Exhibit (h)(6)
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:
ANNUALIZED FEE RATE
AVERAGE DAILY NET ASSETS AS A % OF AVERAGE DAILY NET ASSETS
------------------------ ----------------------------------
$0 - $5 billion 0.0350%
Next $5 billion 0.0325%
Over $10 billion 0.0300%
(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 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.
(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.
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.
(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
------------------------------
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
------------------------------
Name: Xxxx X. Xxxxxxx
Title: President
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
SCHEDULE B
DESCRIPTION OF SERVICES PROVIDED
NSC shall perform or arrange for the performance of the following administration
and clerical service:
CORPORATE SECRETARIAL SERVICES
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
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;
14. coordinate and monitor state Blue Sky qualification through an
experienced vendor partner;
LEGAL CONSULTING AND PLANNING SERVICES
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
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;
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
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;
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
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
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;
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
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
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.
