EXHIBIT 99(g)(3)
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made this _____ day of September, 2005, by and between Evergreen
Investment Management Company, LLC (the "Adviser"), and Analytic Investors, Inc.
(the "Sub-adviser").
WHEREAS, the Adviser serves as investment adviser to the Evergreen
International Balanced Income Fund (the "Trust"), a Delaware statutory trust
which has filed a registration statement under the Investment Company Act of
1940, as amended (the "1940 Act"), and the Securities Act of 1933, as amended
(the "Registration Statement"); and
WHEREAS, the Adviser desires to avail itself of the services, advice and
assistance of the Sub-adviser to assist the Adviser in providing investment
advisory services to the Trust; and
WHEREAS, the Sub-adviser is registered under the Investment Advisers Act
of 1940, as amended (the "Advisers Act"), is engaged in the business of
rendering investment advisory services to investment companies and other
institutional clients and desires to provide such services to the Adviser;
NOW, THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follow:
1. Employment of the Sub-adviser. The Adviser hereby employs the
Sub-adviser to furnish continuously an investment program for the Trust with
respect to the implementation of the Trust's "Option Strategy" (as such term is
described and used in the Trust's current Governing Documents (as defined
below), and as it may be amended from time to time by the agreement of the
parties hereto) and to make all related investment decisions on behalf of the
Trust and place all orders for options and other transactions to implement the
Option Strategy, subject to the control and direction of the Adviser and the
Trust's Board of Trustees, for the period and on the terms hereinafter set
forth. The Sub-adviser hereby accepts such employment and agrees during such
period to render the services and to assume the obligations herein set forth for
the compensation herein provided. The Sub-adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser or the Trust in any way. The Sub-adviser may
execute Trust documentation, agreements, contracts and other documents requested
by brokers, dealers, counterparties and other persons in connection with its
providing advisory services to the Trust.
2. Obligations of Services to be provided by the Sub-adviser. The
Sub-adviser undertakes to provide the following services and to assume the
following obligations:
a. The Sub-adviser shall furnish continuously an investment program
for the Trust with respect to the implementation of the Trust's Option
Strategy and will make all related investment decisions on behalf of the
Trust and place all orders for options and other transactions to implement
the Option Strategy, subject to and in accordance with (i) the investment
objective and policies of the Trust applicable to the Option Strategy set
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forth in the Trust's Prospectus and Statement of Additional Information as
from time to time in effect (the "Governing Documents"), (ii) the
requirements applicable to registered investment companies under
applicable laws, including without limitation the 1940 Act and Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), to the
extent applicable to the Option Strategy, and (iii) any written
instructions which the Adviser or the Trust's Board of Trustees may issue
from time-to-time. The Sub-adviser also agrees to conduct its activities
hereunder in accordance with any applicable procedures or policies adopted
by the Trust's Board of Trustees as from time to time in effect (the
"Procedures"). The Adviser has provided to the Sub-adviser copies of all
Governing Documents and Procedures and shall promptly provide to the
Sub-adviser any amendments or supplements thereto. It is understood that
the extent of the Trust's use of the Option Strategy will be subject to
the oversight of the Adviser, and that the Adviser may limit or suspend
the Option Strategy; accordingly, the Adviser and the Sub-adviser will
consult periodically as to the implementation of the Option Strategy.
Subject to and in pursuance of the foregoing, the Sub-adviser is
authorized to make all determinations with respect to the implementation
of the Trust's Option Strategy and shall take such action necessary to
implement the same. The Sub-adviser shall render such reports to the
Trust's Board of Trustees and the Adviser as they may reasonably request
concerning the investment activities of the Trust. Unless the parties
hereto otherwise agree in writing, the Sub-adviser shall not exercise or
procure the exercise of any voting rights attaching to investments in or
held by the Trust.
The Sub-adviser shall be responsible for daily monitoring of the
investment activities and portfolio holdings associated with the Trust's
Option Strategy in connection with the Trust's compliance with the
investment objectives, policies and restrictions applicable to the Option
Strategy, as set forth in the Trust's current Governing Documents. The
Sub-adviser shall also cooperate with and provide sufficient information
to the Adviser to assist the Adviser in its monitoring of the investment
activities and portfolio holdings of the Trust as a whole in connection
with the Trust's overall compliance with the 1940 Act, the Trust's
compliance with the investment objectives, policies and restrictions of
the Trust as set forth in its current Governing Documents, and the Trust's
satisfaction of quarterly diversification requirements for qualification
as a regulated investment company under the Internal Revenue Code of 1986,
as amended from time to time, and the rules and regulations thereunder.
Notwithstanding the investment discretion delegated to the Sub-adviser
hereunder, the Sub-adviser shall act on any instructions of the Adviser
with respect to the investment activities used to implement the Option
Strategy to ensure the Trust's compliance with the foregoing.
b. Absent instructions of the Adviser to the contrary, the
Sub-adviser shall, in the name of the Trust, place orders for the
execution of portfolio transactions with or through such brokers, dealers
or other financial institutions as it may select. In executing portfolio
transactions and selecting broker-dealers, the Sub-adviser will use its
best efforts to seek best execution on behalf of the Trust. In assessing
the best execution available for any transaction, the Sub-adviser 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
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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, the Sub-adviser may
also consider the brokerage and research services (as those terms are used
in Section 28(e) of the Securities Exchange Act of 1934, as amended (the
"1934 Act")) provided by that broker-dealer to the Trust and/or other
accounts serviced by the Sub-adviser. The Sub-adviser is authorized to pay
a broker-dealer who provides such brokerage and research services an
amount of commission for executing a portfolio transaction for the Trust
which is in excess of the amount of commission another broker-dealer would
have charged for effecting that transaction if, but only 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 services
provided by such broker-dealer viewed in terms of either that particular
transaction or in terms of the Sub-adviser's overall responsibilities with
respect to the accounts over which the Sub-adviser exercises investment
discretion.
c. In connection with the placement of orders for the execution of
the portfolio transactions of the Trust, the Sub-adviser shall create and
maintain all records pertaining to the purchase and sale of investments by
the Sub-adviser on behalf of the Trust required by Rule 31a-1(b)(5) and
(9) under the 1940 Act. All such records shall be the property of the
Trust and shall be available for inspection and use by the Securities and
Exchange Commission ("SEC"), the Trust, the Adviser or any person retained
by the Trust at all reasonable times, with reasonable notice. Where
applicable, such records shall be maintained by the Sub-adviser for the
periods and in the places required by Rule 31a-2 under the 1940 Act.
d. 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 expenses of the Adviser 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 Trust, and (c) custodian fees and
expenses. The Sub-adviser will pay its own expenses incurred in furnishing
the services to be provided by it pursuant to this Agreement.
3. Obligations of the Adviser.
a. The Adviser shall provide the Sub-adviser with a copy of the
Trust's agreement with the custodian designated to hold the assets of the
Trust (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 Trust 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 Adviser shall provide
(or cause the Custodian to provide) timely information to the Sub-adviser
regarding such matters as the composition of assets in the Trust, cash
requirements and cash available for investment in the Trust, and all other
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information as may be reasonably necessary for the Sub-adviser to perform
its responsibilities hereunder.
b. The Adviser agrees to furnish the Sub-adviser with copies of any
financial statements or reports made by the Trust 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.
4. Compensation of the Sub-adviser. In full consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-adviser a fee
at the annual rate set forth in Schedule A hereto. Such fee shall be accrued
daily and paid monthly as soon as practicable after the end of each month. If
the Sub-adviser shall serve for less than the whole of any month, the foregoing
compensation shall be prorated. For the purpose of determining fees payable to
the Sub-adviser, the value of the Trust's net assets shall be computed at the
times and in the manner determined by the Trust's Board of Trustees and set
forth in the Governing Documents.
5. Other Activities of the Sub-adviser. The services of the Sub-adviser
hereunder are not to be deemed exclusive, and the Sub-adviser shall be free to
render similar services to others and to engage in other activities; provided,
however, that the Sub-adviser will not undertake any activities which, in its
reasonable judgment, would be reasonably likely to materially and adversely
affect the performance of its obligations under this Agreement. 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 in any material way or otherwise materially impair the
effective performance by the Sub-adviser of its duties and obligations under
this Agreement. The Adviser and the Trust 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
Trust.
6. Liability of the Sub-adviser. Absent willful misfeasance, bad faith or
gross negligence in the performance of the Sub-adviser's duties hereunder or,
reckless disregard by the Sub-adviser of its obligations and duties hereunder,
neither the Sub-adviser nor any of its officers, directors, shareholders,
employees or agents shall be liable to the Adviser, the Trust or any shareholder
of the Trust for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security or as a result of any other act or
omission. Subject to the foregoing, nothing herein shall constitute a waiver of
any rights or remedies that the Trust may have under any federal or state
securities laws.
7. Limitation of Trust's Liability. The Sub-adviser acknowledges that it
has received notice of and accepts the limitations upon the Trust's liability
set forth in its Agreement and Declaration of Trust. The Sub-adviser agrees that
any of the Trust's obligations shall be limited to the assets of the Trust and
that the Sub-adviser shall not seek satisfaction of any such
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obligation from the shareholders of the Trust nor from any Trust officer,
employee or agent of the Trust.
8. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, until December 31,
2006 and shall continue in full force and effect for successive periods of one
year thereafter, but only so long as each such continuance is specifically
approved at least annually by the Trustees of the Trust or a vote of the holders
of a majority of the outstanding voting securities of the Trust and by vote of a
majority of the Trustees of the Trust who are not interested persons of the
Trust, the Adviser or the Sub-adviser, cast in accordance with the provisions of
the 1940 Act. This Agreement may be terminated at any time without payment of
any penalty, by the Adviser, the Trust's Board of Trustees, or by a vote of a
majority of the outstanding voting securities of the Trust upon 60 days prior
written notice to the Sub-adviser or by the Sub-adviser upon 90 days prior
written notice to the Adviser, or upon such shorter notice as may be mutually
agreed upon. This Agreement shall terminate automatically and immediately upon
termination of the Management Agreement between the Adviser and the Trust. This
Agreement shall terminate automatically and immediately in the event of its
assignment. The terms "assignment" and "vote of a majority of the outstanding
voting securities" shall have the meanings set forth for such terms in the 1940
Act as amended or interpreted by regulatory bodies having jurisdiction from time
to time. This Agreement may be amended at any time by the Sub-adviser and the
Adviser, subject to approval by the Trust's Board of Trustees and, if required
by applicable SEC rules and regulations, a vote of a majority of the Trust's
outstanding voting securities and a vote of a majority of the Trustees of the
Trust who are not interested persons of the Trust, the Adviser or the
Sub-adviser, cast in person at a meeting called for the purpose of voting on
such approval.
9. Confidential Relationship. Any (i) information that is not generally
available to, or known by, the public and obtained or received by a party to
this Agreement in the course of or in connection with the performance of its
obligations under this Agreement and (ii) advice furnished by either party to
this Agreement to the other party to this Agreement in the course of or in
connection with the performance of its obligations under this Agreement, shall
be treated as confidential and shall not be disclosed to third parties without
the consent of the other party hereto except as required by law, rule,
regulation or court order, and shall not be used by the receiving or obtaining
party except for the benefit of the other party. The Adviser hereby consents to
the disclosure to third parties of investment results and other data of the
Trust in connection with providing composite investment results and related
information of the Sub-adviser. The Trust and the Adviser will not issue any
press release or other public communication regarding the Trust and referencing
the Sub-adviser, without the Sub-adviser's prior review and consent, which shall
not be unreasonably withheld.
10. Severability. If any provision of this Agreement shall be held or made
invalid by a court decision, statue, rule or otherwise, the remainder of this
Agreement shall not be affected thereby.
11. Miscellaneous. Each party agrees to perform such further actions and
execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Delaware,
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without giving effect to conflicts of laws rules. The captions in this Agreement
are included for convenience only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. This
Agreement may be executed in several counterparts, all of which together shall
for all purposes constitute one Agreement, binding on the parties.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
EVERGREEN INVESTMENT MANAGEMENT
COMPANY, LLC
By: __________________________________
Name:
Title:
ANALYTICS INVESTORS, INC.
By: __________________________________
Name:
Title:
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September __, 2005
Schedule A
As compensation for the Sub-adviser's services to the Trust during the
period of this Agreement, the Adviser will pay to the Sub-adviser a fee at the
annual rate of:
Average Daily Total Assets
Sub-advisory Fee of the Trust (as defined below)
---------------- -------------------------------
0.15% on first $100,000,000, plus
0.12% on next $150,000,000, plus
0.10% on amounts over $250,000,000,
where "Total Assets" is defined as (i) the net assets of the Trust
(including assets attributable to any preferred shares that may be outstanding)
plus (ii) any assets of the Trust (whether or not included in the calculation
contemplated by clause (i)) attributable to borrowings of money, the use of
reverse repurchase agreements or dollar rolls, or the issuance of debt
securities (collectively "external borrowings"), without deducting liabilities
representing external borrowings. The liquidation preference of any preferred
shares of the Trust, if any, constituting financial leverage shall not be
considered a liability of the Trust.
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