Exhibit (h)(2)(i)
ADMINISTRATIVE SERVICES AGREEMENT
AGREEMENT made as of the 30/th/ day of October, 2000, by and between Nvest
Services Company, Inc., a Massachusetts corporation ("NSC"), and Nvest Funds
Trust I, Nvest Funds Trust II, Nvest Funds Trust III, Nvest Cash Management
Trust and Nvest 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 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
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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.
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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.
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000 Xxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attention: President
With a copy to: General Counsel
If to the Trusts:
Nvest Funds Trust I
Nvest Funds Trust II
Nvest Funds Trust III
Nvest Cash Management Trust
Nvest 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) 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.
(b) 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.
(c) 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.
(d) 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.
(e) 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.
(f) 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.
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NVEST SERVICES COMPANY, INC.
By: /s/ Xxxxxxxxxxx X. Xxxxxx
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Name: Xxxxxxxxxxx X. Xxxxxx
Title: President & Chief Executive Officer
NVEST FUNDS TRUST I
NVEST FUNDS TRUST II
NVEST FUNDS TRUST III
NVEST CASH MANAGEMENT TRUST
NVEST TAX EXEMPT MONEY MARKET TRUST
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President
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Schedule A
Trust Portfolios
1. Nvest Growth Fund
2. Nvest Capital Growth Fund
3. Nvest Growth & Income Fund
4. Nvest Equity Income Fund
5. Nvest Bullseye Fund
6. Nvest Balanced Fund
7. Nvest International Equity Fund
8. Nvest Star Value Fund
9. Nvest Star Advisers Fund
10. Nvest Star Worldwide Fund
11. Nvest Star Small Cap Fund
12. Nvest Bond Income Fund
13. Nvest High Income Fund
14. Nvest Government Securities Fund
15. Nvest Limited Term U.S. Government Fund
16. Nvest Strategic Income Fund
17. Nvest Short Term Income Fund
18. Nvest Municipal Income Fund
19. Nvest Massachusetts Tax Free Income Fund
20. Nvest Intermediate Term Tax Free Fund of California
21. Nvest Cash Management Trust - Money Market Series
22. Nvest 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;
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;
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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;
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;
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);
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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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