EXHIBIT h(4)
FORM OF
SPECIAL SERVICING AGREEMENT
This SPECIAL SERVICING AGREEMENT (the "Agreement"), is made as of this
[ ] day of [ ], 1999 by and among [New England Funds Trust III, a
Massachusetts business trust (the "Trust"), on behalf of its [Name of Fund]
series (the "Fund"),] Nvest Services Corp., a Delaware corporation ("NSC"), New
England Funds Management, L.P., a Delaware limited partnership ("NEFM"), and
[Name of Underlying Trust], a Massachusetts business trust, on behalf of its
[Name of Portfolio] series (the "Portfolio").
W I T N E S S E T H:
WHEREAS, the Trust and the [Name of Underlying Trust] are registered as
open-end management investment companies under the Investment Company Act of
1940, as amended (the "1940 Act");
WHEREAS, the Trust has entered into an agreement with NEFM (the
"Investment Advisory Agreement") for the provision of advice and services to the
Fund;
WHEREAS, the Trust has entered into an agreement with NEFM (the
"[Administration] Agreement") whereby NEFM has agreed to provide, or to procure
at NEFM's expense, certain services necessary to the operation of the Fund;
WHEREAS, the Trust has entered into an agreement with NSC (the
"Transfer Agency Agreement") under which NSC provides the Fund with shareholder
servicing, account management, transfer and dividend disbursing agency services,
shareholder reports, proxies, prospectuses and similar shareholder communication
services and other related recordkeeping services for the Fund (the "Shareholder
Related Services");
[WHEREAS, the Trust has entered into an agreement with New England
Funds, L.P. ("Distribution Agreement") for the provision of distribution
services in connection with shares of the Fund;]
WHEREAS, the Fund intends to invest its assets exclusively in the
Portfolio, except for [temporary defensive purposes and] cash or cash items
[pending investment in the Portfolio or] necessary to meet current redemptions;
WHEREAS, the Fund is expected to provide a means by which the Portfolio
can increase its asset base without adding a substantial number of shareholder
accounts;
WHEREAS, the absence of such additional shareholder accounts can reduce
the expenses of the Portfolio that would otherwise be incurred by the Portfolio
for Shareholder Related Services as a result of such increased asset base; and
WHEREAS, the Board of Trustees of the [Name of Underlying Trust], on
behalf of the Portfolio, has determined that by operation of the Fund, it is
reasonable to expect the Shareholder Related Services provided by NSC to the
Fund will result in quantifiable benefits to the Portfolio as a whole and to
each class of its shareholders that are in excess of the fees payable by the
Portfolio hereunder; and such determination by the Board of Trustees is based on
some or all of the following factors, as they apply to the Portfolio:
a. The amount of assets expected to be and/or actually invested in the
Portfolio by the Fund;
b. The expectation that the assets invested in the Portfolio by the
Fund will be invested in a single omnibus account; and
c. The expenses that the Portfolio would have incurred for such
Shareholder Related Services if the assets invested by individual
investors in the Fund were invested directly by such individual
investors in the Portfolio instead of indirectly through the Fund's
omnibus account position in the Portfolio; and
d. The reduction of the Portfolio's fixed expenses (e.g. accounting,
custodial, auditing and legal services, state qualifications and
filings, director fees and organizational and various miscellaneous
expenses) as a percentage of the Portfolio's net assets attributable to
the investment by the Fund in the Portfolio.
NOW, THEREFORE, in consideration of the promises and mutual covenants
made herein, it is agreed between and among the parties hereto as follows:
1. PAYMENT OF TRANSFER AGENCY FEE
In recognition of the benefits to the Portfolio for the Shareholder
Related Services rendered to the Fund under the Transfer Agency
Agreement, the Portfolio will pay to NSC on behalf of the Fund a
portion of the fee due to NSC under the Transfer Agency Agreement, as
set forth in Schedule A hereto. The Treasurer of NSC shall provide an
invoice for the Fund to [Name of Underlying Trust] with regards to the
Portfolio at the end of each quarter, and such invoice shall include
the information on which the fee is calculated. The fee shall be
payable within 10 business days following the receipt of the quarterly
invoice. The parties agree that the payment of the fee is only for the
Shareholder Related Services provided by NSC and not for legal,
advisory, distribution or other services.
2. OPINION OF COUNSEL
At any time any of the parties hereto may consult legal counsel in
respect of any matter arising in connection with this Agreement, and no
such party shall be liable for any action taken or omitted by it in
good faith in accordance with such instruction or with the advice or
opinion of such legal counsel.
3. LIABILITIES
No party hereto shall be liable to any other party hereto for any
action taken or thing done by it or its agents or contractors in
carrying out the terms and provisions of this Agreement provided such
party has acted in good faith and without negligence or willful
misconduct and selected its agents and contractors with reasonable
care.
4. DURATION AND TERMINATION OF THIS AGREEMENT
This Agreement shall become effective as of the date of its execution,
and
(a) unless otherwise terminated, this Agreement shall continue
in effect for one year from the date of its execution, and
from year to year thereafter only so long as such continuance
is specifically approved at least annually (i) by the Board of
Trustees of the [Name of Underlying Trust], and (ii) by vote
of a majority of the Trustees of the [Name of Underlying
Trust] who are not "interested persons" of [Name of Underlying
Trust], as that term is defined in the 1940 Act (the
"Independent Trustees");
(b) this Agreement may at any time be terminated on sixty
days' written notice to the other parties by either the Trust
or [Name of Underlying Trust] by vote of the terminating
party's Board of Trustees; and
(c) this Agreement shall not be assigned or transferred,
either voluntarily or involuntarily, by operation of law or
otherwise, without the prior written consent of the Trust's
and [Name of Underlying Trust]'s respective Boards of Trustees
and shall automatically and immediately terminate in the event
of its assignment without the prior written consent of the
parties hereto.
Termination of this Agreement pursuant to this section 4 shall be
without payment of any penalty.
5. AMENDMENT OF THE AGREEMENT
The Agreement may be modified or amended from time to time by mutual
written agreement between the parties hereto, with the approval of the
Board of Trustees of [Name of Underlying Trust], including a majority
of the Independent Trustees.
6. NOTICE
Any notice under this Agreement shall be in writing, addressed and
delivered or sent by registered or certified mail, postage prepaid, to
the other party at such address as such other party may designate for
the receipt of such notices.
7. INTERPRETIVE PROVISIONS
In connection with the operation of this Agreement, the parties may
agree from time to time on such provisions interpretive of or in
addition to the provisions of this Agreement as may in their joint
opinion be consistent with the general tenor of this Agreement. Any
such interpretive or additional provisions are to be signed by all
parties and annexed hereto, but no such provisions shall contravene any
applicable Federal or State law or regulation.
8. STATE LAW
This Agreement shall be construed and enforced in accordance with and
governed by the laws of the Commonwealth of Massachusetts.
9. CAPTIONS
The captions in the Agreement are included for convenience of reference
only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
Notice
A copy of the Agreement and Declaration of Trust establishing New
England Funds Trust III is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed with
respect to the Trust's ________ series on behalf of the Trust by officers of the
Trust 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 Fund.
A copy of the Agreement and Declaration of Trust establishing [Name of
Underlying Trust] is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this Agreement is executed with
respect to [Name of Underlying Trust]'s ________ series on behalf of [Name of
Underlying Trust] by officers of [Name of Underlying Trust] 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 Portfolio.
IN WITNESS WHEREOF, the parties have caused the Agreement to be
executed as of the day and year first above written.
NEW ENGLAND FUNDS TRUST III, [Name of Underlying Trust],
on behalf of its [Name of Fund] series on behalf of its [Name of
Underlying Fund] series
By: _______________________ By: ______________________
Name: Name:
Title: Title:
NEW ENGLAND FUNDS NVEST SERVICES CORP.
MANAGEMENT, L.P.
By: NEF Corporation, its general partner By: ______________________
Name:
By: ______________________ Title:
Name:
Title:
SCHEDULE A
For the services rendered to the Fund, the Portfolio agrees to pay NSC a
quarterly fee equal to the lesser of (i) 0.12% (at an annual rate) of the
average daily net asset value of monies that the Fund has invested in the
Portfolio during the quarter, and (ii) the total amount of the fees due to NSC
under the Transfer Agency Agreement in respect of the quarter.
