing, the Sub-Adviser is
authorized, in its discretion and without prior consultation
with the Manager, to buy, sell,
lend and otherwise trade in any stocks, bonds and other
securities and investment instruments
on behalf of the Series, without regard to the length of
time the securities have been held and
the resulting rate of portfolio turnover or any tax
considerations; and the majority or the
whole of the Series may be invested in such proportions of
stocks, bonds, other securities or
investment instruments, or cash, as the Sub-Adviser shall
determine. Notwithstanding the
foregoing provisions of this Section 1.a, however, the Sub-
Adviser shall, upon written
instructions from the Manager, effect such portfolio
transactions for the Series as the Manager
shall determine are necessary in order for the Series to
comply with the Policies.
b. The Sub-Adviser shall furnish the Manager and
the Administrator
monthly, quarterly and annual reports concerning
transactions and performance of the Series
in such form as may be mutually agreed upon, and agrees to
review the Series and discuss the
management of the Series with representatives or agents of
the Manager, the Administrator or
the Trust at their reasonable request. The Sub-Adviser
shall permit all books and records with
respect to the Series to be inspected and audited by the
Manager and the Administrator at all
reasonable times during normal business hours, upon
reasonable notice. The Sub-Adviser
shall also provide the Manager, the Administrator or the
Trust with such other information
and reports as may reasonably be requested by the Manager,
the Administrator or the Trust
from time to time, including without limitation all material
as reasonably may be requested
by the Trustees of the Trust pursuant to Section 15(c) of
the 1940 Act.
c. The Sub-Adviser shall provide to the Manager
a copy of its Form ADV
as filed with the Securities and Exchange Commission and as
amended from time to time and
a list of the persons whom the Sub-Adviser wishes to have
authorized to give written and/or
oral instructions to custodians of assets of the Series.
2. Obligations of the Manager.
a. The Manager shall provide (or cause the
Trust's custodian to provide)
timely information to the Sub-Adviser regarding such matters
as the composition of assets of
the Series, cash requirements and cash available for
investment in the Series, and all other
information as may be reasonably necessary for the Sub-
Adviser to perform its responsibilities
hereunder.
b. The Manager has furnished the Sub-Adviser a
copy of the prospectus
and statement of additional information of the Series and
agrees during the continuance of this
Agreement to furnish the Sub-Adviser copies of any revisions
or supplements thereto at, or, if
practicable, before the time the revisions or supplements
become effective. The Manager
agrees to furnish the Sub-Adviser with minutes of meetings
of the Trustees of the Trust
applicable to the Series to the extent they may affect the
duties of the Sub-Adviser, and with
copies of any financial statements or reports made by the
Series to its shareholders, and any
further materials or information which the Sub-Adviser may
reasonably request to enable it to
perform its functions under this Agreement.
3. Custodian. The Manager shall provide the Sub-
Adviser with a copy of the
Series's agreement with the custodian designated to hold the
assets of the Series (the
"Custodian") and any modifications thereto (the "Custody
Agreement"), copies of such
modifications to be provided to the Sub-Adviser a reasonable
time in advance of the
effectiveness of such modifications. The assets of the
Series shall be maintained in the custody
of the Custodian identified in, and in accordance with the
terms and conditions of, the
Custody Agreement (or any sub-custodian properly appointed
as provided in the Custody
Agreement). The Sub-Adviser shall have no liability for the
acts or omissions of the
Custodian, unless such act or omission is required by and
taken in reliance upon instruction
given to the Custodian by a representative of the Sub-
Adviser properly authorized to give
such instruction under the Custody Agreement. Any assets
added to the Series shall be
delivered directly to the Custodian.
4. Expenses. Except for expenses specifically
assumed or agreed to be paid by the
Sub-Adviser pursuant hereto, the Sub-Adviser shall not be
liable for any expenses of the
Manager or the Trust including, without limitation, (a)
interest and taxes, (b) brokerage
commissions and other costs in connection with the purchase
or sale of securities or other
investment instruments with respect to the Series, and (c)
custodian fees and expenses. The
Sub-Adviser will pay its own expenses incurred in furnishing
the services to be provided by it
pursuant to this Agreement.
5. Purchase and Sale of Assets. Absent instructions
from the Manager to the
contrary, the Sub-Adviser shall place all orders for the
purchase and sale of securities for the
Series with brokers or dealers selected by the Sub-Adviser,
which may include brokers or
dealers affiliated with the Sub-Adviser, provided such
orders comply with Rule 17e-1 under
the 1940 Act in all respects. To the extent consistent with
applicable law, purchase or sell
orders for the Series may be aggregated with contemporaneous
purchase or sell orders of other
clients of the Sub-Adviser. The Sub-Adviser shall use its
best efforts to obtain execution of
transactions for the Series at prices which are advantageous
to the Series and at commission
rates that are reasonable in relation to the benefits
received.
6. Compensation of the Sub-Adviser. As full
compensation for all services
rendered, facilities furnished and expenses borne by the Sub-
Adviser hereunder, the Manager
shall pay the Sub-Adviser compensation at the annual rate of
0.75% of the first $10 million of
the average daily net assets of the Series, 0.60% of the
next $40 million of such assets and
0.45% of such assets in excess of $50 million. Such
compensation shall be payable monthly in
arrears or at such other intervals, not less frequently than
quarterly, as the Manager is paid by
the Series pursuant to the Advisory Agreement. The Manager
may from time to time waive
the compensation it is entitled to receive from the Trust,
however, and such waiver will have
no effect on the Manager's obligation to pay the Sub-Adviser
the compensation provided for
herein.
7. Non-Exclusivity. The Manager and the Series agree
that the services of the Sub-Adviser are not to be deemed
exclusive and that the Sub-Adviser and its affiliates are
free to
act as investment manager and provide other services to
various investment companies and
other managed accounts, except as the Sub-Adviser and the
Manager or the Administrator
may otherwise agree from time to time in writing before or
after the date hereof. This
Agreement shall not in any way limit or restrict the Sub-
Adviser or any of its directors,
officers, employees or agents from buying, selling or
trading any securities or other
investment instruments for its or their own account or for
the account of others for whom it
or they may be acting, provided that such activities do not
adversely affect or otherwise
impair the performance by the Sub-Adviser of its duties and
obligations under this
Agreement. The Manager and the Series recognize and agree
that the Sub-Adviser may
provide advice to or take action with respect to other
clients, which advice or action,
including the timing and nature of such action, may differ
from or be identical to advice given
or action taken with respect to the Series. The Sub-Adviser
shall for all purposes hereof be
deemed to be an independent contractor and shall, unless
otherwise provided or authorized,
have no authority to act for or represent the Trust or the
Manager in any way or otherwise be
deemed an agent of the Trust or the Manager.
8. Liability. Except as may otherwise be provided by
the 1940 Act or other
federal securities laws, neither the Sub-Adviser nor any of
its officers, directors, employees or
agents (the "Indemnified Parties") shall be subject to any
liability to the Manager, the Trust,
the Series or any shareholder of the Series for any error of
judgment, any mistake of law or
any loss arising out of any investment or other act or
omission in the course of, connected
with, or arising out of any service to be rendered under
this Agreement, except by reason of
willful misfeasance, bad faith or gross negligence in the
performance of the Sub-Adviser's
duties or by reason of reckless disregard by the Sub-Adviser
of its obligations and duties. The
Manager shall hold harmless and indemnify the Sub-Adviser
for any loss, liability, cost,
damage or expense (including reasonable attorneys fees and
costs) arising from any claim or
demand by any past or present shareholder of the Series that
is not based upon the obligations
of the Sub-Adviser with respect to the Series under this
Agreement. The Manager
acknowledges and agrees that the Sub-Adviser makes no any
representation or warranty,
express or implied, that any level of performance or
investment results will be achieved by the
Series or that the Series will perform comparably with any
standard or index, including other
clients of the Sub-Adviser, whether public or private.
9. Effective Date and Termination. This Agreement
shall become effective as of
the date of its execution, and
a. unless otherwise terminated, this Agreement
shall continue in effect for
two years from the date of execution, and from year to year
thereafter so long as such
continuance 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 Series, and (ii) by vote of a
majority of the trustees of the Trust who are not interested
persons of the Trust, the Manager
or the Sub-Adviser, cast in person at a meeting called for
the purpose of voting on such
approval;
b. this Agreement may at any time be terminated
on sixty days' written
notice to the Sub-Adviser either by vote of the Board of
Trustees of the Trust or by vote of a
majority of the outstanding voting securities of the Series;
c. this Agreement shall automatically terminate
in the event of its
assignment or upon the termination of the Advisory
Agreement;
d. this Agreement may be terminated by the Sub-
Adviser on sixty days'
written notice to the Manager and the Trust, or, if approved
by the Board of Trustees of the
Trust, by the Manager on sixty days' written notice to the
Sub-Adviser; and
e. if the Sub-Adviser requires the Series to
change its name so as to
eliminate all references to the word "Draycott" then this
Agreement shall automatically
terminate at the time of such change unless the continuance
of this Agreement after such
change shall have been specifically approved by vote of a
majority of the outstanding voting
securities of the Series and by vote of a majority of the
Trustees of the Trust who are not
interested persons of the Trust or the Sub-Adviser, cast in
person at a meeting called for the
purpose of voting on such approval.
Termination of this Agreement pursuant to this Section
9 shall be without the
payment of any penalty.
10. Amendment. This Agreement may be amended at any
time by mutual consent
of the parties, provided that, if required by law, such
amendment shall also have been
approved by vote of a majority of the outstanding voting
securities of the Series and by vote of
a majority of the trustees of the Trust who are not
interested persons of the Trust, the
Manager or the Sub-Adviser, cast in person at a meeting
called for the purpose of voting on
such approval.
11. Certain Definitions. For the purpose of this
Agreement, the terms "vote of a
majority of the outstanding voting securities," "interested
person," "affiliated person" and
"assignment" shall have their respective meanings defined in
the 1940 Act, subject, however,
to such exemptions as may be granted by the Securities and
Exchange Commission under the
1940 Act.
12. General.
a. The Sub-Adviser may perform its services
through any employee, officer
or agent, and the Manager shall not be entitled to the
advice, recommendation or judgment of
any specific person; provided, however, that the persons
identified in the prospectus of the
Series shall perform the portfolio management duties
described therein until the Sub-Adviser
notifies the Manager that one or more other employees,
officers or agents identified in such
notice shall assume such duties as of a specific date.
b. If any term or provision of this Agreement or
the application thereof to
any person or circumstances 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.
c. This Agreement shall be governed by and
interpreted in accordance
with the laws of the Commonwealth of Massachusetts.
TNE ADVISERS, INC.
By:
Xxxxxxxxx X. Xxxxxxxxxx
President
DRAYCOTT PARTNERS, LTD.
By:
Name:
Title:
