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Exhibit 23 (d)(2)
Interim Investment Sub-Advisory Agreement
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INTERIM
SUBADVISORY AGREEMENT
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For Xxxxxxxxxx Variable Series: Emerging Markets Fund
THIS AGREEMENT is made and entered into on this 18th day of January,
2003, among The Xxxxxxxxxx Funds III, a Massachusetts business trust (the
"Trust") on behalf of certain of its series (each, a "Fund", collectively, the
"Funds"), Gartmore Global Asset Management Trust (the "Adviser"), a Delaware
business trust registered under the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), and Gartmore Global Partners, a Delaware general
partnership (the "Subadviser"), also registered under the Advisers Act.
W I T N E S S E T H :
WHEREAS, the Trust is registered with the Securities and Exchange
Commission (the "SEC") as an open-end management investment company under the
Investment Company Act of 1940 (the "1940 Act");
WHEREAS, the Fund previously had retained Xxxxxxxxxx Asset Management,
LLC ("MAM") as the Fund's adviser pursuant to a previous investment advisory
agreement between the Fund and MAM, dated August 30, 2002 (hereinafter, the
"Previous Investment Advisory Agreement"); and
WHEREAS, the Board of Trustees of the Trust, on January 14, 2003,
terminated the Previous Investment Advisory Agreement, effective as of January
17, 2003; and
WHEREAS, the Board of Trustees of the Trust, on January 14, 2003, duly
approved an Interim Investment Advisory Agreement," effective as of January 18,
2003, pursuant to Rule 15a-4 under the 1940 Act, and, pursuant to this interim
agreement, the Adviser is to be retained to act as investment adviser for
certain series of the Trust (said Interim Investment Advisory Agreement
hereinafter referred to as the "Advisory Agreement"); and
WHEREAS, in connection with the Transaction, it is expected that a
proposal shall be submitted to shareholders of each Fund under which such Funds
would be reorganized into the relevant series of Gartmore Variable Insurance
Trust (the "Reorganization") pursuant to an Agreement and Plan of Reorganization
between the Trust and Gartmore Variable Insurance Trust (the "Plan"); and
WHEREAS, the Subadviser is regulated by the Securities and Exchange
Commission as an investment adviser under the Advisers Act and is also regulated
by the Financial Services Authority ("FSA") of the United Kingdom in the conduct
of its investment business; and
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WHEREAS, the Advisory Agreement permits the Adviser to delegate certain
of its duties under the Advisory Agreement to other investment advisers, subject
to the requirements of the 1940 Act; and
WHEREAS, the Adviser desires to retain Subadviser to assist it in the
provision of a continuous investment program for that portion of the Trust's
assets which the Adviser will assign to the Subadviser (the "Subadviser
Assets"), and Subadviser is willing to render such services subject to the terms
and conditions set forth in this Agreement;
WHEREAS, The Board of Trustees of the Fund, on January 14, 2003, duly
approved this Interim Subadvisory Agreement in compliance with Rule 15a-4 under
the 1940 Act;
NOW, THEREFORE, the parties do mutually agree and promise as follows:
1. Appointment as Subadviser. The Adviser hereby retains the Subadviser
to act as investment adviser for and to manage the Subadviser Assets subject to
the supervision of the Adviser and the Board of Trustees of the Trust and
subject to the terms of this Agreement; and the Subadviser hereby accepts such
employment. Such assets are specified in an Exhibit to this Agreement and this
Exhibit may be amended from time to time under this Agreement ("Exhibit A"). In
such capacity, the Subadviser shall be responsible for the investment management
of the Subadviser Assets. It is recognized that the Subadviser and certain of
its affiliates now act, and that from time to time hereafter may act, as
investment adviser to one or more other investment companies and to fiduciary or
other managed accounts and that the Adviser and the Trust have no objection to
such activities.
2. Duties of Subadviser.
(a) Investments. The Subadviser is hereby authorized and directed
and hereby agrees, subject to the stated investment policies and
restrictions of the Fund as set forth in the Fund's prospectus and
statement of additional information as currently in effect and as
supplemented or amended from time to time (collectively referred to
hereinafter as the "Prospectus") and subject to the directions of the
Adviser and the Trust's Board of Trustees, to purchase, hold and sell
investments for the Subadviser Assets and to monitor on a continuous
basis the performance of the Subadviser Assets. In providing these
services, the Subadviser will conduct a continual program of investment,
evaluation and, if appropriate, sale and reinvestment of the Subadviser
Assets.
The Adviser agrees to provide the Subadviser with such assistance
as may be reasonably requested by the Subadviser in connection with the
Subadviser's activities under this Agreement, including, without
limitation, information concerning a Fund, their funds available, or to
become available, for investment and generally as to the conditions of a
Fund's or Trust's affairs. In particular, but without prejudice to the
generality of the foregoing, the Adviser shall authorize and instruct
the Trust's custodian to provide such information to the Subadviser as
it may reasonably require, and to act upon the Subadviser's instructions
given in the proper performance by the Subadviser of this Agreement.
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(b) Compliance with Applicable Laws and Governing Documents. In
the performance of its duties and obligations under this Agreement, the
Subadviser shall act in conformity with the Trust's Declaration of Trust
and By-Laws and the Prospectus and with the instructions and directions
received in writing from the Adviser or the Trustees of the Trust and
will conform to and comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, as amended (the "Code"), and all other
applicable federal and state laws and regulations. Notwithstanding the
foregoing, the Adviser shall remain responsible for ensuring each Fund's
overall compliance with the 1940 Act and the Code and the Subadviser is
only obligated to comply with this subsection (b) with respect to the
Subadviser Assets. The Adviser will provide the Subadviser with a copy
of the minutes of the meetings of the Board of Trustees of the Trust to
the extent they may affect a Fund or the duties of the Subadviser, and
with copies of any financial statements or reports made by the Fund 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. Notwithstanding the foregoing, the Adviser
acknowledges that the Subadviser may also be subject to requirements by
FSA, and will comply with such requirements to the extent they are not
inconsistent with applicable federal and state laws and regulations in
the United States. At a minimum, the Subadviser must comply with the
laws of the United States, but may also choose to comply with more
stringent FSA requirements if the Subadviser deems necessary.
The Adviser will also provide the Subadviser with reasonable
advance notice of any change in a Fund's investment objectives, policies
and restrictions as stated in the Prospectus, and the Subadviser shall,
in the performance of its duties and obligations under this Agreement,
manage the Subadviser Assets consistent with such changes, provided the
Subadviser has received prompt notice of the effectiveness of such
changes from the Trust or the Adviser. In addition to such notice, the
Adviser shall provide to the Subadviser a copy of a modified Prospectus
reflecting such changes. The Adviser acknowledges and agrees that the
Prospectus will at all times be in compliance with all disclosure
requirements under all applicable federal and state laws and regulations
relating to the Trust or the Fund, including, without limitation, the
1940 Act, and the rules and regulations thereunder, and that the
Subadviser shall have no liability in connection therewith, except as to
the accuracy of material information furnished by the Subadviser to the
Trust or to the Adviser specifically for inclusion in the Prospectus.
The Subadviser hereby agrees to provide to the Adviser in a timely
manner following the Adviser's written request such information relating
to the Subadviser and its relationship to, and actions for, the Trust as
may be required to be contained in the Prospectus or in the Trust's
Registration Statement on Form N-1A.
(c) Voting of Proxies. The Subadviser shall have the power to
vote, either in person or by proxy, all securities in which the
Subadviser Assets may be invested from time to time, and shall not be
required to seek or take instructions from, the Adviser, the Fund or the
Trust or take any action with respect thereto. If both the Subadviser
and another entity managing assets of a Fund have invested in the same
security, the Subadviser and such other entity will each have the power
to vote its pro rata share of the security.
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(d) Agent. Subject to any other written instructions of the
Adviser or the Trust, the Subadviser is hereby appointed the Adviser's
and the Trust's agent and attorney-in-fact for the limited purposes of
managing the Subadviser Assets, and executing account documentation,
agreements, contracts and other documents as the Subadviser shall enter
into with brokers, dealers, counterparties and other persons in
connection with its management of the Subadviser Assets. The Subadviser
agrees to provide the Adviser and the Trust with copies of any such
agreements executed on behalf of the Adviser or the Trust.
(e) Brokerage. The Subadviser is authorized, subject to the
supervision of the Adviser and the Trust's Board of Trustees, to
establish and maintain accounts on behalf of each Fund with, and place
orders for the purchase and sale of the Subadviser Assets with or
through, such persons, brokers (including, to the extent permitted by
applicable law, any broker affiliated with the Subadviser) or dealers
("brokers") as the Subadviser may elect and negotiate commissions to be
paid on such transactions. The Subadviser, however, is not required to
obtain the consent of the Adviser or the Trust's Board of Trustees prior
to establishing any such brokerage account. The Subadviser shall place
all orders for the purchase and sale of portfolio investments for a
Fund's account with brokers selected by the Subadviser. In the selection
of such brokers and the placing of such orders, the Subadviser shall
seek to obtain for the Fund the most favorable price and execution
available, except to the extent it may be permitted to pay higher
brokerage commissions for brokerage and research services, as provided
below. In using its reasonable efforts to obtain for the Fund the most
favorable price and execution available, the Subadviser, bearing in mind
the best interests of each Fund at all times, shall consider all factors
it deems relevant, including price, the size of the transaction, the
breadth and nature of the market for the security, the difficulty of the
execution, the amount of the commission, if any, the timing of the
transaction, market prices and trends, the reputation, experience and
financial stability of the broker involved, and the quality of service
rendered by the broker in other transactions. Subject to such policies
as the Trustees may determine, or as may be mutually agreed to by the
Adviser and the Subadviser, the Subadviser shall not be deemed to have
acted unlawfully or to have breached any duty created by this Agreement
or otherwise solely by reason of its having caused a Fund to pay a
broker that provides brokerage and research services (within the meaning
of Section 28(e) of the Securities Exchange Act of 1934) to the
Subadviser an amount of commission for effecting a Fund investment
transaction that is in excess of the amount of commission that another
broker would have charged for effecting that transaction if, but only
if, the Subadviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer viewed in terms of either
that particular transaction or the overall responsibility of the
Subadviser with respect to the accounts as to which it exercises
investment discretion. Notwithstanding the foregoing, the Adviser
acknowledges that the Subadviser may also be subject to requirements by
FSA, and will comply with such requirements to the extent they are not
inconsistent with applicable federal and state laws and regulations in
the United States. At a minimum, the Subadviser must comply with the
laws of the United States, but may also choose to comply with more
stringent FSA requirements if the Subadviser deems necessary.
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It is recognized that the services provided by such brokers may
be useful to the Subadviser in connection with the Subadviser's services
to other clients. On occasions when the Subadviser deems the purchase or
sale of a security to be in the best interests of a Fund as well as
other clients of the Subadviser, the Subadviser, to the extent permitted
by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be sold or purchased. In such
event, allocation of securities so sold or purchased, as well as the
expenses incurred in the transaction, will be made by the Subadviser in
the manner the Subadviser considers to be the most equitable and
consistent with its fiduciary obligations to each Fund and to such other
clients. It is recognized that in some cases, this procedure may
adversely affect the price paid or received by the Fund or the size of
the position obtainable for, or disposed of by, the Fund.
(f) Securities Transactions. The Subadviser and any affiliated
person of the Subadviser may purchase securities or other instruments
from or sell securities or other instruments to a Fund only if such
transaction is permissible under applicable laws and regulations,
including, without limitation, the 1940 Act and the Advisers Act and the
rules and regulations promulgated thereunder.
The Subadviser, including its Access Persons (as defined in
subsection (e) of Rule 17j-1 under the 1940 Act), agrees to observe and
comply with Rule 17j-1 and the Trust's Code of Ethics (which shall
comply in all material respects with Rule 17j-1), as the same may be
amended from time to time. On a quarterly basis, the Subadviser will
either (i) certify to the Adviser that the Subadviser and its Access
Persons have complied with the Trust's Code of Ethics with respect to
the Subadviser Assets or (ii) identify any violations which have
occurred with respect to the Subadviser Assets.
(g) Books and Records. The Subadviser shall maintain separate
detailed records of all matters pertaining to the Subadviser Assets (the
"Fund's Records"), including, without limitation, brokerage and other
records of all securities transactions. The Subadviser acknowledges that
the Fund's Records are property of the Trust; however, nothing in this
clause shall be interpreted to provide the Adviser or the Trust with any
property right in any software used by the Subadviser to maintain such
records. The Fund's Records (relating to the Subadviser Assets) shall be
available to the Adviser at any time upon reasonable request during
normal business hours and shall be available for telecopying without
delay to the Adviser during any day that the relevant Fund is open for
business. The Trust acknowledges that the Subadviser may be obligated
under applicable law and regulation to maintain copies of the Fund's
Records for certain periods prescribed by such law and regulation and
that it will permit the Subadviser to maintain such records as may be so
required both during the term of this Agreement and thereafter.
(h) Information Concerning Subadviser Assets and Subadviser. From
time to time as the Adviser or the Trust may request, the Subadviser
will furnish the requesting party reports on portfolio transactions and
reports on Subadviser Assets held in the portfolio, all in such detail
as the Adviser or the Trust may reasonably request. The Subadviser will
also
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inform the Adviser in a timely manner of material changes in portfolio
management team(s) responsible for Subadviser Assets, any changes in the
ownership or management of the Subadviser, or of material changes in the
control of the Subadviser. Upon reasonable request, the Subadviser will
make available its officers and employees to meet with the Trust's Board
of Trustees to review the Subadviser Assets.
The Subadviser will also provide such information or perform such
additional acts as are customarily performed by a subadviser, and as may
be reasonably requested from time to time, and may be required for the
Trust or the Adviser to comply with their respective obligations under
applicable laws, including without limitation, the Code, the 1940 Act,
the Advisers Act, and the Securities Act of 1933, as amended (the
"Securities Act"), and any rule or regulation thereunder.
(i) Custody Arrangements. The Subadviser shall on each business
day provide the Adviser and the Trust's custodian such information as
the Adviser and the Trust's custodian may reasonably request relating to
all transactions concerning the Fund Investments.
(j) Historical Performance Information. To the extent agreed upon
by the parties, the Subadviser will provide the Trust with historical
performance information on similarly managed investment companies or for
other accounts to be included in the Prospectus or for any other uses
permitted by applicable law. The Trust and the Adviser both acknowledge
that the Subadviser may be bound by applicable law and regulation which
may restrict its ability to disclose details such information, and this
Agreement shall not be construed as requiring the Subadviser to disclose
any such information where such disclosure would result in the
Subadviser being in breach of such applicable law or regulation.
3. Independent Contractor. In the performance of its duties hereunder,
the Subadviser is and shall be an independent contractor and unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund, the Trust or the Adviser in any way
or otherwise be deemed an agent of the Fund, the Trust or the Adviser.
4. Expenses. During the term of this Agreement, Subadviser will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities, commodities and other investments (including
brokerage commissions and other transaction charges, including any tax arising
on any transaction, if any) purchased for a Fund. The Subadviser shall, at its
sole expense, employ or associate itself with such persons as it believes to be
particularly fitted to assist it in the execution of its duties under this
Agreement. The Subadviser shall not be responsible for the Trust's, the Fund's
or Adviser's expenses, which shall include, but not be limited to,
organizational and offering expenses (which include out-of-pocket expenses, but
not overhead or employee costs of the Subadviser); expenses for legal,
accounting and auditing services; taxes and governmental fees; dues and expenses
incurred in connection with membership in investment company organizations;
costs of printing and distributing shareholder reports, proxy materials,
prospectuses, stock certificates and distribution of dividends; charges of the
Fund's custodians and sub-custodians, administrators and sub-administrators,
registrars, transfer agents, dividend disbursing
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agents and dividend reinvestment plan agents; payment for portfolio pricing
services to a pricing agent, if any; registration and filing fees of the
Securities and Exchange Commission (the "SEC"); expenses of registering or
qualifying securities of the Fund for sale in the various states; freight and
other charges in connection with the shipment of the Fund's portfolio
securities; fees and expenses of non-interested Trustees; salaries of
shareholder relations personnel; costs of shareholders meetings; insurance;
interest; brokerage costs; and litigation and other extraordinary or
non-recurring expenses. The Trust or the Adviser, as the case may be, shall
reimburse the Subadviser for any expenses of the Funds or the Adviser as may be
reasonably incurred by such Subadviser on behalf of the Funds or the Adviser.
The Subadviser shall keep and supply to the Trust and the Adviser reasonable
records of all such expenses.
5. Compensation. For the services provided and the expenses assumed with
respect to a Fund and the Subadviser Assets pursuant to this Agreement, the
Subadviser will be entitled to the fee listed for each Fund on Exhibit A. Such
fees will be computed daily and payable no later than the seventh (7th) business
day following the end of each month, from the Adviser calculated at an annual
rate based on the Subadviser Assets' average daily net assets.
The method of determining net assets of a Fund for purposes hereof shall
be the same as the method of determining net assets for purposes of establishing
the offering and redemption price of the shares of that Fund as described in a
Fund's Prospectus. If this Agreement shall be effective for only a portion of a
month, the aforesaid fee shall be prorated for the portion of such month during
which this Agreement is in effect.
Escrow Provision. In accordance with Rule 15a-4 of the 1940 Act, fees
accrued during the term of the Agreement must be held in an interest-bearing
escrow account pursuant to the following requirements:
(i) The fees shall be held in an interest-bearing escrow account
with an escrow institution mutually agreed upon by the parties to
this Agreement, pursuant to an escrow agreement;
(ii) If a majority of a Fund's outstanding voting securities
approve a new investment advisory agreement with the Subadviser
within 150 days after January 18, 2003, the amount in the escrow
account (including interest earned thereon) with respect to that
Fund shall be paid to the Subadviser; and
(iii) If a majority of a Fund's outstanding voting securities do
not approve a new investment advisory 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 services for such
Portfolio under the Agreement (plus interest earned on
that amount in the escrow account); or
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(2) the total amount in the escrow account relating to
such Portfolio (plus interest earned thereon).
6. Representations and Warranties of Subadviser. The Subadviser
represents and warrants to the Adviser and the Trust as follows:
(a) The Subadviser is registered as an investment adviser under
the Advisers Act;
(b) The Subadviser has filed a notice of exemption pursuant to
Section 4.14 under the Commodity Exchange Act (the "CEA") with the
Commodity Futures Trading Commission (the "CFTC") and the National
Futures Association ("NFA"), or is not required to file such exemption;
(c) The Subadviser is a partnership duly organized and validly
existing under the laws of the State of Delaware with the power to own
and possess its assets and carry on its business as it is now being
conducted;
(d) The execution, delivery and performance by the Subadviser of
this Agreement are within the Subadviser's powers and have been duly
authorized by all necessary action by the Subadvisers board of directors
or shareholders and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the
Subadviser for the execution, delivery and performance by the Subadviser
of this Agreement, and the execution, delivery and performance by the
Subadviser of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation, (ii) the
Subadviser's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Subadviser; and
(e) The Form ADV of the Subadviser previously provided to the
Adviser is a true and complete copy of the form as currently filed with
the SEC and the information contained therein is accurate and complete
in all material respects and does not omit to state any material fact
necessary in order to make the statements made, in light of the
circumstances under which they were made, not misleading.
7. Representations and Warranties of Adviser. The Adviser represents and
warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Advisers Act;
(b) The Adviser has filed a notice of exemption pursuant to
Section 4.14 under the CEA with the CFTC and the National Futures
Association or is exempt from doing so;
(c) The Adviser is a business trust duly organized and validly
existing under the laws of the State of Delaware with the power to own
and possess its assets and carry on its business as it is now being
conducted;
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(d) The execution, delivery and performance by the Adviser of
this Agreement, the appointment of the Subadviser and the delegation to
the Subadviser of the duties and powers delegated to it under this
Agreement, are within the Adviser's powers and have been duly authorized
by all necessary action on the part of its shareholders or managing
unitholder, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the
Adviser for the execution, delivery and performance by the Adviser of
this Agreement, and the execution, delivery and performance by the
Adviser of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation, (ii) the
Adviser's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the Adviser;
(e) The Form ADV of the Adviser previously provided to the
Subadviser is a true and complete copy of the form filed with the SEC
and the information contained therein is accurate and complete in all
material respects and does not omit to state any material fact necessary
in order to make the statements made, in light of the circumstances
under which they were made, not misleading;
(f) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV prior to the execution of this Agreement; and
(g) The Adviser and the Trust have duly entered into the Advisory
Agreement pursuant to which the Trust authorized the Adviser to enter
into this Agreement.
8. Representations and Warranties of the Trust. The Trust represents and
warrants to the Adviser and the Subadviser as follows:
(a) The Trust is a business trust duly organized and validly
existing under the laws of the Commonwealth of Massachusetts with the
power to own and possess its assets and carry on its business as it is
now being conducted;
(b) The Trust is registered as an investment company under the
1940 Act and the Fund's shares are registered under the Securities Act;
and
(c) The execution, delivery and performance by the Trust of this
Agreement are within the Trust's powers and have been duly authorized by
all necessary action on the part of the Trust and its Board of Trustees,
and no action by or in respect of, or filing with, any governmental
body, agency or official is required on the part of the Trust for the
execution, delivery and performance by the Adviser of this Agreement,
and the execution, delivery and performance by the Trust of this
Agreement do not contravene or constitute a default under (i) any
provision of applicable law, rule or regulation, (ii) the Trust's
governing instruments, or (iii) any agreement, judgment, injunction,
order, decree or other instrument binding upon the Trust.
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9. Survival of Representations and Warranties; Duty to Update
Information. All representations and warranties made by the Subadviser, the
Adviser and the Trust pursuant to Sections 6, 7 and 8, respectively, shall
survive for the duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the foregoing
representations and warranties are no longer true.
10. Liability and Indemnification.
(a) Liability. The Subadviser shall exercise its best judgment in
rendering the services in accordance with the terms of this Agreement.
In the absence of wilful misfeasance, bad faith or negligence on the
part of the Subadviser or a reckless disregard of its duties hereunder,
the Subadviser, each of its affiliates and all respective partners,
officers, directors and employees ("Affiliates") and each of the
Subadviser's Controlling Persons, if any, shall not be liable for any
error of judgment or mistake of law and shall not be subject to any
expenses or liability to the Adviser, the Trust or a Fund or any of a
Fund's shareholders, in connection with the matters to which this
Agreement relates. In the absence of wilful misfeasance, bad faith or
negligence on the part of the Adviser or a reckless disregard of its
duties hereunder, the Adviser, any of its Affiliates and each of the
Adviser's controlling persons, if any, shall not be subject to any
liability to the Subadviser, for any act or omission in the case of, or
connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of Subadviser Assets;
provided, however, that nothing herein shall relieve the Adviser and the
Subadviser from any of their obligations under applicable law,
including, without limitation, the federal and state securities laws and
the CEA.
(b) Indemnification. The Subadviser shall indemnify the Adviser,
the Trust and the Fund, and their respective Affiliates and Controlling
Persons for any liability and expenses, including reasonable attorneys'
fees, which the Adviser, the Trust and the Fund and their respective
Affiliates and Controlling Persons may sustain as a result of the
Subadviser's wilful misfeasance, bad faith, negligence, reckless
disregard of its duties hereunder or violation of applicable law,
including, without limitation, the federal and state securities laws or
the CEA. Notwithstanding any other provision in this Agreement, the
Subadviser will indemnify the Adviser, the Trust and the Fund, and their
respective Affiliates and Controlling Persons for any liability and
expenses, including reasonable attorneys' fees, to which they may be
subjected as a result of their reliance upon and use of the historical
performance calculations provided by the Subadviser concerning the
Subadviser's composite account data or historical performance
information on similarly managed investment companies or accounts,
except that the Adviser, the Trust and the Fund, and their respective
Affiliates and Controlling Persons shall not be indemnified for a loss
or expense resulting from their negligence, willful misconduct or the
violation of the 1940 Act or federal or state securities laws in using
such numbers, or for their failure to conduct reasonable due diligence
with respect to such information.
The Adviser shall indemnify the Subadviser, the Trust and the
Fund, and their respective Affiliates and Controlling Persons, for any
liability and expenses, including
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reasonable attorneys' fees, which may be sustained as a result of the
Adviser's wilful misfeasance, bad faith, negligence, reckless disregard
of its duties hereunder or violation of applicable law, including,
without limitation, the federal and state securities laws or the CEA, or
as a result of any negligence, willful misconduct or the violation of
the 1940 Act or federal or state securities laws on the part of the
Adviser in the reliance upon and/or use of any historical performance
calculations provided by the Subadviser concerning the Subadviser's
composite account data or historical performance information or
similarly managed investment companies.
The Fund shall indemnify and hold harmless the Adviser and the
Subadviser, their Affiliates and their Controlling Persons for any
liability and expenses, arising out of their respective performance or
non-performance of any duties under this Agreement; provided, however,
that nothing herein shall be deemed to protect any of them against any
liability to which they would otherwise be subject by reason of willful
misfeasance, bad faith or negligence in the performance of duties
hereunder or by reason of reckless disregard of obligations and duties
under this Agreement; and provided, further, that this provision shall
not be construed as a waiver or limitation of any rights which the Trust
or the Fund may have under applicable federal securities laws.
11. Termination.
This Agreement may be terminated at any time with respect to a Portfolio
without the payment of any penalty, by the Fund's Board, or by vote of a
majority of the outstanding shares of the Portfolio, on ten (10) days
written notice to the Adviser and Subadviser, or by the Adviser on sixty
(60) days written notice to the Fund and Subadviser, or by the
Subadviser on sixty (60) days written notice to the Fund and Adviser.
This Agreement shall automatically terminate in the event of its
assignment. In accordance with Rule 15a-4 under the 1940 Act, this
Agreement, unless sooner terminated, shall continue until the earlier
of: (i) the date on which the Trust's Board of Trustees (including a
majority of the Trustees which are not "interested persons" of the Trust
(as that term is defined in the 1940 Act)) and a "majority" (as that
term is defined in the 0000 Xxx) of the Fund's outstanding voting
securities have approved a new investment advisory agreement in regard
to the affected Portfolio; and (ii) June 16, 2003.
This Agreement shall not be assigned (as such term is defined in
the 0000 Xxx) and shall terminate automatically in the event of its
assignment or upon the termination of the Advisory Agreement. Upon
termination of this Agreement, the Trust will immediately discontinue
the use of the historical performance information provided by the
Subadviser provided under Section 2(j) hereof.
Termination will be without prejudice to the settlement of any
outstanding fees and the completion of transactions already initiated.
If on termination any money is due or will or may become due in the
future as a result of a commitment entered into by the Subadviser ("an
outstanding amount") then the Subadviser may at its discretion sell such
of the Subadviser Assets as it may in its discretion select in order to
realize funds sufficient to cover
11
any outstanding amount (but only to the extent that insufficient funds
are otherwise available for the purpose). The Subadviser may also
cancel, close out, terminate or reverse any transaction or enter into
any other transaction or do anything which has the effect of reducing or
eliminating any outstanding amount or of reducing or eliminating any
liability under any contracts, positions or commitments undertaken under
this Agreement
12. Duties of the Adviser.
(a) Responsibility for other services. The Adviser shall continue
to have responsibility for all services to be provided to the Trust
pursuant to the Advisory Agreement and shall oversee and review the
Subadviser's performance of its duties under this Agreement. Nothing
contained in this Agreement shall obligate the Adviser to provide any
funding or other support for the purpose of directly or indirectly
promoting investments in the Trust.
(b) Delivery of documents. The Adviser will provide the
Subadviser with copies of each of the following:
(i) The Trust's Certificate of Trust and Declaration of Trust;
(i) The most recent Prospectus and Statement of Additional
Information relating to the Trust;
(iii) The Trust's Bylaws; and
(iv) The Trust's Code of Ethics.
The Adviser will notify the Subadviser as soon as it becomes
aware of any change in the above documents, and supply a copy of the
amended document or documents. The Subadviser shall not be liable either
for the breach of any provision or otherwise under this Agreement, where
such breach or other liability relates to a failure to comply with the
above documents, in circumstances where the Subadviser was not aware at
the relevant time of the amendment of the relevant document or documents
and, if not for such amendment, such breach or other liability would not
have occurred.
12
13. Reference to Subadviser. Neither the Adviser nor any Affiliate or
agent of it shall make reference to or use the name of Subadviser or any of its
Affiliates, or any of their clients, except references concerning the identity
of and services provided by the Subadviser to the Fund, which references shall
not differ in substance from those included in the Prospectus and this
Agreement, in any advertising or promotional materials without the prior
approval of Subadviser, which approval shall not be unreasonably withheld or
delayed. The Adviser hereby agrees to make all reasonable efforts to cause the
Fund and any Affiliate thereof to satisfy the foregoing obligation.
14. Amendment. This Agreement may be amended by mutual written consent
of the parties, provided that the terms of any material amendment shall be
approved by: a) the Trust's Board of Trustees or by a vote of a majority of the
outstanding voting securities of the Funds (as required by the 0000 Xxx) and b)
the vote of a majority of those Trustees of the Trust who are not "interested
persons" of any party to this Agreement cast in person at a meeting called for
the purpose of voting on such approval, if such approval is required by
applicable law.
15. Confidentiality. Subject to the duties of the Adviser, the Trust and
the Subadviser to comply with the terms of this Agreement and applicable law,
including any demand of any regulatory or taxing authority having jurisdiction,
the parties hereto shall treat as confidential all information pertaining to the
Fund and the actions of the Subadviser, the Adviser and the Fund in respect
thereof.
16. Notice. Any notice that is required to be given by the parties to
each other under the terms of this Agreement shall be in writing, delivered, or
mailed postpaid to the other parties, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties by
notice to the other party:
(a) If to the Subadviser:
Gartmore Global Partners
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
(b) If to the Adviser:
Gartmore Global Asset Management Trust
0000 Xxxxx Xxxx
Xxxxxxxxxxxx, XX 00000
Attention: Legal Department
Facsimile: (000) 000-0000
13
(c) If to the Trust:
The Xxxxxxxxxx Funds III
000 Xxxxxxxxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxxxxxxx, XX 00000
Attention: Xxxxxxx Xxxxxx
Facsimile: (000) 000-0000
17. Governing Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940 and any
rules and regulations promulgated thereunder.
18. Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, all of which shall
together constitute one and the same instrument.
19. Certain Definitions. For the purposes of this Agreement and except
as otherwise provided herein, "interested person," "affiliated person," and
"assignment" shall have their respective meanings as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the SEC. "Controlling
Person" of an entity means any person who "controls" such entity within the
meaning of Section 2(a)(9) of the 1940 Act
20. Captions. The captions herein are included for convenience of
reference only and shall be ignored in the construction or interpretation
hereof.
21. Severability. If any provision of this Agreement shall be held or
made invalid by a court decision or applicable law, the remainder of the
Agreement shall not be affected adversely and shall remain in full force and
effect.
22. Agent Not Principal. The Subadviser shall enter into transaction
under this Agreement as agent on behalf of the Adviser or Trust and not as
principal.
23. Nonpublic Personal Information. Notwithstanding any provision herein
to the contrary, the Subadviser hereto agrees on behalf of itself and its
directors, trustees, shareholders, officers, and employees (1) to treat
confidentially and as proprietary information of the Adviser (on behalf of
itself and the Fund) (a) all records and other information relative to the
Fund's prior, present, or potential shareholders (and clients of said
shareholders) and (b) any Nonpublic Personal Information, as defined under
Section 248.3(t) of Regulation S-P ("Regulation S-P"), promulgated under the
Xxxxx-Xxxxx-Xxxxxx Act (the "G-L-B Act"), and (2) except after prior
notification to and approval in writing by the Adviser, not to use such records
and information for any purpose other than the performance of its
responsibilities and duties hereunder, or as otherwise permitted by Regulation
S-P or the G-L-B Act, and if in compliance therewith, the privacy policies
adopted by the Adviser and the Fund and communicated in writing to the
14
Subadviser. Such written approval shall not be unreasonably withheld by the
Adviser and may not be withheld where the Subadviser may be exposed to civil or
criminal contempt or other proceedings for failure to comply after being
requested to divulge such information by duly constituted authorities.
24. Anti-Money Laundering Compliance. The Subadviser acknowledges that,
in compliance with the Bank Secrecy Act, as amended, the USA PATRIOT ACT, and
implementing regulations (collectively, "AML Laws"), the Fund has adopted an
Anti-Money Laundering Policy and the AML Laws. The Subadviser agrees to comply
with the Fund's Anti-Money Laundering Policy and the AML Laws, as the same may
apply to the Subadviser, now and in the future. The Subadviser further agrees to
provide to the Fund and/or the Adviser such reports, certifications and
contractual assurances as may be requested by the Fund or the Adviser. The
Adviser may disclose information respecting the Subadviser to governmental
and/or regulatory or self-regulatory authorities to the extent required by
applicable law or regulation and may file reports with such authorities as may
be required by applicable law or regulation.
25. Certifications; Disclosure Controls and Procedures. The Subadviser
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Fund is required to make
certain certifications and has adopted disclosure controls and procedures. To
the extent reasonably requested by the Adviser, the Subadviser agrees to use its
best efforts to assist the Adviser and the Fund in complying with the
Xxxxxxxx-Xxxxx Act and implementing the Fund's disclosure controls and
procedures. The Subadviser agrees to inform the Fund of any material development
related to the Allocated Portion that the Subadviser reasonably believes is
relevant to the Fund's certification obligations under the Xxxxxxxx-Xxxxx Act.
26. Soft Commissions. The subadviser may effect transactions under the
Agreement with or through the agency of a person who provides services under a
Soft Commission Agreement, as defined in the rules of FSA, and will report such
transactions to the Adviser upon request. All such transactions must comply with
applicable federal and state regulations in the United States and any mutually
agreed upon policies and procedures.
(remainder of page intentionally left blank)
IN WITNESS WHEREOF, the parties hereto have executed this Agreement on
the day and year first written above.
TRUST
The Xxxxxxxxxx Funds III
By:
-----------------------------------
Name:
Title:
ADVISER
Gartmore Global Asset Management Trust
By:
-----------------------------------
Name:
Title:
SUBADVISER
Gartmore Global Partners
By:
-----------------------------------
Name:
Title:
16
EXHIBIT A
SUBADVISORY AGREEMENT
BETWEEN
THE XXXXXXXXXX FUNDS III
GARTMORE GLOBAL ASSET MANAGEMENT TRUST
AND GARTMORE GLOBAL PARTNERS
Effective January 18, 2003. In accordance with Rule 15a-4
under the 1940 Act, this Agreement, unless sooner terminated,
shall continue until June 16, 2003.
Funds of the Trust Advisory Fees
------------------ -------------
Xxxxxxxxxx Variable Series:
Emerging Markets Fund 0.625% of the first $250
million of the Fund's average
daily net assets; plus 0.50%
of the net assets over $250
million.
17
