Item 77Q (1)
- Copies of any new or amended investment advisory contracts
Investment Sub-Advisory Agreement dated December 16, 2016
between AdvisorShares Investments, LLC and Xxxxxx, Xxxxxx &
Associates LLC is filed herewith.
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made as of this 16th day of December 2016 by and
between AdvisorShares Investments, LLC, a Delaware limited
liability company with its principal place of business at 0000
Xxxxxxxxxx Xxxx, Xxxxx 000, Xxxxxxxx, Xxxxxxxx 00000 (the
"Adviser"), and Xxxxxx, Xxxxxx & Associates, LLC, a Virginia
limited liability company with its principal place of business
at 0000 Xxxxxxx Xxxxxxx Xxxxx, Xxxxx 000, Xxxxxxxx, XX 00000
(the "Sub-Adviser").
WHEREAS, AdvisorShares Trust, a Delaware statutory trust
(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 Adviser has entered into an Investment
Advisory Agreement with the Trust dated June 2, 2009 (the
"Advisory Agreement"), pursuant to which the Adviser acts as
investment adviser to each series of the Trust set forth on
Schedule A attached hereto (each a "Fund"), as such schedule may
be amended by mutual agreement of the parties; and
WHEREAS, the Adviser, with the approval of the Trust,
desires to retain the Sub-Adviser to provide investment sub-
advisory services in connection with the portfolio management of
the Fund, and the Sub-Adviser is willing to render such
investment sub-advisory services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Sub-Adviser. Subject to the oversight and
supervision of the Adviser and the Trust's Board of
Trustees and consistent with its fiduciary duties to the
Fund, the Sub-Adviser shall manage all of the securities
and other assets of the Fund entrusted to it hereunder (the
"Assets"), in accordance with the Fund's investment
objectives, policies and restrictions as stated in the
Fund's prospectus and statement of additional information,
as currently in effect and as amended or supplemented from
time to time (referred to collectively as the
"Prospectus"); provided that Adviser has complied with
Section 4 of this Agreement, and subject to the following:
(a) The Sub-Adviser shall, subject to subparagraph (b),
determine from time to time what Assets will be
purchased, retained or sold by the Fund, and what
portion of the Assets will be invested or held
uninvested in cash.
(b) In the performance of its duties and obligations under
this Agreement, the Sub-Adviser shall act in
conformity with the Trust's Declaration of Trust (as
defined herein) and the Prospectus and with the
instructions and directions of the Adviser and of the
Board of Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act, the
Internal Revenue Code of 1986, as amended (the
"Code"), and all other applicable federal and state
laws and regulations, as each is amended from time to
time. Notwithstanding the foregoing, the Adviser
shall remain responsible for ensuring the Fund's and
the Trust's overall compliance with the 1940 Act, the
Code, and all other applicable federal and state laws
and regulations and the Sub-Adviser is only obligated
to comply with this subsection (b) with respect to the
Assets.
(c) The Sub-Adviser agrees that all records that it
maintains on behalf of the Fund are property of the
Fund and the Sub-Adviser will surrender promptly to
the Fund any of such records upon the Fund's request;
provided, however, that the Sub-Adviser may retain a
copy of such records.
(e) Reserved.
(f) The Sub-Adviser shall promptly notify the Adviser of
any financial condition that is reasonably likely to
impair the Sub-Adviser's ability to fulfill its
commitment under this Agreement.
(g) The Adviser hereby delegates to the Sub-Adviser the
Adviser's discretionary authority to exercise voting
rights with respect to the securities and other
investments in the Assets and authorizes Sub-Adviser
to delegate further such discretionary authority to a
designee identified in a notice given to the Trust and
the Adviser. The Sub-Adviser, including any designee,
shall have the power to vote, either in person or by
proxy, all securities in which the Assets may be
invested from time to time, and shall not be required
to seek or take instructions from, the Adviser, the
Fund or the Trust or take any action with respect
thereto.
(h) In performance of its duties and obligations under
this Agreement, the Sub-Adviser shall not consult with
any other sub-adviser to the Fund or a sub-adviser to
any other series of the Trust or portfolio that is
under common control with the Fund concerning the
Assets, except as permitted by the policies and
procedures of the Fund. The Sub-Adviser shall not
provide investment advice with respect to any assets
of the Fund other than the Assets. This limitation
will not prohibit the Sub-Adviser from consulting with
the Adviser.
(i) Reserved.
(j) The Sub-Adviser shall furnish to the Adviser or the
Board of Trustees such periodic and special reports,
balance sheets or financial information, and such
other information with regard to its affairs as the
Adviser or Board of Trustees may reasonably request.
Upon the request of the Adviser, the Sub-Adviser shall
also furnish to the Adviser any other information
relating to the Assets that is required to be filed by
the Adviser or the Trust with the SEC or sent to
shareholders under the 1940 Act (including the rules
adopted thereunder) or any exemptive or other relief
that the Adviser or the Trust obtains from the SEC.
(k) The Sub-Adviser shall furnish to the Adviser a monthly
portfolio manager commentary within ten (10) business
days of each month-end.
(l) The Sub-Adviser shall (i) not create marketing or
other promotional material relating to the Fund
without the prior express written consent of the
Adviser, (ii) immediately discontinue use of any such
material upon the request of the Adviser, and (iii)
comply with all applicable rules of the Financial
Industry Regulatory Authority in connection with such
material.
To the extent permitted by law, the services to be
furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's
partners, officers, employees or control affiliates;
provided, however, that the use of such mediums does not
relieve the Sub-Adviser from any obligation or duty under
this Agreement.
2. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund
pursuant to the Advisory Agreement which includes, without
limitation oversight and review the Sub-Adviser's
performance of its duties under this Agreement; provided,
however, that in connection with its management of the
Assets and solely to the extent Adviser has complied with
Section 4, nothing herein shall be construed to relieve the
Sub-Adviser of responsibility for compliance with the
Trust's Declaration of Trust (as defined herein), the
Prospectus, the instructions and directions of the Board of
Trustees of the Trust, the requirements of the 1940 Act,
the Code, and all other applicable federal and state laws
and regulations, as each is amended from time to time.
Adviser is solely responsible for the execution of trades
on behalf of the Fund and will place orders with or through
such issuers, brokers or dealers to carry out the policy
with respect to brokerage set forth in the Fund's
Prospectus, in conformity with all federal securities laws.
All orders shall be placed in accordance with the Sub-
Adviser provided strategy without deviation unless
otherwise agreed to by the parties in writing.
3. Non-Exclusivity of Exchange-Traded Fund Investment
Management Services. Except as otherwise detailed in an
applicable schedule, the Adviser acknowledges that the Sub-
Adviser may perform investment advisory services for
various other non-ETF clients using a substantially similar
strategy as that of the Fund, or Sub-Adviser may serve as
index provider or sub-adviser to ETFs of other strategies
and, to the extent it is consistent with applicable law and
the Sub-Adviser's fiduciary obligations, the Sub-Adviser
may give advice and take action with respect to any of
those other clients that may differ from the advice given
or the timing or nature of the action taken for the Fund.
Except as otherwise detailed in an applicable schedule,
nothing in this Agreement precludes Sub-Adviser from
providing services the same or substantially similar to the
investment management services contemplated under this
Agreement. Specifically, Sub-Adviser retains all rights,
title and interest in the strategies or methodologies used
to manage the Funds. Sub-Adviser shall have the right to
market, sell and distribute such strategies independently
of this Agreement in any manner Sub-Adviser desires, and
Sub-Adviser shall not be restricted from entering into any
arrangement with any third party, including competitors of
Adviser in connection with the provision of sub-advisory
services.
4. Delivery of Documents. The Adviser shall furnish the Sub-
Adviser with copies of each of the below documents.
Adviser shall provide any updates to the below referenced
documents and, except for those updates previously
disclosed to Sub-Adviser, Sub-Adviser shall have thirty
(30) days from receipt of any such updates to comply with
the updates as required under Section 1.
(a) The Trust's Agreement and Declaration of Trust (such
Agreement and Declaration of Trust, as in effect on
the date of this Agreement and as amended from time to
time, herein called the "Declaration of Trust");
(b) By-Laws of the Trust (such By-Laws, as in effect on
the date of this Agreement and as amended from time to
time, are herein called the "By-Laws");
(c) Prospectus of the Fund;
(d) Resolutions of the Trust's Board of Trustees approving
the engagement of the Sub-Adviser as a sub-adviser to
the Fund;
(e) Resolutions, policies and procedures adopted by the
Trust's Board of Trustees with respect to the Assets
to the extent such resolutions, policies and
procedures may affect the duties of the Sub-Adviser
hereunder;
(f) A list of the Trust's principal underwriter and each
affiliated person of the Adviser, the Trust, or the
principal underwriter; and
(g) A list of each other investment sub-adviser to the
Fund.
The Adviser shall promptly furnish the Sub-Adviser with
copies of all amendments of or supplements to the
foregoing. Until so provided, the Sub-Adviser may continue
to rely on those documents previously provided. The
Adviser shall not, and shall not permit the Fund to use the
Sub-Adviser's name or make representations regarding the
Sub-Adviser or its affiliates without the prior written
consent of the Sub-Adviser, which consent shall not be
unreasonably withheld. Notwithstanding the foregoing, the
Sub-Adviser's approval is not required when the information
regarding the Sub-Adviser used by the Adviser or the Fund
is limited to information disclosed in materials provided
by the Sub-Adviser to the Adviser and the information is
used (a) as required by applicable law, rule, or
regulation, in the Prospectus or in Fund shareholder
reports or proxy statements; (b) in Adviser communications;
or (c) as may be otherwise specifically approved in writing
by the Sub-Adviser prior to use.
5. Compensation to the Sub-Adviser. For the services to be
provided by the Sub-Adviser pursuant to this Agreement, the
Adviser will pay the Sub-Adviser, and the Sub-Adviser
agrees to accept as full compensation therefor, a sub-
advisory fee at the annual rate specified in Schedule A
attached hereto, as such schedule may be amended by mutual
agreement of the parties. The fee will be calculated based
on the average daily net asset value of the Assets under
the Sub-Adviser's management and will be paid to the Sub-
Adviser monthly within thirty (30) days following the end
of the applicable month. For the avoidance of doubt,
notwithstanding the fact that the Agreement has not been
terminated, no fee will be accrued under this Agreement
with respect to any day that the value of the Assets under
the Sub-Adviser's management equals zero. Except as may
otherwise be prohibited by law or regulation (including any
then current SEC staff interpretation), the Sub-Adviser
may, in its discretion and from time to time, waive a
portion of its fee. The fees specified in Schedule A relate
only to the provision of sub-advisory services. In the
event Adviser requests seminars or other training to be
provided by Sub-Adviser, the fees for such additional
services will discussed in good faith and mutually agreed
upon by the parties.
During the term of this Agreement, and for a one (1) year
period thereafter, Sub-Adviser shall have the right to
audit on a confidential basis and upon reasonable prior
notice to Adviser, the relevant books and records of
Adviser to confirm the accuracy of any one or more
calculations of fees. Sub-Adviser shall bear its own costs
of any such audit unless such audit reveals an underpayment
by Adviser of five percent (5%) or more and the
underpayment is the result of inaccurate data or asset
levels provided to Sub-Adviser by Adviser. In such case
Adviser shall reimburse Sub-Adviser for its reasonable cost
and expenses in conducting the audit. Failure by Sub-
Adviser to conduct an audit pursuant to this Section 5
shall not relieve Adviser from its responsibilities to
comply fully with the terms and conditions of this
Agreement.
Except for expenses assumed or agreed to be paid by the
Sub-Adviser pursuant hereto, or as otherwise agreed to by
the parties, the Sub-Adviser shall not be liable for any
costs or expenses of the Trust, Fund, or Adviser including,
without limitation, (a) interest and taxes, (b) brokerage
commissions and other costs in connection with the purchase
or sale of securities or other investment instruments
purchased for the Fund, and any losses incurred in
connection therewith, (c) expenses of holding or carrying
Assets, charges of the Fund's custodians and sub-custodians
and administrators and sub-administrators, registrars,
transfer agents, dividend disbursing agents and dividend
reinvestment plan agents, (d) accounting, auditing, and
legal expenses, (e) dues and expenses incurred in
connection with membership in investment company
organizations, (f) costs of printing and distributing
shareholder reports, proxy materials, prospectuses, stock
certificates and distribution of dividends, (g) payment for
portfolio pricing services to a pricing agent, if any, (h)
registration and filing fees of the SEC, (i) expenses of
registering or qualifying securities of the Funds for sale
in the various states, (j) fees and expenses of Trustees,
(k) salaries of shareholder relations personnel, (l) costs
of shareholder meetings, and (m) litigation and other
extraordinary or non-recurring expenses. The Sub-Adviser
will pay its own expenses incurred in furnishing the
services to be provided by it pursuant to this Agreement.
6. Indemnification. The Sub-Adviser shall indemnify and hold
harmless the Adviser from and against any and all third
party claims, losses, liabilities, or damages (including
reasonable attorney's fees and other related expenses)
(collectively, "Losses") arising from the Sub-Adviser's
willful misfeasance, bad faith, gross negligence, or
reckless disregard of its duties under this Agreement in
the performance of its obligations under this Agreement;
provided, however, that the Sub-Adviser shall not be
obligated to indemnify Adviser under this Paragraph 6 to
the extent that the claim against, or the loss, liability,
or damage experienced by the Adviser, is caused by or is
otherwise directly related to (i) any breach by the Adviser
of its representations or warranties made herein, (ii) any
willful misconduct, bad faith, reckless disregard or
negligence of the Adviser in the performance of any of its
duties or obligations hereunder, (iii) any untrue statement
of a material fact contained in the Prospectus or SAI,
proxy materials, reports, advertisements, sales literature,
or other materials pertaining to the Fund(s) or the
omission to state therein a material fact known to the
Adviser that was required to be stated therein or necessary
to make the statements therein not misleading, if such
statement or omission was made in reliance upon information
furnished to the Sub-Adviser or the Trust, or the omission
of such information, by the Adviser for use therein; or
(iv) any action taken in good faith by Sub-Adviser at the
direction of Adviser or the Trust, provided such action
taken by Sub-Adviser is consistent with its fiduciary
duties and in compliance with applicable law.
The Adviser shall indemnify and hold harmless the Sub-
Adviser from and against any and all Losses arising from
the Adviser's willful misfeasance, bad faith, gross
negligence, or reckless disregard of its duties under this
Agreement in the performance of its obligations under this
Agreement; provided, however, that the Adviser's obligation
under this Paragraph 6 shall be reduced to the extent that
the claim against, or the loss, liability, or damage
experienced by the Sub-Adviser, is caused by or is
otherwise directly related to (i) any breach by the Sub-
Adviser of its representations or warranties made herein,
(ii) any willful misconduct, bad faith, reckless disregard
or negligence of the Sub-Adviser in the performance of any
of its duties or obligations hereunder, or (iii) any untrue
statement of a material fact contained in the Prospectus or
SAI, proxy materials, reports, advertisements, sales
literature, or other materials pertaining to the Fund(s) or
the omission to state therein a material fact known to the
Sub-Adviser that was required to be stated therein or
necessary to make the statements therein not misleading, if
such statement or omission was made in reliance upon
information furnished to the Adviser or the Trust, or the
omission of such information, by the Sub-Adviser for use
therein.
A party seeking indemnification hereunder (the "Indemnified
Party") will (i) provide prompt notice to the other of any
claim ("Claim") for which it intends to seek
indemnification, (ii) grant control of the defense and /or
settlement of the Claim to the other party, and (iii)
cooperate with the other party in the defense thereof. The
Indemnified Party will have the right at its own expense to
participate in the defense of any Claim, but will not have
the right to control the defense, consent to judgment or
agree to the settlement of any Claim without the written
consent of the other party. The party providing the
indemnification will not consent to the entry of any
judgment or enter any settlement which (i) does not
include, as an unconditional term, the release by the
claimant of all liabilities for Claims against the
Indemnified Party or (ii) which otherwise adversely affects
the rights of the Indemnified Party.
No party will be liable to another party for consequential
damages under any provision of this Agreement.
7. Trust and Shareholder Liability. The Sub-Adviser is hereby
expressly put on notice of the limitation of shareholder
liability as set forth in the Declaration of Trust and
agrees that obligations assumed by the Trust pursuant to
this Agreement will be limited in all cases to the Trust
and its assets, and if the liability relates to one series,
the obligations hereunder will be limited to the respective
assets of that series. The Sub-Adviser further agrees that
it will not seek satisfaction of any such obligation from
the shareholders or any individual shareholder of a Fund,
nor from the Trustees or any individual Trustee of the
Trust.
8. Representations and Warranties of Sub-Adviser and Adviser.
(a) The Sub-Adviser represents and warrants to the
Adviser and the Fund as follows:
(i) The Sub-Adviser is registered as an
investment adviser under the Investment Advisers
Act of 1940, as amended (the "Advisers Act");
(ii) The Sub-Adviser will immediately notify the
Adviser of the occurrence of any event that would
disqualify the Sub-Adviser from serving as an
investment adviser of an investment company
pursuant to Section 9(a) of the 1940 Act;
(iii) Reserved
(iv) The Sub-Adviser is limited liability
company, duly organized and validly existing
under the laws of the Commonwealth of Virginia
with the power to own and possess its assets and
carry on its business as it is now being
conducted;
(v) The execution, delivery, and performance by the
Sub-Adviser of this Agreement are within the Sub-
Adviser's powers and have been duly authorized by
all necessary action on the part of its members,
and no action by or in respect of, or filing
with, any governmental body, agency, or official
is required on the part of the Sub-Adviser for
the execution, delivery, and performance by the
Sub-Adviser of this Agreement, and the execution,
delivery and performance by the Sub-Adviser of
this Agreement do not contravene or constitute a
default under (i) any provision of applicable
law, rule, or regulation, (ii) the Sub-Adviser's
governing instruments, or (iii) any agreement,
judgment, injunction, order, decree, or other
instrument binding upon the Sub-Adviser;
(vi) This Agreement is a valid and binding agreement
of the Sub-Adviser;
(vii) The Form ADV of the Sub-Adviser previously
provided to the Adviser is a true and complete
copy of the form filed with the SEC and the
information contained therein is accurate and
complete in all material respects as of its
filing date, and does not omit any material fact
necessary to make the statements made, in light
of the circumstances under which they were made,
not misleading;
(viii) Reserved
(ix) Reserved
(x) The Sub-Adviser understands the unique
characteristics of the Fund as an actively
managed exchange-traded fund (i.e., a novel
investment vehicle in a limited market) and will
use commercially reasonable efforts to educate
the investing public about the investment
objectives and investment strategies of the Fund
in an effort to expand the Fund's shareholder
base.
(b) The Adviser represents and warrants to the Sub-
Adviser as follows:
(i) The Adviser is registered as an investment
adviser under the Advisers Act;
(ii) The Adviser will immediately notify the Sub-
Adviser of the occurrence of any event that would
disqualify the Adviser from serving as an
investment adviser of an investment company
pursuant to Section 9(a) of the 1940 Act;
(iii) The Adviser is fully authorized under all
applicable law to serve as an investment adviser
to the Fund and to perform the services described
under this Agreement;
(iv) The Adviser is a limited liability company duly
organized and validly existing under the laws of
the state of Delaware with the power to own and
possess its assets and carry on its business as
it is now being conducted;
(v) The execution, delivery, and performance by the
Adviser of this Agreement are within the
Adviser's powers and have been duly authorized by
all necessary action on the part of its members,
and no action by or in respect of, or filing
with, any governmental body, agency, or official
is required on the part of the Adviser for the
execution, delivery, and performance by the
Adviser of this Agreement, and the execution,
delivery, and performance by the Adviser of this
Agreement do not contravene or constitute a
default under (i) any provision of applicable
law, rule, or regulation, (ii) the Adviser's
governing instruments, or (iii) any agreement,
judgment, injunction, order, decree, or other
instrument binding upon the Adviser; and
(vi) This Agreement is a valid and binding
agreement of the Adviser.
9. Duration and Termination.
(a) Duration. This Agreement shall become effective upon
the date first above written, provided that this
Agreement shall not take effect with respect to the
Funds unless it has first been approved by a vote of a
majority of those Trustees of the Trust, who are not
parties to this Agreement or interested persons of any
such party, cast in person at a meeting called for the
purpose of voting on such approval. This Agreement
shall continue in effect for a period of two years
from the date hereof, subject thereafter to being
continued in force and effect from year to year if
specifically approved each year by the Board of
Trustees or by the vote of a majority of the Fund's
outstanding voting securities. In addition to the
foregoing, each renewal of this Agreement must be
approved by the vote of a majority of the Fund's
Trustees who are not parties to this Agreement or
interested persons of any such party, cast in person
at a meeting called for the purpose of voting on such
approval. Prior to voting on the renewal of this
Agreement, the Board of Trustees of the Fund may
request and evaluate, and the Sub-Adviser shall
furnish, such information as may reasonably be
necessary to enable the Trust's Board of Trustees to
evaluate the terms of this Agreement.
(b) Termination. Notwithstanding whatever may be provided
herein to the contrary, this Agreement may be
terminated at any time, without payment of any
penalty:
(i) By vote of a majority of the Board of Trustees of
the Fund, or by vote of a majority of the
outstanding voting securities of the Fund, or by
the Adviser, in each case, upon sixty (60) days'
written notice to the Sub-Adviser;
(ii) By the Adviser upon breach by the Sub-Adviser of
any representation or warranty contained in
Paragraphs 8 and 10 hereof, if such breach has
not been cured within thirty (30) days of the
Sub-Adviser's receipt of written notice of such
breach;
(iii) By the Adviser immediately upon written
notice to the Sub-Adviser if the Sub-Adviser
becomes unable to discharge its duties and
obligations under this Agreement; or
(iv) By the Sub-Adviser upon one hundred twenty days'
written notice to the Adviser and the Fund for
any reason or no reason whatsoever.
This Agreement shall terminate automatically and
immediately in the event of its assignment, or in the
event of a termination of the Advisory Agreement with
the Trust. As used in this Paragraph 9, the terms
"assignment" and "vote of a majority of the
outstanding voting securities" shall have the
respective meanings set forth in the 1940 Act and the
rules and regulations thereunder, subject to such
exceptions as may be granted by the SEC under the 1940
Act.
10. Compliance Program of the Sub-Adviser. The Sub-Adviser
hereby represents and warrants that:
(a) in accordance with Rule 206(4)-7 under the Advisers
Act, the Sub-Adviser has adopted and implemented and
will maintain written policies and procedures
reasonably designed to prevent violation by the Sub-
Adviser and its supervised persons (as such term is
defined in the Advisers Act) of the Advisers Act and
the rules the SEC has adopted under the Advisers Act;
and
(b) to the extent that the Sub-Adviser's activities or
services could affect the Fund, the Sub-Adviser has
adopted and implemented and will maintain written
policies and procedures that are reasonably designed
to prevent violation of the "federal securities laws"
(as such term is defined in Rule 38a-1 under the 0000
Xxx) by the Fund and the Sub-Adviser (the policies and
procedures referred to in this Paragraph 10(b), along
with the policies and procedures referred to in
Paragraph 10(a), are referred to herein as the Sub-
Adviser's "Compliance Program").
11. Confidentiality. Subject to the duty of the Adviser or
Sub-Adviser to comply with applicable law, including any
demand of any regulatory or taxing authority having
jurisdiction, the parties hereto shall treat as
confidential all non-public information pertaining to the
Fund and the actions of the Sub-Adviser and the Fund in
respect thereof. It is understood that any information or
recommendation supplied by the Sub-Adviser in connection
with the performance of its obligations hereunder is to be
regarded as confidential and for use only by the Adviser,
the Fund, the Board of Trustees, or such persons as the
Adviser may designate in connection with the Fund. It is
also understood that any information supplied to the Sub-
Adviser in connection with the performance of its
obligations hereunder, particularly, but not limited to,
any list of investments which, on a temporary basis, may
not be bought or sold for the Fund, is to be regarded as
confidential and for use only by the Sub-Adviser in
connection with its obligation to provide investment advice
and other services to the Fund. The parties acknowledge and
agree that all nonpublic personal information with regard
to shareholders in the Fund shall be deemed proprietary
information of the Adviser, and that the Sub-Adviser shall
use that information solely in the performance of its
duties and obligations under this Agreement and shall take
reasonable steps to safeguard the confidentiality of that
information. Further, the Sub-Adviser shall maintain and
enforce adequate security procedures with respect to all
materials, records, documents, and data relating to any of
its responsibilities pursuant to this Agreement, including
all means for the effecting of investment transactions.
12. Reporting of Compliance Matters.
(a) The Sub-Adviser shall promptly provide to the Trust's
Chief Compliance Officer ("CCO") the following
documents:
(i) reasonable access, at the Sub-Adviser's principal
office or such other place as may be mutually
agreed to by the parties, to all SEC examination
correspondences, including correspondences
regarding books and records examinations and
"sweep" examinations, issued during the term of
this Agreement, in which the SEC identified any
concerns, issues, or matters (such
correspondences are commonly referred to as
"deficiency letters") that may materially impact
or relate to the Services provided under this
Agreement and the Sub-Adviser's responses
thereto; provided that the Sub-Adviser may redact
from such correspondences client specific
confidential information, material subject to the
attorney-client privilege, and material non-
public information, that the Sub-Adviser
reasonably determines should not be disclosed to
the Trust's CCO;
(ii) a report of any material violations of the Sub-
Adviser's Compliance Program or any "material
compliance matters" (as such term is defined in
Rule 38a-1 under the 0000 Xxx) that have occurred
with respect to the Sub-Adviser's Compliance
Program;
(iii) on Adviser's request not more than once per
quarter, a report of any material changes to the
policies and procedures that compose the Sub-
Adviser's Compliance Program;
(iv) a summary of the Sub-Adviser's chief compliance
officer's report (or similar document(s) that
serve the same purpose) regarding his or her
annual review of the Sub-Adviser's Compliance
Program, as required by Rule 206(4)-7 under the
Advisers Act; and
(v) an annual (or more frequently as the Trust's CCO
may reasonably request) representation regarding
the Sub-Adviser's compliance with Paragraphs 8
and 10 of this Agreement.
(b) The Sub-Adviser shall also provide the Trust's CCO
with reasonable access, during normal business hours,
to the Sub-Adviser's facilities or personnel for the
purpose of conducting pre-arranged on-site compliance
related due diligence meetings with personnel of the
Sub-Adviser.
13. Use of Intellectual Property by the Sub-Adviser. The
Adviser grants to the Sub-Adviser a sublicense to use the
trademarks, service marks, logos, names, or any other
proprietary designations of the Adviser ("AdvisorShares
Marks") on a non-exclusive basis. The Sub-Adviser will
acquire no rights in the AdvisorShares Marks, and all
goodwill of the AdvisorShares Marks shall inure to and
remain with the Adviser. The Sub-Adviser agrees that
neither it, nor any of its affiliates, will knowingly in
any way refer directly or indirectly to its relationship
with the Trust, the Fund, the Adviser or any of their
respective affiliates or use AdvisorShares Marks in
offering, marketing or other promotional materials without
the prior express written consent of the Adviser, which
approval will not be unreasonably withheld or delayed,
except as required by rule, regulation or upon the request
of a governmental authority. Notwithstanding the foregoing,
the Sub-Adviser and its affiliates may, without obtaining
the Adviser's prior approval, refer directly or indirectly
to its relationship with the Trust, the Fund, the Adviser
or any of their respective affiliates and use AdvisorShares
Marks in offering, marketing or other promotional materials
provided that such materials were previously approved by
the Adviser and remain in substantially the same form.
14. Use of Intellectual Property by the Adviser. The Sub-
Adviser grants to the Adviser a sublicense to use the
trademarks, service marks, logos, names, or any other
proprietary designations of the Sub-Adviser ("Sub-Adviser
Marks") on a non-exclusive basis. The Adviser will acquire
no rights in the Sub-Adviser Marks, and all goodwill of the
Sub-Adviser Marks shall inure to and remain with the Sub-
Adviser.
15. Limitation of Liability.
(a) UNLESS ARISING OUT OF A PARTY'S INDEMNIFICATION
OBLIGATIONS OR AS A RESULT OF BREACH OF CONFIDENTIALITY
OBLIGATIONS OR AS DETAILED IN SECTION 15(b) BELOW, UNDER
NO CIRCUMSTANCES WILL EITHER PARTY OR ITS RELATED
ENTITIES OR PERSONS BE LIABLE FOR ANY CONSEQUENTIAL,
INDIRECT, SPECIAL, PUNITIVE, OR INCIDENTAL DAMAGES,
WHETHER FORESEEABLE OR UNFORESEEABLE, BASED ON CLAIMS
(INCLUDING, BUT NOT LIMITED TO, CLAIMS FOR LOSS OF DATA,
GOODWILL, PROFITS, USE OF MONEY, INTERRUPTION IN USE OR
AVAILABILITY OF DATA, STOPPAGE OF OTHER WORK OR
IMPAIRMENT OF OTHER ASSETS) ARISING OUT OF BREACH OF
EXPRESS OR IMPLIED WARRANTY, BREACH OF CONTRACT,
MISREPRESENTATION, NEGLIGENCE, STRICT LIABILITY IN TORT
OR OTHERWISE, REGARDLESS OF WHETHER IT HAS BEEN ADVISED
OF THE POSSIBILITY OF SUCH DAMAGES OR ANY REMEDY IS
DEEMED TO HAVE FAILED OF ITS ESSENTIAL PURPOSE. UNLESS
ARISING OUT OF A PARTY'S INDEMNIFICATION OBLIGATIONS OR
AS A RESULT OF BREACH OF CONFIDENTIALITY OBLIGATIONS, ANY
AMOUNTS OWED PURSUANT TO SECTION 5, OR AS DETAILED IN
SECTION 15(b) BELOW, IN NO EVENT WILL THE AGGREGATE
LIABILITY WHICH EITHER PARTY AND ITS RELATED PERSONS MAY
INCUR IN ANY ACTION OR PROCEEDING EXCEED THE TOTAL AMOUNT
OF FEES PAYABLE DURING THE TWELVE (12) MONTHS PRIOR TO
WHEN THE CLAIM AROSE.
(b) Notwithstanding Section 15(a) above, the Sub-Adviser
shall reimburse the appropriate Fund for any loss that
directly results from a Trade Error made by the Sub-
Adviser; provided that any gain which directly results
from a Trade Error shall be returned to the appropriate
Fund. Such reimbursement and/or refund shall the sole and
exclusive remedy for any Trade Error made by Sub-Adviser.
For the purposes of this Agreement, a "Trade Error" is
defined as situations where the transaction was
incorrectly communicated by the Sub-Adviser: (i) in the
wrong security; (ii) on the wrong side of the market;
(iii) on incorrect price instructions; or (iv) for a
quantity greater than intended by the Sub-Adviser. "Trade
Errors" shall explicitly exclude: (a) good faith errors
in judgment in making investment decisions for the
Fund(s), (b) errors corrected before execution by the
Adviser, or (c) errors made by persons, acting upon good
instructions from the Sub-Adviser, other than the Sub-
Adviser; or (d) errors that result from a request of the
Adviser or Fund.
16. Governing Law. This Agreement shall be governed by the
internal laws of the State of Delaware, without regard to
conflict of law principles; provided, however, that nothing
herein shall be construed as being inconsistent with the
1940 Act.
17. Interpretation and Severability. Where the effect of a
requirement of the 1940 Act or Advisers Act reflected in
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.
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.
18. Notice. Any notice, advice, or report to be given pursuant
to this Agreement shall be deemed sufficient if delivered
or mailed by registered, certified, or overnight mail,
postage prepaid, and addressed by the party giving notice
to the last address furnished by the other party:
To the Adviser at:
AdvisorShares Investments, LLC
0000 Xxxxxxxxxx Xxxx
Xxxxx 000
Xxxxxxxx, XX 00000
Attention: Legal Department
AdvisorShares Investments, LLC
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, XX 00000
Attention: Xxx Xxxxxx
To the Sub-Adviser at:
Xxxxxx, Xxxxxx & Associates, LLC
Attn: Xxxx Xxxxxxxxx
0000 Xxxxxxx Xxxxxxx Xxxxx,
Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
Office of General Counsel
(Contracts and IP)
Xxxxxx, Xxxxxx & Associates, LLC
000 Xxxx Xxxx Xxxxxxxxx
Xxxxxxxxx, XX 00000
19. Amendment of Agreement. This Agreement may be amended only
by written agreement of the Adviser and the Sub-Adviser and
only in accordance with the provisions of the 1940 Act and
the rules and regulations promulgated thereunder.
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. This Agreement may be
executed in any number of counterparts, each of which shall
be deemed to be an original, but such counterparts shall,
together, constitute only one instrument.
In the event the terms of this Agreement are applicable to
more than one Fund, the Adviser is entering into this
Agreement with the Sub-Adviser on behalf of each Fund
severally and not jointly, with the express intention that
the provisions contained in each numbered paragraph hereof
shall be understood as applying separately with respect to
each Fund as if contained in separate agreements between
the Adviser and Sub-Adviser for each such Fund. In the
event that this Agreement is made applicable to any
additional Funds by way of a schedule executed subsequent
to the date first indicated above, provisions of such
schedule shall be deemed to be incorporated into this
Agreement as it relates to such Fund so that, for example,
the execution date for purposes of Paragraph 9 of this
Agreement with respect to such Fund shall be the execution
date of the relevant schedule.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below as
of the day and year first written above.
AdvisorShares Investments, LLC
Xxxxxx, Xxxxxx & Associates, LLC
By:
____________________________________
Xxx Xxxxxx
Managing Director
By:
____________________________________
Xxx X. Xxxxxxxx
Executive Vice President
Schedule A
to the
Sub-Advisory Agreement
between
AdvisorShares Investments, LLC
and
Xxxxxx, Xxxxxx & Associates, LLC
as of December 16, 2016
A. List of Funds
AdvisorShares Xxxxxx Xxxxxx ADR ETF
B. Fee Schedule
Average Daily Net Assets Sub-Advisory Fee
All assets 0.25%
In accordance with Section 5 of the Agreement, the sub-
advisory fee shall be computed and paid as follows:
At the end of each month during the Term, Advisor shall
calculate the average daily net asset value of each Fund
during the month by (i) adding together the daily net asset
values of the Fund, as determined by the Administrator of
the Fund on each day during the month, and then (ii)
dividing such sum by the number of daily net asset value
amounts determined in (i) above. The resulting average
daily net asset value then is multiplied by the basis point
amount) divided by the number of days in the fiscal year
and then multiplied by the days in the current month,
resulting in the monthly payment to be paid to Sub-Advisor
by Advisor.
Each monthly payment shall be accompanied by a statement
setting forth the calculations on which the payment is
based and shall be paid within thirty (30) days of the end
of the month.
C. Exclusivity of Services
Notwithstanding Section 3 of the Agreement, but otherwise
subject to the terms and conditions of the Agreement, Sub-
Adviser agrees that it shall not grant a license to use the
specific strategy utilized in the management of a Fund
listed on Schedule A within an actively managed exchange
traded fund (ETF) listed in the United States for a period
of one (1) year from the date Sub-Adviser begins actively
managing the Assets of the Fund.
Agreed and Accepted:
AdvisorShares Investments, LLC
Xxxxxx, Xxxxxx & Associates, LLC
By:
____________________________________
Xxx Xxxxxx
Managing Director
By:
____________________________________
Xxx X. Xxxxxxxx
Executive Vice President
