Exhibit (d)(2)
FORM OF INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT dated as of March 21, 2003, among Xxx Xxxxx Research Funds,
a Delaware statutory trust (the "Trust"), on behalf of its series, Xxx Xxxxx
Research Asset Allocation Fund (the "Fund"), Gabelli Funds LLC, a New York
limited liability corporation (the "Advisor"), and Xxx Xxxxx Research, Inc., a
Florida corporation (the "Sub-Advisor").
WHEREAS, the Advisor has agreed to furnish investment advisory
services to the Trust, an open-end management investment company registered
under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Advisor wishes to retain the Sub-Advisor to provide it
with certain sub-advisory services as described below in connection with
Advisor's advisory activities on behalf of the Fund;
WHEREAS, the advisory agreement between the Advisor and the Trust
dated March 21, 2003 (such Agreement or the most recent successor agreement
between such parties relating to advisory services to the Trust and its series
is referred to herein as the "Advisory Agreement") contemplates that the
Advisor may sub-contract investment advisory services with respect to the
Trust and its series to one or more sub-advisors pursuant to sub-advisory
agreements agreeable to the Trust and approved in accordance with the
provisions of the 1940 Act applicable thereto; and
WHEREAS, this Agreement has been approved by the Trust's Board of
Trustees and the sole initial shareholder of the Fund in accordance with the
provisions of the 1940 Act, and the Sub-Advisor is willing to furnish such
services upon the terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the mutual promises and covenants
herein contained and other good and valuable consideration, the receipt of
which is hereby acknowledged, it is agreed by and between the parties hereto
as follows:
1. Appointment. The Advisor hereby appoints the Sub-Advisor to act as
sub-advisor with respect to the Fund and the Sub-Advisor accepts such
appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Services of the Sub-Advisor. (a) Subject to the succeeding
provisions of this Agreement, the oversight and supervision of the Advisor and
the direction and control of the Trust's Board of Trustees, the Sub-Advisor
will perform certain of the day-to-day operations of the Fund which may
include one or more of the following services at the request of the Advisor:
(i) acting as investment advisor for and managing the investment and
reinvestment of those assets of the Fund as the Advisor may from time to time
request and in connection therewith have discretion in purchasing and selling
assets for the Fund in accordance with the terms hereof; (ii) arranging,
subject to the provisions of Section 3 hereof, for the purchase and sale of
assets held in the investment portfolio of the Fund; (iii) providing
investment research and credit analysis concerning the Fund's investments;
(iv) assisting the Advisor in determining what portion of the Fund's assets
will be invested in cash, cash equivalents and money market instruments; (v)
placing orders for all purchases and sales of such investments made for the
Fund, and (vi) maintaining those books and records with respect to the Fund's
portfolio transactions as are required by subparagraphs (b)(5), (6), (7), (9),
(10) and (11) of Rule 31a-1 (as modified, amended or reclassified from time to
time) under the 1940 Act and the rules and regulations of the Securities and
Exchange Commission (the "SEC") promulgated under the 1940 Act (the "1940 Act
Rules").
(b) The Sub-Advisor will keep the Trust and the Advisor
informed of developments materially affecting the Fund and shall, on its own
initiative, furnish to the Trust from time to time whatever information the
Sub-Advisor believes appropriate for this purpose.
(c) The Sub-Advisor will periodically communicate to the
Advisor, at such times as the Advisor may direct, information concerning the
purchase and sale of assets for the Fund, including: (i) the name of the
issuer, (ii) the amount of the purchase or sale, (iii) the name of the broker
or dealer, if any, through which the purchase or sale is effected, (iv) the
CUSIP number of the instrument, if any, and (v) such other information as the
Advisor may reasonably require for purposes of the Advisor and other service
providers fulfilling their obligations to the Trust under their agreements
with the Trust and the Trust fulfilling its obligations under the 1940 Act,
the 1940 Act Rules and various policies and procedures adopted by the Trust
and communicated to the Sub-Advisor by the Trust.
3. Covenants of the Sub-Advisor. In the performance of its duties
under this Agreement, the Sub-Advisor covenants to the Advisor and the Trust
that it shall:
(a) at all times conform to, and act in accordance with, any
requirements imposed by: (i) the provisions of the 1940 Act, the 1940 Act
Rules and the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), and all applicable Rules and Regulations of the SEC promulgated
thereunder (the "Advisors Act Rules"); (ii) any other applicable provision of
law; (iii) the provisions of the Agreement and Declaration of Trust and the
By-Laws of the Trust, as such documents are amended from time to time (upon
notification of such amendment); (iv) the investment objectives, policies and
restrictions of the Fund (as currently in effect and as they may be amended or
supplemented from time to time) as stated in the Trust's or the Fund's
Prospectus and Statement of Additional Information and the resolutions of the
Trust's Board of Trustees (upon notification of such amendment or supplement);
and (v) any policies and determinations of the Board of Trustees of the Trust
(upon notification of such policy or determination). The Trust agrees to
provide written copies to the Sub-Advisor of documents (and any amendments
thereto) referred to in Section 3(a)(iii) to (a)(v) above;
(b) keep the Advisor fully informed as to the composition of
the Fund's assets under the Sub-Advisor's management;
(c) performing its duties hereunder so that (i) the portion of
the Fund managed by the Sub-Advisor meets the income and asset diversification
requirements of Section 851 of the Internal Revenue Code of 1986, as amended
(the "Code), as if such portion were the entire Fund, and (ii) if the Advisor
provides the Sub-Advisor with the necessary information regarding all assets
of the Fund not managed by the Sub-Adviser within 10 days after the end of
each fiscal quarter of the Fund, the Fund meets the income and asset
diversification requirements of Section 851 of the Code;
(d) place orders for the purchase or sale of assets by the
Trust either directly with the issuer or with any broker or dealer. Subject to
the other provisions of this paragraph, in placing orders with brokers and
dealers, the Sub-Advisor will attempt to obtain the best price and the most
favorable execution of its orders. In placing orders with brokers or dealers,
the Sub-Advisor will consider the experience and skill of the firm's
securities traders as well as the firm's financial responsibility and
administrative efficiency. Consistent with the foregoing obligations, and
subject to any other instructions from the Trust or the Advisor, the
Sub-Advisor may select brokers on the basis of the research, statistical and
pricing services they provide to the Trust, the Fund and other clients of the
Advisor or the Sub-Advisor. Information and research received from such
brokers will be in addition to, and not in lieu of, the services required to
be performed by the Sub-Advisor hereunder. A commission paid to such brokers
may be higher than that which another qualified broker would have charged for
effecting the same transaction, provided that the Sub-Advisor determines in
good faith that such commission is reasonable in terms either of the
transaction or the overall responsibility of the Sub-Advisor to the Trust, the
Fund and the Sub-Advisor's other clients and that the total commissions paid
by the Fund will be reasonable in relation to the benefits to the Fund over
the long-term. In addition, the Sub-Advisor, subject to the approval of the
Trust's Board of Trustees, is authorized to take into account the sale of
shares of the Fund in allocating purchase and sale orders for portfolio
securities to brokers or dealers (including brokers and dealers that are
affiliated with the Advisor or the Sub-Advisor), provided that the Sub-Advisor
believes that the quality of the transaction and the commission are comparable
to what they would be with other qualified firms. On occasions when the
Sub-Advisor deems the purchase or sale of a security to be in the best
interest of the Fund as well as other clients of the Sub-Advisor, it may
allocate such transactions in the manner it considers to be the most equitable
and consistent with its fiduciary obligation to the Fund and to such other
clients. In no instance, however, will the Fund's securities be purchased from
or sold to the Advisor, the Sub-Advisor or any affiliated person thereof,
except to the extent permitted by the SEC or by applicable law;
(e) vote all proxies solicited by or with respect to the
issuers of securities in which assets of the Fund allocated to Sub-Advisor are
invested consistent with the Sub-Advisor's proxy voting guidelines as approved
by the Board based upon the best interests of the Fund. The Sub-Advisor will
maintain appropriate records detailing its voting of proxies on behalf of the
Fund and (1) will provide to the Trust at least quarterly (and more often to
the extent required by applicable law) a report setting forth the proposals
since the prior report on which the Fund's assets over which the Sub-Advisor
had voting power were entitled to vote and how the Sub-Adviser exercised such
voting power, including the name of the corresponding issuers, and (2) will
comply with the 1940 Act and the 1940 Act Rules with respect to voting of
proxies by the Fund;
(f) if requested by the Advisor, provide the Advisor, no later
than the 45th day following the end of each of the Fund's semi-annual fiscal
period and fiscal year, with a letter to shareholders (to be subject to
review, approval and editing by the Advisor and, if so determined,
incorporated into any report by the Advisor);
(g) provide reports to the Trust's Board of Trustees for
consideration at meetings of the Board on the Sub-Advisor's investment program
for the Fund and the issuers and securities represented in the Fund's
portfolio managed by the Sub-Advisor, and will furnish the Advisor or the
Trust's Board of Trustees with such periodic and special reports and attend
such meetings as the Trustees or the Advisor may reasonably request;
(h) cooperate with the Fund's independent public accountants
and take all reasonable action in the performance of services and obligations
under this Agreement to assure that the information needed by such accountants
and that is not otherwise available from the Fund or its agents is made
available to them for the expression of their opinion without any
qualification as to the scope of their examination, including, but not limited
to, their opinion included in the Trust's or the Fund's annual report under
the 1940 Act;
(i) promptly notify the Advisor of (1) any financial or other
condition that will or is likely to impair the Sub-Advisor's ability to
fulfill its commitment under this Agreement, and (2) any reduction,
non-renewal or restrictive modification to the Sub-Advisor's fidelity bond,
errors and omissions or other similar insurance policies and any claims or
payments thereunder;
(j) use reasonable compliance techniques as the Advisor or the
Board of Trustees of the Trust may adopt, including any written compliance
procedures;
(k) maintain disclosure controls and procedures reasonably
designed to ensure that any information provided to the Trust for inclusion in
any filings made with the SEC or delivered to shareholders is materially
accurate and complete and otherwise complies with applicable disclosure
requirements;
(l) furnish to the Advisor any information in the possession of
the Sub-Advisor that is required to be filed by the Advisor or the Trust with
the SEC or sent to shareholders under the 1940 Act, the 1940 Act Rules, the
Advisors Act or the Advisors Act Rules or any exemptive or other relief that
the Advisor or the Trust obtains from the SEC;
(m) immediately notify the Advisor of any inquiry or proceeding
by any regulatory or self regulatory body or any judicial or arbitration
proceeding by any person relating to the Sub-Advisor or its affiliates that
may adversely affect the ability of the Sub-Advisor, or its relevant
employees, to provide services in accordance with the terms hereof or that
relate to the Fund or the Sub-Advisor;
(n) immediately notify the Advisor as to any change in the
portfolio manager, team or committee for the Fund; and
(o) notify the Advisor of any material change in the ownership
of the Sub-Advisor or any other significant changes to the Sub-Advisor's
management structure within a reasonable time following such change.
4. Covenants of the Advisor. In the performance of its duties under
this Agreement, the Advisor covenants to the Sub-Advisor that it shall:
(a) keep the Sub-Advisor fully advised of the Fund's investment
objectives, and any modifications and changes thereto, as well as any specific
investment restrictions or limitations by sending the Sub-Advisor copies of
each registration statement;
(b) furnish the Sub-Advisor with a copy of any financial
statement or report prepared for the Fund by its independent public
accountants, and with copies of any financial statements or reports made by
the Fund to shareholders or to any governmental body or securities exchange
and to inform the Sub-Advisor of the results of any audits or examinations by
regulatory authorities pertaining to the Fund; and
(c) furnish the Sub-Advisor with any further materials or
information which the Sub-Advisor may reasonably request to enable it to
perform its functions under this Agreement.
5. Services Not Exclusive. Nothing in this Agreement shall prevent
the Sub-Advisor or any partner, officer, employee or other affiliate thereof
from acting as investment advisor for any other person, firm or corporation,
or from engaging in any other lawful activity, and shall not in any way limit
or restrict the Sub-Advisor or any of its partners, officers, employees or
agents from buying, selling or trading any securities for its or their own
accounts or for the accounts of others for whom it or they may be acting;
provided, however, that the Sub-Advisor will undertake no activities which, in
its reasonable good faith judgment, will adversely affect the performance of
its obligations under this Agreement.
6. Disclosure about Sub-Advisor. The Sub-Advisor has reviewed the
Registration Statement for the Trust in the form declared effective by the SEC
that contains disclosure about the Sub-Advisor, and represents and warrants
that, with respect to the disclosure about the Sub-Advisor or information
describing the Sub-Advisor and provided by or approved in writing by the
Sub-Advisor, such Registration Statement contains, as of the date of such
Registration Statement and the date hereof, no untrue statement of any
material fact and does not omit any statement of a material fact which was
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. If at any time such disclosure or information becomes inaccurate
in any material respect, the Sub-Advisor will promptly provide corrective
disclosure to the Advisor and the Trust. The Sub-Advisor further represents
and warrants that it is a duly registered investment adviser under the
Advisers Act and will maintain such registration so long as this Agreement
remains in effect. The Sub-Advisor will provide or offer to provide the
Advisor and the Trust with a copy of the Sub-Advisor's Form ADV, from time to
time if and when it is amended.
7. Books and Records. In compliance with the requirements of Rule
31a-3 under the 1940 Act, the Sub-Advisor hereby agrees that all records which
it maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any such records upon the Trust's request;
provided that the Sub-Advisor may retain copies of such records. The
Sub-Advisor further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act (to the extent such books and records are not maintained by
the Advisor or the Trust's custodian, its transfer agent or shareholder
servicing agent).
8. Agency Cross Transactions. From time to time, the Sub-Advisor or
brokers or dealers affiliated with it may find themselves in a position to buy
for certain of their brokerage clients (each an "Account") securities which
the Sub-Advisor's investment advisory clients wish to sell, and to sell for
certain of their brokerage clients securities which advisory clients wish to
buy. Where one of the parties is an advisory client, the Sub-Advisor or the
affiliated broker or dealer cannot participate in this type of transaction
(known as an agency cross transaction) on behalf of an advisory client and
retain commissions from both parties to the transaction without the advisory
client's consent. By execution of this Agreement, the Trust authorizes the
Sub-Advisor or its affiliates to participate in agency cross transactions
involving an Account on the one hand, and the Trust or the other. The
Sub-Advisor will provide the Advisor and the Trust with all information about
such transactions requested by either of them from time to time. The Trust may
revoke its consent at any time by written notice to the Sub-Advisor.
9. Expenses. During the term of this Agreement, the Sub-Advisor will
bear all costs and expenses of its employees and any overhead incurred by the
Sub-Advisor in connection with its duties hereunder.
10. Compensation. The Advisor agrees to pay to the Sub-Advisor and
the Sub-Advisor agrees to accept as full compensation for all services
rendered by the Sub-Advisor as such, a monthly fee in arrears at an annual
rate equal to 0.30% of the Fund's average daily net assets managed by the
Sub-Advisor on the first $500 million of the Fund's average daily net assets
and 0.35% of the Fund's average daily net assets managed by the Sub-Adviser in
excess of $500 million. For any period less than a month during which this
Agreement is in effect, the fee shall be prorated according to the proportion
which such period bears to a full month of 28, 29, 30 or 31 days, as the case
may be.
11. Indemnification.
(a) Subject to Section 11(c), the Trust agrees to indemnify the
Sub-Advisor and each of the Sub-Advisor's partners, officers, employees,
agents, associates and controlling persons and the directors, partners,
members, officers, employees and agents thereof (including any individual who
serves at the Sub-Advisor's request as director, officer, partner, member,
trustee or the like of another entity) (each such person being a "Sub-Advisor
Indemnitee") against any liabilities and expenses, including amounts paid in
satisfaction of judgments, in compromise or as fines and penalties, and
counsel fees (all as provided in accordance with applicable state law)
reasonably incurred by such Sub-Advisor Indemnitee in connection with the
defense or disposition of any action, suit or other proceeding, whether civil
or criminal, before any court or administrative or investigative body in which
such Sub-Advisor Indemnitee may be or may have been involved as a party or
otherwise or with which such Sub-Advisor Indemnitee may be or may have been
threatened, as a result of acting in any capacity set forth herein and by
reason of such Sub-Advisor Indemnitee having acted in any such capacity,
except with respect to any matter as to which such Sub-Advisor Indemnitee
shall have been adjudicated not to have acted in good faith in the reasonable
belief that such Sub-Advisor Indemnitee's action was in the best interest of
the Trust and furthermore, in the case of any criminal proceeding, so long as
such Sub-Advisor Indemnitee had no reasonable cause to believe that the
conduct was unlawful; provided, however, that (1) no Sub-Advisor Indemnitee
shall be indemnified hereunder against any liability to the Advisor or the
Trust or any expense of such Sub-Advisor Indemnitee arising by reason of (i)
willful misfeasance, (ii) bad faith, (iii) gross negligence or (iv) reckless
disregard of the duties involved in the conduct of such Sub-Advisor
Indemnitee's position (the conduct referred to in such clauses (i) through
(iv) being sometimes referred to herein as "disabling conduct"), (2) as to any
matter disposed of by settlement or a compromise payment by such Sub-Advisor
Indemnitee, pursuant to a consent decree or otherwise, no indemnification
either for said payment or for any other expenses shall be provided unless
there has been a determination that such settlement or compromise is in the
best interests of the Trust and that such Sub-Advisor Indemnitee appears to
have acted in good faith in the reasonable belief that such Sub-Advisor
Indemnitee's action was in the best interest of the Trust and did not involve
disabling conduct by such Sub-Advisor Indemnitee and (3) with respect to any
action, suit or other proceeding voluntarily prosecuted by any Sub-Advisor
Indemnitee as plaintiff, indemnification shall be mandatory only if the
prosecution of such action, suit or other proceeding by such Sub-Advisor
Indemnitee was authorized by a majority of the full Board of Trustees of the
Trust.
(b) Subject to Section 11(d) and notwithstanding Section 12 of
this Agreement, the Sub-Advisor agrees to indemnify and hold harmless the
Trust and the Advisor and each of the Trust's and Advisor's directors,
officers, employees, agents, associates and controlling persons and the
directors, partners, members, officers, employees and agents thereof
(including any individual who serves at the Trust's or Advisor's request as
director, officer, partner, member, trustee or the like of another entity)
(each such person being a "Trust/Advisor Indemnitee") against any liabilities
and expenses, including amounts paid in satisfaction of judgments, in
compromise or as fines and penalties, and counsel fees (all as provided in
accordance with applicable state law) reasonably incurred by such
Trust/Advisor Indemnitee in connection with the defense or disposition of any
action, suit or other proceeding, whether civil or criminal, before any court
or administrative or investigative body in which such Trust/Advisor Indemnitee
may be or may have been involved as a party or otherwise or with which such
Trust/Advisor Indemnitee may be or may have been threatened, as a result of
acting in any capacity set forth herein and by reason of such Trust/Advisor
Indemnitee having acted in any such capacity, except with respect to any
matter as to which such Trust/Advisor Indemnitee shall have been adjudicated
not to have acted in good faith in the reasonable belief that such
Trust/Advisor Indemnitee's action was in the best interest of the Trust and
furthermore, in the case of any criminal proceeding, so long as such
Trust/Advisor Indemnitee had no reasonable cause to believe that the conduct
was unlawful; provided, however, that (1) no Trust/Advisor Indemnitee shall be
indemnified hereunder against any liability to the Sub-Advisor or any expense
of such Trust/Advisor Indemnitee arising by reason of (i) willful misfeasance,
(ii) bad faith, (iii) gross negligence or (iv) reckless disregard of the
duties involved in the conduct of such Trust/Advisor Indemnitee's position
(the conduct referred to in such clauses (i) through (iv) being sometimes
referred to herein as "disabling conduct"), (2) as to any matter disposed of
by settlement or a compromise payment by such Trust/Advisor Indemnitee,
pursuant to a consent decree or otherwise, no indemnification either for said
payment or for any other expenses shall be provided unless there has been a
determination that such settlement or compromise is in the best interests of
the Trust and that such Trust/Advisor Indemnitee appears to have acted in good
faith in the reasonable belief that such Trust/Advisor Indemnitee's action was
in the best interest of the Trust and did not involve disabling conduct by
such Trust/Advisor Indemnitee and (3) with respect to any action, suit or
other proceeding voluntarily prosecuted by any Trust/Advisor Indemnitee as
plaintiff, indemnification shall be mandatory only if the prosecution of such
action, suit or other proceeding by such Trust/Advisor Indemnitee was
authorized by the Sub-Advisor.
(c) The Trust shall not be liable under Paragraph (a) of this
Section 11 with respect to any claim made against a Sub-Advisor Indemnitee
unless such Sub-Advisor Indemnitee shall have notified the Advisor in writing
within a reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon such
Sub-Advisor Indemnitee (or after such Sub-Advisor Indemnitee shall have
received notice of such service on any designated agent), but failure to
notify the Trust of any such claim shall not relieve the Trust from any
liability which it may have to the Sub-Advisor Indemnitee against whom such
action is brought except to the extent the Trust is prejudiced by the failure
or delay in giving such notice. In case any such action is brought against the
Sub-Advisor Indemnitee, the Trust will be entitled to participate, at its own
expense, in the defense thereof or, after notice to the Sub-Advisor
Indemnitee, to assume the defense thereof, with counsel satisfactory to the
Sub-Advisor Indemnitee. If the Trust assumes the defense of any such action
and the selection of counsel by the Trust to represent the Trust and the
Sub-Advisor Indemnitee would result in a conflict of interests and therefore,
would not, in the reasonable judgment of the Sub-Advisor Indemnitee,
adequately represent the interests of the Sub-Advisor Indemnitee, the Trust
will, at its own expense, assume the defense with counsel to the Trust and,
also at its own expense, with separate counsel to the Sub-Advisor Indemnitee,
which counsel shall be satisfactory to the Trust and to the Sub-Advisor
Indemnitee. The Sub-Advisor Indemnitee shall bear the fees and expenses of any
additional counsel retained by it, and the Trust shall not be liable to the
Sub-Advisor Indemnitee under this Agreement for any legal or other expenses
subsequently incurred by the Sub-Advisor Indemnitee independently in
connection with the defense thereof other than reasonable costs of
investigation. The Advisor shall not have the right to compromise on or settle
the claim without the prior written consent of the Sub-Advisor Indemnitee if
the compromise or settlement results, or may result in, a finding of
wrongdoing on the part of the Sub-Advisor Indemnitee.
(d) The Sub-Advisor shall not be liable under Paragraph (b) of
this Section 11 with respect to any claim made against a Trust/Advisor
Indemnitee unless such Advisor Indemnitee shall have notified the Sub-Advisor
in writing within a reasonable time after the summons or other first legal
process giving information of the nature of the claim shall have been served
upon such Trust/Advisor Indemnitee (or after such Trust/Advisor Indemnitee
shall have received notice of such service on any designated agent), but
failure to notify the Sub-Advisor of any such claim shall not relieve the
Sub-Advisor from any liability which it may have to the Trust/Advisor
Indemnitee against whom such action is brought except to the extent the
Sub-Advisor is prejudiced by the failure or delay in giving such notice. In
case any such action is brought against the Trust/Advisor Indemnitee, the
Sub-Advisor will be entitled to participate, at its own expense, in the
defense thereof or, after notice to the Sub/Advisor Indemnitee, to assume the
defense thereof, with counsel satisfactory to the Advisor Indemnitee. If the
Sub-Advisor assumes the defense of any such action and the selection of
counsel by the Sub-Advisor to represent both the Sub-Advisor and the
Trust/Advisor Indemnitee would result in a conflict of interests and
therefore, would not, in the reasonable judgment of the Trust/Advisor
Indemnitee, adequately represent the interests of the Trust/Advisor
Indemnitee, the Sub-Advisor will, at its own expense, assume the defense with
counsel to the Sub-Advisor and, also at its own expense, with separate counsel
to the Trust/Advisor Indemnitee, which counsel shall be satisfactory to the
Sub-Advisor and to the Trust/Advisor Indemnitee. The Trust/Advisor Indemnitee
shall bear the fees and expenses of any additional counsel retained by it, and
the Sub-Advisor shall not be liable to the Trust/Advisor Indemnitee under this
Agreement for any legal or other expenses subsequently incurred by the
Trust/Advisor Indemnitee independently in connection with the defense thereof
other than reasonable costs of investigation. The Sub-Advisor shall not have
the right to compromise on or settle the claim without the prior written
consent of the Trust/Advisor Indemnitee if the compromise or settlement
results, or may result in a finding of wrongdoing on the part of the
Trust/Advisor Indemnitee.
12. Limitation on Liability.
(a) The Sub-Advisor will not be liable for any error of
judgment or mistake of law or for any loss suffered by the Advisor or by the
Trust in connection with the performance of this Agreement, except a loss
resulting from a breach of fiduciary duty with respect to the receipt of
compensation for services or a loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or from
reckless disregard by it of its duties under this Agreement.
(b) Notwithstanding anything to the contrary contained in this
Agreement, the parties hereto acknowledge and agree that, as provided in
Section 5.1 of Article V of the Declaration of Trust, as amended and restated,
this Agreement is executed by the trustees and/or officers of the Trust, not
individually but as such trustees and/or officers of the Trust, and the
obligations hereunder are not binding upon any of the trustees or shareholders
individually but bind only the estate of the Trust.
13. Duration and Termination. This Agreement shall become effective
as of the date hereof and, unless sooner terminated with respect to the Trust
as provided herein, shall continue in effect for a period of two years.
Thereafter, if not terminated, this Agreement shall continue in effect with
respect to the Trust in accordance with the applicable requirements of the
1940 Act and the 1940 Act Rules. Notwithstanding the foregoing, this Agreement
may be terminated by the Trust or the Advisor at any time, without the payment
of any penalty, upon giving the Sub-Advisor 60 days' notice (which notice may
be waived by the Sub-Advisor), provided that such termination by the Trust or
the Advisor shall be directed or approved by the vote of a majority of the
Trustees of the Trust in office at the time or by the vote of the holders of a
majority of the voting securities of the Fund at the time outstanding and
entitled to vote, or by the Sub-Advisor on 60 days' written notice (which
notice may be waived by the Trust and the Advisor), and will terminate
automatically upon any termination of the Advisory Agreement between the Trust
(on behalf of the Fund) and the Advisor. This Agreement will also immediately
terminate in the event of its assignment. (As used in this Agreement, the
terms "majority of the outstanding voting securities," "interested person" and
"assignment" shall have the same meanings of such terms in the 1940 Act and
the 1940 Act Rules; provided however that no transfer may be made by the
Sub-Advisor under Rule 2a-6 of the 1940 Act without the approval of a majority
of the Trust's Board of Trustees who are not interested persons of the Trust).
14. Confidential Relationship. Information furnished by the Trust or
by one party to another relating to the Trust is confidential and shall not be
disclosed to third parties unless required by law or unless the Trust
otherwise consents. Advisor and Sub-Advisor, on behalf of themselves and their
affiliates and representatives, agree to keep confidential all records and
other information relating to the other party (as the case may be), except
after prior notification to and approval in writing by Advisor or the
Sub-Advisor (as the case may be), which approval shall not be unreasonably
withheld, and may not be withheld, where the Advisor or the Sub-Advisor or any
affiliate would be exposed to civil or criminal contempt proceedings for
failure to comply or when requested to divulge such information by duly
constituted authorities. Without limiting the generality of the foregoing, the
Sub-Advisor shall not take any action which shall result in a violation or
breach of the Trust's Privacy Policy as in effect from time to time and
provided to the Sub-Advisor by the Trust.
15. Notices. Any notice under this Agreement shall be in writing to
the other party at such address as the other party may designate from time to
time for the receipt of such notice and shall be deemed to be received on the
earlier of the date actually received or on the fourth day after the postmark
if such notice is mailed first class postage prepaid.
16. Amendment of this Agreement. No provision of this Agreement may
be changed, waived, discharged or terminated orally, but only by an instrument
in writing signed by the party against which enforcement of the change,
waiver, discharge or termination is sought. Any amendment of this Agreement
shall be subject to approval by a majority of the Trust's Board of Trustees,
including a majority of the Trust's Board of Trustees who are not interested
persons of the Trust and to approval by shareholders of the Fund if required
by the 1940 Act and the 1940 Act Rules and not excepted by exemptive order of
the SEC.
17. Miscellaneous. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding on, and shall inure to the
benefit of the parties hereto and their respective successors.
18. Governing Law. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York for contracts to be
performed entirely therein without reference to choice of law principles
thereof and in accordance with the applicable provisions of the 1940 Act.
19. Counterparts. This Agreement may be executed in counterparts by
the parties hereto, each of which shall constitute an original counterpart,
and all of which, together, shall constitute one Agreement.
20. Entire Agreement. This Agreement embodies the entire agreement
and understanding between the parties hereto, and supersedes all prior
agreements and understandings relating to this Agreement's subject matter.
21. 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.
22. Use of Name. The Sub-Advisor acknowledges that the Trust has a
non-exclusive, revocable license to use the word "Xxx Xxxxx" in its name and
that if the Sub-Adviser ceases to be the investment sub-adviser to the Trust,
the Trust will cease using the name as promptly as practicable, making all
reasonable efforts to remove "Xxx Xxxxx" from its name.
Where the effect of a requirement of the 1940 Act reflected in or
contemplated by 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.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be executed by their duly authorized officers designated below as of the day
and year first above written.
GABELLI FUNDS LLC
By:
--------------------------------
Name:
Title:
XXX XXXXX RESEARCH, INC.
By:
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Name:
Title:
XXX XXXXX RESEARCH FUNDS
By:
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Name:
Title:
