Exhibit (h)(2)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 1st day of December 1999, by and between Nvest
Services Company, Inc., a Massachusetts corporation ("NSC"), and New England
Funds Trust I, New England Funds Trust II, New England Funds Trust III, New
England Cash Management Trust and New England Tax Exempt Money Market Trust
(collectively, the "Trusts").
WITNESSETH:
WHEREAS, each Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Trusts desire to employ NSC to provide certain administrative
services to the Trusts in the manner and on the terms set forth in this
Agreement, and NSC wishes to perform such services;
NOW, THEREFORE, in consideration of the premises and covenants hereinafter
contained, the parties hereby agree as follows:
1. APPOINTMENT AND ACCEPTANCE. The Trusts hereby employ NSC to act as
Administrator of the Trusts on the terms set forth in this agreement. NSC hereby
accepts such employment and agrees to furnish the services and to assume the
obligations herein set forth for the compensation herein provided. The Trusts
will initially consist of the series and/or classes of shares (each a "Fund" and
collectively, the "Funds") listed on Schedule A to this Agreement. In the event
that any of the Trusts establish one or more additional Funds with respect to
which such Trust wishes to employ NSC to act as Administrator hereunder, the
Trust shall notify NSC in writing. Upon written acceptance by NSC, such Fund
shall become subject to the provisions of this Agreement to the same extent as
the existing Funds, except to the extent that such provisions (including those
relating to the compensation and expenses payable by the Trusts and its Funds)
may be modified with respect to each additional Fund in writing by the Trust and
NSC at the time of the addition of the Fund.
2. SERVICES PROVIDED BY NSC.
(a) NSC shall perform or arrange for the performance of the various
administrative and clerical services listed in Schedule B hereto. The
administrative services provided hereunder shall be subject to the
control, supervision and direction of the Trusts and the review and
comment by the Trusts' auditors and legal counsel and shall be performed
in accordance with procedures which may be established from time to time
between the Trusts and NSC. NSC shall provide the office space,
facilities, equipment and the personnel required by it to perform the
services contemplated herein.
(b) In providing any or all of the services listed in Schedule B hereto, and
in satisfaction of its obligations to provide such services, NSC may
enter into agreements with one or more other third parties to provide
such services to the Trusts; provided, however, that NSC shall be as
fully
responsible to the Trusts for the acts and omissions of any such third
party service providers as it would be for its own acts or omissions
hereunder.
3. COMPENSATION AND EXPENSES.
(a) For the services provided by NSC hereunder, the Trusts shall pay NSC the
greater of the following:
(1) an annual minimum fee payable in equal monthly installments equal to
$2,300,000. This minimum fee would only apply when and if the collective
average net assets of the Trusts dropped below $7,000,000,000; or
(2) a monthly fee (accrued daily) based on the Trusts' average daily net
assets during the calendar month, such fee being calculated at the
annualized rates set forth below:
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AVERAGE DAILY NET ASSETS ANNUALIZED FEE RATE
AS A % OF AVERAGE DAILY NET ASSETS
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$0 - $5 billion 0.0350%
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Next $5 billion 0.0325%
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Over $10 billion 0.0300%
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(b) In addition, the Trusts shall reimburse NSC for its reasonable
out-of-pocket expenses as well as any other advances incurred by NSC
with the consent of the Trusts with respect to its provision of services
hereunder. It is agreed that the expenses for Blue Sky administrative
services performed and vendor costs incurred will be paid directly by
the Trusts.
(c) For any period less than a full calendar month, any fees payable to NSC
for such period shall be pro-rated for such lesser period. All of the
foregoing fees and expenses will be billed monthly in arrears by NSC.
The Trusts shall pay such fees and reimburse such expenses promptly upon
receipt of an invoice therefor and, in no event, later than five (5)
business days after receipt of the invoice.
(d) The Trusts agrees promptly to reimburse NSC for any equipment and
supplies specially ordered by or for the Trusts through NSC at the
request or with the consent of the Trusts, and for any other expenses
not contemplated by this Agreement that NSC may incur on behalf of, at
the request of, or with the consent of the Trusts.
(e) The Trusts will bear all expenses that are incurred in its operation and
not specifically assumed by NSC. Expenses to be borne by the Trusts,
include, but are not limited to: organizational expenses; cost of
services of independent accountants and outside legal and tax counsel
(including such counsel's review of each Trust's registration statement,
proxy materials, federal and state tax qualification as a regulated
investment company and other reports and materials prepared by NSC under
this Agreement); cost of any services contracted for by the Trusts
directly from parties other than NSC; cost of trading operations and
brokerage fees, commissions and transfer taxes in connection with the
purchase and sale of securities for the Funds; investment advisory fees;
taxes, insurance premiums and other fees and expenses applicable to
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its operation; costs incidental to any meetings of shareholders
including, but not limited to, legal and accounting fees, proxy filing
fees and the costs of preparation, printing and mailing of any proxy
materials; costs incidental to Board meetings, including fees and
expenses of Board members; the salary and expenses of any non-affiliated
officer or director/trustee or any employee of the Trusts; costs
incidental to the preparation, printing and distribution of the Trusts'
registration statements and any amendments thereto and shareholder
reports; cost of typesetting and printing of prospectuses; cost of
preparation and filing of each of the Fund's tax returns, Form N-1A and
Form N-SAR, and all notices, registrations and amendments associated
with applicable federal and state tax and securities laws; all
applicable registration fees and filing fees required under federal and
state securities laws; fidelity bond and directors' and officers'
liability insurance; and cost of independent pricing services used in
computing each Fund's net asset value.
4. LIMITATION OF LIABILITY; INDEMNIFICATION.
(a) NSC shall not be liable to the Trusts for any error of judgment or
mistake of law or for any loss arising out of any act or omission by
NSC, or any persons engaged pursuant to Section 2(b) hereof, including
officers, agents, and employees of NSC and its affiliates, in the
performance of its duties hereunder; provided, however, that nothing
contained herein shall be construed to protect NSC against any liability
to the Trusts, the Funds, or the shareholders to which NSC shall
otherwise be subject by reason of its willful misfeasance, bad faith, or
negligence in the performance of its duties or the reckless disregard of
its obligations and duties hereunder.
(b) NSC will indemnify and hold harmless the Trusts, their officers,
employees, and agents and any persons who control the Trusts
(collectively, the "Trusts Indemnified Parties") and hold each of them
harmless from any losses, claims, damages, liabilities, or actions in
respect thereof to which the Trusts Indemnified Parties may become
subject, including amounts paid in settlement with the prior written
consent of NSC, insofar as such losses, claims, damages, liabilities, or
actions in respect thereof arise out of or result from the failure of
NSC to comply with the terms of this Agreement.
NSC will reimburse the Trusts for reasonable legal or other expenses
reasonably incurred by the Trusts in connection with investigating or
defending against any such loss, claim, damage, liability, or action.
NSC shall not be liable to the Trusts for any action taken or omitted by
the Trusts in bad faith or with willful misfeasance or negligence or
with reckless disregard by the Trusts of their respective obligations
and duties hereunder. The indemnities herein shall, upon the same terms
and conditions, extend to and inure to the benefit of each of the
officers of the Trusts and any person controlling the Trusts.
(c) The obligations set forth in this Section 4 shall survive the
termination of this Agreement.
5. ACTIVITIES OF NSC NOT EXCLUSIVE; DUAL INTERESTS.
(a) The services of NSC under this Agreement are not to be deemed
exclusive, and NSC and any person controlled by or under common control
with NSC shall be free to render similar services to others.
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(b) It is understood that any of the officers, employees, and agents of the
Trusts or the Manager may be a shareholder, director, officer, employee,
or agent of, or be otherwise interested in, NSC, any affiliated person
of NSC, any organization in which NSC may have an interest, or any
organization that may have an interest in the Trusts. Except as
otherwise provided by specific provisions of applicable law, the
existence of any such dual interest shall not affect the validity of
this Agreement or any of the transactions hereunder.
6. REPRESENTATIONS AND WARRANTIES.
(a) The Trusts each represents and warrants to NSC that this Agreement has
been duly authorized by each of them and, when executed and delivered,
will constitute a legal, valid, and binding obligation of the Trusts,
enforceable against the Trusts in accordance with its terms, subject to
bankruptcy, insolvency, reorganization, moratorium, and other laws of
general application affecting the rights and remedies of creditors and
secured parties.
(b) NSC represents and warrants to the Trusts that this Agreement has been
duly authorized by NSC and, when executed and delivered by NSC, will
constitute a legal, valid, and binding obligation of NSC, enforceable
against NSC in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium, and other laws of general
application affecting the rights and remedies of creditors and secured
parties.
7. DURATION AND TERMINATION OF THIS AGREEMENT.
(a) This Agreement shall become effective as of the date first above written
and, unless otherwise terminated, shall continue indefinitely; provided,
however, that this Agreement may be terminated at any time without the
payment of any penalty by either party on not less than sixty (60) days'
written notice to the other party.
(b) This Agreement shall automatically terminate for any Fund in the
attached Schedule A upon the termination of that Fund's Advisory
Agreement.
(c) Unless otherwise terminated, this Agreement shall continue in effect for
one year from the date of execution, and from year to year thereafter so
long as such continuance is specifically approved at least annually by
the Board of Trustees of the Trusts.
(d) NSC hereby agrees that any books and records prepared hereunder with
respect to the Trusts are the property of the Trusts and shall be
readily accessible to the Trusts and their respective trustees, officers
and agents during normal business hours. NSC further agrees that, upon
the termination of this Agreement or otherwise upon request, NSC will
surrender promptly to the Trusts copies of all such books and records.
8. AMENDMENTS AND WAIVERS. This Agreement may be amended by the parties hereto
only if such amendment is specifically approved by the Trusts' Board of
Trustees, and such amendment is set forth in a written instrument executed by
each of the parties hereto. At any time, any of the provisions hereof may be
waived by the written mutual consent of the parties hereto.
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9. NOTICES. All notices or other communications hereunder to either party shall
be in writing and shall be deemed to be received on the earlier of the date
actually received or on the fourth day after the postmark if such notice is
mailed first class postage prepaid. Notices shall be sent to the addresses set
forth below or to such other address as either party may designate by written
notice to the other.
If to NSC:
Nvest Services Company, Inc.
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
With a copy to: General Counsel
If to the Trusts:
New England Funds Trust I
New England Funds Trust II
New England Funds Trust III
New England Cash Management Trust
New England Tax Exempt Money Market Trust
000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
With a copy to: Secretary
Notice shall also be deemed sufficient if given electronically or by telex,
telecopier, telegram, or other similar means of same day delivery (with a
confirming copy by mail as provided herein).
10. ADDITIONAL PROVISIONS
(a) Year 2000. Neither party shall be held liable for computer-related
problems arising out of or associated with third party vendor computer
systems or related equipment that are incurred in connection with the
change from the years 1999 to 2000.
(b) Separate Portfolios. This Agreement shall be construed to be made by the
Trusts as a separate agreement with respect to each Fund, and under no
circumstances shall the rights, obligations, or remedies with respect to
a particular Fund be deemed to constitute a right, obligation, or remedy
applicable to any other Fund.
(c) Entire Agreement. This Agreement constitutes the entire agreement of the
parties with respect to the subject matter hereof and supersedes any
prior arrangements, agreements, or understandings.
(d) Severability. If any term or provision of this Agreement or the
application thereof to any person or circumstance 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.
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(e) Governing Law. The provisions of this Agreement shall be construed and
interpreted in accordance with the laws of The Commonwealth of
Massachusetts as then in effect.
(f) Counterparts. This Agreement may be executed by the parties hereto in
one or more counterparts, and, if so executed, the separate instruments
shall constitute one agreement.
(g) Headings. Headings used in this Agreement are included for convenience
only and are not to be used to construe or interpret this Agreement.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day
and year first above written.
NVEST SERVICES COMPANY, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Name: Xxxxxxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
NEW ENGLAND FUNDS TRUST I
NEW ENGLAND FUNDS TRUST II
NEW ENGLAND FUNDS TRUST III
NEW ENGLAND CASH MANAGEMENT TRUST
NEW ENGLAND TAX EXEMPT MONEY MARKET TRUST
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: President
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SCHEDULE A
TRUST PORTFOLIOS
1. New England Growth Fund
2. New England Capital Growth Fund
3. New England Growth & Income Fund
4. New England Equity Income Fund
5. New England Bullseye Fund
6. New England Balanced Fund
7. New England Value Fund
8. New England International Equity Fund
9. New England Star Advisers Fund
10. New England Star Worldwide Fund
11. New England Star Small Cap Fund
12. New England Bond Income Fund
13. New England High Income Fund
14. New England Government Securities Fund
15. New England Limited Term U.S. Government Fund
16. New England Strategic Income Fund
17. New England Short Term Income Fund
18. New England Municipal Income Fund
19. New England Massachusetts Tax Free Income Fund
20. New England Intermediate Term Tax Free Fund of California
21. New England Cash Management Trust - Money Market Series
22. New England Tax Exempt Money Market Trust
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SCHEDULE B
DESCRIPTION OF SERVICES PROVIDED
NSC shall perform or arrange for the performance of the following administration
and clerical service:
CORPORATE SECRETARIAL SERVICES
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1. provide Secretary and Assistant Secretaries for the Trusts and
other officers as requested;
2. maintain general corporate calendar, tracking all legal and
regulatory compliance through annual cycles;
3. prepare Board materials for quarterly Board meetings and Board
committee meetings, including agenda and background materials
for annual review of advisory and distribution fees,
presentation of issues to the Board, prepare minutes and
follow-up on matters raised at meetings;
4. maintain charter documents for the Trusts;
5. prepare organizational Board meeting materials for new Funds;
6. draft contracts, assisting in negotiation and planning, as
appropriate, for example advisory, distribution and selling
agreements, transfer agency and custodian agreements, 12b-1 and
shareholder servicing plans and related agreements and various
other agreements and amendments;
7. prepare and file proxy solicitation materials, oversee
solicitation and tabulation efforts, conduct shareholder
meetings and provide legal presence at meetings;
REGISTRATION AND DISCLOSURE ASSISTANCE SERVICES
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8. prepare and file amendments to the Funds' registration
statement, including updating prospectuses and SAIs;
9. prepare and file prospectus and SAI supplements, as needed;
10. prepare and file other regulatory documents, including N-SARs,
Rule 24f-2/24e-2 Notices;
11. negotiate, obtain and file fidelity bonds and monitor compliance
with Rule 17g-1 and Rule 17d-1(7) under the 1940 Act;
12. negotiate, obtain and monitor directors' and officers' errors
and omissions policies;
13. prepare and file shareholder meeting materials and assist with
all shareholder communications;
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14. coordinate and monitor state Blue Sky qualification through an
experienced vendor partner;
LEGAL CONSULTING AND PLANNING SERVICES
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15. provide general legal advice on matters relating to portfolio
management, Fund operations, mutual fund sales, development of
advertising materials, changing or improving prospectus
disclosure, and any potential changes in each Fund's investment
policies, operations, or structure;
16. communicate significant emerging regulatory and legislative
developments to the Adviser, the Trusts and the Board and
provide related planning assistance;
17. develop or assist in developing guidelines and procedures to
improve overall compliance by the Trusts and Funds;
18. provide advice with regard to litigation matters, routine fund
examinations and investigations by regulatory agencies;
19. provide advice regarding long-term planning for the Funds,
including creation of new funds or portfolios, corporate
structural changes, mergers, acquisitions, and other asset
gathering plans including new distribution methods;
20. maintain effective communications with fund counsel and counsel
to the independent Trustees, if any;
21. create and implement timing and responsibility system for
outside legal counsel when necessary to implement major projects
and the legal management of such projects;
22. monitor activities and billing practices of counsel performing
services for the Funds or in connection with related fund
activities;
23. provide consultation and advice for resolving compliance
questions along with the Adviser, its counsel, the Trusts and
fund counsel;
24. provide active involvement with the management of SEC and other
regulatory examinations;
25. maintain the Trust's Code of Ethics and monitor compliance of
personnel;
TRANSFER AGENT MONITORING SERVICES
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26. ensure that the content of confirmations, statements, annual and
semi-annual reports, disclosure statements and shareholder
administrative communications conform to regulatory requirements
and are distributed within the mandated time frames;
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27. monitor and review transfer agent activity in order to evaluate
the status of regulatory compliance, protect the integrity of
the funds and shareholders, search for systemic weaknesses, and
examine for potential liability and fraud;
28. investigate and research customer and other complaints to
determine liability, facilitate resolution and promote equitable
treatment of all parties;
29. consult with transfer agent and other staff regarding prospectus
and SAI provisions and requirements, distribution issues
including payment programs, sub-transfer agent arrangements and
other regulatory issues;
TREASURY FINANCIAL SERVICES
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30. provide Treasurer and Assistant Treasurers for the Trusts as
requested;
31. generate portfolio schedules utilizing State Street Xxxxxx
system;
32. create financial statements and financial highlight tables;
33. maintain and update the notes to the financials;
34. supply State Street Bank with a listing of audit reports and
schedules;
35. coordinate with external auditors for annual audit;
36. review financial statements for completeness accuracy and full
disclosure;
37. coordinate ROCSOP adjustments with auditors;
38. determine and monitor expense accrual for each fund;
39. verify management and 12b-1 fees calculated by State Street;
40. review fund waivers and deferrals;
41. calculate total returns for each fund and respective classes
using the Fundstation system;
42. oversee and review custodial bank services including maintenance
of books and records;
43. provide service bureaus with funds statistical information;
44. oversee the determination and publication of the Funds' net
asset values;
45. review the calculation, submit for approval by an officer of the
Funds', and arrange for the payment of the Funds' expenses;
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46. oversee and review the calculation of fees paid to the Funds'
manager, subadvisers, custodian, transfer agent and distributor
and submit to an officer for Funds' approval;
TREASURY REGULATORY SERVICES
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47. prepare and file annual and semi-annual N-SAR forms with the
SEC;
48. provide Trustees with condensed portfolio information;
49. review securities lending activity;
50. review pricing errors;
51. review fair value pricing;
52. review stale pricing;
53. review collateral segregation;
54. provide bi-monthly summaries of pricing overrides to management;
55. provide a review of expense caps and management fee waivers to
management;
56. review short sales;
57. review derivatives positions;
58. review brokerage commissions;
59. review dividends and capital gain distributions;
TREASURY TAX SERVICES
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60. provide annual tax information (Form 1099) for each fund or class of
shares to shareholders and transfer agents;
61. calculate distribution of capital gains, income and spill back
requirements;
62. provide estimates of capital gains;
63. provide 1099 information to vendors;
64. provide service bureaus, brokers and various parties with tax
information noticed;
65. prepare excise tax returns;
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66. prepare income tax returns;
67. prepare tax identification number filings;
68. perform IRS sub-Chapter M testing for 25% diversification, 50%
diversification, 90% gross income, 90% income distribution requirement
(annually), and 98% excise distribution requirement (annually);
TREASURY COMPLIANCE SERVICES
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69. perform oversight review to ensure investment manager compliance with
investment policies and limitations;
70. obtain and review investment manager certification on adhering to all
investment policies, restrictions and guidelines;
71. monitor SEC diversification with 75% diversification test and Section 12
diversification test;
72. review bi-monthly designated collateral on all fund derivative and
delayed delivery positions;
TREASURY SPECIAL SERVICES
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73. administer daily review of securities lending with Xxxxxxx Xxxxx and
State Street Bank;
74. ensure semiannual review of Funds for opportunities with lending and
review of current income levels;
75. establish opportunities with investment manager and brokers for directed
commission programs;
76. monitor line of credit arrangement and payment of commitment fees;
77. maintain Trustee payments and monitor deferred compensation
arrangements;
78. provide Trustees with Form 1099 information;
79. generate expense proformas for new products;
80. negotiate with vendors to ensure new products are brought in at the
lowest costs;
81. ensure all aspects of new products are operationally ready.
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