INVESTMENT ADVISORY AGREEMENT
INVESTMENT ADVISORY AGREEMENT (the "Agreement") made as of this 30th
day of May , 2014 by and between X'Xxxxxx EQUUS (the "Fund"), a Delaware
statutory trust registered as a closed end non-diversified management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"), and UBS X'Xxxxxx LLC (the "Adviser"), a Delaware limited liability
company with its principal place of business at Xxx Xxxxx Xxxxxx Xxxxx, 00xx
Xxxxx, Xxxxxxx, Xxxxxxxx 00000.
W I T N E S S E T H
WHEREAS, the Board of Trustees (the "Board") of the Trust has
selected the Adviser to act as investment adviser to the Trust as set forth on
Schedule A to this Agreement (the "Schedule"), as such Schedule may be amended
from time to time upon mutual agreement of the parties, and to provide certain
related services, as more fully set forth below, and to perform such services
under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Trust and the Adviser do hereby agree as follows:
1. THE ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Adviser shall
act as investment adviser with respect to the Fund. In such capacity, the
Adviser shall, subject to the supervision of the Board, regularly provide the
Fund with investment research, advice and supervision and shall furnish
continuously an investment program for the Fund, consistent with the investment
objectives and policies of the Fund. The Adviser shall determine, from time to
time, what securities shall be purchased for the Fund, what securities shall be
held or sold by the Fund and what portion of the Fund's assets shall be held
uninvested in cash, subject always to the provisions of the Trust's Agreement
and Declaration of Trust, By-Laws and its registration statement on Form N-2
(the "Registration Statement") under the 1940 Act, and under the Securities Act
of 1933, as amended (the "1933 Act"), covering Fund shares, as filed with the
Securities and Exchange Commission (the "Commission"), and to the investment
objectives, policies and restrictions of the Fund, as each of the same shall be
from time to time in effect. To carry out such obligations, the Adviser shall
exercise full discretion and act for the Fund in the same manner and with the
same force and effect as the Fund itself might or could do with respect to
purchases, sales or other transactions, as well as with respect to all other
such things necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions. No reference in this Agreement to the
Adviser having full discretionary authority over the Fund's investments shall in
any way limit the right of the Board, in its sole discretion, to establish or
revise policies in connection with the management of the Fund's assets or to
otherwise exercise its right to control the overall management of the Fund.
(b) COMPLIANCE. The Adviser agrees to comply in all material respects
with the requirements of the 1940 Act, the Investment Advisers Act of 1940, as
amended (the
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"Advisers Act") and the respective rules and regulations thereunder, as
applicable, as well as with all other applicable federal and state laws, rules,
regulations and case law that relate to the services and relationships
described hereunder and to the conduct of its business as a registered
investment adviser with respect to the Fund. The Adviser also agrees to comply
with the objectives, policies and restrictions set forth in the Registration
Statement, as amended or supplemented, of the Fund, and with any policies,
guidelines, instructions and procedures approved by the Board and provided to
the Adviser. The Adviser shall select the Fund's portfolio securities so that
the Fund may comply with the diversification and source of income requirements
of Subchapter M of the Internal Revenue Code of 1986, as amended (the "Code")
and qualify as a regulated investment company thereunde. The Adviser shall
maintain compliance procedures that it reasonably believes are adequate to
ensure its compliance with the foregoing. No supervisory activity undertaken by
the Board shall limit the Adviser's full responsibility for any of the
foregoing.
(c) PROXY VOTING. The Board has the authority to determine how
proxies with respect to securities that are held by the Fund shall be voted,
and the Board has initially determined to delegate the authority and
responsibility to vote proxies for the Fund's securities to the Adviser. So
long as proxy voting authority for the Fund has been delegated to the Adviser,
the Adviser shall exercise its proxy voting responsibilities. The Adviser shall
carry out such responsibility in accordance with any instructions that the
Board shall provide from time to time, and at all times in a manner consistent
with Rule 206(4)-6 under the Advisers Act and its fiduciary responsibilities to
the Fund. The Adviser shall provide periodic reports and keep records relating
to proxy voting as the Board may reasonably request or as may be necessary for
the Fund to comply with the 1940 Act and other applicable law. Any such
delegation of proxy voting responsibility to the Adviser may be revoked or
modified by the Board at any time.
The Adviser is authorized to instruct the Fund's custodian and/or broker(s) to
forward promptly to the Adviser or designated service provider copies of all
proxies and shareholder communications relating to securities held in the
portfolio of the Fund (other than materials relating to legal proceedings
against the Fund). The Adviser may also instruct the Fund's custodian and/or
broker(s) to provide reports of holdings in the portfolio of the Fund. The
Adviser has the authority to engage a service provider to assist with
administrative functions related to voting Fund proxies. The Fund shall direct
the Fund's custodian and/or broker(s) to provide any assistance requested by
the Adviser in facilitating the use of a service provider. In no event shall
the Adviser have any responsibility to vote proxies that are not received on a
timely basis. The Fund acknowledges that the Adviser, consistent with the
Adviser's written proxy voting policies and procedures, may refrain from voting
a proxy if, in the Adviser's discretion, refraining from voting would be in the
best interests of the Fund and its shareholders.
(d) RECORDKEEPING. The Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Adviser to
supply to the Fund or its Board the information required to be supplied under
this Agreement.
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The Adviser shall maintain separate books and detailed records of all
matters pertaining to Fund assets advised by the Adviser required by Rule 31a-1
under the 1940 Act (other than those records being maintained by any
administrator, custodian or transfer agent appointed by the Fund) relating to
its responsibilities provided hereunder with respect to the Fund, and shall
preserve such records for the periods and in a manner prescribed therefore by
Rule 31a-2 under the 1940 Act (the "Fund Books and Records"). The Fund Books
and Records shall be available to the Board at any time upon request, shall be
delivered to the Fund upon the termination of this Agreement and shall be
available without delay during any day the Trust is open for business.
(e) HOLDINGS INFORMATION AND PRICING. The Adviser shall provide
regular reports regarding Fund holdings, and may, on its sole discretion,
furnish the Fund and its Board from time to time with whatever information the
Adviser believes is appropriate for this purpose. The Adviser agrees to notify
the Fund promptly if the Adviser reasonably believes that the value of any
security held by the Fund for which market quotations were not originally
available and which was given a fair valuation in accordance with the Fund's
valuation policies, may not reflect its actual fair value. The Adviser agrees
to provide upon request any pricing information of which the Adviser is aware
to the Fund, its Board and/or any Fund pricing agent to assist in the
determination of the fair value of any Fund holdings for which market
quotations are not readily available or as otherwise required in accordance
with the 1940 Act or the Fund's valuation procedures for the purpose of
calculating the Fund net asset value in accordance with procedures and methods
established by the Board.
(f) COOPERATION WITH AGENTS OF THE FUND. The Adviser agrees to
cooperate with and provide reasonable assistance to the Fund, any Fund
custodian or foreign sub-custodians, any Fund pricing agents and all other
agents and representatives of the Fund with respect to such information
regarding the Fund as such entities may reasonably request from time to time in
the performance of their obligations, provide prompt responses to reasonable
requests made by such persons and establish appropriate interfaces with each so
as to promote the efficient exchange of information and compliance with
applicable laws and regulations.
2. CODE OF ETHICS. The Adviser has adopted a written code of ethics
that it reasonably believes complies with the requirements of Rule 17j-1 under
the 1940 Act, which it has provided to the Fund. The Adviser shall ensure that
its Access Persons (as defined in the Adviser's Code of Ethics) comply in all
material respects with the Adviser's Code of Ethics, as in effect from time to
time. Upon request, the Adviser shall provide the Fund with a (i) copy of the
Adviser's current Code of Ethics, as in effect from time to time, and (ii)
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Adviser's Code of
Ethics. Annually, the Adviser shall furnish a written report, which complies
with the requirements of Rule 17j-1, concerning the Adviser's Code of Ethics to
the Fund's Board. The Adviser shall respond to requests for information from
the Fund as to violations of the Code by Access Persons and the sanctions
imposed by the Adviser. The Adviser shall provide quarterly certifications to
the Fund of any material violation of the Code and shall notify the Fund as
soon as practicable of any material violation that affects the Fund.
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3. INFORMATION AND REPORTING. The Adviser shall provide the Fund and
its officers with such periodic reports concerning the obligations the Adviser
has assumed under this Agreement as the Fund may from time to time reasonably
request.
(a) NOTIFICATION OF BREACH / COMPLIANCE REPORTS. The Adviser shall
notify the Fund's chief compliance officer as soon as practical upon detection
of (i) any material failure by the Adviser to manage the Fund in accordance
with its investment objectives and policies or any applicable law; or (ii) any
material breach by the Adviser of any of the Fund's or the Adviser's policies,
guidelines or procedures. In addition, the Adviser shall provide a quarterly
report regarding any matters relating to Fund's compliance with its investment
objectives and policies over which the Adviser has oversight, and any material
failures to comply with applicable law, including, but not limited to the 1940
Act and Subchapter M of the Code, and the Fund's policies, guidelines or
procedures applicable to the Adviser's obligations under this Agreement. The
Adviser agrees to endeavor to correct any such failure promptly and to take
action that the Board may reasonably request to cure any such breach. Upon
request, the Adviser shall also provide the officers of the Fund with
supporting certifications in connection with such certifications of Fund
financial statements and disclosure controls pursuant to the Xxxxxxxx-Xxxxx
Act. The Adviser will promptly notify the Fund in the event (i) the Adviser is
served or otherwise receives notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board, or
body, involving the affairs of the Fund (excluding class action suits in which
the Fund is a member of the plaintiff class by reason of the Fund's ownership
of shares in the defendant) or the compliance by the Adviser with the federal
or state securities laws that materially affects its obligations hereunder or
(ii) an actual change in control of the Adviser resulting in an "assignment"
(as defined in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) BOARD AND FILINGS INFORMATION. The Adviser will provide the Fund
with any information reasonably requested regarding its management of the Fund
required for any meeting of the Board, or for any shareholder report, Form
N-CSR, Form N-Q, Form N-PX, Form N-SAR, amended registration statement, proxy
statement, or prospectus supplement to be filed by the Fund with the
Commission. This list of reports is not exclusive. The Adviser will make its
officers and employees available to meet with the Board from time to time on
due notice to review its investment management services to the Fund in light of
current and prospective economic and market conditions and shall furnish to the
Board such information as may reasonably be necessary in order for the Board to
evaluate this Agreement or any proposed amendments thereto.
(c) TRANSACTION INFORMATION. The Adviser shall furnish to the Fund
such information concerning portfolio transactions as may be necessary to
enable the Fund or its designated agent to perform such compliance testing on
the Fund and the Adviser's services as the Fund may, in its sole discretion,
determine to be appropriate. The provision of such information by the Adviser
to the Fund or its designated agent in no way relieves the Adviser of its own
responsibilities under this Agreement.
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4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of the Fund, neither the Adviser nor any of its
directors, officers or employees will act as a principal or agent or receive
any commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Adviser shall arrange for the placing of
all orders for the purchase and sale of securities for the Fund's account with
brokers or dealers selected by the Adviser. In the selection of such brokers or
dealers and the placing of such orders, the Adviser is directed at all times to
seek for the Fund the most favorable execution and net price available under
the circumstances. It is also understood that it is desirable for the Fund that
the Adviser have access to brokerage and research services provided by brokers
who may execute brokerage transactions at a higher cost to the Fund than may
result when allocating brokerage to other brokers, consistent with section
28(e) of the 1934 Act and any Commission staff interpretations thereof.
Therefore, the Adviser is authorized to place orders for the purchase and sale
of securities for the Fund with such brokers, subject to review by the Board
from time to time with respect to the extent and continuation of this practice.
It is understood that the services provided by such brokers may be useful to
the Adviser in connection with its or its affiliates' services to other
clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Adviser deems the
purchase or sale of a security to be in the best interest of the Fund as well
as other clients of the Adviser, the Adviser may, to the extent permitted by
applicable law and regulations, aggregate the order for securities to be sold
or purchased. In such event, the Adviser will allocate securities or futures
contracts so purchased or sold, as well as the expenses incurred in the
transaction, in the manner the Adviser reasonably considers to be equitable and
consistent with its fiduciary obligations to the Fund and to such other clients
under the circumstances.
5. AFFILIATED BROKERS. The Adviser or any of its affiliates may act
as broker in connection with the purchase or sale of securities or other
investments for the Fund, subject to: (a) the requirement that the Adviser seek
to obtain best execution and price within the policy guidelines determined by
the Board and set forth in the Fund's current Registration Statement; (b) the
provisions of the 1940 Act; (c) the provisions of the Advisers Act; (d) the
provisions of the 1934 Act; and (e) other provisions of applicable law. These
brokerage services are not within the scope of the duties of the Adviser under
this Agreement. Subject to the requirements of applicable law and any
procedures adopted by the Board, the Adviser or its affiliates may receive
brokerage commissions, fees or other remuneration from the Fund for these
services in addition to the Adviser's fees for services under this Agreement.
6. CUSTODY. Nothing in this Agreement shall permit the Adviser to
take or receive physical possession of cash, securities or other investments of
the Fund.
7. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own
costs of providing services hereunder. Other than as herein specifically
indicated, the Adviser shall not be responsible for the Fund's expenses,
including brokerage and other expenses incurred in placing orders for the
purchase and sale of securities and other investment instruments.
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8. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the duration
of this Agreement.
The Adviser is not prohibited by the Advisers Act or the 1940 Act from
performing the services contemplated by this Agreement, and to the best
knowledge of the Adviser, there is no proceeding or investigation that is
reasonably likely to result in the Adviser being prohibited from performing the
services contemplated by this Agreement. The Adviser agrees to promptly notify
the Fund of the occurrence of any event that would disqualify the Adviser from
serving as an investment adviser to the Fund. The Adviser is in compliance in
all material respects with all applicable federal and state law in connection
with its investment management services to be provided to the Fund hereunder.
(b) ADV DISCLOSURE. The Adviser has provided the Fund with a copy of
its Form ADV Part I as most recently filed with the SEC and its current Part II
and will, promptly after filing any amendment to its Form ADV with the SEC
updating its Part II, furnish a copy of such amendments or updates to the Fund.
The information contained in the Adviser's Form ADV is accurate and complete in
all material respects and does not omit to state any material fact necessary in
order to make the statements made, in light of the circumstances under which
they were made, not misleading.
(c) FUND DISCLOSURE DOCUMENTS. The Adviser has reviewed, and will in
the future review, to the extent supplied to the Adviser, the Registration
Statement, summary prospectus, prospectus, statement of additional information,
periodic reports to shareholders, reports and schedules filed with the
Commission (including any amendment, supplement or sticker to any of the
foregoing) and advertising and sales material relating to the Fund
(collectively the "Disclosure Documents") as and when furnished to the Adviser
by the Fund or the Fund's service providers and represents and warrants that,
with respect to disclosure about the Adviser, the manner in which the Adviser
manages the Fund and information relating directly or indirectly to the Adviser
(the "Adviser Disclosure"), and represents and warrants that such Disclosure
Documents contain or will contain no untrue statement of any material fact and
do not and will not omit any statement of material fact required to be stated
therein or necessary to make the statements therein not misleading.
(d) USE OF THE NAMES "X'XXXXXX" AND "EQUUS". The Adviser has the
right to use the names "X'Xxxxxx" and "EQUUS" in connection with its services
to the Fund and that, subject to the terms set forth in Section 9 of this
Agreement, the Fund shall have the right to use the names "X'Xxxxxx" and
"EQUUS" in connection with the management and operation of the Fund. The
Adviser is not aware of any threatened or existing actions, claims, litigation
or proceedings that would adversely affect or prejudice the rights of the
Adviser or the Fund to use the names "X'Xxxxxx" or "EQUUS."
(e) INSURANCE. The Adviser maintains errors and omissions insurance
coverage in an appropriate amount and shall provide prior written notice to the
Fund (i) of any material changes in its insurance policies or insurance
coverage; or (ii) if any
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material claims will be made on its insurance policies. Furthermore, the
Adviser shall, upon reasonable request, provide the Fund with any information
it may reasonably require concerning the amount of or scope of such insurance.
(f) NO DETRIMENTAL AGREEMENT. The Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Fund, that would influence the decision of the Adviser with respect to its
selection of securities for the Fund, and that all selections shall be done in
accordance with what is in the best interest of the Fund.
(g) CONFLICTS. The Adviser shall act honestly, in good faith and in
the best interests of the Fund and shall require any of its personnel with
knowledge of Fund trading to act consistent with the Adviser's fiduciary duties
to the Fund under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 8 shall be deemed to be made on the date this Agreement is executed and
at the time of delivery of the quarterly compliance report required by Section
3(a), whether or not specifically referenced in such report.
9. THE NAMES "X'XXXXXX" AND "EQUUS". The Adviser grants to the Fund a
license to use the names "X'Xxxxxx and "EQUUS" (the "Names") as part of the
name of the Fund, in each case only for so long as this Agreement. The
foregoing authorization by the Adviser to the Fund to use the Names as part of
the name of the Fund is not exclusive of the right of the Adviser itself to
use, or to authorize others to use, the Names; the Fund acknowledges and agrees
that, as between the Fund and the Adviser, the Adviser has the right to use, or
authorize others to use, the Names. The Fund shall (1) only use the Names in a
manner consistent with uses approved by the Adviser; (2) use its best efforts
to maintain the quality of the services offered using the Names; (3) adhere to
such other specific quality control standards as the Adviser may from time to
time promulgate. At the request of the Adviser, the Fund will
(a) submit to Adviser representative samples of any promotional
materials using the Names; and
(b) change the name of the Fund within three months of its receipt
of the Adviser's request, or such other shorter time period as may be required
under the terms of a settlement agreement or court order, so as to eliminate all
reference to the Names and will not thereafter transact any business using the
Names in the name of the Fund; provided, however, that the Fund may continue to
use beyond such date any supplies of prospectuses, marketing materials and
similar documents that the Fund had on the date of such name change in
quantities not exceeding those historically produced and used in connection with
such Fund.
10. ADVISER'S COMPENSATION. The Fund shall pay to the Adviser, as
compensation for the Adviser's services hereunder, a monthly average net
asset-based fee (the "Management Fee") and a performance-based incentive fee
(the "Incentive Fee"), each determined as described in Schedule A that is
attached hereto and made a part hereof.
In the event of termination of this Agreement, the Fees provided in
this Section shall be computed on the basis of the period ending on the last
business day on which this Agreement is in effect subject to a pro rata
adjustment based on the number of days elapsed in the current month as a
percentage of the total number of days in such month.
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(a) MANAGEMENT FEE. The Management Fee shall be computed daily and
paid to the Adviser not less than monthly in arrears by the Fund.
The method for determining net assets of the Fund for purposes hereof
shall be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Fund's prospectus.
(b) INCENTIVE FEE. The Incentive Fee shall be paid to the Adviser
quarterly in arrears. The Incentive Fee shall generally be accrued as of the
end of each business day, equal to a percentage, as described in Schedule A, of
the "Investment Profits" (as defined below), attributable to each share for
such calendar quarter, provided however that an Incentive Fee with respect to a
share will be paid only with respect to Investment Profits for the applicable
calendar quarter in excess of Unrecouped Investment Losses (as defined below)
as of the end of the previous calendar quarter. For the avoidance of doubt, the
Adviser does not need to "earn back" Incentive Fees previously paid to it in
order to recognize profits subject to additional Incentive Fees.
The term "Investment Profits" refers to an increase in the
NAV of a share attributable to the net realized and unrealized gains arising
from the Fund's investment activities during the calendar quarter (after
deducting Fund expenses other than any accrued Incentive Fee for the calendar
quarter and after adjusting for any repurchase of shares made during the
calendar quarter). The term "Unrecouped Investment Losses" refers to any
decrease in the NAV of a share attributable to the net realized and unrealized
losses arising from the Fund's investment activities (after deducting Fund
expenses other than any accrued Incentive Fee for the calendar quarter and
after adjusting for any repurchase of shares made during the calendar quarter)
that have not been offset by subsequent Investment Profits since the formation
of the Fund.
11. INDEPENDENT CONTRACTOR. In the performance of its duties
hereunder, the Adviser is and shall be an independent contractor and, unless
otherwise expressly provided herein or otherwise authorized in writing, shall
have no authority to act for or represent the Fund in any way or otherwise be
deemed to be an agent of the Fund. If any occasion should arise in which the
Adviser gives any advice to its clients concerning the shares of the Fund, the
Adviser will act solely as investment counsel for such clients and not in any
way on behalf of the Fund.
12. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, in the event of its assignment
(as defined in section 2(a)(4) of the 1940 Act); provided that such termination
shall not relieve the Adviser of any liability incurred hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
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13. DURATION AND TERMINATION.
This Agreement shall become effective as of the date executed and
shall remain in full force and effect continually thereafter, subject to
renewal as provided in Section 13(c) and unless terminated automatically as set
forth in Section 12 hereof or until terminated as follows:
(a) The Fund may cause this Agreement to terminate either (i) by vote
of its Board or (ii) upon the affirmative vote of a majority of the outstanding
voting securities of the Fund; or
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Fund; or
(c) This Agreement shall automatically terminate two years from the
date of its execution unless its renewal is specifically approved at least
annually thereafter by (i) a majority vote of the Trustees, including a
majority vote of such Trustees who are not interested persons of the Fund or
the Adviser, at a meeting called for the purpose of voting on such approval; or
(ii) the vote of a majority of the outstanding voting securities of the Fund;
provided, however, that if the continuance of this Agreement is submitted to
the shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein, the Adviser may
continue to serve hereunder as to the Fund in a manner consistent with the 1940
Act and the rules and regulations thereunder; and
(d) Termination of this Agreement pursuant to this Section shall be
without
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payment of any penalty.
In the event of termination of this Agreement for any reason, the
Adviser shall, immediately upon notice of termination or on such later date as
may be specified in such notice, cease all activity on behalf of the Fund and
with respect to any of its assets, except as otherwise required by any
fiduciary duties of the Adviser under applicable law. In addition, the Adviser
shall deliver the Fund Books and Records to the Trust by such means and in
accordance with such schedule as the Trust shall direct and shall otherwise
cooperate, as reasonably directed by the Fund, in the transition of portfolio
asset management to any successor of the Adviser.
14. CERTAIN DEFINITIONS. For the purposes of this Agreement:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the Commission under
the 1940 Act or any interpretations of the Commission staff.
(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under the 1940 Act or any interpretations of
the Commission staff.
15. LIABILITY AND INDEMNIFICATION OF THE ADVISER.
(a) The Adviser shall be liable to the Fund for any loss (including
transaction costs) incurred by the Fund as a result of (i) any investment made
by the Adviser in contravention of: (a) any investment policy, guideline or
restriction set forth in the Registration Statement or as approved by the Board
from time to time and provided to the Adviser or (b) applicable law, including
but not limited to the 1940 Act and the Code (including but not limited to the
Fund's failure to satisfy the diversification or source of income requirements
of Subchapter M of the Code) (the investments described in this subsection (b)
collectively are referred to as "Improper Investments") or (ii) the accuracy and
completeness (and liability for the lack thereof) of the Adviser Disclosure
included in the Fund's Disclosure Documents.
(b) The Adviser may rely on information reasonably believed by it to
be accurate and reliable and shall give the Fund the benefit of its best
judgment and effort in rendering services hereunder. Except as set forth in
Section 15(a), above, neither the Adviser, each affiliated person of the
Adviser within the meaning of Section 2(a)(3) of the 1940 Act, and each person
who controls the Adviser within the meaning of Section 15 of the 1933 Act and
each member, director, officer, employee, executor, heir, assign, successor or
other legal representative thereof shall be subject to any liability for any
act or omission, error of judgment, mistake of law, or for any loss suffered by
the Fund, in the course of, connected with, or arising out of any services to
be rendered hereunder, except by reason of willful misfeasance, bad faith,
gross negligence or reckless disregard on the part of the Adviser in the
performance of its duties hereunder.
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(c) To the fullest extent permitted by law and subject to Section
15(c) of this Agreement, the Fund shall indemnify and hold harmless the
Adviser, each affiliated person of the Adviser within the meaning of Section
2(a)(3) of the 1940 Act, and each person who controls the Adviser within the
meaning of Section 15 of the 1933 Act and each member, director, officer,
employee, executor, heir, assign, successor or other legal representative
thereof, (any such person, an "Advisor Indemnified Party") against any and all
losses, claims, damages, expenses or liabilities (including the reasonable cost
of investigating and defending any alleged loss, claim, damage, expense or
liability and reasonable counsel fees incurred in connection therewith) to
which any such person may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon the performance
or non-performance by any Advisor Indemified Person's duties in respect of the
Fund, except those resulting from the willful misfeasance, bad faith, gross
negligence or reckless disregard of an Advisor Indemnified Person and, in the
case of criminal proceedings, unless such Advisor Indemnified Person had
reasonable cause to believe its actions unlawful.
(d) An indemnification of an Adviser Indemnified Party by the Fund
shall be provided in accordance with Section 15(b) of this Agreement if (A)(i)
approved as in the best interests of the Fund by a majority of the Independent
Trustees (excluding any Trustee who is or has been a party to any other action,
suit, investigation or other proceeding involving claims similar to those
involved in the action, suit, investigation or proceeding giving rise to a
claim for indemnification under this Agreement) upon a determination based upon
a review of readily available facts (as opposed to a full trial-type inquiry)
that the Adviser Indemnified Party acted in good faith and in the reasonable
belief that the actions were in the best interests of the Fund and that the
Adviser Indemnified Party is not liable to the Fund by reason of willful
misfeasance, bad faith, gross negligence, or reckless disregard of its duties
to the Fund or (ii) the Trustees secure a written opinion of independent legal
counsel based upon a review of readily available facts (as opposed to a full
trial-type inquiry) to the effect that the requested indemnification would not
protect the Adviser Indemnified Party against any liability to the Fund to
which the Adviser Indemnified Party would otherwise be subject by reason of
willful misfeasance, bad faith, gross negligence, or reckless disregard of its
duties to the Fund (it being understood that the Adviser has the discretion to
determine whether the option in subclause (A)(i) or the option in subclause
(A)(ii) of this subparagraph (d) is pursued) and (B) the Adviser is not liable
to the Fund in accordance with Section 15(a) of this Agreement. Where the
Adviser Indemnified Party is entitled to indemnification hereunder, the Fund
shall provide advancement of reasonable expenses incurred in connection with
the matter as to which the Adviser Indemnified Party is seeking
indemnification; provided that the Adviser Indemnified Party shall provide a
written undertaking to repay any such advancement if it should ultimately be
determined that the Adviser Indemnified Party did not satisfy the standard of
conduct set forth herein and should not have been entitled to indemnification
by the Fund.
11
16. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
17. LIMITATION OF LIABILITY. The parties to this Agreement
acknowledge and agree that all litigation arising hereunder, whether direct or
indirect, and of any and every nature whatsoever shall be satisfied solely out
of the assets of the affected Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Fund shall be personally liable for any of
the foregoing liabilities. The Fund's Certificate of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the State
of Delaware. Such Certificate of Trust and the Trust's Agreement and
Declaration of Trust describe in detail the respective responsibilities and
limitations on liability of the Trustees, officers, and holders of shares of
beneficial interest.
18. CHANGE IN THE ADVISER'S OWNERSHIP. The Adviser agrees that it
shall notify the Fund of any anticipated or otherwise reasonably foreseeable
change in the ownership of the Adviser within a reasonable time prior to such
change being effected.
19. JURISDICTION. This Agreement shall be governed by and construed
in accordance with the substantive laws of State of New York and the Adviser
consents to the jurisdiction of courts, both state or federal, in the State of
New York, with respect to any dispute under this Agreement.
20. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
21. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be signed on their behalf by their duly authorized officers as of the date
first above written.
12
X'XXXXXX EQUUS
By: /s/ Xxxxxxx Xxxxxxx
-----------------------
Name: Xxxxxxx Xxxxxxx
Title: Vice President
UBS X'XXXXXX LLC
By: Xxxxxx Xxxxxxxxxx
--------------------------
Name: Xxxxxx Xxxxxxxxxx
Title: Manager, General Counsel
By: Xxxxxxxx X. Xxxxx
---------------------
Name: Xxxxxxxx X. Xxxxx
Title: Manager, COO
13
SCHEDULE A
TO THE
INVESTMENT ADVISORY AGREEMENT
DATED , MAY 30, 2014 BETWEEN
X'XXXXXX EQUUS
AND
UBS X'XXXXXX LLC
The Trust will pay to the Adviser as compensation for the Adviser's services
rendered a Management Fee and an Incentive Fee at the following rates:
--------------------------------------------------------------------------------
FUND FEE RATE
--------------------------------------------------------------------------------
X'Xxxxxx EQUUS Management Fee 2% of the average net assets
--------------------------------------------------------------------------------
X'Xxxxxx EQUUS Incentive Fee 20% of the Investment Profits
--------------------------------------------------------------------------------
A-1
