Exhibit (d)(17)
NEW ENGLAND ZENITH FUND
INTERIM SUBADVISORY AGREEMENT
(Xxxxxx Oakmark Mid Cap Value Series)
This Interim Subadvisory Agreement (this "Agreement") is entered into as of
October 30, 2000 by and between New England Investment Management, Inc., a
Massachusetts corporation (the "Manager"), and Xxxxxx Associates L.P. (the
"Subadviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated May 1,
2000 (the "Advisory Agreement") with New England Zenith Fund (the "Trust"),
pursuant to which the Manager provides portfolio management and administrative
services to the Xxxxxx Oakmark Mid Cap Value Series of the Trust (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 subadvisers;
WHEREAS, the Manager desires to retain the Subadviser 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 Manager and the Subadviser agree as follows:
1. Subadvisory Services.
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a. The Subadviser shall, subject to the supervision of the Manager
and in cooperation with the Manager, as administrator, or with any other
administrator appointed by the Manager (the "Administrator"), manage the
investment and reinvestment of the assets of the Series. The Subadviser shall
manage the Series 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, as revised or supplemented from time to time, relating
to the Series (the "Prospectus"), (2) any additional policies or guidelines
established by the Manager or by the Trust's trustees that have been furnished
in writing to the Subadviser and (3) the provisions of the Internal Revenue Code
(the "Code") applicable to "regulated investment companies" (as defined in
Section 851 of the Code) and "segregated asset accounts" (as defined in Section
817 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") the rules and regulations thereunder and the interpretive opinions
thereof of the staff of the Securities and Exchange Commission ("SEC") ("SEC
Positions"); provided, however, that the Manager agrees to inform the Subadviser
of any and all applicable state insurance law restrictions that operate to limit
or restrict the investments the Series might otherwise make ("Insurance
Restrictions"), and to inform the Subadviser promptly of any changes in such
Insurance Restrictions. Subject to the foregoing, the Subadviser is authorized,
in its discretion and without prior consultation with the Manager, to buy, sell,
lend
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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 Series may be invested
in such proportions of stocks, bonds, other securities or investment
instruments, or cash, as the Subadviser shall determine. Notwithstanding the
foregoing provisions of this Section 1.a, however, the Subadviser shall, upon
written instructions from the Manager, effect such portfolio transactions for
the Series as the Manager shall determine are necessary in order for the Series
to comply with the Policies.
b. The Subadviser shall furnish the Manager and the Administrator
daily, weekly, monthly, quarterly and/or annual reports concerning portfolio
transactions and the investment performance of the Series in such form as may be
mutually agreed upon, and agrees to review the Series and discuss the management
of the Series with representatives or agents of the Manager, the Administrator
or the Trust at their reasonable request. The Subadviser shall permit all books
and records with respect to the Series to be inspected and audited by the
Manager and the Administrator at all reasonable times during normal business
hours, upon reasonable notice. The Subadviser shall also provide the Manager,
the Administrator or the Trust with such other information and reports as may
reasonably be requested by the Manager, the Administrator or the Trust from time
to time, including without limitation all material as reasonably may be
requested by the Trustees of the Trust pursuant to Section 15(c) of the 1940
Act. The Subadviser shall furnish the Manager (which may also provide it to the
Trust's Board of Trustees) with copies of all comment letters relevant to the
Series received from the SEC following routine or special SEC examinations or
inspections.
c. The Subadviser shall provide to the Manager a copy of the
Subadviser's Form ADV as filed with the SEC and any amendments or restatements
thereof in the future and a list of the persons whom the Subadviser wishes to
have authorized to give written and/or oral instructions to custodians of assets
of the Series.
d. Unless the Manager gives the Subadviser written instructions to
the contrary, the Subadviser shall use its good faith judgment in a manner which
it reasonably believes best serves the interest of the Series' shareholders to
vote or abstain from voting all proxies solicited by or with respect to the
issuers of securities in which assets of the Series are invested.
2. Obligations of the Manager.
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a. The Manager shall provide (or cause the Trust's custodian to
provide) timely information to the Subadviser regarding such matters as the
composition of assets in the Series, cash requirements and cash available for
investment in the Series, and all other information as may be reasonably
necessary for the Subadviser to perform its responsibilities hereunder.
b. The Manager has furnished the Subadviser a copy of the Prospectus
and agrees during the continuance of this Agreement to furnish the Subadviser
copies of any
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revisions or supplements thereto at, or, if practicable, before the time the
revisions or supplements become effective. The Manager agrees to furnish the
Subadviser with relevant sections of minutes of meetings of the Trustees of the
Trust applicable to the Series to the extent they may affect the duties of the
Subadviser, and with copies of any financial statements or reports of the Trust
with respect to the Series to its shareholders, and any further materials or
information which the Subadviser may reasonably request to enable it to perform
its functions under this Agreement, including, but not limited to, timely
information relating to any Insurance Restrictions.
3. Custodian. The Manager shall provide the Subadviser with a copy of the
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Series' agreement with the custodian designated to hold the assets of the Series
(the "Custodian") and any modifications thereto (the "Custody Agreement"). The
assets of the Series 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 Subadviser shall provide timely instructions directly to the
Trust's custodian, in the manner and form as required by the Trust's Custody
Agreement (including with respect to exchange offerings and other corporate
actions) necessary to effect the investment and reinvestment of the Series'
assets. 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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Subadviser is the sole owner of the name and trade or service xxxx "Xxxxxx" or
"Oakmark" and that all use of any designation consisting in whole or part of
either such trade or service xxxx under this Agreement shall inure to the
benefit of the Subadviser.
5. Expenses. Except for expenses specifically assumed or agreed to be
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paid by the Subadviser pursuant hereto, the Subadviser shall not be liable for
any 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. The Subadviser will pay its
own expenses incurred in furnishing the services to be provided by it pursuant
to this Agreement.
6. Purchase and Sale of Assets. Absent instructions from the Manager to
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the contrary, the Subadviser shall place all orders for the purchase and sale of
securities for the Series with brokers or dealers selected by the Subadviser,
which may include brokers or dealers affiliated with the Subadviser, provided
such orders comply with Rule 17e-1 (or any successor or other relevant
regulations) under the 1940 Act in all respects. To the extent consistent with
applicable law and then-current SEC positions, purchase or sell orders for the
Series may be aggregated with contemporaneous purchase or sell orders of other
clients of the Subadviser. The Subadviser shall use its best efforts to obtain
execution of transactions for the Series at prices which are advantageous to the
Series and at commission rates that are reasonable in relation to the benefits
received. However, the Subadviser 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 Subadviser. Not all such services
or products need to be used by the Subadviser in managing the Series.
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7. Compensation of the Subadviser. As full compensation for all services
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rendered, facilities furnished and expenses borne by the Subadviser hereunder,
the Manager shall pay the Subadviser compensation at the annual rate of 0.45% of
the first $100 million of the average daily net assets of the Series during the
Series' then-current fiscal year, 0.40% of the next $400 million of such assets
and 0.35% of such assets in excess of $500 million. 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. If the Subadviser shall serve for less than the whole of any month or
other agreed-upon interval, the foregoing compensation shall be prorated. The
Manager may from time to time waive the compensation it is entitled to receive
from the Trust; however, any such waiver will have no effect on the Manager's
obligation to pay the Subadviser the compensation provided for herein.
Further:
a. Such compensation shall be held in an interest-bearing escrow account
with State Street Bank and Trust Company;
b. If a majority of the outstanding voting securities of the Series approve
a new Sub-Advisory Agreement with the Subadviser before 150 days after the
Effective Date (as defined in Section 10), the amount in the escrow account
(including interest earned thereon) with respect to such Series shall be paid to
the Subadviser; and
c. If a majority of the outstanding voting securities of the Series do not
approve a new Subadvisory Agreement with the Subadviser, the Subadviser shall be
paid, from the escrow account, the lesser of an amount equal to:
(1) any costs incurred in performing this Agreement (plus interest
earned on that amount in the escrow account) or
(2) the total amount in the escrow account (plus interest earned
thereon).
8. Non-Exclusivity. The Manager agrees that the services of the
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Subadviser are not to be deemed exclusive and that the Subadviser 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
Subadviser 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 Subadviser 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 Subadviser of its
duties and obligations under this Agreement. The Manager recognizes and agrees
that the Subadviser 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 Subadviser shall for all purposes hereof be deemed to be an
independent contractor and shall, unless otherwise provided or authorized, have
no authority to
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act for or represent the Trust or the Manager in any way or otherwise be deemed
an agent of the Trust or the Manager.
9. Liability and Indemnification. Except as may otherwise be provided by
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the 1940 Act or other federal securities laws, neither the Subadviser nor any of
its officers, partners, managing directors, employees, affiliates 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, 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 a violation of law, willful misfeasance, bad
faith or gross negligence in the performance of any Indemnified Party's duties
or by reason of reckless disregard by any Indemnified Party of its obligations
and duties. The Manager shall hold harmless and indemnify the Subadviser for any
loss, liability, cost, damage or expense (including reasonable attorneys fees
and costs) arising (i) from any claim or demand by any past or present
shareholder of the Series that is not based upon the obligations of the
Subadviser with respect to the Series under this Agreement or (ii) resulting
from the failure of the Manager to inform the Subadviser of any applicable
Insurance Restrictions or any changes therein. The Subadviser agrees to
indemnify the Manager for any loss, liability, cost, damage or expense
(including reasonable attorney's fees) resulting from a material misstatement or
omission in the Series' Prospectus with respect to disclosure of the Series'
investment objectives, policies and risks. The Manager acknowledges and agrees
that the Subadviser makes no representation or warranty, express or implied,
that any level of performance or investment results will be achieved by the
Series or that the Series will perform comparably with any standard or index,
including other clients of the Subadviser, 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 (the "Effective Date") and will continue in
effect until a new Subadvisory Agreement between the Manager and the Subadviser
is approved by the shareholders of the Series or for 150 days, whichever is
sooner.
Additionally, this Agreement may be terminated at any time, without the
payment of any penalty,
a. by the Board of Trustees of the Trust, by the vote of a majority of
the outstanding voting securities of the Series, or by the vote of a
majority of the outstanding voting securities of the Series, on ten
days' written notice to the Subadviser,
b. by the Subadviser on sixty days' written notice to the Manager and the
Trust;
c. if approved by the Board of Trustees of the Trust, by the Manager upon
ten days' written notice to the Subadviser; or
d. automatically in the event of its assignment or upon termination of
the Advisory Agreement.
In the event of termination of this Agreement, all compensation due to the
Subadviser through the
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date of termination will be calculated on a pro rata basis through the date of
termination and paid on the first business day after the next succeeding month
end.
11. Amendment. This Agreement may be amended at any time by mutual consent
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of the Manager and the Subadviser, provided that, if required by law (as may be
modified by any exemptions received by the Manager), such 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 Subadviser, 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 terms
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"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 SEC under the 1940 Act.
13. General.
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a. The Subadviser may perform its services through any employee,
officer or agent of the Subadviser, 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
portfolio management duties described therein until the Subadviser notifies the
Manager that one or more other employees, officers or agents of the Subadviser,
identified in such notice, shall assume such duties as of a specific date. The
Subadviser shall use commercially reasonable efforts to inform the Manager of
any such events enough time prior to the event taking effect such that allows
the Manager sufficient time to prepare and file any necessary supplement to the
Prospectus.
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.
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NEW ENGLAND INVESTMENT MANAGEMENT, INC.
By: /s/ Xxxx X. Xxxxxxx, Xx.
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Xxxx X. Xxxxxxx, Xx.
Senior Vice President
XXXXXX ASSOCIATES L.P.
By: /s/ Xxxxx Xxxxxx
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Name: Xxxxx Xxxxxx
Title: Chief Operating Officer
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