Exhibit d(3)(xii)
NVEST STAR VALUE FUND
Sub-Advisory Agreement
(Xxxxxx Associates L.P.)
Sub-Advisory Agreement (this "Agreement") entered into as of April 19,
2000, by and among Nvest Funds Trust I, a Massachusetts business trust (the
"Trust"), with respect to its Nvest Star Value Fund series (the "Series"), Nvest
Funds Management, L.P., a Delaware limited partnership (the "Manager"), and
Xxxxxx Associates L.P., 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.
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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 (each
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. Obligations of the Manager.
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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 in 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
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Series' 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 Segment
shall be delivered directly to the Custodian.
4. Proprietary Rights. The Manager agrees and acknowledges that the Sub-
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Adviser is the sole owner of the name "Xxxxxx Associates" and that all use of
any designation consisting in whole or part of "Xxxxxx Associates" (a "Xxxxxx
Associates 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 Xxxxxx Associates 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 in
any
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disclosure document, advertisement or sales literature or other materials
relating to the Series. 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 Xxxxxx Associates Xxxx(s) as soon as reasonably
practicable.
5. Expenses. Except for expenses specifically assumed or agreed to be paid by
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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
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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
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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.
To the extent permitted by applicable law, and in all instances subject to
the foregoing policy of best execution, the Sub-Adviser may allocate brokerage
transactions in a manner that takes into account the sale of shares of one or
more funds distributed by the Series' distributor, Nvest Funds Distributor, L.P.
("Nvest Distributor"). In addition, the Sub-Adviser may allocate brokerage
transactions to broker-dealers (including affiliates of Nvest Distributor) that
have entered into arrangements in which the broker-dealer allocates a portion of
the commissions paid by a fund toward the reduction of that fund's expenses,
subject to the policy of best execution.
7. Compensation of the Sub-Adviser. As full compensation for all services
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rendered, facilities furnished and expenses borne by the Sub-Adviser hereunder,
the Sub-Adviser shall be paid at the annual rate of 0.500% of the first $100
million of the average daily net assets of its Segment; and 0.450% of its
Segment's assets in excess of $100 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
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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.
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9. Liability. Except as may otherwise be provided by the 1940 Act or other
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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 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
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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;
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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
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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
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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.
13. General.
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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
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.
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NVEST FUNDS MANAGEMENT, L.P.
By Nvest Distribution Corp., its general partner
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: Senior Vice President, General Counsel, Secretary and Clerk
NVEST FUNDS TRUST I,
on behalf of its Nvest Star Value Fund series
By: /s/ Xxxx X. Xxxxxxxxx
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Name: Xxxx X. Xxxxxxxxx
Title: Secretary and Clerk
XXXXXX ASSOCIATES L.P.
By Xxxxxx Associates Inc., its general partner
By: /s/ Xxxxxx X. Xxxx
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Name: Xxxxxx X. Xxxx
Title: President and CEO
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Notice
A copy of the Agreement and Declaration of Trust establishing Nvest Funds
Trust I (the "Fund") is on file with the Secretary of the Commonwealth of
Massachusetts, and notice is hereby given that his Agreement is executed with
respect to the Fund's Nvest Star Value 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.
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