TRUST FOR PROFESSIONAL MANAGERS INVESTMENT ADVISORY AGREEMENT SMEAD VALUE FUND
XXXXX
VALUE FUND
THIS
INVESTMENT ADVISORY AGREEMENT is made as of the 24th day of October,
2007, by and between Trust for Professional Managers, (hereinafter called the
“Trust”), on behalf of the Xxxxx Value Fund (the “Fund”), a series of the Trust,
and Xxxxx Capital Management, Inc. (hereinafter called the
“Adviser”).
WITNESSETH:
WHEREAS,
the Trust is an open-end management investment company, registered as such
under
the Investment Company Act of 1940, as amended (the “Investment Company Act”);
and
WHEREAS,
the Fund is a series of the Trust having separate assets and liabilities;
and
WHEREAS,
the Adviser is registered as an investment adviser under the Investment Advisers
Act of 1940, as amended (the “Advisers Act”) and is engaged in the business of
supplying investment advice as an independent contractor; and
WHEREAS,
the Trust desires to retain the Adviser to render advice and services to the
Fund pursuant to the terms and provisions of this Agreement, and the Adviser
desires to furnish said advice and services;
NOW,
THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties to this Agreement, intending to be legally
bound hereby, mutually agree as follows:
1.
APPOINTMENT OF ADVISER. The Trust hereby employs the Adviser, and the
Adviser hereby accepts such employment, to render investment advice and related
services with respect to the assets of the Fund for the period and on the terms
set forth in this Agreement, subject to the supervision and direction of the
Trust’s Board of Trustees.
2.
DUTIES OF ADVISER.
(a)
GENERAL DUTIES. The Adviser shall act as investment adviser to
the Fund and shall supervise investments of the Fund on behalf of the Fund
in
accordance with the investment objectives, policies and restrictions of the
Fund
as set forth in the Fund’s and Trust’s governing documents, including, without
limitation: the Trust’s Agreement and Declaration of Trust and By-Laws; the
Fund’s prospectus, statement of additional information and undertakings; and
such other limitations, policies and procedures as the Trustees may impose
from
time to time in writing to the Adviser. In providing such services,
the Adviser shall at all times adhere to the provisions and restrictions
contained in the federal securities laws, applicable state securities laws,
the
Internal Revenue Code, the Uniform Commercial Code and other applicable
law.
Without
limiting the generality of the foregoing, the Adviser shall: (i) furnish the
Fund with advice and recommendations with respect to the investment of the
Fund’s assets and the purchase and sale of portfolio securities for the Fund,
including the taking of such steps as may be necessary to implement such advice
and recommendations (i.e., placing the orders); (ii) manage and oversee
the investments of the Fund, subject to the ultimate supervision and direction
of the Trust’s Board of Trustees; (iii) vote proxies for the Fund, file
ownership reports under Section 13 of the Securities Exchange Act of 1934,
as
amended (the “Exchange Act”) for the Fund, and take other actions on behalf of
the Fund; (iv) maintain the books and records required to be maintained by
the
Fund except to the extent arrangements have been made for such books and records
to be maintained by the administrator or another agent of the Fund; (v) furnish
reports, statements and other data on securities, economic conditions and other
matters related to the investment of the Fund’s assets that the Fund’s
administrator or distributor or the officers of the Trust may reasonably
request; and (vi) render to the Trust’s Board of Trustees such periodic and
special reports with respect to the Fund’s investment activities as the Board
may reasonably request, including at least one in-person appearance annually
before the Board of Trustees.
(b)
BROKERAGE. The Adviser shall be responsible for decisions to buy and
sell securities for the Fund, for broker-dealer selection, and for negotiation
of brokerage commission rates, provided that the Adviser shall not direct orders
to an affiliated person of the Adviser without general prior authorization
to
use such affiliated broker or dealer by the Trust’s Board of Trustees. The
Adviser’s primary consideration in effecting a securities transaction will be
execution at the most favorable price. In selecting a broker-dealer to execute
each particular transaction, the Adviser may take the following into
consideration: the best net price available; the reliability, integrity and
financial condition of the broker-dealer; the size of and difficulty in
executing the order; and the value of the expected contribution of the
broker-dealer to the investment performance of the Fund on a continuing basis.
The price to the Fund in any transaction may be less favorable than that
available from another broker-dealer if the difference is reasonably justified
by other aspects of the portfolio execution services offered.
Subject
to such policies as the Board of Trustees of the Trust may determine and
consistent with Section 28(e) of the Exchange Act the Adviser shall not be
deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused the Fund to pay
a
broker or dealer that provides (directly or indirectly) brokerage or research
services to the Adviser an amount of commission for effecting a portfolio
transaction in excess of the amount of commission another broker or dealer
would
have charged for effecting that transaction, if the Adviser determines in good
faith that such amount of commission was reasonable in relation to the value
of
the brokerage and research services provided by such broker or dealer, viewed
in
terms of either that particular transaction or the Adviser’s overall
responsibilities with respect to the Trust. Subject to the same policies and
legal provisions, the Adviser is further authorized to allocate the orders
placed by it on behalf of the Fund to such brokers or dealers who also provide
research or statistical material, or other services, to the Trust, the Adviser,
or any affiliate of either. Such allocation shall be in such amounts and
proportions as the Adviser shall determine, and the Adviser shall report on
such
allocations regularly to the Trust, indicating the broker-dealers to whom such
allocations have been made and the basis therefor.
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 of other clients, the Adviser, to the
extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. In such
event, allocation of the securities so purchased or sold, as well as the
expenses incurred in the transaction, will be made by the Adviser in the manner
it considers to be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
3.
REPRESENTATIONS OF THE ADVISER.
(a)
The
Adviser shall use its best judgment and efforts in rendering the advice and
services to the Fund as contemplated by this Agreement.
(b)
The
Adviser shall maintain all licenses and registrations necessary to perform
its
duties hereunder in good order.
(c)
The
Adviser shall conduct its operations at all times in conformance with the
Advisers Act, the Investment Company Act, and any other applicable state and/or
self-regulatory organization regulations.
4.
INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent
the
Trust in any way, or in any way be deemed an agent for the Trust. It is
expressly understood and agreed that the services to be rendered by the Adviser
to the Fund under the provisions of this Agreement are not to be deemed
exclusive, and the Adviser shall be free to render similar or different services
to others so long as its ability to render the services provided for in this
Agreement shall not be impaired thereby.
5.
ADVISER’S PERSONNEL. The Adviser shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Adviser shall be
deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical
and
scientific developments, and such other information, advice and assistance
as
the Adviser or the Trust’s Board of Trustees may desire and reasonably request
and any compliance staff and personnel required by the Adviser.
6.
EXPENSES.
(a)
With
respect to the operation of the Fund, the Adviser shall be responsible for
(i)
the Fund’s organizational expenses, (ii) providing the personnel, office space
and equipment reasonably necessary for the operation of the Fund, (iii) the
expenses of printing and distributing extra copies of the Fund’s prospectus,
statement of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders) to the extent such expenses are
not
covered by any applicable plan adopted pursuant to Rule 12b-1 under the
Investment Company Act, (iv) the costs of any special Board of Trustees meetings
or shareholder meetings convened for the primary benefit of the Adviser, and
(v)
any costs of liquidating or reorganizing the Fund (unless such cost is otherwise
allocated by the Board of Trustees). If the Adviser has agreed, whether
voluntarily or pursuant to an agreement, to limit the operating expenses of
the
Fund, the Adviser shall also be responsible on a monthly basis for any operating
expenses that exceed the agreed upon expense limit.
(b)
The
Fund is responsible for and has assumed the obligation for payment of all of
its
expenses, other than as stated in Subparagraph 6(a) above, including but not
limited to: fees and expenses incurred in connection with the issuance,
registration and transfer of its shares; brokerage and commission expenses;
all
expenses of transfer, receipt, safekeeping, servicing and accounting for the
cash, securities and other property of the Trust for the benefit of the Fund
including all fees and expenses of its custodian, shareholder services agent
and
accounting services agent; interest charges on any borrowings; costs and
expenses of pricing and calculating its daily net asset value and of maintaining
its books of account required under the Investment Company Act; taxes, if any;
a
pro rata portion of expenditures in connection with meetings of the Fund’s
shareholders and the Trust’s Board of Trustees that are properly payable by the
Fund; salaries and expenses of officers of the Trust, including
without limitation the Trust’s Chief Compliance Officer, and fees and expenses
of members of the Trust’s Board of Trustees or members of any advisory board or
committee who are not members of, affiliated with or interested persons of
the
Adviser; insurance premiums on property or personnel of the Fund which inure
to
its benefit, including liability and fidelity bond insurance; the cost of
preparing and printing reports, proxy statements, prospectuses and statements
of
additional information of the Fund or other communications for distribution
to
existing shareholders; legal, auditing and accounting fees; all or any portion
of trade association dues or educational program expenses determined appropriate
by the Board of Trustees; fees and expenses (including legal fees) of
registering and maintaining registration of its shares for sale under federal
and applicable state and foreign securities laws; all expenses of maintaining
and servicing shareholder accounts, including all charges for transfer,
shareholder recordkeeping, dividend disbursing, redemption, and other agents
for
the benefit of the Fund, if any; and all other charges and costs of its
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise prescribed.
(c)
The
Adviser may voluntarily absorb certain Fund expenses or waive the Adviser’s own
advisory fee.
(d)
To
the extent the Adviser incurs any costs by assuming expenses which are an
obligation of the Fund as set forth herein, the Fund shall promptly reimburse
the Adviser for such costs and expenses, except to the extent the Adviser has
otherwise agreed to bear such expenses. To the extent the services for which
the
Fund is obligated to pay are performed by the Adviser, the Adviser shall be
entitled to recover from the Fund to the extent of the Adviser’s actual costs
for providing such services. In determining the Adviser’s actual costs, the
Adviser may take into account an allocated portion of the salaries and overhead
of personnel performing the services.
(e)
The
Adviser may not pay fees in addition to any Fund distribution or servicing
fees
to financial intermediaries, including, without limitation, banks,
broker-dealers, financial advisors, or pension administrators, for
sub-administration, sub-transfer agency or any other shareholder servicing
or
distribution services associated with shareholders whose shares are held in
omnibus or other group accounts, except with the prior authorization of the
Trust’s Board of Trustees. Where such arrangements are authorized by
the Trust’s Board of Trustees, the Adviser shall report regularly to the Trust
on the amounts paid and the relevant financial institutions.
7.
INVESTMENT ADVISORY AND MANAGEMENT FEE.
(a)
The
Fund shall pay to the Adviser, and the Adviser agrees to accept, as full
compensation for all investment management and advisory services furnished
or
provided to the Fund pursuant to this Agreement, an annual management fee at
the
rate set forth in Schedule A to this Agreement.
(b)
The
management fee shall be accrued daily by the Fund and paid to the Adviser on
the
first business day of the succeeding month.
(c)
The
initial fee under this Agreement shall be payable on the first business day
of
the first month following the effective date of this Agreement and shall be
prorated as set forth below. If this Agreement is terminated prior to the end
of
any month, the fee to the Adviser shall be prorated for the portion of any
month
in which this Agreement is in effect which is not a complete month according
to
the proportion which the number of calendar days in the month during which
the
Agreement is in effect bears to the number of calendar days in the month, and
shall be payable within ten (10) days after the date of
termination.
(d)
The
fee payable to the Adviser under this Agreement will be reduced to the extent
of
any receivable owed by the Adviser to the Fund and as required under any expense
limitation applicable to the Fund.
(e)
The
Adviser voluntarily may reduce any portion of the compensation or reimbursement
of expenses due to it pursuant to this Agreement and may agree to make payments
to limit the expenses which are the responsibility of the Fund under this
Agreement. Any such reduction or payment shall be applicable only to such
specific reduction or payment and shall not constitute an agreement to reduce
any future compensation or reimbursement due to the Adviser hereunder or to
continue future payments. Any such reduction will be agreed to prior to accrual
of the related expense or fee and will be estimated daily and reconciled and
paid on a monthly basis.
(f)
Any
such reductions made by the Adviser in its fees or payment of expenses which
are
the Fund’s obligation are subject to reimbursement by the Fund to the Adviser,
if so requested by the Adviser, in subsequent fiscal years if the aggregate
amount actually paid by the Fund toward the operating expenses for such fiscal
year (taking into account the reimbursement) does not exceed the applicable
limitation on Fund expenses. Under the expense limitation agreement, the Adviser
may recoup reimbursements made in any fiscal year of the Fund over the following
three fiscal years. Any such reimbursement is also contingent upon
Board of Trustees review and approval at the time the reimbursement is made.
Such reimbursement may not be paid prior to the Fund’s payment of current
ordinary operating expenses.
(g)
The
Adviser may agree not to require payment of any portion of the compensation
or
reimbursement of expenses otherwise due to it pursuant to this Agreement. Any
such agreement shall be applicable only with respect to the specific items
covered thereby and shall not constitute an agreement not to require payment
of
any future compensation or reimbursement due to the Adviser
hereunder.
8.
NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any
of its officers or employees shall take any short position in the shares of
the
Fund. This prohibition shall not prevent the purchase of such shares by any
of
the officers or employees of the Adviser or any trust, pension, profit-sharing
or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value thereof at the time of purchase, as allowed
pursuant to rules promulgated under the Investment Company Act. The Adviser
agrees that neither it nor any of its officers or employees shall borrow from
the Fund or pledge or use the Fund’s assets in connection with any borrowing not
directly for the Fund’s benefit. For this purpose, failure to pay any amount due
and payable to the Fund for a period of more than thirty (30) days’ shall
constitute a borrowing.
9.
CONFLICTS WITH TRUST’S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust’s Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct
of
the affairs of the Trust and Fund. In this connection, the Adviser acknowledges
that the Trustees retain ultimate plenary authority over the Fund and may take
any and all actions necessary and reasonable to protect the interests of
shareholders.
10.
REPORTS AND ACCESS. The Adviser agrees to supply such information to
the Fund’s administrator and to permit such compliance inspections by the Fund’s
administrator as shall be reasonably necessary to permit the administrator
to
satisfy its obligations and respond to the reasonable requests of the
Trustees.
11.
ADVISER’S LIABILITIES AND INDEMNIFICATION.
(a)
The
Adviser shall have responsibility for the accuracy and completeness (and
liability for the lack thereof) of the statements in the Fund’s offering
materials (including the prospectus, the statement of additional information,
advertising and sales materials), except for information supplied by the
administrator or the Trust or another third party for inclusion
therein.
(b)
The
Adviser shall be liable to the Fund for any loss (including brokerage charges)
incurred by the Fund as a result of any improper investment made by the
Adviser.
(c)
In
the absence of willful misfeasance, bad faith, negligence, or reckless disregard
of the obligations or duties hereunder on the part of the Adviser, the Adviser
shall not be subject to liability to the Trust or the Fund or to any shareholder
of the Fund for any act or omission in the course of, or connected with,
rendering services hereunder or for any losses that may be sustained in the
purchase, holding or sale of any security by the
Fund. Notwithstanding the foregoing, federal securities laws and
certain state laws impose liabilities under certain circumstances on persons
who
have acted in good faith, and therefore nothing herein shall in any way
constitute a waiver or limitation of any rights which the Trust, the Fund or any
shareholder of the Fund may have under any federal securities law or state
law.
(d)
Each
party to this Agreement shall indemnify and hold harmless the other party and
the shareholders, directors, officers and employees of the other party (any
such
person, an “Indemnified Party”) against any loss, liability, claim, damage or
expense (including the reasonable cost of investigating and defending any
alleged loss, liability, claim, damage or expenses and reasonable counsel fees
incurred in connection therewith) arising out of the Indemnified Party’s
performance or non-performance of any duties under this Agreement provided,
however, that nothing herein shall be deemed to protect any Indemnified Party
against any liability to which such Indemnified Party would otherwise be subject
by reason of willful misfeasance, bad faith or negligence in the performance
of
duties hereunder or by reason of reckless disregard of obligations and duties
under this Agreement.
(e)
No
provision of this Agreement shall be construed to protect any Trustee or officer
of the Trust, or officer of the Adviser, from liability in violation of Sections
17(h) and (i) of the Investment Company Act.
12.
NON-EXCLUSIVITY; TRADING FOR ADVISER’S OWN ACCOUNT. The Trust’s
employment of the Adviser is not an exclusive arrangement. The Trust may from
time to time employ other individuals or entities to furnish it with the
services provided for herein. Likewise, the Adviser may act as investment
adviser for any other person, and shall not in any way be limited or restricted
from buying, selling or trading any securities for its or their own accounts
or
the accounts of others for whom it or they may be acting, provided, however,
that the Adviser expressly represents that it will undertake no activities
which
will adversely affect the performance of its obligations to the Fund under
this
Agreement, and provided further that the Adviser will adhere to a code of ethics
governing employee trading and trading for proprietary accounts that conforms
to
the requirements of the Investment Company Act and the Advisers Act and has
been
approved by the Trust’s Board of Trustees.
13.
TERM.
(a)
This
Agreement shall become effective with respect to the Fund at the time the Fund
commences operations pursuant to an effective amendment to the Trust’s
Registration Statement under the Securities Act of 1933, as amended, and shall
continue for an initial term of two years from that date, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one year so long as such
continuation is approved for the Fund at least annually by (i) the Board of
Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of such Fund and (ii) the vote of a majority of the Trustees of
the
Trust who are not parties to this Agreement nor interested persons thereof,
cast
in person at a meeting called for the purpose of voting on such approval. The
terms “majority of the outstanding voting securities” and “interested persons”
shall have the meanings as set forth in the Investment Company Act.
(b)
The
Fund may use the names “Xxxxx” or any name derived from or using the name “Xxxxx
Value Fund” only for so long as this Agreement or any extension, renewal or
amendment hereof remains in effect. Within sixty (60) days from such time as
this Agreement shall no longer be in effect, the Fund shall cease to use such
a
name or any other name connected with the Adviser.
14.
TERMINATION; NO ASSIGNMENT.
(a)
This
Agreement may be terminated by the Trust on behalf of the Fund at any time
without 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 Fund, upon sixty
(60)
days’ written notice to the Adviser, and by the Adviser upon sixty (60) days
written notice to such Fund. In the event of a termination, the Adviser shall
cooperate in the orderly transfer of the Fund’s affairs and, at the request of
the Board of Trustees, transfer any and all books and records of such Fund
maintained by the Adviser on behalf of the Fund.
(b)
This
Agreement shall terminate automatically in the event of any transfer or
assignment thereof, as defined in the Investment Company Act.
15.
NONPUBLIC PERSONAL INFORMATION.
Notwithstanding any provision
herein to the contrary, the Adviser
agrees on behalf of itself and its directors, trustees, shareholders, officers,
and employees (1) to treat confidentially and as proprietary information of
the
Trust (a) all records and other information relative to the Fund’s prior,
present, or potential shareholders (and clients of said shareholders) and (b)
any Nonpublic Personal Information, as defined under Section 248.3(t) of
Regulation S-P (“Regulation S-P”), promulgated under the Xxxxx-Xxxxx-Xxxxxx Act
(the “G-L-B Act”), and (2) except after prior notification to and approval in
writing by the Trust, not to use such records and information for any purpose
other than the performance of its responsibilities and duties hereunder, or
as
otherwise permitted by Regulation S-P or the G-L-B Act, and if in compliance
therewith, the privacy policies adopted by the Trust and communicated in writing
to the Adviser. Such written approval shall not be unreasonably
withheld by the Trust and may not be withheld where the Adviser may be exposed
to civil or criminal contempt or other proceedings for failure to comply after
being requested to divulge such information by duly constituted
authorities.
16.
ANTI-MONEY LAUNDERING COMPLIANCE. The Adviser acknowledges that, in
compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and
any
implementing regulations thereunder (together, “AML Laws”), the Trust has
adopted an Anti-Money Laundering Policy. The Adviser agrees to comply with
the
Trust’s Anti-Money Laundering Policy and the AML Laws, as the same may apply to
the Adviser, now and in the future. The Adviser further agrees to provide to
the
Trust and/or the Administrator such reports, certifications and contractual
assurances as may be reasonably requested by the Trust. The Trust may disclose
information regarding the Adviser to governmental and/or regulatory or
self-regulatory authorities to the extent required by applicable law or
regulation and may file reports with such authorities as may be required by
applicable law or regulation.
17.
CERTIFICATIONS; DISCLOSURE CONTROLS AND PROCEDURES. The Adviser
acknowledges that, in compliance with the Xxxxxxxx-Xxxxx Act, and the
implementing regulations promulgated thereunder, the Trust and the Fund are
required to make certain certifications and have adopted disclosure controls
and
procedures. To the extent reasonably requested by the Trust, the Adviser agrees
to use its best efforts to assist the Trust and the Fund in complying with
the
Xxxxxxxx-Xxxxx Act and implementing the Trust’s disclosure controls and
procedures. The Adviser agrees to inform the Trust of any material development
related to the Fund that the Adviser reasonably believes is relevant to the
Fund’s certification obligations under the Xxxxxxxx-Xxxxx Act.
18.
SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected
thereby.
19.
CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof
or
otherwise affect their construction or effect.
20.
GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Wisconsin without giving effect to
the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation
or
rule, including the Investment Company Act and the Advisers Act and any rules
and regulations promulgated thereunder.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their duly authorized officers, all on the day and year first
above written.
| TRUST FOR PROFESSSIONAL MANAGERS | XXXXX CAPITAL MANAGEMENT, INC. |
| on behalf of the | |
| Xxxxx Value Fund | |
| By: /s/ Xxxxxx X. Xxxxxxxxx | By: /s/ Xxxxxxx X. Xxxxx |
| Name: Xxxxxx X. Xxxxxxxxx | Name: Xxxxxxx X. Xxxxx |
| Title: President | Title: Chief Executive Officer |
SCHEDULE
A
|
Series
or Fund of Trust for Professional Managers
|
Annual Fee rate | |
| Xxxxx Value Fund | 0.75% of average net assets |
