CDC IXIS MODERATE DIVERSIFIED PORTFOLIO
SUB-ADVISORY AGREEMENT
(XXXXX & XXXX ASSET MANAGEMENT, LLC)
Sub-Advisory Agreement (this "Agreement") entered into as of this 14th
day of July, 2004, by and among CDC Nvest Funds Trust III, a Massachusetts
business trust (the "Trust"), with respect to its CDC IXIS Moderate Diversified
Portfolio (the "Series"), CDC IXIS Asset Management Advisers, L.P., a Delaware
limited partnership (the "Manager"), and Xxxxx & Tang Asset Management, LLC., a
Delaware limited liability company (the "Sub-Adviser").
WHEREAS, the Manager has entered into an Advisory Agreement dated July
14, 2004 (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.
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 designated as the "Xxxxx & Xxxx, Mid Cap
Value Discipline" as the Manager may from time to time allocate to the
Sub-Adviser for management (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.
2. Obligations of the Manager.
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
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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 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
Sub-Adviser is the sole owner of the name and marks "Xxxxx & Tang Asset
Management, LLC" and that all use of any designation consisting in whole or part
of "Xxxxx & Xxxx Asset Management, LLC." 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 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
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.
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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 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 to broker-dealers (including affiliates of CDC IXIS Asset
Management Distributors, L.P.) 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.
The Manager agree that, subject to its fiduciary duties to the Series
arising from its position as Manager of the Series, the Manager shall not
dictate brokerage allocation or selection decisions or investment decisions to
or for the Series, either directly or pursuant to directions given to the
Sub-Adviser by the Manager; provided, however, that nothing in this paragraph
shall prohibit officers of the Trust (who may also be officers or employees of
the Manager) from exercising authority conferred upon them as officers of the
Trust by the Board of Trustees of the Trust.
7. Compensation of the Sub-Adviser. As full compensation for all
services rendered, facilities furnished and expenses borne by the Sub-Adviser
hereunder, the Sub-Adviser shall be paid at the annual rate of 0.45% of the
first $250 million of the average
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daily net assets of its Segment, and 0.40% of its Segment's average daily net
assets in excess of $250 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
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 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, 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.
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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 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
consent of the Manager and the Sub-Adviser, provided that, if required by law,
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 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
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.
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13. General.
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.
CDC IXIS ASSET MANAGEMENT ADVISERS, L.P.
By CDC IXIS Asset Management Corporation, its general partner
By: /s/XXXX X. XXXXXX
-----------------------
Name: Xxxx X. Xxxxxx
Title: President
CDC NVEST FUNDS TRUST III,
on behalf of its CDC IXIS Moderate Diversified Portfolio series
By: /s/XXXX X. XXXXXX
------------------------
Name: Xxxx X. Xxxxxx
Title: President
XXXXX & XXXX ASSET MANAGEMENT, LLC
By: /s/ XXXXXXX X. XXXXX III
---------------------------
Name: Xxxxxxx X. Xxxxx III
Title: Executive Managing Director
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NOTICE
A copy of the Agreement and Declaration of Trust establishing CDC Nvest
Funds Trust III (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 CDC IXIS Moderate Diversified Portfolio 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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