Exhibit d(3)(viii)
NEW ENGLAND STAR ADVISERS FUND
Sub-Advisory Agreement
(Xxxxxxx Funds LLC)
Sub-Advisory Agreement (this "Agreement") entered into as of October 29,
1999, by and among New England Funds Trust I, a Massachusetts business trust
(the "Trust"), with respect to its New England Star Advisers Fund series (the
"Series"), New England Funds Management, L.P., a Delaware limited partnership
(the "Manager"), and Xxxxxxx Funds LLC, a Delaware limited partnership (the
"Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated August
30, 1996 and amended May 1, 1998 (the "Advisory Agreement") with the Trust,
relating to the provision of portfolio management and administrative services to
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 and the trustees of the Trust desire 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 Trust, 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
of any administrator appointed by the Manager (the "Administrator"), manage
the investment and reinvestment of such portion of the assets of the Series
as the Manager may from time to time allocate to the Sub-Adviser for
management (such portion, the "Segment") and the Sub-Adviser shall have the
authority on behalf of the Series to vote all proxies and exercise all
other rights of the Series as a security holder of companies in which the
Segment from time to time invests. The Sub-Adviser shall manage the Segment
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),
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, as amended
(the "1940 Act") and the rules and regulations thereunder. For purposes of
compliance with the Policies, the Sub-Adviser shall be entitled to treat
the Segment as though the Segment constituted the entire Series, and the
Sub-Adviser shall not be responsible in any way for the compliance of any
assets of the Series, other than the Segment, with the Policies, or for the
compliance of the Series, taken as a whole, with the Policies. 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 Segment, 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 Segment 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 Segment 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 portfolio transactions and
performance of the Segment in such form as may be mutually agreed upon, and
agrees to review the Segment and discuss the management of it. The
Sub-Adviser shall permit all books and records with respect to the Segment
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 with such other information and
reports as may reasonably be requested by the Manager from time to time,
including without limitation all material requested by or required to be
delivered to the trustees of the Trust.
c. The Sub-Adviser shall provide to the Manager a copy of the
Sub-Adviser's Form ADV as filed with the Securities and Exchange Commission
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
2. Obligations of the Manager.
--------------------------
a. The Manager shall provide (or cause the Series' Custodian (as
defined in Section 3 hereof) to provide) timely information to the
Sub-Adviser regarding such matters as the composition of assets of the
Segment, cash requirements and cash available for investment in the
Segment, 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 Segment 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 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. Proprietary Rights. The Manager agrees and acknowledges that the
------------------
Sub-Adviser is the sole owner of the names "Xxxxxxx Funds LLC" and "Kobrick" and
that all use of any designation consisting in whole or part of "Xxxxxxx Funds
LLC" and "Kobrick" (a "Xxxxxxx Xxxx") under this Agreement shall inure to the
benefit of the Sub-Adviser. The Manager on its own behalf and on behalf of the
Segment agrees not to use any Xxxxxxx Xxxx in any advertisement or sales
literature or other materials promoting the Series or the Segment, except with
the prior written consent of the Sub-Adviser. Without the prior written consent
of the Sub-Adviser, the Manager shall not, and the Manager shall use its best
efforts to cause the Series not to, make representations regarding the
Sub-Adviser or the Kobrick Funds in any disclosure document, advertisement or
sales literature or other materials relating to the Series.
3
Upon termination of this Agreement for any reason, the Manager shall cease, and
the Manager shall use its best efforts to cause the Series to cease, all use of
any Kobrick Marks as soon as reasonably practicable.
5. 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 organizational, operational or business 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. Any reimbursement of advisory fees required by any expense limitation
provision of any law shall be the sole responsibility of the Manager. The
Manager and the Sub-Adviser shall not be considered as partners or participants
in a joint venture. The Sub-Adviser will pay its own expenses incurred in
furnishing the services to be provided by it pursuant to this Agreement. Neither
the Sub-Adviser nor any affiliated person thereof shall be entitled to any
compensation from the Manager or the Trust with respect to service by any
affiliated person of the Sub-Adviser as an officer or trustee of the Trust
(other than the compensation to the Sub-Adviser payable by the Trust pursuant to
Section 7 hereof).
6. 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 Segment 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 Segment 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 Segment at prices which are
advantageous to the Series and at commission rates that are reasonable in
relation to the benefits received. However, the Sub-Adviser may select brokers
or dealers on the basis that they provide brokerage, research or other services
or products to the Series and/or other accounts serviced by the Sub-Adviser. To
the extent consistent with applicable law, the Sub-Adviser may pay a broker or
dealer an amount of commission for effecting a securities transaction in excess
of the amount of commission or dealer spread another broker or dealer would have
charged for effecting that transaction if the Sub-Adviser determines in good
faith that such amount of commission was reasonable in relation to the value of
the brokerage and research products and/or services provided by such broker or
dealer. This determination, with respect to brokerage and research services or
products, may be viewed in terms of either that particular transaction or the
overall responsibilities which the Sub-Adviser and its affiliates have with
respect to the Series or to accounts over which they exercise investment
discretion. Not all such services or products need be used by the Sub-Adviser in
managing the Segment.
4
7. Compensation of the Sub-Adviser. As full compensation for all
-------------------------------
services rendered, facilities furnished and expenses borne by the Sub-Adviser
hereunder, the Sub-Adviser shall be paid at the annual rate of 0.55% of the
first $50 million of the average daily net assets of the Segment, 0.50% of the
next $200 million of such assets and 0.475% of such assets in excess of $250
million. Such compensation shall be paid by the Trust (except to the extent that
the Trust, the Sub-Adviser and the Manager otherwise agree in writing from time
to time). 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.
8. 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 Series or the
Manager in any way or otherwise be deemed an agent of the Series or the Manager.
9. 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 hereunder. 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 under this Agreement.
Without limiting the foregoing, it is expressly understood and agreed that
the Manager and the Series shall hold harmless and indemnify the Indemnified
Parties for
5
any loss arising out of any act or omission of any other sub-adviser to the
Series, or for any loss arising out of the failure of the Series to comply with
the Policies, except for losses arising out of the Sub-Adviser's failure to
comply with the Policies with respect to the Segment. The Manager acknowledges
and agrees that the Sub-Adviser makes no representation or warranty, expressed
or implied, that any level of performance or investment results will be achieved
by the Series or the Segment or that the Series or the Segment will perform
comparably with any standard or index, including other clients of the Sub-
Adviser, whether public or private.
10. 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; and
d. this Agreement may be terminated by the Sub-Adviser on ninety days'
written notice to the Manager and the Trust, or by the Manager on ninety
days' written notice to the Sub-Adviser.
Termination of this Agreement pursuant to this Section 10 shall be without
the payment of any penalty.
11. Amendment. This Agreement may be amended at any time by mutual consent
---------
of the Manager and the Sub-Adviser, 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.
12. 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,
6
subject, however, to such exemptions as may be granted by the Securities and
Exchange Commission under the 1940 Act.
13. General.
-------
a. The Sub-Adviser may perform its services through any employee,
officer or agent of the Sub-Adviser, 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 day-to-day portfolio management duties described therein until
the Sub-Adviser notifies the Manager that one or more other employees,
officers or agents of the Sub-Adviser, 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.
7
NEW ENGLAND FUNDS MANAGEMENT, L.P.
By NEF Corporation, its general partner
By: /s/ Xxxx X. Xxxxxxxxx
---------------------
Name: Xxxx X. Xxxxxxxxx
Title: Managing Director, Senior Vice President, General Counsel, Secretary &
Clerk
NEW ENGLAND FUNDS TRUST I,
on behalf of its New England Star Advisers Fund series
By: /s/ Xxxxx X. Xxxxx
------------------
Name: Xxxxx X. Xxxxx
Title: President
XXXXXXX FUNDS LLC
By: /s/ Xxxxxxxxx X. Xxxxxxx
------------------------
Name: Xxxxxxxxx X. Xxxxxxx
Title: President and Chief Executive Officer
8
NOTICE
A copy of the Agreement and Declaration of Trust establishing New
England Funds Trust I (the "Fund") is on file with the Secretary of The
Commonwealth of Massachusetts, and notice is hereby given that this Agreement is
executed with respect to the Fund's New England Star Advisers Fund series (the
"Series") on behalf of the Fund by officers of the Fund as officers and not
individually and that the obligations of or arising out of this Agreement are
not binding upon any of the Trustees, officers or shareholders individually but
are binding only upon the assets and property belonging to the Series.
9
