OPERATING SERVICES AGREEMENT
THIS AGREEMENT is made and
entered into as of this 15th day of
September, 2009, by and between Hatteras Alternative Mutual Funds, LLC, a
Delaware limited liability company (the “Adviser”) and the Underlying Funds
Trust, a Delaware statutory trust (the “Trust”), regarding each series of the
Trust (the “Funds”).
WHEREAS, the Trust is
registered as an open-end, management investment company under the Investment
Company Act of 1940, as amended (the " 1940 Act"); and
WHEREAS, the Board of Trustees
of the Trust has approved this Agreement, and the Adviser is willing to furnish
such services upon the terms and conditions herein set forth.
NOW, THEREFORE, in
consideration of the premises and mutual covenants herein contained, it is
agreed between the parties hereto as follows:
1. Appointment of Adviser as
Primary Service Provider. The Trust desires to employ the
Adviser in performing or arranging for the delivery of all professional,
administrative and operational services required by the Funds to operate their
business in accordance with the limitations specified in its Declaration of
Trust dated March 27, 2006, as amended from time to time (the "Charter"), and in
its Prospectus as from time to time in effect (the "Prospectus"), and in the
manner and to the extent as may from time to time be approved by the Board of
Trustees of the Trust. The Trust desires to employ and hereby
appoints the Adviser to act as primary service provider to the
Funds. The Adviser accepts the appointment and agrees to furnish the
services for the compensation set forth below.
2. Delivery of Fund
Documents. The Trust has furnished the Adviser with copies
properly certified or authenticated of each of the following:
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(a)
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Charter.
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(b)
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By-Laws-of
the Trust, as amended from time to
time.
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(c)
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Resolutions
of the Trustees of the Trust selecting Hatteras Alternative Mutual Funds,
LLC as Adviser to the Funds and approving the form of this
Agreement.
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(d)
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Funds’
Prospectus.
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The Trust
will furnish the Adviser from time to time with copies, properly certified or
authenticated, of all amendments of or supplements to the foregoing, if
any.
3. Services Provided by Adviser
as Primary Service Provider. Subject to the supervision and
direction of the Board of Trustees of the Trust, the Adviser will, either
directly or by employing suitable sub-contractors (a) act in strict
conformity with the Trust’s Declaration of Trust, the Investment Company Act of
1940, as amended (the "1940 Act") and the Investment Advisers Act of 1940, as
amended, (b) provide compliance and other administrative oversight in
accordance with each Fund's investment objective and policies as described in
the Funds’ Prospectus, (c) provide continuous registration and maintenance
of its registration under the Investment Company Act of 1940, as amended, and
state securities laws and regulations, (d) preparation of and printing and
mailing reports, notices and prospectuses to current shareholders, (e)
provide custodial services to each Fund’s portfolio, daily fund account
services, transfer agency and shareholder account servicing and services in
acting as the Funds’ distributor, (f) providing required insurance for
fidelity and other coverage as deemed appropriate by the Board of Trustees of
the Trust, and (g) advise and assist the officers of the Trust in taking
such steps as are necessary or appropriate to carry out the decisions of the
Board of Trustees of the Trust and its committees with respect to the foregoing
matters and the conduct of the business of the Funds. In addition,
the Adviser will furnish the Trust with whatever statistical information the
Trust may reasonably request with respect to ongoing operations of the
Funds.
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The
Adviser will keep the Trust informed of any service related developments
materially affecting the Funds, and will, on its own initiative, furnish the
Trust from time to time with whatever information the Adviser believes is
appropriate for this purpose.
4. Allocation of Charges and
Expenses. The Adviser will pay all expenses incurred in
performing all professional, administrative and operational services under this
Agreement. (a) costs incurred in connection with registration and maintenance of
its registration under the Investment Company Act of 1940, as amended, and state
securities laws and regulations, (b) preparation of and
printing and mailing reports, notices and prospectuses to current
shareholders, (c) transfer taxes on the sales of the Funds’
shares, (d) custodial, shareholder transfer charges and
fees of the Funds’ distributor, (e) legal, auditing, tax
return preparation and accounting expenses, (f) expenses
of servicing shareholder accounts held at the
Funds, (g) insurance expenses for fidelity and other
coverage, (h) fees and expenses of Trustees who are not
“interested persons” within the meaning of the Investment Company Act of 1940,
and (i) expenses of Trustee and shareholder
meetings. The Adviser will not be required to pay any expenses
of the Funds other than those specifically allocated to it in this paragraph
4. In particular, but without limiting the generality of the
foregoing, the Funds will be required to pay: brokerage and other expenses of
executing portfolio transactions; transfer taxes on the sales of portfolio
securities: other taxes or governmental fees; dividends paid out on short sales;
interest charges and other costs of borrowing funds; litigation and
indemnification expenses and other extraordinary expenses not incurred in the
ordinary course of the Funds’ business.
5. Compensation of the
Adviser. In consideration of the services rendered pursuant to
this Agreement, the Funds will pay to the Adviser, as compensation for the
services provided by the Adviser and its agents under this Agreement, a monthly
fee of 0.50% (on an annualized basis) of the average net assets of the
Funds.
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In the event of any termination of this
Agreement, the fee provided for in this paragraph 5 shall be calculated on the
basis of a period ending on the last day on which this Agreement is in effect,
subject to a pro rata adjustment based
on the number of days elapsed in the current period as a percentage of the total
number of days in such period.
6. Standard of Care; Limitation
of Liability. The Adviser will exercise its best judgment in
rendering the services described in paragraph 3 above. The Adviser
shall not be liable for any error of judgment or mistake of law or for any loss
suffered by the Funds in connection with the matters to which this Agreement
relates, except 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 the Adviser of its obligations and duties under this
Agreement. Any person, even though an officer, director, employee, or
agent of the Adviser, who may be or become an officer, trustee, employee or
agent of the Funds, will be deemed, when rendering services to the Funds, to be
rendering such services to, or acting solely for, the Funds and not as an
officer, director, employee or agent, or one under the control or direction of
the Adviser, even though paid by it.
7. Duration and Termination of
this Agreement. This Agreement shall remain in force for an
initial term of two years and from year to year thereafter, but only so long as
such continuance is specifically approved at least annually by the vote of a
majority of the Trustees who are not interested persons of the Adviser or of the
Funds, cast in person at a meeting called for the purpose of voting on such
approval and by a vote of the Board of Trustees or of a majority of the
outstanding voting securities of the Funds. The aforesaid requirement
that continuance of this Agreement be specifically approved at least annually
shall be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder. This Agreement may, on sixty (60) days,
written notice, be terminated at any time without the payment of any penalty, by
the Board of Trustees of the Trust, or by vote of a majority of the outstanding
voting securities of the Funds, or by the Adviser. This Agreement
shall automatically terminate in the event of its assignment. In
interpreting the provisions of this Agreement, the definitions contained in
Section 2(a) of the 1940 Act (particularly the definitions of "interested
person", "assignment" and "majority of the outstanding voting securities"), as
from time to time amended, shall be applied, subject, however, to such
exemptions, as may be granted by the Securities and Exchange Commission by any
rule, regulation or order.
8. Amendment of this
Agreement. No provisions of this Agreement may be amended,
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against whom enforcement of the amendment, change,
waiver, discharge or termination is sought, and no amendment of this Agreement
shall be effective until approved by vote of the Board of Trustees of the Funds,
including a majority of the Trustees who are not interested persons of the
Adviser or of the Funds, cast in person at a meeting called for the purpose of
voting on such approval.
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9. Notice. Any
notice, advice or report to be given pursuant to this Agreement shall be
delivered or mailed:
To the Adviser
at:
Hatteras
Alternative Mutual Funds, LLC
0000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000-0000
Attn: J.
Xxxxxxx Xxxxxx, Chief Operating Officer
Facsimile: (000)
000-0000
with a copy
to:
Drinker
Xxxxxx & Xxxxx, LLP
Xxx Xxxxx
Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx,
XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx,
Esq.
To the Trust and the Funds
at:
AIP
Alternative Strategies Funds
0000
Xxxxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx,
XX 00000-0000
with a copy
to:
Blank
Rome LLP
000
Xxxxxxxxx Xxxxxx
Xxx Xxxx,
Xxx Xxxx 00000
Attn:
Xxxxxx X. Xxxxxx, Esq.
10. Governing
Law. This Agreement constitutes the entire agreement of the
parties, shall be binding upon and shall inure to the benefit of the parties
hereto and their respective successors and shall be governed by New York law in
a manner not in conflict with the provisions of the 1940 Act.
11. Miscellaneous. Neither
the holders of Shares of the Funds nor the Trustees shall be personally liable
hereunder. 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 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.
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12. Counterparts. This
Agreement may be executed 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.
If you are in agreement with the
foregoing, please sign the form of acceptance on the accompanying counterpart of
this letter and return such counterpart to the Funds, whereupon this letter
shall become a binding contract between the Trust, on behalf of the Funds, and
the Adviser.
IN WITNESS WHEREOF, the
parties hereto have caused this instrument to be executed by their officers
designated below as of the day and year first above written.
By:
/s/ J.
Xxxxxxx
Xxxxxx
Name: J.
Xxxxxxx Xxxxxx
Title: Secretary
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HATTERAS
ALTERNATIVE MUTUAL FUNDS, LLC
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By:
/s/ J.
Xxxxxxx
Xxxxxx
Name: J.
Xxxxxxx Xxxxxx
Title: Chief
Operating Officer
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APPENDIX
A
Each
Series of the Underlying Funds Trust as set forth in its Prospectus
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