FORM OF SUB-ADVISORY AGREEMENT
Exhibit 10.2
FORM OF SUB-ADVISORY AGREEMENT
THIS SUB-ADVISORY AGREEMENT (this “Agreement”), is made as of , 2009 by and
among XXXXXXXXXX ASSET MANAGEMENT CORPORATION, a Maryland corporation (the “Company”),
WATERFALL ASSET MANAGEMENT, LLC, a Delaware limited liability company (the “Manager”) and
M.D. SASS INVESTOR SERVICES, INC., a Delaware corporation (the “Sub-Advisor”).
RECITALS
WHEREAS, the Company and the Manager entered into a Management Agreement (the “Management
Agreement”), dated as of the date hereof, pursuant to which the Manager will provide management
services to the Company; and
WHEREAS, the Company and the Manager wish to enter into this Agreement with the Sub-Advisor to
secure assistance in the implementation and execution of the Company’s business strategy; and
WHEREAS, the terms and conditions of the arrangement between the Manager, the Company and the
Sub-Advisor are set forth below.
NOW, THEREFORE, in consideration of the foregoing and of the mutual covenants and agreements
contained herein, the parties hereto agree as follows:
1. Definitions. As used in this Agreement, the following terms have the following
meanings assigned to them:
“Agency MBS” means residential mortgage-backed securities for which a U.S. government
entity such as the Government National Mortgage Association or a U.S. government-sponsored entity,
such as the Federal National Mortgage Association or the Federal Home Loan Mortgage Corporation,
guarantees payment of principal and interest to holders of the securities.
“Company Indemnified Party” has the meaning set forth in Section 10(c) hereof.
“Indemnitee” has the meaning set forth in Section 10(c) hereof.
“Indemnitor” has the meaning set forth in Section 10(d) hereof.
“Management Agreement” has the meaning set forth in the Recitals hereof.
“Manager Indemnified Party” has the meaning set forth in Section 10(b) hereof.
“Person” means any individual, corporation, partnership, joint venture, limited
liability company, estate, trust, unincorporated association, any federal, state, county or
municipal government or any bureau, department or agency thereof and any fiduciary acting in such
capacity on behalf of any of the foregoing.
“Sub-Advisor Indemnified Party” has the meaning set forth in Section 10(a)
hereof.
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2. Appointment. The Manager and the Company hereby appoint the Sub-Advisor to serve
as consulting advisor on the terms and conditions set forth in this Agreement, and the Sub-Advisor
hereby accepts such appointment.
3. Duties of the Sub-Advisor.
(a) provide the Manager and the Company with access to the personnel and resources of
the Sub-Advisor in the implementation and execution of the Company’s business strategy;
(b) provide support to the Manager in connection with certain of the Manager’s
activities performed pursuant to the Management Agreement;
(c) provide guidance and expertise to the Manager with respect to the Company’s Agency
MBS strategy; and
(d) perform such other services as may be required from time to time for the management
and other activities relating to the Company’s assets and business as the Manager shall
reasonably request or the Manager shall deem necessary under the particular circumstances.
4. Records; Access. The Sub-Advisor shall maintain appropriate records of all its
activities hereunder and make such records available for inspection by the Manager, the Company and
auditors and authorized agents of the Manager and the Company, at any time or from time to time
during normal business hours.
5. Fees. The Manager shall pay to the Sub-Advisor such fees and expenses as shall be
mutually agreed by the Manager and the Sub-Advisor from time to time for the services performed by
the Sub-Advisor under this Agreement.
6. Other Activities of the Sub-Advisor. Nothing in this Agreement shall (i) prevent
the Sub-Advisor or any of its affiliates, officers, directors, employees or personnel, from
engaging in other businesses or from rendering services of any kind to any other Person, including,
without limitation, investing in, or rendering advisory services to others investing in, any type
of business (including, without limitation, acquisitions of assets that meet the principal
objectives of the Company), whether or not the objectives or policies of any such other Person or
entity are similar to those of the Company or (ii) in any way bind or restrict the Sub-Advisor or
any of its affiliates, officers, directors, employees or personnel from buying, selling or trading
any securities or assets for their own accounts or for the account of others for whom the Manager
or any of its affiliates, officers, directors, employees or personnel may be acting.
7. Relationship of Sub-Advisor, Manager and Company. The Manager and the Sub-Advisor
are not partners or joint venturers with each other nor with the Company, and nothing in this
Agreement shall be construed to make them such partners or joint venturers or impose any liability
as such on any of them.
8. Term; Termination. Unless this Agreement is terminated in accordance with its
terms, this Agreement shall be in effect until , 2012 and shall be automatically renewed
for a one-year term each anniversary date thereafter; provided that this Agreement shall terminate
immediately upon termination of the Management Agreement. In addition, the Manager may terminate
this Agreement effective upon 60 days’ prior written notice to the Sub-Advisor and the Company.
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9. Assignment to an Affiliate. This Agreement may not be assigned by the Sub-Advisor
without the prior written consent of the Manager; provided that any assignment by the Sub-Advisor
to any Affiliate of the Manager shall be deemed approved for purposes of this Section 9.
10. Indemnification.
(a) The Sub-Advisor assumes no responsibility under this Agreement other than to render the
services called for under this Agreement and shall not be responsible for any action of the Manager
or the Company in following or declining to follow any advice or recommendations of the
Sub-Advisor. The Sub-Advisor, its officers, stockholders, members, managers, directors, personnel
and any Person controlling or controlled by the Sub-Advisor will not be liable to the Manager or
the Company or the Manager’s or the Company’s stockholders, members or partners for any acts or
omissions by any such Person, pursuant to or in accordance with this Agreement, except by reason of
acts or omissions constituting bad faith, willful misconduct, gross negligence or reckless
disregard of the Sub-Advisor’s duties under this Agreement, as determined by a final non-appealable
order of a court of competent jurisdiction. The Company shall, to the full extent lawful,
reimburse, indemnify and hold the Sub-Advisor, its officers, stockholders, members, managers,
directors, personnel and any Person controlling or controlled by the Sub-Advisor (each a
“Sub-Advisor Indemnified Party”), harmless of and from any and all expenses, losses,
damages, liabilities, demands, charges and claims of any nature whatsoever (including attorneys’
fees) in respect of or arising from any acts or omissions of such Sub-Advisor Indemnified Party
made in good faith in the performance of the Sub-Advisor’s duties under this Agreement and not
constituting such Sub-Advisor Indemnified Party’s bad faith, willful misconduct, gross negligence
or reckless disregard of the Sub-Advisor’s duties under this Agreement.
(b) The Sub-Advisor shall, to the full extent lawful, reimburse, indemnify and hold the
Manager, its stockholders, member, directors and officers and each other Person, if any,
controlling the Manager (each, a “Manager Indemnified Party”), harmless of and from any and
all expenses, losses, damages, liabilities, demands, charges and claims of any nature whatsoever
(including attorneys’ fees) in respect of or arising from the Sub-Advisor’s bad faith, willful
misconduct, gross negligence or reckless disregard of its duties under this Agreement or any claims
by the Sub-Advisor’s personnel relating to the terms and conditions of their employment by the
Manager.
(c) The Sub-Advisor shall, to the full extent lawful, reimburse, indemnify and hold the
Company (or any subsidiary of the Company), its stockholders, members, directors and officers and
each other Person, if any, controlling the Company (each, a “Company Indemnified Party” and
together with a Sub-Advisor Indemnified Party and a Manager Indemnified Party, the
“Indemnitee”), harmless of and from any and all expenses, losses, damages, liabilities,
demands, charges and claims of any nature whatsoever (including attorneys’ fees) in respect of or
arising from the Sub-Advisor’s bad faith, willful misconduct, gross negligence or reckless
disregard of its duties under this Agreement or any claims by the Sub-Advisor’s personnel relating
to the terms and conditions of their employment by the Sub-Advisor.
(d) The Indemnitee will promptly notify the party against whom indemnity is claimed (the
“Indemnitor”) of any claim for which it seeks indemnification; provided, however, that the
failure to so notify the Indemnitor will not relieve the Indemnitor from any liability which it may
have hereunder, except to the extent such failure actually prejudices the Indemnitor. The
Indemnitor shall have the right to assume the defense and settlement of such claim; provided, that
the Indemnitor notifies the Indemnitee of its election to assume such defense and settlement within
30 days after the Indemnitee gives the Indemnitor notice of the claim. In such case, the
Indemnitee will not settle or compromise such claim, and the Indemnitor will not be liable for any
such settlement made without its prior written consent. If the Indemnitor is entitled to, and
does, assume such defense by delivering the aforementioned notice to the Indemnitee, the Indemnitee
will (i) have the right to approve the Indemnitor’s counsel
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(which approval will not be unreasonably withheld, delayed or conditioned), (ii) be obligated to
cooperate in furnishing evidence and testimony and in any other manner in which the Indemnitor may
reasonably request and (iii) be entitled to participate in (but not control) the defense of any
such action, with its own counsel and at its own expense.
11. Notices. Any notice, report or other communication required or permitted to be
given hereunder shall be in writing and shall be given by being delivered by hand or by overnight
mail or other overnight delivery service to the addresses set forth herein:
| To the Manager: | Waterfall Asset Management, LLC 1185 Avenue of the Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention: Facsimile: |
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| To the Sub-Advisor: | M.D. Sass Investor Services, Inc. 1185 Avenue of the Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention: Facsimile: |
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| To the Company: | Xxxxxxxxxx Asset Management Corporation 1185 Avenue of the Xxxxxxxx, 00xx Xxxxx Xxx Xxxx, Xxx Xxxx 00000 Attention: Facsimile: |
Either party may at any time give notice in writing to the other party of a change in its
address for the purposes of this Section 11.
12. Modification. This Agreement shall not be changed, modified, terminated, or
discharged, in whole or in part, except by an instrument in writing signed by the parties hereto.
13. Severability. Any provision of this Agreement that is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions hereof, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable
such provision in any other jurisdiction.
14. Governing Law. THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES UNDER
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES TO THE CONTRARY.
15. Entire Agreement. This Agreement contains the entire agreement and understanding
among the parties hereto with respect to the subject matter hereof, and supersedes all prior and
contemporaneous agreements, understandings, inducements and conditions, express or implied, oral or
written, of any nature whatsoever with respect to the subject matter hereof. The express terms
hereof control and supersede any course of performance and/or usage of the trade inconsistent with
any of the terms hereof. This Agreement may not be modified or amended other than by an agreement
in writing.
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16. No Waiver; Cumulative Remedies. No failure to exercise and no delay in
exercising, on the part of any party hereto, any right, remedy, power or privilege hereunder shall
operate as a waiver thereof; nor shall any single or partial exercise of any right, remedy, power
or privilege hereunder preclude any other or further exercise thereof or the exercise of any other
right, remedy, power or privilege. The rights, remedies, powers and privileges herein provided are
cumulative and not exclusive of any rights, remedies, powers and privileges provided by law. No
waiver of any provision hereunder shall be effective unless it is in writing and is signed by the
party asserted to have granted such waiver.
17. Gender. Words used herein regardless of the number and gender specifically used,
shall be deemed and construed to include any other number, singular or plural, and any other
gender, masculine, feminine or neuter, as the context requires.
18. Titles not to Affect Interpretation. The titles of paragraphs and subparagraphs
contained in this Agreement are for convenience only, and they neither form a part of this
Agreement nor are they to be used in the construction or interpretation hereof.
19. Execution in Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original as against any party whose signature
appears thereon, and all of which shall together constitute one and the same instrument. This
Agreement shall become binding when one or more counterparts hereof, individually or taken
together, shall bear the signatures of all of the parties reflected hereon as the signatories.
[SIGNATURES APPEAR ON THE FOLLOWING PAGE]
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of the date and year
first above written.
| WATERFALL ASSET MANAGEMENT, LLC |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| M.D. SASS INVESTOR SERVICES, INC. |
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| By: | ||||
| Name: | ||||
| Title: | ||||
| XXXXXXXXXX ASSET MANAGEMENT CORPORATION |
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| By: | ||||
| Name: | ||||
| Title: | ||||
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