Exhibit d(3)(xxvi)
NVEST STAR SMALL CAP FUND
Sub-Advisory Agreement
(Xxxxxx, Xxxxxx & Company, L.P)
Sub-Advisory Agreement (this "Agreement") entered into as of 30/th/ day of
October, 2000, by and among Nvest Funds Trust I, a Massachusetts business trust
(the "Trust"), with respect to its Nvest Star Small Cap Fund series (the
"Series"), Nvest Funds Management, L.P., a Delaware limited partnership (the
"Manager"), and Xxxxxx, Xxxxxx & Company, L.P., a Delaware limited partnership
(the "Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated October
30, 2000 (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 (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 (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
Series, 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.
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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 of 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
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the 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 Series shall be delivered directly to the Custodian.
4. Proprietary Rights. The Manager agrees and acknowledges that the
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Sub-Adviser is the sole owner of the name "Xxxxxx, Xxxxxx & Company, L.P." and
that all use of any designation consisting in whole or part of "Xxxxxx, Xxxxxx &
Company, L.P." under this Agreement shall inure to the benefit of the Sub-
Adviser. The Manager on its own behalf and on behalf of the Series agrees not
to use any such designation in any advertisement or sales literature or other
materials promoting the Series, 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 disclosure document,
advertisement or sales literature or other materials relating to the Series.
Upon termination of this Agreement for any reason, the Manager
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shall cease, and the Manager shall use its best efforts to cause the Series to
cease, all use of any such designation as soon as reasonably practicable.
5. Expenses. Except for expenses specifically assumed or agreed to
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be paid by 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 Manager
pursuant to Section 7 hereof).
6. Purchase and Sale of Assets. Absent instructions from the Manager
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to the 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 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
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by 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
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services rendered, facilities furnished and expenses borne by the Sub-Adviser
hereunder, the Sub-Adviser shall be paid at the annual rate of 0.55% of the
first $50 million of its Segment's average daily net assets and 0.50% of its
Segment's average daily net assets in excess of $50 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
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services of the 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.
9. Liability. Except as may otherwise be provided by the 1940 Act or
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other federal securities laws, neither the Sub-Adviser nor any of its officers,
directors, partners, 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,
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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 with respect to the Segment
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
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as 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;
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
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consent of the Manager and the Sub-Adviser, provided that, if required by law,
such
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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
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terms "vote of 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 day-to-day 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.
NVEST FUNDS MANAGEMENT, L.P.
By Nvest Distribution Corp., its general partner
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President
XXXXXX, XXXXXX & COMPANY, L.P.
By Xxxxxx, Xxxxxx & Company, Inc., its general partner
By: /s/ Xxxx X. Xxxxxxx
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Name: Xxxx X. Xxxxxxx
Title: Vice President & Director
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NVEST FUNDS TRUST I,
on behalf of its Nvest Star Small Cap Fund series
By: /s/ Xxxx X. Xxxxxx
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Name: Xxxx X. Xxxxxx
Title: President
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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 this Agreement is executed with
respect to the Fund's Nvest Star Small Cap 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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