XXXXX XXXXX TAX-ADVANTAGED BOND AND
OPTION STRATEGIES FUND
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT effective this 1st day of November,
2016 between Xxxxx Xxxxx Management (the
"Adviser"), and Parametric Portfolio Associates
LLC, (the "Sub-Adviser").
WHEREAS, Xxxxx Xxxxx Tax-Advantaged Bond
and Option Strategies Fund (the "Trust") is
registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as a closed-
end, management investment company;
WHEREAS, the Adviser has entered into an
Investment Advisory Agreement, dated May 4,
2010 (the "Advisory Agreement"), with the Trust,
relating to the provision of advisory and
management services; and
WHEREAS, pursuant to authority granted to the
Adviser in the Advisory Agreement, the Adviser
retained Parametric Risk Advisers LLC ("PRA") to
furnish investment advisory services to the Trust
related to the Trust's options strategy, pursuant to
an investment sub-advisory agreement dated May
4, 2010; and
WHEREAS, the Trust and PRA desire that the Sub-
Adviser, which is under common control with PRA,
be appointed by the Adviser to replace PRA as the
Trust's sub-adviser in a transfer which does not
result in a change of control or management in
accordance with Rule 2a-6 of the 1940 Act, and the
Sub-Adviser accepts such appointment and is
willing to furnish such services to the Trust and the
Adviser pursuant to this Agreement.
NOW, THEREFORE, in consideration of the mutual
covenants and agreements set forth herein, the
Adviser and the Sub-Adviser agree as follows:
1. Appointment. The Adviser hereby
appoints the Sub-Adviser to act as the investment
adviser for and to manage the investment and
reinvestment of the assets of the Trust related to
the Trust's option strategy on the terms set forth in
this Agreement. The Sub-Adviser accepts such
appointment and agrees to furnish the services set
forth herein for the compensation herein provided.
The Sub-Adviser shall not be responsible for
aspects of the Trust's investment program other
than its options strategy, including without limitation
purchases and sales of securities other than
options, selection of brokers to conduct such
purchases and sales of securities other than
options, compliance with investment policies and
restrictions other than those concerning options, or
proxy voting.
2. Sub-Adviser Duties. Subject to the
supervision of the Trust's Board of Trustees (the
"Board") and the Adviser, the Sub-Adviser will
provide a continuous investment program relating
to the Trust's purchase or sale of options for the
Trust's portfolio. Subject to approval of the Trust's
Board and notice to the Sub-Adviser, the Adviser
retains complete authority immediately to assume
direct responsibility for any function delegated to
the Sub-Adviser under this Agreement. Subject to
the foregoing, the Sub-Adviser will provide options
investment research and conduct a continuous
program of options evaluation, investment, sales,
and reinvestment of the Trust's assets by
determining the options strategy that the Trust shall
pursue, including which options shall be purchased,
entered into, sold, closed, or exchanged for the
Trust, when these transactions should be executed,
and what portion of the assets of the Trust shall
have options written against them. The Sub-
Adviser will provide the services under this
Agreement in accordance with the Trust's
investment objective or objectives, policies, and
restrictions as stated in the Trust's Registration
Statement filed with the Securities and Exchange
Commission ("SEC"), as amended (the
"Registration Statement"), copies of which shall be
sent to the Sub-Adviser by the Adviser prior to the
commencement of this Agreement and promptly
following any such amendment. The Adviser and
the Sub-Adviser further agree as follows:
a. Each of the Adviser and the Sub-
Adviser will conform materially with the 1940 Act
and all rules and regulations thereunder, all other
applicable federal and state laws and regulations,
with materially any applicable procedures adopted
by the Trust's Board of which the Sub-Adviser has
been sent a copy, and the provisions of the
Registration Statement, of which the Sub-Adviser
has received a copy and with the Sub-Adviser's
portfolio manager operating policies and
procedures as are approved by the Adviser. Each
of the Adviser and the Sub-Adviser shall exercise
reasonable care in the performance of its duties
under the Agreement.
b. In connection with any purchase
and sale of securities for the Trust related to the
implementation of the options strategy developed
by the Sub-Adviser, the Sub-Adviser will arrange
for the transmission to the custodian for the Trust
(the "Custodian") on a daily basis such
confirmation, trade tickets, and other documents
and information, including, but not limited to, Cusip,
Cedel, or other numbers that identify options to be
purchased or sold on behalf of the Trust, as may be
reasonably necessary to enable the Custodian to
perform its administrative and recordkeeping
responsibilities with respect to the Trust. With
respect to options to be settled through the Trust's
Custodian, the Sub-Adviser will arrange for the
prompt transmission of the confirmation of such
options trades to the Trust's Custodian.
c. The Sub-Adviser will assist the
Custodian in determining or confirming, consistent
with the procedures and policies stated in the
Registration Statement or adopted by the Board,
the value of any options or other assets of the Trust
for which the Sub-Adviser is responsible and for
which the Custodian seeks assistance from or
identifies for review by the Sub-Adviser; provided
that the Sub-Adviser shall be responsible for
determining in good faith, consistent with the
procedures and policies stated in the Registration
Statement or adopted by the Board, the fair value
of the Trust's portfolio of options for which the Sub-
Adviser is responsible and shall obtain at its own
expense pricing services for the Trust's portfolio of
options from Interactive Data ("IDS"), Bloomberg, or
another pricing service to be mutually agreed. The
parties acknowledge that the Sub-Adviser is not a
custodian of the Trust's assets and will not take
possession or custody of such assets.
d. Following the end of the Trust's
semi-annual period and fiscal year, the Sub-Adviser
will assist the Adviser in preparing a letter to
shareholders containing a discussion of relevant
investment factors in respect of both the prior
quarter and the fiscal year to date.
e. The Sub-Adviser will complete
and deliver to the Adviser for each quarter by the
5th business day of the following quarter a written
compliance checklist in a form provided by the
Adviser relating to the performances of the Sub-
Adviser under this Agreement.
f. The Sub-Adviser will make
available to the Trust and the Adviser, promptly
upon request, any of the Trust's investment records
and ledgers maintained by the Sub-Adviser (which
shall not include the records and ledgers
maintained by the Custodian or portfolio accounting
agent for the Trust) as are necessary to assist the
Trust and the Adviser to comply with requirements
of the 1940 Act and the Investment Advisers Act of
1940, as amended (the "Advisers Act"), and the
rules under each, as well as other applicable laws.
The Sub-Adviser will furnish to regulatory
authorities having the requisite authority any
information or reports in connection with such
services in respect to the Trust which may be
requested by such authorities in order to ascertain
whether the operations of the Trust are being
conducted in a manner consistent with applicable
laws and regulations.
g. The Sub-Adviser will provide
reports to the Board for consideration at meetings
of the Board on the options portion of the
investment program for the Trust and the options
purchased and sold for the Trust's portfolio, and will
furnish the Board with such periodic and special
reports as the Board and the Adviser may
reasonably request.
h. The Adviser shall assure that the
Trust complies with its investment policies and
restrictions as set forth in the Registration
Statement, except for policies and restrictions
concerning implementation of the Trust's options
strategy, and the Adviser acknowledges that the
Sub-Adviser shall not be responsible for the Trust's
compliance with its investment policies and
restrictions other than those concerning
implementation of the Trust's options strategy.
i. The Adviser acknowledges that
the Sub-Adviser shall not be responsible for
meeting or monitoring compliance with the income
and asset diversification requirements of Section
851 of the Internal Revenue Code, and the Adviser
acknowledges that the Adviser is responsible for
the same.
3. Broker-Dealer Selection. The Sub-
Adviser is authorized to make decisions to buy and
sell options for the Trust's portfolio, and to select
broker-dealers and to negotiate brokerage
commission rates in effecting an option transaction.
The Sub-Adviser's primary consideration in
effecting an option transaction will be to obtain the
best execution for the Trust, taking into account the
factors specified in the prospectus and/or statement
of additional information for the Trust, and
determined in consultation with the Adviser, which
include price (including the applicable brokerage
commission or dollar spread), the size of the order,
the nature of the market for the option, the timing of
the transaction, the reputation, experience and
financial stability of the broker-dealer involved, the
quality of the service, the difficulty of execution, and
the execution capabilities and operational facilities
of the firm involved, and the firm's risk in positioning
a block of options. Accordingly, the price to the
Trust in any transaction may be less favorable than
that available from another broker-dealer if the
difference is reasonably justified, in the judgment of
the Sub-Adviser in the exercise of its fiduciary
obligations to the Trust, by other aspects of the
portfolio execution services offered. The Sub-
Adviser shall not receive any research service from
any broker-dealer or from any third party that is
paid by such broker-dealer in return for placing
trades through such broker-dealer on behalf of the
Trust. The Sub-Adviser will consult with the
Adviser to ensure that portfolio transactions on
behalf of the Trust are directed to broker-dealers on
the basis of criteria reasonably considered
appropriate by the Adviser. To the extent
consistent with these standards, the Sub-Adviser is
further authorized to allocate the orders placed by it
on behalf of the Trust to an affiliated broker-dealer.
Such allocation shall be in such amounts and
proportions as the Sub-Adviser shall determine
consistent with the above standards, and the Sub-
Adviser will report on said allocation regularly to the
Trust's Board indicating the broker-dealers to which
such allocations have been made and the basis
therefore.
4. Compensation of the Sub-Adviser. For
the services, payments and facilities to be furnished
hereunder by the Sub-Adviser, to the extent the
Adviser receives at least such amount from the
Trust pursuant to the Advisory Agreement, the Sub-
Adviser shall be entitled to receive from the Adviser
compensation in an amount equal to the following
average daily net assets of the Trust throughout
each month.
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For purposes of this calculation, "net assets" of the
Trust shall mean total assets of the Trust, minus all
accrued expenses incurred in the normal course of
operations.
Such compensation shall be payable monthly in
arrears on the last business day of each month.
The Trust's daily net assets shall be computed in
accordance with the Declaration of Trust of the
Trust and any applicable votes and determinations
of the Trustees of the Trust. In case of initiation or
termination of the Agreement during any month
with respect to the Trust, the fee for that month
shall be based on the number of calendar days
during which it is in effect.
5. Allocation of Charges and Expenses. It
is understood that, pursuant to the Advisory
Agreement, the Trust will pay all expenses other
than those expressly stated to be payable by the
Sub-Adviser hereunder or by the Adviser under the
Advisory Agreement, which expenses payable by
the Trust shall include without limitation: (i)
expenses of organizing and maintaining the Trust
and continuing its existence, (ii) registration of the
Trust under the 1940 Act, (iii) commissions, fees and
other expenses connected with the acquisition,
holding and disposition of securities and other
investments, (iv) auditing, accounting and legal
expenses, (v) taxes and interest, (vi) governmental
fees, (vii) expenses of listing shares of the Trust with
a stock exchange, and expenses of issue, sale,
repurchase and redemption (if any) of shares in the
Trust, including expenses of conducting tender
offers for the purpose of repurchasing Trust shares,
(viii) expenses of registering and qualifying the Trust
and its shares under federal and state securities
laws and of preparing and printing registration
statements or other offering statements or
memoranda for such purposes, including
amendments, and for distributing the same to
shareholders and investors, and fees and expenses
of registering and maintaining registrations of the
Trust and of the Trust's principal underwriter, if any,
as broker-dealer or agent under state securities
laws, (ix) expenses of reports and notices to
shareholders and of meetings of shareholders and
proxy solicitations therefor, (x) expenses of reports
to governmental officers and commissions, (xi)
insurance expenses, (xii) association membership
dues, (xiii) fees, expenses and disbursements of
custodians and subcustodians for all services to the
Trust (including without limitation safekeeping of
funds, securities and other investments, keeping of
books, accounts and records, and determination of
net asset values), (xiv) fees, expenses and
disbursements of transfer agents, dividend
disbursing agents, shareholder servicing agents and
registrars for all services to the Trust, (xv) expenses
for servicing shareholder accounts, (xvi) any direct
charges to shareholders approved by the Trustees
of the Trust, (xvii) compensation and expenses of
Trustees of the Trust who are not members of Xxxxx
Xxxxx'x organization and (xviii) such non-recurring
items as may arise, including expenses incurred in
connection with litigation, proceedings and claims
and the obligation of the Trust to indemnify its
Trustees, officers and shareholders with respect
thereto. During the term of this Agreement, the Sub-
Adviser will pay all expenses incurred by it and its
staff and for their activities in connection with its
duties under this Agreement including, but not
limited to, rental and overhead expenses, expenses
of the Sub-Adviser's personnel, pricing services in
accordance with Section 2, insurance of the Sub-
Adviser and its personnel, research services and
taxes of the Sub-Adviser.
6. Other Interests. It is understood that
Trustees and officers of the Trust and shareholders
of the Trust are or may be or become interested in
the Sub-Adviser as partners, officers, employees,
interestholders or otherwise and that partners,
officers, employees and interestholders of the Sub-
Adviser are or may be or become similarly
interested in the Trust, and that the Sub-Adviser
may be or become interested in the Trust as a
shareholder or otherwise. It is also understood that
partners, officers, employees and interestholders of
the Sub-Adviser may be or become interested (as
directors, trustees, officers, employees,
shareholders or otherwise) in other companies or
entities (including, without limitation, other
investment companies) that the Sub-Adviser may
organize, sponsor, or acquire, or with which it may
merge or consolidate, and which may include the
words "Parametric" or any combination thereof as
part of their name, and that the Sub-Adviser or its
affiliates may enter into advisory or management
agreements or other contracts or relationships with
such other companies or entities.
7. Limitation of Liability of the Sub-Adviser.
The services of the Sub-Adviser to the Adviser for
the benefit of the Trust are not to be deemed to be
exclusive, the Sub-Adviser being free to render
services to others and engage in other business
activities. In the absence of willful misfeasance,
bad faith, gross negligence or reckless disregard of
obligations or duties hereunder on the part of the
Sub-Adviser, the Sub-Adviser shall not be subject
to liability to the Adviser or the Trust or any
shareholder in the Trust for any act or omission in
the course of, or connected with, rendering services
hereunder or for any losses that may be sustained
in the acquisition, holding, or disposition of any
security or other investment.
8. Duration and Termination.
a. This Agreement shall become
effective upon the date of its execution, and unless
terminated as provided herein, shall remain in full
force and effect through and including the second
anniversary of the execution of this Agreement and
shall continue in full force and affect indefinitely
thereafter, but only so long as such continuance
after such date is specifically approved at least
annually by (a) the Board, or by the vote of a
majority of the outstanding voting securities of the
Trust, and (b) the vote of a majority of those
Trustees who are not interested persons of the
Sub-Adviser, the Adviser, or the Trust cast in
person at a meeting called for the purpose of voting
on such approval.
b. Notwithstanding the foregoing,
this Agreement may be terminated: (a) by the
Adviser at any time without payment of any penalty,
upon 60 days' prior written notice to the Sub-
Adviser and the Trust; (b) at any time without
payment of any penalty by the Trust, by the Trust's
Board or a majority of the outstanding voting
securities of the Trust, upon 60 days' prior written
notice to the Adviser and the Sub-Adviser, or (c) by
the Sub-Adviser upon 3 months' prior written notice
unless the Trust or the Adviser requests additional
time to find a replacement for the Sub-Adviser, in
which case the Sub-Adviser shall allow the
additional time requested by the Trust or Adviser
not to exceed 3 additional months beyond the initial
three-month notice period; provided, however, that
the Sub-Adviser may terminate this Agreement at
any time without penalty, effective upon written
notice to the Adviser and the Trust, in the event
either the Sub-Adviser (acting in good faith) or the
Adviser ceases to be registered as an investment
adviser under the Advisers Act or otherwise
becomes legally incapable of providing investment
management services pursuant to its respective
contract with the Trust.
9. Notices. Any notice must be in writing
and shall be sufficiently given (1) when delivered in
person, (2) when dispatched by electronic mail or
electronic facsimile transfer (confirmed in writing by
postage prepaid first class air mail simultaneously
dispatched), (3) when sent by internationally
recognized overnight courier service (with receipt
confirmed by such overnight courier service), or (4)
when sent by registered or certified mail, to the
other party at the address of such party set forth
below or at such other address as such party may
from time to time specify in writing to the other
party.
If to the Trust:
Xxxxx Xxxxx Tax-Advantaged Bond
and Option Strategies Fund
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Legal Officer
If to the Adviser:
Xxxxx Xxxxx Management
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, Xxxxxxxxxxxxx 00000
Attn: Chief Legal Officer
If to the Sub-Adviser:
Parametric Portfolio Associates LLC
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Legal and Compliance
Department
Phone: 000-000-0000
Email: PPA-
XxxxxXxxxxxx@xxxxxxxx.xxx
10. Amendments. This Agreement may be
amended by a writing signed by both parties
hereto, provided that no amendment to this
Agreement shall be effective until approved (i) by
the vote of a majority of those Trustees of the Trust
who are not interested persons of the Sub-Adviser,
the Adviser, or the Trust cast in person at a
meeting called for the purpose of voting on such
approval, and (ii) if required by the 1940 Act, by
vote of a majority of the outstanding voting
securities of the Trust.
11. Limitation of Liability. The Sub-Adviser
expressly acknowledges the provision in the
Declarations of Trust of the Trust and of the Adviser
limiting the personal liability of trustees, officers,
and shareholders of the Trust and the Adviser,
respectively, and the Sub-Adviser hereby agrees
that it shall have recourse to the Trust or the
Adviser, respectively, for payment of claims or
obligations as between the Trust or the Adviser,
respectively, and the Sub-Adviser arising out of this
Agreement and shall not seek satisfaction from the
trustees, officers, or shareholders of the Trust or
the Adviser
12. Certain Definitions. The terms
"assignment" and "interested persons" when used
herein shall have the respective meanings specified
in the 1940 Act, as now in effect or as hereafter
amended subject, however, to such exemptions as
may be granted by the Securities and Exchange
Commission by any rule, regulation or order. The
term "vote of a majority of the outstanding voting
securities" shall mean the vote, at a meeting of
shareholders, of the lesser of (a) 67 per centum or
more of shares of the Trust present or represented
by proxy at the meeting if the holders of more than
50 per centum of the outstanding shares of the
Trust are present or represented by proxy at the
meeting, or (b) more than 50 per centum of the
outstanding shares of the Trust.
13. Miscellaneous.
a. This Agreement shall be
governed by and interpreted in accordance with the
laws of the Commonwealth of Massachusetts.
b. The captions of this Agreement
are included for convenience only and in no way
define or limit any of the provisions hereof or
otherwise affect their construction or effect.
c. If any provision of this Agreement
or the application thereof to any person or
circumstance is held to be invalid or unenforceable
to any extent, the remainder of this Agreement or
the application of such provision to other persons or
circumstances shall not be affected thereby and
shall be enforced to the fullest extent permitted by
law.
d. This Agreement may be
executed in any number of counterparts, and all of
said counterparts shall be deemed to constitute one
and the same instrument.
[Signature page follows.]
IN WITNESS WHEREOF, the parties hereto
have caused this instrument to be executed as of
the day and year first above written.
XXXXX XXXXX
MANAGEMENT
By:
Name:
Xxxxxxx X. Gemma
Vice
President, and not individually
PARAMETRIC
PORTFOLIO
ASSOCIATES LLC
By:
Name:
Xxxxxxxx Xxxxxx
Managing Director, and not individually
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