EXHIBIT(D)(3)
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made as of this 1st day of June, 1997 by and between Sentinel Advisors
Company (herein called "SAC"), a Vermont general partnership, having its
principal office at National Life Drive, Montpelier, Vermont 05604, and Keystone
Investment Management Company (herein called "Keystone"), a Delaware
corporation, having its principal office at ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
Witnesseth:
WHEREAS, SAC is a party to an Investment Advisory Agreement dated as of
June 1, 1997, between it and Sentinel Group Funds, Inc. ("Sentinel Funds"), a
corporation organized under the laws of the State of Maryland, a series of which
is Sentinel High Yield Bond Fund (herein called the "Fund"), pursuant to which
SAC provides, inter alia, investment research and advice to the Fund; and
WHEREAS, SAC wishes to employ Keystone as a sub-investment adviser to the
Fund to provide SAC with investment research and other investment services; and
WHEREAS, Keystone is prepared to provide such services on the terms and
conditions hereinafter contained;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, SAC and Keystone agree as follows:
1. Keystone shall act as sub-investment adviser to the Fund. As
such, it shall, subject to SAC's supervision and the supervision of the Board of
Directors of Sentinel Funds, provide a complete program for the investment and
reinvestment of the cash, securities, and other properties comprising the
investment portfolio of the Fund in accordance with the investment policies and
objectives of the Fund as reflected in the current Prospectus and Statement of
Additional Information of the Sentinel Funds and as may be adopted from time to
time by the Board of Directors of the Sentinel Funds. Keystone shall also give
SAC a continuing review of economic conditions and security markets relevant to
the Fund.
2. Keystone shall select industries and companies to be represented
in the investment portfolio of the Fund and shall carry out programs for the
purchase and sale of the securities included or to be included in the investment
portfolio. All activities will be regularly reported to SAC and the Sentinel
Funds. Keystone shall place orders for the purchase and sale of portfolio
securities for the account of the Fund with broker-dealers selected by Keystone.
In executing portfolio transactions and selecting broker-dealers, Keystone will
use its best efforts to seek best execution on behalf of the Fund. In assessing
the best execution available for any transaction, Keystone shall consider all
factors it deems relevant, including the breadth of the market in the security,
the price of the security, the financial condition and execution capability of
the broker-dealer and the reasonableness of the commission, if any (all for the
specific transaction and on a continuing basis). In evaluating the best
execution available, and in selecting the broker-dealer to execute a particular
transaction, Keystone may also consider the brokerage and research services (as
those terms are defined in Section 28(e) of the Securities and
Exchange Act of 1934) provided to the Fund and/or other accounts over which
Keystone or an affiliate of Keystone exercises investment discretion. Keystone
is authorized to pay to a broker-dealer who provides such brokerage and research
services a commission for executing a portfolio transaction for the Fund which
is in excess of the amount of commission another broker-dealer would have
charged for effecting that transaction if, but only if, Keystone determines in
good faith that such commission was reasonable in relation to the value of the
brokerage and research services provided by such broker-dealer viewed in terms
of that particular transaction or in terms of all of the accounts over which
investment discretion is so exercised.
In allocating investment opportunities or investment sale
opportunities among the various accounts over which Keystone exercises
investment discretion and which investment objectives and policies similar to
those of the Fund, Keystone will employ procedures reasonably designed to assure
that the Fund is treated fairly in relation to such other accounts.
3. The initial portfolio manager of the Fund will be ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, and ▇▇. ▇▇▇▇▇▇▇'▇ management team will include two other managers.
Keystone will immediately inform SAC of any changes in personnel assigned to the
Fund's account.
4. Keystone personnel, including ▇▇. ▇▇▇▇▇▇▇, will participate in a
new fund marketing rollout with meetings in approximately six cities. This
marketing rollout is currently scheduled for the months of June and July, 1997.
In addition, the management team will participate in four 30 minute conference
calls to be scheduled during these first two months, and one 30 minute
conference call in each calendar quarter thereafter. The management team will
also be available thereafter for periodic major marketing meetings, and a senior
member of the management team will attend quarterly meetings of the Board of
Directors of the Sentinel Funds to report on performance. However, SAC
acknowledges that the primary function of the investment management team will be
portfolio management, and that the time available for marketing activities will
be limited. Out of pocket expenses incurred by Keystone personnel in the course
of marketing travel on behalf of the Fund will be paid by SAC or an affiliate.
If such expenses are incurred in the course of travel which is partly on the
Fund's behalf and partly for other business, Keystone will reasonably allocate
such expenses among the parties benefiting from the travel.
5. Nothing in this Agreement shall limit or restrict the right of
any director, officer, or employee of Keystone to engage in any other business
or to render services of any kind to any other corporation, firm, individual, or
association.
6. SAC, for its part, shall at all times keep Keystone fully
informed with regard to the funds available or to become available for
investment, and, in general, the condition of the Fund's affairs. SAC shall
furnish Keystone with a certified copy of all financial statements and a signed
copy of each report prepared by independent public accountants and with such
other information with regard to the Fund's affairs as Keystone may from time to
time reasonably request. SAC shall provide Keystone with copies of the Sentinel
Funds' prospectus, statement of additional information, bylaws and Articles of
Incorporation, and shall promptly furnish Keystone with any amendments or
supplements to such documents.
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7. For the services to be rendered by Keystone hereunder, SAC shall
pay to Keystone a monthly fee equal to one half of the advisory fee payable by
the Fund to SAC for such month, subject to a minimum overall effective fee rate
payable to Keystone of 0.35% per annum of the average daily net assets of the
Fund. It is jointly understood that the advisory fee payable by the Fund to SAC
shall be computed in accordance with the following schedule: 0.75% per annum on
the first $100 million of average daily net assets of the Fund; 0.70% per annum
on the next $100 million of such assets; 0.65% per annum on the next $100
million of such assets, and 0.60% per annum on such assets in excess of $300
million.
8. This Agreement shall become effective upon approval by a vote of
a majority of the outstanding voting securities, as such term is defined in the
Investment Company Act of 1940, as amended (the "Act"), of the Fund, and shall
remain in full force and effect until November 30, 1998, and shall continue
thereafter only so long as its continuance is specifically approved at least
annually by vote of a majority of the outstanding voting securities, as such
term is defined in the Act, of the Fund, or by the Board of Directors of the
Sentinel Funds, including the approval by a majority of those directors who are
not interested persons, as such term is defined in the Act, of any party to this
Agreement, at a meeting called for the purpose of voting on such approval,
provided, however, that (1) this Agreement may at any time be terminated without
the payment of any penalty, either by vote of the Board of Directors of the
Sentinel Funds or by vote of a majority of the outstanding voting securities of
the Fund, on 60 days written notice to Keystone, (2) this Agreement shall
immediately terminate in the event of its assignment (within the meaning of the
Act), and (3) this Agreement may at any time be terminated by Keystone or SAC on
60 days written notice to the other party to this Agreement. Any notice under
this Agreement shall be given in writing, addressed and delivered or mailed
postpaid, to the other party at any office of such party.
9. In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of its obligations hereunder, Keystone shall
not be subject to liability for any act or omission in the course or in
connection with the rendition of services hereunder.
10. Any and all notices or other communications required or
authorized to be given hereunder shall be in writing and either personally
delivered or sent by first class mail, postage prepaid, or recognized overnight
delivery service to the other party at its address set forth below or to such
other address as such party may hereafter specify from time to time by written
notice to the other party.
IF TO KEYSTONE:
Keystone Investment Management Company
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: General Counsel
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IF TO SAC:
Sentinel Advisors Company
National Life Drive
Montpelier, Vermont 05604
Attention: Legal Department
11. This agreement shall be governed by, and construed in accordance
with, the laws of the Commonwealth of Massachusetts.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed on the day and year first above written.
Sentinel Advisors Company
By /s/ ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman & CEO
Keystone Investment Management Company
By /s/
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