SUBADVISORY AGREEMENT
Agreement made as of the February 28, 2002, by and between American Express
Financial Corporation, a Delaware corporation ("AEFC"), and GAMCO Investors,
Inc., a wholly-owned subsidiary of Gabelli Asset Management Inc., a New York
corporation ("Subadviser").
WHEREAS the Fund or Funds listed in Schedule A are each a series of an
investment company registered under the Investment Company Act of 1940, as
amended (the "1940 Act"); provided that references in this Agreement to "the
Fund" in the singular shall be understood to refer to all Funds so listed in
Schedule A.
WHEREAS AEFC has entered into an Investment Management Services Agreement
(the "Advisory Agreement") with the Fund pursuant to which AEFC provides
investment advisory services to the Fund.
WHEREAS AEFC and the Fund each desire to retain Subadviser to provide
investment advisory services to the Fund, and Subadviser is willing to render
such investment advisory services.
NOW, THEREFORE, the parties, intending to be legally bound, agree as follows:
1. Subadviser's Duties.
(a) Portfolio Management. Subject to supervision by AEFC and the Fund's
Board of Directors (the "Board"), Subadviser shall manage the
investment operations and the composition of that portion of assets of
the Fund which is allocated to Subadviser from time to time by AEFC
(which portion may include any or all of the Fund's assets), including
the purchase, retention, and disposition thereof, in accordance with
the Fund's investment objectives, policies, and restrictions, and
subject to the following understandings:
(i) Investment Decisions. Subadviser shall determine from time to
time what investments and securities will be purchased, retained,
or sold by the Fund, and what portion of such assets will be
invested or held uninvested as cash.
(ii) Investment Limits. In the performance of its duties and
obligations under this Agreement, Subadviser shall act in
conformity with applicable limits and requirements, as amended
from time to time, as set forth in the (A) Fund's, Prospectus and
Statement of Additional Information ("SAI"); (B) instructions and
directions of AEFC and of the Board; (C) requirements of the 1940
Act, the Internal Revenue Code of 1986, as amended, as applicable
to the Fund, and all other applicable federal and state laws and
regulations; and (D) the procedures and standards set forth in,
or established in accordance with, the Advisory Agreement.
(iii) Portfolio Transactions.
(A) Trading. With respect to the securities and other investments to
be purchased or sold for the Fund, Subadviser shall place orders
with or through such persons, brokers, dealers, or futures
commission merchants (including, but not limited to,
broker-dealers that are affiliated with AEFC or Subadviser)
selected by Subadviser; provided, however, that such orders shall
be consistent with the brokerage policy set forth in the Fund's
SAI, as approved by the Board; and conform with federal
securities laws and the interpretations thereof by the Securities
and Exchange Commision ("SEC"). Within the framework of this
policy, Subadviser may consider the research, investment
information, and other services provided by, and the financial
responsibility of, brokers, dealers, or futures commission
merchants who may effect, or be a party to, any such transaction
or other transactions to which Subadviser's other clients may be
a party.
(B) Aggregation of Trades. On occasions when Subadviser deems the
purchase or sale of a security or futures contract to be in the
best interest of the Fund as well as other clients of Subadviser,
Subadviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to, aggregate
the securities or futures contracts to be sold or purchased in
order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of
the securities or futures contracts so purchased or sold, as well
as the expenses incurred in the transaction, will be made by
Subadviser in the manner Subadviser considers to be the most
equitable and consistent with its fiduciary obligations to the
Fund and to such other clients.
(iv) Records and Reports. Subadviser shall maintain such books and records
required under the 1940 Act as shall be agreed upon from time to time by
the parties hereto, shall render to the Board such periodic and special
reports as the Board or AEFC may reasonably request, and shall meet with
any persons at the request of AEFC or the Board for the purpose of
reviewing Subadviser's performance under this Agreement at reasonable times
and upon reasonable advance written notice.
(v) Transaction Reports. Subadviser shall provide the Fund's custodian on each
business day with information relating to all transactions concerning the
Fund's assets and shall provide AEFC with such information upon AEFC's
request.
(b) Subadviser's Directors, Officers, and Employees. Subadviser shall
authorize and permit any of its directors, officers, and employees who
may be elected as directors or officers of the Fund to serve in the
capacities in which they
are elected. Services to be furnished by Subadviser under this
Agreement may be furnished through any such directors, officers, or
employees.
(c) Maintenance of Records. Subadviser shall timely furnish to AEFC all
information relating to Subadviser's services hereunder which are
needed by AEFC to maintain the books and records of the Fund required
under the 1940 Act. Subadviser shall maintain for the Fund the records
required by paragraphs (b)(5), (b)(6), (b)(7), (b)(9), (b)(10) and (f)
of Rule 31 a-1 under the 1940 Act and any additional records as agreed
upon by Subadviser and AEFC. Subadviser agrees that all records which
it maintains for the Fund are the property of the Fund and Subadviser
will surrender promptly to the Fund any of such records upon the
Fund's request; provided, however, that Subadviser may retain a copy
of such records. Subadviser further agrees to preserve for the periods
prescribed under the 1940 Act any such records as are required to be
maintained by it pursuant to paragraph 1(a) hereof.
(d) Fidelity Bond and Code of Ethics. Subadviser will provide the Fund
with reasonable evidence that, with respect to its activities on
behalf of the Fund, Subadviser is maintaining (i) adequate fidelity
bond insurance, and (ii) an appropriate Code of Ethics and related
reporting procedures.
2. AEFC's Duties. AEFC shall continue to have responsibility for all other
services to be provided to the Fund pursuant to the Advisory Agreement and
shall oversee and review Subadviser's performance of its duties under this
Agreement. AEFC shall also retain direct portfolio management
responsibility with respect to any assets of the Fund which are not
allocated by it to the portfolio management of Subadviser as provided in
paragraph 1(a) hereof.
3. Documents Provided to Subadviser. AEFC has delivered or will deliver to
Subadviser current copies and supplements thereto of each of the Prospectus
and SAI pertaining to the Fund, and will deliver to it all future
amendments and supplements, if any.
4. Compensation of Subadviser. For the services provided and the expenses
assumed pursuant to this Agreement, AEFC will pay to Subadviser, effective
from the date of this Agreement, a fee which shall be accrued daily and
paid monthly, on or before the last business day of the next succeeding
calendar month, from the Fund's assets at the annual rates as a percentage
of the Fund's average daily net assets set forth in the attached Schedule
A, which Schedule can be modified from time to time to reflect changes in
annual rates, subject to appropriate approvals required by the 1940 Act, if
any. If this Agreement becomes effective or terminates before the end of
any month, the fee for the period from the effective date to the end of the
month or from the beginning of such month to the date of termination, as
the case may be, shall be prorated according to the proportion that such
month bears to the full month in which such effectiveness or termination
occurs.
5. Liability of Subadviser. Subadviser agrees to perform faithfully the
services required to be rendered to the Fund under this Agreement, but
nothing herein contained shall make Subadviser or any of its officers,
directores, or employees liable for any loss sustained by
the Fund or its officers, directors, or shareholders, or any other person
on account of the services which Subadviser may render or fail to render
under this Agreement; provided, however, that nothing herein shall protect
Subadviser against liability to the Fund or to any of its shareholders, to
which Subadviser would otherwise be subject, by reason of its willful
misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of its obligations and
duties under this Agreement. Nothing in this Agreement shall protect
Subadviser from any liabilities which it may have under the 1933 Act or the
1940 Act.
6. Representations of Subadviser. Subadviser represents and warrants as
follows:
(a) Subadviser (i) is registered as an investment adviser under the
Advisers Act of 1940 (the "Advisers Act") and will continue to be so
registered for so long as this Agreement remains in effect; (ii) is
not prohibited by the 1940 Act or the Advisers Act from performing the
services contemplated by this Agreement, (iii) has met and will seek
to continue to meet for so long as this Agreement remains in effect,
any other applicable federal or state requirements, or the applicable
requirements of any regulatory or industry self-regulatory agency
necessary to be met in order to perform the services contemplated by
this Agreement; (iv) has the authority to enter into and perform the
services contemplated by this Agreement; and (v) will promptly notify
AEFC of the occurrence of any event that would disqualify Subadviser
from serving as an investment adviser of an investment company
pursuant to Section 9(a) of the 1940 Act or otherwise.
(b) Subadviser has adopted a written code of ethics complying with the
requirements of Rule 17j-1 under the 1940 Act and will provide AEFC
with a copy of the code of ethics, together with evidence of its
adoption. Within 45 days of the end of the last calendar quarter of
each year that this Agreement is in effect, a duly authorized officer
of Subadviser shall certify to AEFC that Subadviser has complied with
the requirements of Rule 17j-1 during the previous year and that there
has been no material violation of Subadviser's code of ethics or, if
such a violation has occurred, that appropriate action was taken in
response to such violation. Upon the written request of AEFC,
Subadviser shall permit AEFC, its employees, or its agents to examine
the reports required to be made to Subadviser by Rule 17j-1(c)(1) and
all other records relevant to Subadviser's code of ethics.
(c) Subadviser has provided AEFC with a copy of its Form ADV, which as of
the date of this Agreement is its Form ADV as most recently filed with
the SEC and promptly will furnish a copy of all amendments to AEFC at
least annually.
(d) Subadviser will promptly notify AEFC of any changes in the controlling
shareholder, in the key personnel who are either the portfolio
manager(s) responsible for the Fund or senior management of
Subadviser, or if there is otherwise an actual change in control or
management of Subadviser within the meaning of the 1940 Act.
(e) Subadviser agrees that neither it nor any of its affiliates will in
any way refer directly or indirectly to its relationship with the Fund
or AEFC, or any of
their respective affiliates in offering, marketing, or other
promotional materials without the prior written consent of Adviser
except that the Subadviser may, while this Agreement is in effect,
include in marketing materials the names of the Fund or Adviser as
part of a list of representative clients without seeking the prior
written consent of AEFC.
7. Liability and Indemnification.
(a) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, Subadviser, any of its affiliates and any of
the officers, directors, employees, consultants, or agents thereof
shall not be liable for any losses, claims, damages, liabilities, or
litigation (including legal and other expenses) incurred or suffered
by AEFC, the Fund or its shareholders as a result of any error of
judgment or mistake of law by Subadviser with respect to the Fund,
except that nothing in this Agreement shall operate or purport to
operate in any way to exculpate, waive, or limit the liability of
Subadviser for, and Subadviser shall indemnify and hold harmless the
Fund, AEFC, all affiliated persons thereof (within the meaning of
Section 2(a)(3) of the 0000 Xxx) and all controlling persons (as
described in Section 15 of the Securities Act of 1933, as amended
("1933 Act")) (collectively, "AEFC Indemnitees") against any and all
losses, claims, damages, liabilities, or litigation (including
reasonable legal and other expenses) to which any of the AEFC
Indemnitees may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, or under any other statute, at common law, or otherwise
arising out of or based on (i) any willful misconduct, bad faith,
reckless disregard, or gross negligence of Subadviser in the
performance of any of its duties or obligations hereunder; (ii) any
untrue statement of a material fact contained in the Prospectus and
SAI, proxy materials, reports, advertisements, sales literature, or
other materials pertaining to the Fund or the omission to state
therein a material fact known to Subadviser which was required to be
stated therein or necessary to make the statements therein not
misleading, if such statement or omission was made in reliance upon
information furnished to AEFC or the Fund by the Subadviser
Indemnitees (as defined below) for use therein; or (iii) any violation
of federal or state statutes or regulations by Subadviser. It is
further understood and agreed that Subadviser may rely upon
information furnished to it by AEFC that it reasonably believes to be
accurate and reliable. The federal securities laws impose liabilities
in certain circumstances on persons who act in good faith, and
therefore nothing herein shall in any way constitute a waiver of
limitation of any rights which AEFC may have under any securities
laws.
(b) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, AEFC and the Fund shall not be liable for any
losses, claims, damages, liabilities, or litigation (including legal
and other expenses) incurred or suffered by Subadviser as a result of
any error of judgment or mistake of law by AEFC with respect to the
Fund, except that nothing in this Agreement shall operate or purport
to operate in any way to exculpate, waive, or limit the liability of
AEFC for, and AEFC shall indemnify and hold harmless Subadviser, all
affiliated persons thereof (within the meaning of Section 2(a)(3) of
the 0000 Xxx)
and all controlling persons (as described in Section 15 of the 1933
Act) (collectively, "Subadviser Indemnitees") against any and all
losses, claims, damages, liabilities, or litigation (including
reasonable legal and other expenses) to which any of the Subadviser
Indemnitees may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, or under any other statute, at common law, or otherwise
arising out of or based on (i) any willful misconduct, bad faith,
reckless disregard, or gross negligence of AEFC in the performance of
any of its duties or obligations hereunder; (ii) any untrue statement
of a material fact contained in the Prospectus and SAI, proxy
materials, reports, advertisements, sales literature, or other
materials pertaining to the Fund or the omission to state therein a
material fact known to AEFC which was required to be stated therein or
necessary to make the statements therein not misleading, unless such
statement or omission was made in reliance upon information furnished
to AEFC or the Fund by a Subadviser Indemnitee for use therein, or
(iii) any violation of federal or state statutes or regulations by
AEFC or the Fund.
(c) After receipt by AEFC or Subadviser, its affiliates, or any officer,
director, employee, or agent of any of the foregoing, entitled to
indemnification as stated in (a) or (b) above ("Indemnified Party") of
notice of the commencement of any action, if a claim in respect
thereof is to be made against any person obligated to provide
indemnification under this section ("Indemnifying Party"), such
Indemnified Party shall notify the Indemnifying Party in writing of
the commencement thereof as soon as practicable after the summons or
other first written notification giving information of the nature of
the claim that has been served upon the Indemnified Party; provided
that the failure to so notify the Indemnifying Party will not relieve
the Indemnifying Party from any liability under this section, except
to the extent that the omission results in a failure of actual notice
to the Indemnifying Party and such Indemnifying Party is damaged
solely as a result of the failure to give such notice. The
Indemnifying Party, upon the request of the Indemnified Party, shall
retain counsel satisfactory to the Indemnified Party to represent the
Indemnified Party in the proceeding, and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any Indemnified Party shall have the right to retain its
own counsel, but the fees and expenses of such counsel shall be at the
expense of such Indemnified Party unless (1) the Indemnifying Party
and the Indemnified Party shall have mutually agreed to the retention
of such counsel, or (2) the named parties to any such proceeding
(including any impleaded parties) include both the Indemnifying Party
and the Indemnified Party and representation by both parties by the
same counsel would be inappropriate due to actual or potential
differing interests between them. The Indemnifying Party shall not be
liable for any settlement of any proceeding effected without its
written consent, which consent shall not be unreasonably withheld, but
if settled with such consent or if there be a final judgment for the
plaintiff, the Indemnifying Party agrees to indemnify the Indemnified
Party from and against any loss or liability by reason of such
settlement or judgment.
8. Duration and Termination.
(a) Unless sooner terminated as provided herein, this Agreement shall
continue in effect for a period of more than two years from the date
written above only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the
1940 Act. Thereafter, if not terminated, this Agreement shall continue
automatically for successive periods of 12 months each, provided that
such continuance is specifically approved at least annually (i) by a
vote of a majority of the Board members who are not parties to this
Agreement or interested persons (as defined in the 0000 Xxx) of any
such party, cast in person at a meeting called for the purpose of
voting on such approval, and (ii) by the Board or by a vote of the
holders of a majority of the outstanding voting securities (as defined
in the 1940 Act) of the Fund.
(b) Notwithstanding the foregoing, this Agreement may be terminated at any
time, without the payment of any penalty, by the Board or by vote of a
majority of the outstanding voting securities (as defined in the 0000
Xxx) of the Fund on 60 days' written notice to Subadviser. This
Agreement may also be terminated, without the payment of any penalty,
by AEFC (i) upon 60 days' written notice to Subadviser; (ii) upon
material breach by Subadviser of any representations and warranties
set forth in this Agreement, if such breach has not been cured within
20 days after written notice of such breach; or (iii) immediately if,
in the reasonable judgment of AEFC, Subadviser becomes unable to
discharge its duties and obligations under this Agreement, including
circumstances such as the insolvency of Subadviser or other
circumstances that could adversely affect the Fund. Subadviser may
terminate this Agreement at any time, without payment of any penalty,
on 60 days' written notice to AEFC. This Agreement shall terminate
automatically in the event of its assignment (as defined in the 0000
Xxx) or upon the termination of the Advisory Agreement.
9. Subadviser's Services Are Not Exclusive. Nothing in this Agreement shall
limit or restrict the right of any of Subadviser's partners, officers, or
employees who may also be a director, officer, or employee of the Fund to
engage in any other business or to devote his or her time and attention in
part to the management or other aspects of any business, whether of a
similar or a dissimilar nature, or limit or restrict Subadviser's right to
engage in any other business or to render services of any kind to any other
corporation, firm, individual, or association.
10. References to Subadviser. During the term of this Agreement, AEFC agrees to
furnish to Subadviser at its principal office all prospectuses, proxy
statements, reports to shareholders, sales literature, or other material
prepared for distribution to sales personnel, shareholders of the Fund or
the public, which refer to Subadviser or its clients in any way, prior to
use thereof and not to use such material if Subadviser reasonably objects
in writing five business days (or such other time as may be mutually agreed
upon) after receipt thereof. Sales literature may be furnished to
Subadviser hereunder by first-class or overnight mail, electronic or
facsimile transmission, or hand delivery.
11. Notices. Any notice under this Agreement must be given in writing as
provided below or to another address as either party may designate in
writing to the other.
Subadviser:
GAMCO Investors, Inc.
Xxx Xxxxxxxxx Xxxxxx
Xxx, XX 00000
Attn: Xxxxxxx X. XxXxxx
Fax: 000-000-0000
AEFC:
Vice President, Investment Administration
American Express Financial Corporation
53600 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
with a copy to:
H. Xxxxx xxx Xxxxx
Group Counsel
American Express Financial Advisors Inc.
50606 AXP Financial Center
Xxxxxxxxxxx, XX 00000
Fax: 000-000-0000
12. Amendments. This Agreement may be amended by mutual consent, subject to
approval by the Board and the Fund's shareholders to the extent required by
the 1940 Act.
13. Assignment. No assignment (as defined in the 0000 Xxx) shall be made by
AEFC without the prior written consent of the Fund and AEFC.
Notwithstanding the foregoing, no assignment shall be deemed to result from
any changes in the directors, officers, or employees of AEFC except as may
be provided to the contrary in the 1940 Act or the rules and regulations
thereunder.
14. Governing Law. This Agreement shall be governed by the laws of the State of
Minnesota, without giving effect to the conflicts of laws principles
thereof, or any applicable provisions of the 1940 Act. To the extent that
the laws of the State of Minnesota, or any of the provision of this
Agreement, conflict with applicable provisions of the 1940 ACT, the latter
shall control.
15. Entire Agreement. This Agreement embodies the entire agreement and
understanding among the parties hereto, and supersedes all prior agreements
and understandings relating to the subject matter hereof.
16. Severability. Should any part of this Agreement be held invalid by a court
decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby. This Agreement shall be binding upon and
shall inure to the benefit of the parties hereto and their respective
successors.
17. Interpretation. Any questions of interpretation of any term or provision of
this Agreement having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to such term or
provision in the 1940 Act and to interpretation thereof, if any, by the
federal courts or, in the absence of any controlling decision of any such
court, by rules, regulations, or orders of the SEC validly issued pursuant
to the 1940 Act. Where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is altered by a rule,
regulation, or order of the SEC, whether of special or general application,
such provision shall be deemed to incorporate the effect of such rule,
regulation, or order.
18. Headings. The headings in this Agreement are intended solely as a
convenience and are not intended to modify any other provision herein.
19. Authorization. Each of the parties represents and warrants that the
execution and delivery of this Agreement and the consummation of the
transactions contemplated by this Agreement have been duly authorized by
all necessary corporate action by such party and when so executed and
delivered, this Agreement will be the valid and binding obligation of such
party in accordance with its terms.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
American Express Financial Corporation GAMCO Investors, Inc.
By: /s/ Xxxxxx X. Xxxxxxxx By: /s/ Xxxxxxx X. Xxxxxxxx
----------------------- ---------------------
Name: Xxxxxx X. Xxxxxxxx Name: Xxxxxxx X. Xxxxxxxx
Title: Vice President, Mutual Funds Title: Executive Vice President
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