eUnitsTM 2 YEAR U.S. MARKET
PARTICIPATION TRUST:
UPSIDE TO CAP / BUFFERED DOWNSIDE
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT effective this 25th day of January,
2012 between Xxxxx Xxxxx Management (the "Adviser"),
and Parametric Risk Advisors LLC (the "Sub-Adviser").
WHEREAS, eUnitsTM 2 Year U.S. Market Participation Trust:
Upside to Cap / Buffered Downside (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 and Administrative Agreement, dated January 25,
2012 (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 wishes to retain the Sub-
Adviser to furnish investment advisory services to the Trust
related to the Trust's options strategy, and the Sub-Adviser is
willing to furnish such services to the Trust and the Adviser.
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. In addition to the foregoing, on each day the
Trust strikes a net asset value per unit, the Sub-Adviser will
independently test and verify the valuation (as reported by the
Custodian) of all options or other assets of the Trust for which
the Sub-Adviser is responsible. The Sub-Adviser will
immediately notify the Adviser and the Custodian of any
differences between the valuations as determined by the
Custodian and by the Sub-Adviser, and will assist the
Custodian in resolving any such differences. 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.
j. The Sub-Adviser will monitor the credit
quality of each counterparty to which the Trust has exposure
with respect to its options strategy on a regular basis. The
Sub-Adviser will notify the Adviser immediately (but in no
event more than 1 business day later) in the event of any
decline in the Sub-Adviser's assessment of the credit quality
of any counterparty or any downgrade in the rating of such
counterparty by a nationally recognized rating agency.
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, the Sub-Adviser shall be entitled to receive
from the Adviser compensation in an amount equal to an
annual rate of one third (1/3) of the management fee actually
received by the Adviser pursuant to the Advisory Agreement
after deduction of all costs incurred by the Adviser including,
but not limited to, operating expenses of the Trust,
organizational and offering expenses, revenue sharing and
distribution expenses.
Such compensation shall be payable monthly in arrears. 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, Xxxxx
Xxxxx shall pay directly all ordinary operating expenses
incurred by the Trust, including but not limited to custody,
transfer agent, audit, and printing and postage expenses.
The Trust shall be responsible for and will pay all
extraordinary expenses incurred by the Trust, including, but
not limited to attorneys' fees and other costs in connection
with any litigation or regulatory action. 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 effect thereafter
until the Termination Date (as such term is defined in the
Registration Statement) and winding down of the affairs of the
Trust, 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:
eUnitsTM 2 Year U.S. Equity Market
Participation Trust:
Upside to Cap / Buffered Downside
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 Risk Advisors LLC
000 Xxxxxxxxx Xxxxxx
Xxxxxxxx, XX 00000
Attn: Xxxx Xxxxxxxx
10. Amendments. 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, and no material amendment of this
Agreement shall be effective until approved as required by
applicable law. The Sub-Adviser shall furnish to the Board
such information as may be reasonably necessary in order for
the Board to evaluate this Agreement or any proposed
amendments thereto for the purposes of casting a vote
pursuant to Section 15 or this Section 17 of this Agreement.
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:
Xxxxxxxxx X. Marius
Vice
President, and not individually
PARAMETRIC RISK
ADVISORS LLC
By:
Name: Xxxx
Xxxxxxxx
Managing Director, and not individually
10
071_0037.doc
