EVERGREEN INCOME ADVANTAGE FUND
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NOTICE OF SPECIAL MEETING OF
SHAREHOLDERS
JANUARY 16, 2009
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200 Berkeley Street, Boston, Massachusetts 02116-5034
TO THE SHAREHOLDERS OF
EVERGREEN INCOME ADVANTAGE FUND
Notice is hereby given that the Special Meeting of
Shareholders (the "Meeting") of Evergreen Income Advantage Fund (the "Fund")
will be held on January 16, 2009 at 10:00 a.m. Eastern time, at the offices of
Evergreen Investments, 200 Berkeley Street, 26th Floor, Boston, Massachusetts
02116-5034, for the following purposes:
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To consider and act upon (a) the new Investment Advisory
Agreement with Evergreen Investment Management Company, LLC and (b) the new
Sub-Advisory Agreement with Tattersall Advisory Group, Inc.;
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To transact such other business as may properly come before
the Meeting or any adjournments thereof.
Shareholders of record at the close of business on October
31, 2008 will be entitled to vote at the Meeting to the extent described in the
accompanying proxy statement.
It is hoped that you will attend the Meeting, but if you
cannot do so, please complete and sign the enclosed proxy card and return it in
the accompanying envelope as promptly as possible. Any shareholder attending the
Meeting can vote in person even though a proxy may have already been designated
by the shareholder.
Instructions for the proper execution of the proxy card
are set forth at the end of this proxy statement.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE IN FAVOR OF THE NEW INVESTMENT ADVISORY AGREEMENT WITH EVERGREEN
INVESTMENT MANAGEMENT COMPANY, LLC AND THE NEW SUB-ADVISORY AGREEMENT WITH
TATTERSALL ADVISORY GROUP, INC.
By Order of the Board of Trustees
MICHAEL H. KOONCE
Secretary
November 24, 2008
EVERGREEN INCOME ADVANTAGE
FUND
PROXY STATEMENT
This proxy statement is furnished in connection with the solicitation of
proxies by and on behalf of the Board of Trustees of Evergreen Income Advantage
Fund (the "Fund") for the Special Meeting of Shareholders (the "Meeting") to be
held at Evergreen Investments, 200 Berkeley Street, 26th Floor, Boston,
Massachusetts 02116-5034, on January 16, 2009 at 10:00 a.m. Eastern time. The
address of the principal office of the Fund is Evergreen Investments, 200
Berkeley Street, Boston, Massachusetts 02116-5034.
This proxy statement, the accompanying Notice of Annual Meeting of
Shareholders and the proxy card will be first sent to shareholders on or about
November 24, 2008. You may obtain a copy of the Fund's most recent shareholder
report(s) without charge from Evergreen Service Company, LLC, P.O. Box 8400,
Boston, Massachusetts 02266-8400, by calling 1.800.343.2898 or by downloading it
from www.EvergreenInvestments.com.
Proxy Solicitation
The Board of Trustees intends to bring before the Meeting the matters set
forth in the accompanying notice. Holders of common or preferred shares
(together, "Shares") of the Fund (together, "Shareholders") may together vote on
the matters set forth in the accompanying notice. You can vote by returning your
properly executed proxy card in the envelope provided. When you complete and
sign your proxy card, the proxies named will vote on your behalf at the Meeting
(or any adjournments thereof) exactly as you have indicated. If no choice is
specified, your shares of the Fund will be voted IN FAVOR OF the new Investment
Advisory Agreement with Evergreen Investment Management Company, LLC ("EIMC")
and the new Sub-Advisory Agreement with Tattersall Advisory Group, Inc. ("TAG"
or an "affiliated sub-advisor"). Shareholders will vote on the proposed
Investment Advisory Agreement and Sub-Advisory Agreement with EIMC and TAG,
respectively. If any other matters are properly presented at the Meeting for
action, the persons named as proxies will vote in accordance with the views of
management of the Fund. Any shareholder who has returned a properly executed
proxy card, including a broker who may hold Shares on your behalf, has the right
to revoke it at any time prior to its exercise by attending the Meeting and
voting his or her Shares in person, by submitting a letter of revocation to the
Fund at the above address prior to the date of the Meeting or by submitting a
later-dated and properly executed proxy card to the Fund at the above address
prior to the date of the Meeting. If Shareholders do not approve the new
Investment Advisory Agreement with EIMC, the new Sub-Advisory Agreement with TAG
will not be adopted, even if approved by Shareholders. However, the outcome of
the vote for the Sub-Advisory Agreement does not affect the outcome of the
Investment Advisory Agreement.
The Fund's Amended and Restated Agreement and Declaration of Trust (the
"Declaration") provides that the holders of thirty-three and a third percent (33
1/3%) of the Shares issued and outstanding, present in person or by proxy, shall
constitute a quorum for the transaction of business at the Meeting (although a
larger percentage is required for approval of the proposals). With regard to the
new Investment Advisory Agreement with EIMC and the new Sub-Advisory Agreement
with TAG, votes may be cast IN FAVOR OF or AGAINST the proposed agreements or
you may ABSTAIN from voting. Abstentions, broker non-votes (i.e., Shares held by
brokers or nominees as to which (i) instructions have not been received from the
beneficial owners or other persons entitled to vote and (ii) the broker or
nominee does not have discretionary voting power on a particular matter), and
votes that are withheld will count for purposes of determining whether a quorum
is present will have the effect of a vote against the proposed Investment
Advisory Agreement with EIMC and the Sub-Advisory Agreement with TAG (Proposals
1a and 1b).
The approval of the new Investment Advisory Agreement with EIMC and the new
Sub-Advisory Agreement with TAG, respectively, (Proposals 1a and 1b) require the
affirmative vote of a majority of the outstanding voting securities of the Fund
as defined in the Investment Company Act of 1940, as amended (the "1940 Act").
The 1940 Act defines the vote of a majority of the outstanding voting securities
of the Fund to mean the affirmative vote of the lesser of (a) 67% or more of the
Shares of the Fund present at the meeting, if more than 50% of the outstanding
shares of the Fund are present in person or by proxy at the Meeting, or (b) more
than 50% of the outstanding Shares of the Fund.
In the event a quorum is not present at the Meeting or a quorum is present
but sufficient votes to approve a proposal are not received, the persons named
as proxies may propose one or more adjournments of the Meeting to permit further
solicitation of proxies. The persons named as proxies will vote in favor of an
adjournment those votes that may be voted in favor of the proposal. The persons
named as proxies will vote against any such adjournment those votes marked
against the proposal. The Meeting, whether or not a quorum is present, may be
adjourned from time to time by the vote of a majority of the Shares represented
at the Meeting, either in person or by proxy; or by the chair of the Meeting, in
his or her discretion. Abstentions and broker non-votes will not be voted on a
motion to adjourn.
Any proposal for which sufficient favorable votes have been received by the
time of the Meeting may be acted upon and considered final regardless of whether
the Meeting is adjourned to permit additional solicitation with respect to any
other proposal. In certain circumstances in which the Fund has received
sufficient votes to approve a matter being recommended for approval by the
Fund's Board of Trustees, the Fund may request that brokers and nominees, in
their discretion, withhold submission of broker non-votes in order to avoid the
need for solicitation of additional votes in favor of the proposal.
EIMC will bear the costs associated with this proxy statement. Solicitation
may be undertaken by mail, telephone, facsimile and personal contact. EIMC has
engaged the Altman Group to solicit proxies from brokers, banks, other
institutional holders and individual Shareholders for a fee of approximately
$30,000.
Voting Securities and Principal Holders
Thereof
Shareholders of record at the close of business on October 31, 2008 are
entitled to vote at the Meeting or any adjournment thereof to the extent set
forth in this proxy statement. As of October 31, 2008, the Fund had outstanding
68,933,639 common shares and 7,840 preferred shares. Each common share is
entitled to one vote for each dollar, and a fractional vote for each fraction of
a dollar, of net asset value per share. Each preferred share is entitled to the
same number of votes as each common share (one vote per dollar of the common
share's net asset value).
As of October 31, 2008, the Depository Trust Company owned of record
approximately 100% of the outstanding shares of the Fund. No person is reflected
on the books and records of the Fund as owning beneficially 5% or more of the
outstanding shares of any class of the Fund as of October 31, 2008.
As of October 31, 2008, the officers and Trustees of the Fund as a group
beneficially owned in the aggregate less than 1.00% of the common shares of the
Fund, less than 1.00% of the preferred shares of the Fund and less than 1.00% of
the outstanding securities of Wachovia Corporation ("Wachovia"), the parent of
EIMC, the Fund's investment advisor, and TAG, the Fund's sub-advisor, and less
than 1.00% of the outstanding securities of Wells Fargo Company ("Wells Fargo"),
which may be deemed to "control" Wachovia. Richard K. Wagoner, a member of the
Board of Trustees of the Fund, is an "interested person" of the Evergreen funds,
as defined in Section 2(a)(19) of the 1940 Act, because he and members of his
immediate family own approximately 27,000 shares of Wachovia common stock, and
may benefit from Wells Fargo's acquisition of Wachovia.
I. APPROVAL OF THE NEW ADVISORY AGREEMENT
WITH EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC AND THE NEW SUB-ADVISORY
AGREEMENT WITH TATTERSALL ADVISORY GROUP, INC. (PROPOSALS 1A AND 1B)
Information about Wells Fargo's Proposed Acquisition of Wachovia
On October 3, 2008, Wachovia Corporation, the parent company of EIMC and
several companies that serve as sub-advisors to one or more of the Evergreen
funds (the "affiliated sub-advisors"), and Wells Fargo & Company announced
that Wells Fargo had agreed to purchase Wachovia, including all of Wachovia's
banking and other businesses, in a stock-for-stock merger transaction. Wells
Fargo is a diversified financial services company providing banking, insurance,
investments, mortgage banking and consumer finance through almost 6,000 stores
and the internet across North America and elsewhere internationally. Wells Fargo
is located at 420 Montgomery Street, San Francisco, California 94104. Wachovia
is a bank holding company in the United States located at 301 South College
Street, Charlotte, North Carolina 28288-0013.
Wachovia and Wells Fargo entered into an Agreement and Plan of Merger on
October 3, 2008 that provides for Wachovia to merge into Wells Fargo, with Wells
Fargo the surviving corporation. The merger requires the approval of Wachovia
shareholders, customary approvals of regulators, and the satisfaction of other
closing conditions. Although there is no assurance that the merger will be
completed, if the approvals are obtained and the other closing conditions are
satisfied or waived, Wachovia and Wells Fargo anticipate that the merger will
close by the end of 2008.
In connection with the merger, Wachovia and Wells Fargo entered into a Share
Exchange Agreement on October 3, 2008. Under the Share Exchange Agreement,
Wachovia agreed to issue preferred shares to Wells Fargo representing a 39.9%
voting interest in Wachovia. Wachovia issued the preferred shares to Wells Fargo
after the close of business on October 20, 2008. Wells Fargo has said that it
intends to vote these shares in favor of the merger. After the merger, EIMC will
be an indirect wholly owned subsidiary of Wells Fargo.
Both Wachovia's issuance of preferred shares to Wells Fargo, and the
subsequent merger, are the types of events that might be considered to be
"changes of control" of EIMC under the 1940 Act. Under the 1940 Act, which
regulates investment companies such as the Evergreen funds, investment advisory
agreements are required to terminate automatically when there is a "change of
control" of the investment adviser. Fund shareholders must then approve a new
agreement so that the fund may continue to receive advisory services.
The Interim Investment Advisory and Sub-Advisory Agreements
Each of the Evergreen funds' investment advisory and sub-advisory agreements
terminates automatically in the event of a "change of control" of EIMC or the
sub-advisor. In addition, each of the Evergreen funds' sub-advisory agreements
terminates automatically upon termination of the investment advisory agreement
with EIMC. The issuance of preferred stock to Wells Fargo under the Share
Exchange Agreement likely constituted a change of control of EIMC (and the
affiliated sub-advisors). It is possible, though not certain, that the
subsequent merger of Wachovia into Wells Fargo also constitutes a change of
control of EIMC (and the affiliated sub-advisors); the funds have opted to treat
that transaction as a change of control in any event.
In anticipation of the change of control resulting from the issuance of
preferred shares to Wells Fargo, the Evergreen funds' Boards of Trustees met (a
majority of the disinterested Trustees attending in person, the remainder by
telephone) on October 20, 2008, before the issuance of the preferred shares, and
approved interim investment advisory and sub-advisory agreements for each of the
Evergreen funds (the "Initial Interim Agreements").
Each Initial Interim Agreement provides that it may not continue in effect
for longer than 150 days, meaning that it will terminate no later than March 19,
2009. In addition, the Trustees, or the shareholders upon a vote of a majority
of the fund's outstanding voting securities, may terminate an Initial Interim
Agreement without penalty on no more than ten calendar days' notice. Each of the
Initial Interim Agreements with EIMC or an affiliated sub-advisor also provides
that any fees payable under the agreement must be held in an interest-bearing
escrow account, to be released to EIMC or the affiliated sub-advisor only if a
new, definitive agreement is subsequently approved by fund shareholders;
otherwise, EIMC or the affiliated sub-advisor will be entitled to receive for
its services under the agreement only an amount, paid out of the escrow account,
equal to the lesser of (i) its costs of performing services during the interim
period plus interest and (ii) the amount in the escrow account plus interest.
Each of the Initial Interim Agreements is identical to the agreement it
replaced, except for its date and the provisions regarding the term of the
contract and, in the case of Initial Interim Agreements with EIMC or any
affiliated sub-advisor, fees being held in escrow. The Initial Interim
Agreements became effective on October 20, 2008, when Wachovia issued preferred
shares to Wells Fargo.
Upon the closing of the merger of Wells Fargo and Wachovia, the Funds will
consider that a second change of control has occurred and that the Initial
Interim Agreements have terminated automatically. Because of the likelihood that
the merger will close before shareholders meet to approve new, definitive
agreements, the Evergreen funds' Board of Trustees met by telephone on November
12, 2008, to approve a second set of interim agreements (the "Subsequent Interim
Agreements"), to become effective upon the closing of the merger. The Subsequent
Interim Agreements are identical to the Initial Interim Agreements, except that
they will have different effective dates. Like the Initial Interim Agreements,
the Subsequent Interim Agreements will terminate no later than March 19, 2009
(150 days after the first change of control event). Because the Subsequent
Interim Agreements must be approved by the Trustees at a meeting held in person,
the Trustees are expected to consider, and approve, the agreements again in
person in December before they become effective.
The New Investment Advisory and Sub-Advisory Agreements
At their telephonic meeting on November 12, 2008, the Trustees of the
Evergreen funds also approved new, definitive investment advisory agreements
with EIMC (the "New Advisory Agreements") as well as new, definitive
sub-advisory agreements with both the affiliated and unaffiliated sub-advisors
(the "New Sub-Advisory Agreements, and together with the "New Advisory
Agreements", the "New Agreements"). Because the 1940 Act also requires trustee
approval of definitive advisory agreements to occur at an in-person meeting, the
Trustees will consider the New Agreements again at their scheduled in-person
meetings on December 3 and 4, 2008. At these meetings, the Trustees are expected
to approve the New Agreements again.
The New Agreements are identical to the investment advisory and sub-advisory
agreements that were in effect before October 20, 2008, except that they will
have different effective dates and will continue until September 30, 2009 and
from year to year thereafter so long as the continuance is approved. (They are
also identical to the Initial Interim Agreements and the Subsequent Interim
Agreements, except that they will have different effective dates, will not
terminate on March 19, 2009, and do not require advisory fees to be paid into an
escrow account.) The New Agreements will become effective upon shareholder
approval. The terms of the New Agreements are described generally below, but are
qualified entirely by reference to the New Agreements. Please refer to Exhibits
A and B for a form of the New Agreements.
Under each New Advisory Agreement, subject to the supervision of the Board of
Trustees, EIMC will manage and administer the operation of the Fund, supervise
the provision of services to the Fund by others, manage the investment and
reinvestment of the Fund's assets in conformity with its investment objective
and restrictions, and select broker-dealers for the Fund's portfolio trades.
Under each New Sub-Advisory Agreement, subject to the supervision of the Board
of Trustees and EIMC, the sub-advisor is responsible for the day-to-day
investment and reinvestment of the Fund's portfolio or a portion thereof. EIMC
and each sub-advisor will receive a fee for their services and all expenses
incurred in connection with their services under the New Agreements which is
identical to the fee under the agreements that were in effect before October 20,
2008. These fees are set forth below.
EIMC also assumes and pays for all compensation to any Trustees who are
affiliated with EIMC or its affiliates and to all officers of the Trust. EIMC
may retain any sub-advisors, at its own expense, to provide all services
provided by EIMC and may delegate to any sub-advisor its rights, obligations and
duties under the New Advisory Agreements.
The New Advisory Agreements may be terminated, without payment of any
penalty, by EIMC, by the Trustees, or by a majority vote of the outstanding
shares of the Fund upon 60 days prior written notice, or upon shorter notice as
may be mutually agreed upon. The New Sub-Advisory Agreement may be terminated
without payment of any penalty, by EIMC, by the Trustees, or by a majority vote
of the outstanding shares of the Fund upon 60 days prior written notice to the
Sub-Advisor, or by the Sub-Advisor upon 90 days prior written notice to EIMC, or
upon shorter notice as may be mutually agreed upon. The New Agreements will
terminate automatically in the event of their "assignment" as such term is
defined in the 1940 Act. The New Agreements provide that EIMC or the sub-advisor
is not liable for any error of judgment or mistake of law or for any loss
suffered by the Fund in connection with the performance of the New Agreements,
except a loss resulting from EIMC's or the sub-advisor's willful misfeasance,
bad faith, gross negligence or reckless disregard of its duties or obligations.
If approved by shareholders, each New Agreement will have an initial term
through September 30, 2009, and thereafter may be renewed on an annual basis by
a vote of the Trustees, including a separate vote of a majority of the
independent Trustees. If shareholders approve the New Agreements, it is expected
that each Fund's current portfolio management team will continue to manage the
Fund's assets.
The actual fees paid by some Evergreen funds are subject to
expense limitations to which EIMC has agreed. It is not anticipated that any
existing expense limitation commitment will change as a result of the
transactions between Wells Fargo and Wachovia. The Fund's current investment
advisory contract was last approved by Shareholders on February 24, 2003, and
last approved by the Trustees on September 18, 2008.
Under the Fund's current investment advisory contract, the Fund pays EIMC a
fee equal to 0.60% of the total assets (defined as net assets plus borrowings or
other leverage for investment purposes to the extent excluded in calculating net
assets). For the fiscal year ended April 30, 2008, the Fund paid EIMC
$8,321,151.
Under the Fund's current sub-advisory contract with TAG,
EIMC pays TAG a fee equal to 0.54% of the Fund's total assets (defined as net
assets of the Fund plus borrowings or other leverage for investment purposes to
the extent excluded in calculating net assets). For the fiscal year ended April
30, 2008, EIMC paid TAG $4,852,197. The Fund's current sub-advisory agreement
with TAG was last approved by the Trustees on September 18, 2008. The current
sub-advisory agreement with TAG did not require Shareholder approval.
The Trustees' Considerations
In considering whether to approve the Initial Interim Agreements, the
Subsequent Interim Agreements and the New Agreements, the Trustees took into
account that they had recently approved the annual continuation of all of the
existing investment advisory and sub-advisory agreements for the Evergreen funds
in September 2008. That approval, on which the Trustees voted at their meeting
held in person on September 17 and 18, 2008, followed a lengthy process during
which the Trustees considered a variety of factors, including, for example, the
nature and quality of services that the funds receive, and the fees that the
funds pay, under the agreements, and the funds' investment performance, as well
as a wide range of other matters that the Trustees considered to have a bearing
upon the agreements. Exhibit C contains a general description of the Trustees'
deliberations.
In all of the meetings where the Trustees considered the Funds' investment
advisory agreements, including their meeting in September when they considered
the annual approval of the funds' investment advisory agreements and in a series
of subsequent meetings at which they considered the Initial Interim Agreements,
the Subsequent Interim Agreements, and the New Agreements, the Trustees took
into account current and anticipated market and economic conditions, the
financial condition of EIMC and of Wachovia generally, and, in connection with
the Initial Interim Agreements, the Subsequent Interim Agreements, and the New
Agreements, the likely effect of the merger on the financial condition of
Wachovia. In general, the Trustees considered that the proposed merger of
Wachovia with Wells Fargo would very likely improve substantially the financial
condition of EIMC's parent company, increase the capital available to support
the funds, and ensure that EIMC and its affiliates would have the resources to
provide continuing services to the funds. In light principally of these
considerations and their recent continuation of the funds' investment advisory
arrangements in September, the Trustees approved the Initial Interim Agreements
at their meeting on October 20, 2008. In all of their deliberations, the
disinterested Trustees were represented by independent counsel, and met
separately on various occasions with such counsel to discuss these matters.
At their November 12, 2008 meeting, the Trustees considered presentations by
representatives of EIMC and Wells Fargo regarding the anticipated implications
of the merger for EIMC and the Evergreen funds. The Trustees approved the
Subsequent Interim Agreements and the New Agreements at this meeting. The
Trustees reviewed the terms of these agreements, noting that the terms were
generally identical to those of the funds' existing agreements (but for
provisions required by law to be included in the interim agreements). As part of
their review, the Trustees also considered:
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Their understanding that the merger was not expected to
result in any adverse effect on the Evergreen funds, on the quality and level
of services that EIMC would provide to the funds, or on the resources
available to the Evergreen funds and to EIMC, and that Wells Fargo is
committed to continue providing the funds with high quality services;
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Information about Wells Fargo's financial condition,
reputation, and resources, and the likelihood that the merger would result in
improved organizational stability for EIMC, benefiting the funds as well as
offering the potential for the funds, over time, to access Wells Fargo's
infrastructure, resources and capabilities;
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That EIMC and Wells Fargo representatives have stated that
there is no present intention to change the funds' existing advisory fees or
expense limitations;
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That the representatives of Wells Fargo have expressed
their intention to pursue the integration of EIMC and the Evergreen funds with
corresponding Wells Fargo businesses and funds only after a deliberative
process designed to identify and retain the relative strengths of both
organizations;
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That the Wells Fargo representatives expect that the
deliberative process and any subsequent integration will take more than a year
and that, in the meantime, Wells Fargo expects to retain, largely in its
current form, the existing EIMC management team and investment advisory and
other key professionals and to operate EIMC following the merger as a separate
business unit under the Evergreen brand;
-
That Wells Fargo and EIMC would consult with the Trustees
before implementing any significant changes that would affect the funds or the
services provided by EIMC or its affiliates to the funds;
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Wells Fargo's experience and approach with respect to
acquisitions of other fund complexes;
-
The fact that, if the New Agreements are not approved, on
March 19, 2009, the Subsequent Interim Agreements will expire and the funds
will no longer have a contractual right to investment advisory services from
EIMC or any sub-advisors;
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That EIMC's management supports the merger; and
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That representatives of EIMC have committed that the
Evergreen funds will not bear the expenses relating to Wells Fargo's
acquisition of Wachovia, including the costs of soliciting fund shareholders
to approve the New Agreements.
Based on the foregoing, the Trustees, including all of the Trustees who are
not "interested persons" of the Evergreen funds or EIMC, unanimously approved
the New Agreements and determined to recommend their approval to shareholders of
the Evergreen funds.
Section 15(f) of the 1940 Act
Section 15(f) provides a non-exclusive "safe harbor" for an investment
company's adviser or any affiliated persons of the adviser to receive any amount
or benefit in connection with a change of control of the investment adviser if
two conditions are met. First, for a period of three years after the change of
control, at least 75% of the investment company's trustees must not be
interested persons of the adviser or of the predecessor adviser. Second, there
must not be any "unfair burden" imposed on the investment company as a result of
the transaction or any express or implied terms, conditions or understandings
relating to the transaction.
"Unfair burden" includes any arrangement during the two year period after the
transaction in which the adviser or predecessor adviser (or any interested
person of them) receives or is entitled to receive any compensation, directly or
indirectly, from the investment company or its security holders, other than fees
for bona fide investment advisory or other services, or from any person in
connection with the purchase or sale of securities or other property to, from or
on behalf of the investment company, other than bona fide ordinary compensation
as principal underwriter of the investment company. EIMC has informed the funds
that neither it, Wachovia, nor Wells Fargo, after reasonable inquiry, is aware
of any express or implied term, condition, or understanding or any arrangement
that would impose an "unfair burden" on the funds as a result of the issuance of
preferred shares or the merger. EIMC, Wachovia, and Wells Fargo have agreed to
pay all of the funds' costs relating to Wells Fargo's acquisition of Wachovia,
including all of the costs of this proxy solicitation.
Managing Directors and Principal Executive Officers and Directors of
EIMC
The following is a list of EIMC's managing directors and principal executive
officers and directors. EIMC's principal address is 200 Berkeley Street, Boston,
Massachusetts 02116-5034.
Name Principal and Occupation(s)
W. Douglas Munn, Chief Operating
Officer and Director
Dennis H. Ferro, President of EIMC and the Evergreen
funds
Michael H. Koonce, Chief Legal Officer of EIMC and Secretary of EIMC
and the Evergreen funds
Richard S. Gershen, Executive Managing
Director
Barbara A. Lapple, Chief Compliance Officer
Matthew C. Moss,
Chief Financial Officer
J. David Germany, Chief Investment Officer
EIMC is an indirect, wholly-owned subsidiary of Wachovia located at 301 South
College Street, Charlotte, North Carolina 28288-0013. It is expected that Wells
Fargo, who currently holds aproximately a 39.9% voting interest in Wachovia,
will acquire a 100% interest in Wachovia.
Managing Directors and Principal Executive Officers and Directors of
TAG
The following is a list of TAG's managing directors and principal executive
officers and directors. TAG's principal address is 6802 Paragon Place, Suite
200, Richmond, Virginia 23230.
Name Principal and Occupation(s)
Robert A. Calhoun, Executive
Managing Director and Chief Investment Officer of Multi-Strategy Fixed
Income
Dennis H. Ferro, Director of TAG and President of the Evergreen
Funds
Thomas B. Burton, Chief Compliance Officer
Michael H. Koonce, Chief
Legal Officer of TAG and Secretary of the Evergreen Funds
Christine James,
Managing Director and Chief Operating Officer
J. David Germany, Chief
Investment Officer
TAG is a wholly-owned subsidiary of Wachovia located at 301 South College
Street, Charlotte, North Carolina 28288-0013. It is expected that Wells Fargo,
who currently holds approximately a 39.9% voting interest in Wachovia, will
acquire a 100% interest in Wachovia.
Other Similar Funds Managed by EIMC and TAG
The following table contains certain information regarding funds for which
EIMC and TAG provide investment advisory services and that may have similar
investment objectives and policies as the Fund.
Evergreen High Income
Fund
|
The fund seeks high
income.
|
406,848,301
|
EIMC is entitled to
receive from Evergreen High Income Fund an annual fee of 2.0% of the
Fund's gross dividend and interest income, plus a fee at the following
annual rate:
First $500 million - 0.31%
Over $500 million - 0.16%
|
No
|
Section 16(a) Beneficial Ownership Reporting
Compliance
Section 16(a) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), requires the Fund's Trustees, principal executive officers and
certain other persons to file reports regarding ownership of, and transactions
in, the Fund's securities with the Securities and Exchange Commission (the
"SEC"). Copies of the required filings must also be furnished to the Fund. For
the prior fiscal year, the Fund believes that all reports required to be filed
by the Fund's officers and Trustees were filed on a timely basis.
Forms 3, 4, and 5 for the officers and Trustees of the Fund may be accessed
through Evergreen Investments' Web site at www.EvergreenInvestments.com.
Service Providers
Investment Advisor and Administrator
. EIMC, an indirect wholly owned
subsidiary of Wachovia, a North Carolina-based, multi-bank financial holding
company subject to the Bank Holding Company Act of 1956, as amended, and the
rules and regulations promulgated thereunder, currently serves as both the
Fund's investment advisor and administrator. EIMC has been managing mutual funds
and private accounts since 1932. The principal business address of EIMC is 200
Berkeley Street, Boston, Massachusetts 02116-5034.
EIMC became the Fund's administrator on January 1, 2008. For the fiscal year
ended April 30, 2008, the Fund paid $693,429 in administrative services fees.
Investment Sub-advisor
. TAG, a subsidiary of Wachovia and an affiliate
of EIMC, serves as a sub-advisor to the Fund. The principal business address of
TAG is 6802 Paragon Place, Suite 200, Richmond, Virginia 23230.
Principal Underwriter/Distributor
. Evergreen Investment Services,
Inc., a subsidiary of Wachovia and an affiliate of the Fund and EIMC, is the
distributor and principal underwriter of the Fund and is located at 200 Berkeley
Street, Boston, Massachusetts 02116-5034. The Fund paid no underwriting
commissions for the fiscal year ended April 30, 2008.
Brokerage Commissions
. Wachovia Securities LLC is an affiliate of
Wachovia and a dealer that places trades through its wholly owned subsidiary,
First Clearing Corporation, received $1,610 in brokerage commissions paid by the
Fund for the fiscal year ended April 30, 2008.
Transfer Agent
. Computershare Fund Services ("Computershare") is the
Fund's transfer agent and is located at P.O. Box 43010, Providence, Rhode Island
02940-3010.
Other Business
As of the date of this Proxy Statement, neither the Fund's
officers nor EIMC are aware of any other business to come before the Meeting
other than as set forth in the Notice of Annual Meeting of Shareholders. If any
other business is properly brought before the Meeting, or any adjournment
thereof, the persons named as proxies in the enclosed proxy card will vote in
accordance with the views of management of the Fund.
REQUIRED VOTE FOR PROPOSALS 1A AND
1B
Approval of the new Investment Advisory Agreement with EIMC and the new
Sub-Advisory Agreement with TAG, respectively, require the affirmative vote of a
majority of the outstanding voting securities of the Fund as defined in the 1940
Act. The 1940 Act defines the vote of a majority of the oustanding voting
securities of the Fund to mean the affirmative vote of the lesser of (a) 67% or
more of the Shares of the Fund present at the meeting, if more than 50% of the
outstanding shares of the Fund are present in person or by proxy at the Meeting,
or (b) more than 50% of the outstanding Shares of the Fund.
If Shareholders do not approve the New Advisory Agreement, the New
Sub-Advisory Agreement with TAG will not be adopted, even if approved by
Shareholders. However, the outcome of the vote for the New Sub-Advisory
Agreement does not affect the outcome of the New Advisory Agreement.
A Shareholder who objects to any proposal will not be
entitled under either Delaware law or the Declaration of Trust to demand payment
for, or an appraisal of, his or her shares.
Notice
A Certificate of Trust in respect of the Fund is on file
with the Secretary of the State of Delaware. As provided in the Fund's
Declaration, the obligations of any instrument made or issued by any Trustee or
Trustees or by any officer or officers of the Fund are not binding upon any of
them or the Shareholders individually but are binding only upon the assets and
property of the Fund.
Shareholder
Proposals
Currently, the Fund holds an annual meeting of Shareholders for the purpose
of electing Trustees.
Any Shareholder desiring to present a proposal for consideration at the 2009
annual meeting of Shareholders of the Fund to be included in the Fund's proxy
materials should submit such a timely proposal in writing to the Secretary, c/o
Evergreen Investment Services, Inc., Evergreen Income Advantage Fund, 200
Berkeley Street, Boston, MA 02116-5034 by the close of business on or before
March 29, 2009.
Any Shareholder desiring to present a proposal for consideration at the 2009
annual meeting of Shareholders of the Fund that will not be included in the
Fund's proxy materials should submit such a timely proposal in writing to the
Secretary, c/o Evergreen Investment Services, Inc., Evergreen Income Advantage
Fund, 200 Berkeley Street, Boston, MA 02116-5034 by the close of business on or
before February 27, 2009, but no earlier than March 30, 2009.
The persons named as proxies for the 2008 annual meeting of Shareholders of
the Fund will have discretionary authority to vote on any matters presented at
the meeting of which the Fund did not have notice on or before May 13, 2009.
Mere submission of a proposal does not guarantee inclusion of the proposal in
the proxy statement or presentation of the proposal at the 2009 annual meeting
since such inclusion and presentation are subject to various conditions and
requirements, including those required by applicable law.
THE BOARD OF TRUSTEES OF THE FUND UNANIMOUSLY RECOMMENDS
THAT YOU VOTE IN FAVOR OF THE NEW INVESTMENT ADVISORY AGREEMENT WITH EVERGREEN
INVESTMENT MANAGEMENT COMPANY, LLC AND THE NEW SUB-ADVISORY AGREEMENT WITH
TATTERSALL ADVISORY GROUP, INC.
Michael H. Koonce, Secretary
November 24, 2008
Instructions for Executing Proxy
Card
The following general rules for signing proxy cards may be of assistance to
you and may help to avoid the time and expense involved in validating your vote
if you fail to sign your proxy card properly.
1. INDIVIDUAL ACCOUNTS: Sign your name exactly as it appears in the
Registration on the proxy card.
2. JOINT ACCOUNTS: Either party may sign, but the name of the party signing
should conform exactly to a name shown in the Registration on the proxy card.
3. ALL OTHER ACCOUNTS: The capacity of the individual signing the proxy card
should be indicated unless it is reflected in the form of Registration. For
example:
REGISTRATION CORPORATE ACCOUNTS
|
|
VALID SIGNATURE
|
(1) ABC Corp.
|
|
ABC Corp.
|
(2) ABC Corp.
|
|
John Doe, Treasurer
|
(3) ABC Corp. c/o John Doe, Treasurer
|
|
John Doe
|
(4) ABC Corp. Profit Sharing Plan
|
|
John Doe, Trustee
|
TRUST ACCOUNTS
|
|
|
(1) ABC Trust
|
|
Jane B. Doe, Trustee
|
(2) Jane B. Doe, Trustee u/t/d
12/28/78
|
|
Jane B. Doe
|
CUSTODIAL OR ESTATE ACCOUNTS
|
|
|
(1) John B. Smith, Cust. f/b/o John B.
Smith, Jr. UGMA
|
|
John B. Smith
|
(2) John B. Smith
|
|
John B. Smith, Jr., Executor
|
After completing your proxy card, return it in the enclosed postage-paid
envelope.
If you have any questions about the proxy card, please call the Altman Group,
our proxy solicitor, at 800.821.8781 (toll free).
Exhibit A
FORM OF INVESTMENT ADVISORY AND MANAGEMENT
AGREEMENT
AGREEMENT made as of the ____ day of ________, by and between EVERGREEN
INCOME ADVANTAGE FUND, a Delaware statutory trust (the "Trust") and EVERGREEN
INVESTMENT MANAGEMENT COMPANY, LLC, a Delaware limited liability company, (the
"Adviser").
WHEREAS, the Trust and the Adviser wish to enter into an Agreement setting
forth the terms on which the Adviser will perform certain services for the
Trust.
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Trust and the Adviser agree as follows:
1. The Trust hereby employs the Adviser to manage the investment and
reinvestment of the assets of the Trust in conformity with the Trust's
investment objectives and restrictions as may be set forth in the Trust's
prospectus and statement of additional information, or as in effect from time to
time, all subject to the supervision of the Board of Trustees of the Trust, for
the period and on the terms set forth in this Agreement. The Adviser hereby
accepts such appointment and agrees during such period, at its own expense, to
render the services and to assume the obligations set forth herein, for the
compensation provided herein. The Adviser shall for all purposes herein be
deemed to be an independent contractor and shall, unless otherwise expressly
provided or authorized, have no authority to act for or represent the Trust in
any way or otherwise be deemed an agent of the Trust.
2. The Adviser shall place all orders for the purchase and sale of portfolio
securities for the account of the Trust with broker-dealers selected by the
Adviser. In executing portfolio transactions and selecting broker-dealers, the
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 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 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 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 (the "1934 Act")) provided to the Trust and/or other accounts over
which the Adviser or an affiliate of the Adviser exercises investment
discretion. The Adviser is authorized to pay a broker-dealer who provides such
brokerage and research services a 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 Adviser 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.
3. The Adviser, at its own expense, shall furnish to the Trust office space
in the offices of the Adviser or in such other place as may be agreed upon by
the parties from time to time, all necessary office facilities, equipment and
personnel in connection with its services hereunder, and shall arrange, if
desired by the Trust, for members of the Adviser's organization to serve without
salaries from the Trust as officers or, as may be agreed from time to time, as
agents of the Trust. The Adviser assumes and shall pay or reimburse the Trust
for:
(a) the compensation (if any) of the Trustees of the Trust who are affiliated
with the Adviser or with its affiliates, or with any adviser retained by the
Adviser, and of all officers of the Trust as such; and
(b) all expenses of the Adviser incurred in connection with its services
hereunder.
The Trust assumes and shall pay all other expenses of the Trust, including,
without limitation:
(a) all charges and expenses of any custodian or depository appointed by the
Trust for the safekeeping of the cash, securities and other property of the
Trust;
(b) all charges and expenses for bookkeeping and auditors;
(c) all charges and expenses of any transfer agents and registrars appointed
by the Trust;
(d) all fees of all Trustees of the Trust who are not affiliated with the
Adviser or any of its affiliates, or with any adviser retained by the Adviser;
(e) all brokers' fees, expenses, and commissions and issue and transfer taxes
chargeable to the Trust in connection with transactions involving securities and
other property to which the Trust is a party;
(f) all stock exchange listing expenses;
(g) all taxes and trust fees payable by the Trust to Federal, state, or other
governmental agencies;
(h) all costs of certificates representing shares of the Trust;
(i) all fees and expenses involved in registering and maintaining
registrations of the Trust with the Securities and Exchange Commission (the
"Commission") and registering or qualifying the Trust's shares under state or
other securities laws, including, without limitation, the preparation and
printing of registration statements, prospectuses, and statements of additional
information for filing with the Commission and other authorities;
(j) expenses of preparing, printing, and mailing prospectuses and statements
of additional information to shareholders of the Trust;
(k) all expenses of shareholders' and Trustees' meetings and of preparing,
printing, and mailing notices, reports, and proxy materials to shareholders of
the Trust;
(l) all charges and expenses of legal counsel for the Trust and for Trustees
of the Trust in connection with legal matters relating to the Trust, including,
without limitation, legal services rendered in connection with the Trust's
existence, trust, and financial structure and relations with its shareholders,
registrations and qualifications of securities under Federal, state, and other
laws, issues of securities, expenses which the Trust have herein assumed,
whether customary or not, and extraordinary matters, including, without
limitation, any litigation involving the Trust, its Trustees, officers,
employees, or agents;
(m) all charges and expenses of filing annual and other reports with the
Commission and other authorities; and
(n) all extraordinary expenses and charges of the Trust.
In the event that the Adviser provides any of these services or pays any of
these expenses, the Trust will promptly reimburse the Adviser therefor.
The services of the Adviser to the Trust hereunder are not to be deemed
exclusive, and the Adviser shall be free to render similar services to others.
4. As compensation for the Adviser's services to the Trust during the period
of this Agreement, the Trust will pay to the Adviser a fee at the annual rate of
0.60% of its total assets (defined as net assets of the Trust plus borrowings or
other leverage for investment purposes to the extent excluded in calculating net
assets).
The Adviser's fee is computed as of the close of business on each business
day.
A pro rata portion of the Trust's fee shall be payable in arrears at the end
of each day or calendar month as the Adviser may from time to time specify to
the Trust. If and when this Agreement terminates, any compensation payable
hereunder for the period ending with the date of such termination shall be
payable upon such termination. Amounts payable hereunder shall be promptly paid
when due.
5. The Adviser may enter into an agreement to retain, at its own expense, a
firm or firms ("SubAdviser") to provide the Trust all of the services to be
provided by the Adviser hereunder, if such agreement is approved as required by
law. Such agreement may delegate to such SubAdviser all of Adviser's rights,
obligations, and duties hereunder.
6. The Adviser shall not be liable for any error of judgment or mistake of
law or for any loss suffered by the Trust in connection with the performance of
this Agreement, except a loss resulting from the Adviser's willful misfeasance,
bad faith, gross negligence, or from reckless disregard by it of its obligations
and duties under this Agreement. Any person, even though also an officer,
Director, partner, employee, or agent of the Adviser, who may be or become an
officer, Trustee, employee, or agent of the Trust, shall be deemed, when
rendering services to the Trust or acting on any business of the Trust (other
than services or business in connection with the Adviser's duties hereunder), to
be rendering such services to or acting solely for the Trust and not as an
officer, Director, partner, employee, or agent or one under the control or
direction of the Adviser even though paid by it.
7. The Trust shall cause the books and accounts to be audited at least once
each year by a reputable independent public accountant or organization of public
accountant or organization of public accountants who shall render a report to
the Trust.
8. Subject to and in accordance with the Declaration of Trust of the Trust,
the governing documents of the Adviser and the governing documents of any
SubAdviser, it is understood that Trustees, Directors, officers, agents and
shareholders of the Trust or any Adviser are or may be interested in the Adviser
(or any successor thereof) as Directors and officers of the Adviser or its
affiliates, as stockholders of Wachovia Corporation or otherwise; that
Directors, officers and agents of the Adviser and its affiliates or stockholders
of Wachovia Corporation are or may be interested in the Trust or any Adviser as
Trustees, Directors, officers, shareholders or otherwise; that the Adviser (or
any such successor) is or may be interested in the Trust or any SubAdviser as
shareholder, or otherwise; and that the effect of any such adverse interests
shall be governed by the Declaration of Trust of the Trust, governing documents
of the Adviser and governing documents of any SubAdviser.
9. This Agreement shall continue in effect until September 30, 2009 and after
such date (a) such continuance is specifically approved at least annually by the
Board of Trustees of the Trust or by a vote of a majority of the outstanding
voting securities of the Trust, and (b) such renewal has been approved by the
vote of the majority of Trustees of the Trust who are not interested persons, as
that term is defined in the 1940 Act, of the Adviser or of the Trust, cast in
person at a meeting called for the purpose of voting on such approval.
10. On sixty days' written notice to the Adviser, this Agreement may be
terminated at any time without the payment of any penalty by the Board of
Trustees of the Trust or by vote of the holders of a majority of the outstanding
voting securities of the Trust; and on sixty days' written notice to the Trust,
this Agreement may be terminated at any time without the payment of any penalty
by the Adviser. This Agreement shall automatically terminate upon its assignment
(as that term is defined in the 1940 Act). Any notice under this Agreement shall
be given in writing, addressed and delivered, or mailed postage prepaid, to the
other party at the main office of such party.
11. This Agreement may be amended at any time by an instrument in writing
executed by both parties hereto or their respective successors, provided that
with regard to amendments of substance such execution by the Trust shall have
been first approved by the vote of the holders of a majority of the outstanding
voting securities of the Trust and by the vote of a majority of Trustees of the
Trust who are not interested persons (as that term is defined in the 1940 Act)
of the Adviser, any predecessor of the Adviser, or of the Trust, cast in person
at a meeting called for the purpose of voting on such approval. A "majority of
the outstanding voting securities" of the Trust or the affected Funds shall
have, for all purposes of this Agreement, the meaning provided therefor in the
1940 Act.
12. Any compensation payable to the Adviser hereunder for any period other
than a full year shall be proportionately adjusted.
13. The provisions of this Agreement shall be governed, construed, and
enforced in accordance with the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
EVERGREEN INCOME ADVANTAGE FUND
By: __________________________
Name:
Title:
EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC
By: __________________________
Name:
Title:
Exhibit B
FORM OF SUB-ADVISORY AGREEMENT
AGREEMENT made the ___ day of _____, by and between Evergreen Investment
Management Company, LLC, a Delaware limited liability company (the "Adviser")
and Tattersall Advisory Group, Inc., a Virginia corporation (the "Sub-adviser").
WHEREAS, the Adviser serves as investment adviser to Evergreen Income
Advantage Fund (the "Fund"), 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 (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 Fund; 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;
THEREFORE, in consideration of the promises and the mutual agreements
hereinafter contained, the Adviser and the Sub-adviser agree as follows:
1. Employment of the Sub-adviser. The Adviser hereby employs the Sub-adviser
to manage the investment and reinvestment of the Fund's assets specified from
time to time by the Adviser ("Managed Assets") in conformity with the Fund's
investment objectives and restrictions as may be set forth from time to time in
the Fund's then current prospectus and statement of additional information, if
any, and other governing documents, all subject to the control and direction of
the Board of Trustees of the Fund, for the period and on the terms set forth in
this Agreement. The Sub-adviser hereby accepts such appointment and agrees
during such period to render the services and to assume the obligations set
forth herein, for the compensation provided herein. The Adviser shall for all
purposes herein be deemed to be an independent contractor and shall, unless
otherwise expressly provided or authorized, have no authority to act for or
represent the Adviser or the Fund in any way.
2. Obligations of and 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 manage the investment and reinvestment of the
Managed Assets, all without prior consultation with the Adviser, subject to and
in accordance with (i) the investment objective and policies of the Fund set
forth in the Fund's Prospectus and Statement of Additional Information or other
governing documents 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") and (iii) any written
instructions which the Adviser or the Fund'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 Fund'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. Subject to and in pursuance of the foregoing, the Sub-adviser shall
make all determinations with respect to the purchase and sale of portfolio
securities in respect of the Managed Assets and shall take such action necessary
to implement the same. The Sub-adviser shall render such reports to the Fund's
Board of Trustees and the Adviser as they may reasonably request concerning the
investment activities of the Fund.
b. Absent instructions of the Adviser to the contrary, the Sub-adviser shall,
in the name of the Fund, 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 Fund. 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 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) provided to the Fund
and/or other accounts over which the Sub-adviser or an affiliate of the
Sub-adviser exercises investment discretion. The Sub-adviser is authorized to
pay 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, the Sub-adviser 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.
c. In connection with the placement of orders for the execution of the
portfolio transactions of the Fund, 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 Fund required by Rule 31a-1(b)(5) and (9) under the
1940 Act. All such records shall be the property of the Fund and shall be
available for inspection and use by the Securities and Exchange Commission
("SEC"), the Fund, the Adviser or any person retained by the Fund at all
reasonable times. 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. The Sub-adviser shall bear its expenses of providing services pursuant to
this Agreement.
3. Compensation of the Sub-adviser. As compensation for the Sub-adviser's
services during the period of this Agreement, the Adviser will pay to the
Sub-adviser a fee at the annual rate of 0.54% of the Fund's total assets
(defined as net assets of the Trust plus borrowings or other leverage for
investment purposes to the extent excluded in calculating net assets). The
Sub-adviser's fee is computed as of the close of business on each business day.
A pro rata portion of the fee shall be payable in arrears at the end of each day
or calendar month as the Sub-adviser may from time to time specify. If and when
this Agreement terminates, any compensation payable hereunder for the period
ending with the date of such termination shall be payable upon such termination.
Amounts payable hereunder shall be promptly paid when due.
4. Other Activities of the Sub-adviser. The services of the Sub-adviser to
the Fund 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, so
long as the services rendered hereunder are not impaired.
5. Liability of the Sub-adviser. The Sub-adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
the Sub-adviser's willful misfeasance, bad faith, gross negligence, or from
reckless disregard by it of its obligations and duties under this Agreement. Any
person, even though also an officer, director, partner, employee, or agent of
the Sub-adviser, who may be or become an officer, Trustee, employee, or agent of
the Fund, shall be deemed, when rendering services to the Fund or acting on any
business of the Fund (other than services or business in connection with the
Sub-adviser's duties hereunder), to be rendering such services to or acting
solely for the Fund and not as an officer, director, partner, employee, or agent
or one under the control or direction of the Sub-adviser.
6. Limitation of Fund's Liability. The Sub-adviser acknowledges that it has
received notice of and accepts the limitations upon the Fund's liability set
forth in its Agreement and Declaration of Trust. The Sub-adviser agrees that any
of the Fund's obligations shall be limited to the assets of the Fund and that
the Sub-adviser shall not seek satisfaction of any such obligation from the
shareholders of the Fund nor from any Fund officer, employee or agent of the
Fund.
7. Renewal, Termination and Amendment. This Agreement shall continue in
effect, unless sooner terminated as hereinafter provided, until September 30,
2009 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 Fund or a vote of the holders
of a majority of the outstanding voting securities of the Fund and by vote of a
majority of the Trustees who are not parties to this Agreement or interested
persons of any such party or the Fund, 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 Fund's Board of Trustees, or by a vote of a
majority of the outstanding voting securities of the Fund 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 Investment Advisory and Management Agreement between the
Adviser and the Fund. 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 meaning set
forth for such terms in the 1940 Act.
8. Confidential Relationship. Any information and advice furnished by either
party to this Agreement to the other 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 or regulation. The Adviser hereby consents to
the disclosure to third parties of investment results and other data of the Fund
in connection with providing composite investment results and related
information of the Sub-adviser.
9. 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.
10. Miscellaneous. This Agreement shall be construed and enforced in
accordance with and governed by the laws of the State of Delaware.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
EVERGREEN INVESTMENT MANAGEMENT COMPANY, LLC
By:___________________________________
Name:_________________________________
Title:__________________________________
TATTERSALL ADVISORY GROUP, INC.
By:__________________________________
Name:________________________________
Title:_________________________________
Exhibit C
DESCRIPTION OF CONTRACT APPROVAL PROCESS
Each year, the Evergreen funds' Board of Trustees determines whether to
approve the continuation of the funds' investment advisory agreements. In
September 2008, the Trustees, including a majority of the Trustees who are not
"interested persons" (as that term is defined in the 1940 Act) of the Evergreen
funds, approved the continuation of the funds' investment advisory agreements.
The description below refers to the Trustees' process for considering, and
conclusions regarding, all of the funds' agreements. In all of its
deliberations, the Board of Trustees and the independent Trustees were advised
by independent counsel to the independent Trustees and counsel to the funds.
The review process.
In connection with its review of the funds'
investment advisory agreements, the Board of Trustees requests and evaluates,
and EIMC and any sub-advisors furnish, such information as the Trustees consider
to be reasonably necessary in the circumstances. The Trustees began their 2008
review process at the time of the last advisory contract-renewal process in
September 2007. In the course of their 2007 review, the Trustees identified a
number of funds that had experienced either short-term or longer-term
performance issues. During the 2008 review process, the Trustees monitored each
of these funds in particular for changes in performance and for the results of
any changes in a fund's investment process or investment team. In addition,
during the course of the year, the Trustees regularly reviewed information
regarding the investment performance of all of the funds, paying particular
attention to funds whose performance since September 2007 indicated short-term
or longer-term performance issues.
In spring 2008, a committee of the Board of Trustees (the "Committee"),
working with EIMC management, determined generally the types of information the
Board would review as part of its 2008 review process and set a timeline
detailing the information required and the dates for its delivery to the
Trustees. The Board engaged the independent data provider Keil Fiduciary
Strategies LLC ("Keil") to provide fund-specific and industry-wide data
containing information of a nature and in a format generally prescribed by the
Committee, and the Committee worked with Keil and EIMC to develop appropriate
groups of peer funds for each fund. The Committee also identified a number of
expense, performance, and other issues and requested specific information as to
those issues.
The Trustees reviewed, with the assistance of an independent industry
consultant retained by the independent Trustees, the information that EIMC, the
sub-advisors, and Keil provided. The Trustees formed small groups to review
individual funds in greater detail. In addition, the Trustees considered
information regarding, among other things, brokerage practices of the funds, the
use of derivatives by the funds, strategic planning for the funds, analyst and
research support available to the portfolio management teams, and information
regarding the various fall-out benefits received directly and indirectly by EIMC
and its affiliates from the funds. The Trustees requested and received
additional information following that review.
The Committee met several times by telephone during the 2008 review process
to consider the information provided by EIMC. The Committee then met with
representatives of EIMC. In addition, over the period of this review, the
independent Trustees discussed the continuation of the funds' advisory
agreements with representatives of EIMC and in multiple private sessions with
independent legal counsel at which no personnel of EIMC were present. At a
meeting of the full Board of Trustees in September, the Committee reported the
results of its discussions with EIMC, and the full Board met with
representatives of EIMC and engaged in further review of the materials provided
to it, and approved the continuation of each of the advisory and sub-advisory
agreements.
In considering the continuation of the agreements, the Trustees did not
identify any particular information or consideration that was all-important or
controlling, and each Trustee attributed different weights to various factors.
The Trustees evaluated information provided to them both in terms of the
Evergreen mutual funds generally and with respect to each fund specifically as
they considered appropriate. Although the Trustees considered the continuation
of the agreements as part of the larger process of considering the continuation
of the advisory contracts for all of the funds, their determination to continue
the advisory agreements for each of the funds was ultimately made on a
fund-by-fund basis.
This summary describes a number of the most important, but not necessarily
all, of the factors considered by the Board and the independent Trustees.
Information reviewed.
The Board of Trustees and committees of
the Board of Trustees meet periodically during the course of the year. At those
meetings, EIMC presents a wide variety of information regarding the services it
performs, the investment performance of the funds, and other aspects of the
business and operations of the funds. At those meetings, and in the process of
considering the continuation of the agreements, the Trustees considered
information regarding, for example, the funds' investment results; the portfolio
management teams for the funds and the experience of the members of those teams,
and any recent changes in the membership of the teams; portfolio trading
practices; compliance by the funds, EIMC, and the sub-advisors with applicable
laws and regulations and with the funds' and EIMC's compliance policies and
procedures; risk evaluation and oversight procedures at EIMC; services provided
by affiliates of EIMC to the funds and shareholders of the funds; and other
information relating to the nature, extent, and quality of services provided by
EIMC and the sub-advisors. The Trustees considered a number of changes in
portfolio management personnel at EIMC and its advisory affiliates in the year
since September 2007. The Trustees also considered changes in personnel at the
funds and EIMC, including the appointment of a new Chief Compliance Officer for
the funds in June of 2007 and a new Chief Investment Officer at EIMC in August
of 2008.
The Trustees considered the rates at which the funds pay investment advisory
fees, and the efforts generally by EIMC and its affiliates as sponsors of the
funds. The data provided by Keil showed the management fees paid by each fund in
comparison to the management fees of other peer mutual funds, in addition to
data regarding the investment performance of the funds in comparison to other
peer mutual funds. The Trustees were assisted by an independent industry
consultant in reviewing the information presented to them.
The Trustees noted that, in certain cases, EIMC and/or its affiliates provide
advisory services to other clients that are comparable to the advisory services
they provide to certain funds. The Trustees considered the information EIMC
provided regarding the rates at which those other clients pay advisory fees to
EIMC or its affiliates for such services. Fees charged to those other clients
were generally lower than those charged to the respective funds. In respect of
those other accounts, EIMC noted that the compliance, reporting, and other legal
burdens of providing investment advice to mutual funds generally exceed those
required to provide advisory services to non-mutual fund clients such as
retirement or pension plans. The Trustees also considered the investment
performance of those other accounts managed by EIMC and its affiliates, where
applicable, and concluded that the performance of those accounts did not suggest
any substantial difference in the quality of the service provided by EIMC and
its affiliates to those accounts.
The Trustees considered the transfer agency fees paid by the funds to an
affiliate of EIMC. They reviewed information presented to them showing that the
transfer agency fees charged to the funds were generally consistent with
industry norms.
The Trustees also considered that EIMC serves as administrator to the funds
and receives a fee for its services as administrator. In their comparison of the
advisory fee paid by the funds with those paid by other mutual funds, the
Trustees considered administrative fees paid by the funds and those other mutual
funds. The Board considered that EIS, an affiliate of EIMC, serves as
distributor to the funds generally and receives fees from the funds for those
services. They considered other so-called "fall-out" benefits to EIMC and its
affiliates due to their other relationships with the funds, including, for
example, soft-dollar services received by EIMC attributable to transactions
entered into by EIMC for the benefit of the funds, and brokerage commissions
received by Wachovia Securities, LLC, an affiliate of EIMC, from transactions
effected by it for the funds. The Trustees also noted that the funds pay
sub-transfer agency fees to various financial institutions that hold fund shares
in omnibus accounts, and that Wachovia Securities, LLC and its affiliates
receive such payments from the funds in respect of client accounts they hold in
omnibus arrangements, and that an affiliate of EIMC receives fees for
administering the sub-transfer agency payment program. In reviewing the services
provided by an affiliate of EIMC, the Trustees noted that an affiliate of EIMC
had won recognition from Dalbar for customer service each year since 1998, and
also won recognition from National Quality Review for customer service and for
accuracy in processing transactions in 2008. They also considered that Wachovia
Securities, LLC and its affiliates receive distribution-related fees and
shareholder servicing payments (including amounts derived from payments under
the funds' Rule 12b-1 plans) in respect of shares sold or held through it. The
Trustees also noted that an affiliate of EIMC receives compensation for serving
as a securities lending agent for a number of the funds.
Nature and quality of the services provided.
The Trustees
considered that EIMC and its affiliates generally provide a comprehensive
investment management service to the funds. They noted that EIMC, or EIMC and
one or more sub-advisers, formulate and implement an investment program for each
fund. They noted that EIMC makes its personnel available to serve as officers of
the funds, and concluded that the reporting and management functions provided by
EIMC with respect to the funds were generally satisfactory. The Trustees
considered the investment philosophy of each fund's portfolio management team,
and considered the in-house research capabilities of EIMC and its affiliates, as
well as other resources available to EIMC, including research services available
to it from third parties. The Board considered the managerial and financial
resources available to EIMC and its affiliates, and the commitment that the
Wachovia organization has made to the funds generally. On the basis of these
factors, they determined that the nature and scope of the services provided by
EIMC and the sub-advisors were consistent with their respective duties under the
investment advisory agreements and appropriate and consistent with the
investment programs and best interests of the funds.
The Trustees noted the resources EIMC and its affiliates have committed to
the regulatory, compliance, accounting, tax and oversight of tax reporting, and
shareholder servicing functions, and the number and quality of staff committed
to those functions, which they concluded were appropriate and generally in line
with EIMC's responsibilities to the funds. The Board and the disinterested
Trustees concluded, within the context of their overall conclusions regarding
the funds' advisory agreements, that they were generally satisfied with the
nature, extent, and quality of the services provided by the sub-advisors and
EIMC, including services provided by EIMC under its administrative services
agreements with the funds.
Investment performance.
The Trustees considered the investment
performance of each fund, both by comparison to other comparable mutual funds
and to broad market indices. The Trustees discussed each fund's performance with
representatives of EIMC. In each instance where a fund experienced a substantial
period of underperformance relative to its benchmark index and/or the
non-Evergreen fund peers against which the Trustees compared the fund's
performance, the Trustees considered EIMC's explanation of the reasons for the
relative underperformance and the steps being taken to address the relative
underperformance.
The Trustees noted that EIMC had appointed a new Chief Investment Officer in
August of 2008 who had not yet had sufficient time to evaluate and direct
remedial efforts with respect to Evergreen funds that have experienced a
substantial period of relative underperformance. The Trustees emphasized that
the continuation of the investment advisory agreement for a fund should not be
taken as any indication that the Trustees did not believe investment performance
for any specific fund might not be improved, and they noted that they would
continue to monitor closely the investment performance of the funds going
forward.
Advisory and administrative fees.
The Trustees recognized that
EIMC does not seek to provide the lowest cost investment advisory service, but
to provide a high quality, full-service investment management product at a
reasonable price. They also noted that EIMC has in many cases sought to set its
investment advisory fees at levels consistent with industry norms. The Trustees
compared each fund's management fee against the advisory fees of certain peer
mutual funds selected by Keil and noted that, in certain cases, a fund's
management fees were higher than many or most of the other mutual funds.
However, in each case, the Trustees determined on the basis of the information
presented that the level of management fees or EIMC's profitability was not
excessive.
Economies of scale.
The Trustees noted the possibility that
economies of scale would be achieved by EIMC in managing the funds as the funds
grow. The Trustees noted that certain funds had implemented breakpoints in their
advisory fee structures. The Trustees noted that they would continue to review
the appropriate levels of breakpoints in the future, but concluded that the
breakpoints as implemented to date appeared to be a reasonable step toward the
realization of economies of scale by these funds.
Profitability.
The Trustees considered information provided to
them regarding the profitability to the EIMC organization of the investment
advisory, administration, and transfer agency (with respect to the open-end
funds only) fees paid to EIMC and its affiliates by each of the funds. They
considered that the information provided to them was necessarily estimated, and
that the profitability information provided to them, especially on a
fund-by-fund basis, did not necessarily provide a definitive tool for evaluating
the appropriateness of each fund's advisory fee. They noted that the levels of
profitability of the funds to EIMC varied widely, depending on among other
things the size and type of fund. They considered the profitability of the funds
in light of such factors as, for example, the information they had received
regarding the relation of the fees paid by the funds to those paid by other
mutual funds, the investment performance of the funds, and the amount of
revenues involved. In light of these factors, the Trustees concluded that the
profitability of any of the funds, individually or in the aggregate, should not
prevent the Trustees from approving the continuation of the agreements.
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