SUB-ADVISORY AGREEMENT
THIS AGREEMENT is made and entered into as of this 1st day of June, 2015, by and among Hatteras Funds, LLC, a Delaware limited liability company (the “Advisor”), Mountaineer Partners Management, LLC, a Delaware limited liability company (the “Sub-Advisor”), and the Hatteras Alternative Mutual Funds Trust, a Delaware statutory trust (the “Trust”) on behalf of such series as designated by the Advisor (the “Fund”).
WHEREAS, the Trust, and therefore the Fund, is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”); and
WHEREAS, the Advisor has been appointed investment advisor to the Fund, pursuant to an Investment Advisory Agreement dated July 1, 2014 (the “Advisory Agreement”), which has been approved by the Trust’s Board of Trustees (the “Board of Trustees”); and
WHEREAS, the Advisor has the authority to determine, in its sole discretion, the percentage of the Fund’s net assets to be advised by the Sub-Advisor; and
WHEREAS, the Advisor and the Trust desire to retain the Sub-Advisor to assist the Advisor in providing a continuous investment program for a portion of the Fund’s assets (designated herein as a “Separate Account”) and the Sub-Advisor is willing to do so; and
WHEREAS, the Board of Trustees has approved this Agreement, and the Sub-Advisor 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:
Without limiting the generality of the foregoing, the Sub-Advisor further agrees that it:
(a) will assist in determining from time to time what securities and other investments will be purchased, retained or sold for the Separate Account;
(b) will manage, in consultation with the Advisor, the Separate Account’s temporary investments in securities, cash and cash equivalents;
(c) will place orders pursuant to its investment determinations for the Separate Account either directly with the issuer or with any broker or dealer;
(d) will consult with the Advisor on a continuous basis as to the Fund’s total assets which shall be invested in the Separate Account;
(e) will attend either in person or via telephone regular business and investment-related meetings with the Board of Trustees and the Advisor, as requested by the Trust, the Advisor or both; and
(f) will maintain books and records with respect to the securities transactions for the Separate Account, furnish to the Advisor and the Board of Trustees such periodic and special reports as they may reasonably request with respect to the Separate Account, and provide in advance to the Advisor all reports to the Board of Trustees for examination and review within a reasonable time prior to the Board of Trustees’ meetings.
(a) as part of its retention as a Sub-Advisor with respect to the investment of the Separate Account, a portion of the assets held by the Fund, as determined by the Advisor, is authorized by its governing documents to enter into this Agreement and the terms of this Agreement do not violate any obligation by which the Sub-Advisor is bound, whether arising by contract, operation of law or otherwise;
(b) will maintain all necessary governmental, self regulatory and exchange licenses and approvals, has effected all necessary filings and registrations with each applicable regulatory body, including its status as a Registered Investment Advisor with the Securities and Exchange Commission and will conform with all applicable Rules and Regulations of the Securities and Exchange Commission;
(c) will furnish trade information related to transactions effected for the Separate Account to the Fund’s designated Fund Accountant no later than the first business day following the day of the trade and cause broker confirmations to be sent directly to the Fund’s designated Fund Accountant and adopt such other trade reporting, settlement and clearance procedures with respect to the Fund as shall be in accordance with the Fund’s existing procedures and as mutually agreed by the parties hereto;
(d) will treat confidentially and as proprietary information of the Fund all records and other information, except to the extent that such information relates to the Sub-Advisor’s strategy for the Separate Account and the Sub-Advisor’s implementation thereof, relative to the Fund and prior, present or potential shareholders, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder (except (i) after prior written notification to the Trust, the Fund or the Advisor (unless such prior notification is not reasonably practicable), to respond to requests that are a part of any investigation, proceeding, regulatory audits or inspections; or (ii) after prior notification to and approval in writing by the Trust, the Fund or the Advisor, which approval shall not be unreasonably withheld, and may not be withheld and will be deemed granted where the Sub-Advisor may be exposed to civil or criminal contempt proceedings for failure to comply, when requested to divulge such information by duly constituted authorities, or when so requested by the Trust);
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(e) will maintain its own Code of Ethics and report to the Advisor’s Compliance Officer any violation of such Code that pertains to the management of the Fund, via a periodic compliance certification;
(f) will maintain its own compliance program or manual, pursuant to Rule 206(4) -7 of the Investment Advisors Act of 1940, as amended (the “Advisers Act”).. The Sub-Advisor will provide either the manual or a summary thereof, including updates thereto, to the Advisor’s Compliance Officer; and
(g) in furnishing services hereunder, the Sub-Advisor will not consult with any other advisor to (except an advisor that is an affiliated person of the Sub-Advisor) (i) the Funds, (ii) any other Fund of the Trust or (iii) any other investment company under common control with the Trust concerning transactions of the Separate Account in securities or other assets. (This shall not be deemed to prohibit the Sub-Advisor from consulting with any other covered advisors concerning compliance with paragraphs a and b of Rule 12d3-1 under the 1940 Act.)
(a) that the retention of the Sub-Advisor as investment advisor with respect to the Separate Account, is authorized by the governing documents relating to the Fund, and the terms of this Agreement do not violate any obligation by which the Fund is bound, whether arising by contract, operation of law or otherwise;
(b) that the Sub-Advisor may use the Fund’s name on a representative client list.
(c) as to the Fund, but not to the Advisor, that this Agreement and the retention of the Sub-Advisor to provide the services set forth herein have been approved, in accordance with applicable law, by the Fund and, if required, Fund shareholders;
(d) as to the Advisor, but not to the Fund, that the Advisor (i) is duly registered as an investment adviser under the Advisers Act and will continue to be so registered for so long as this Agreement and the Advisor’s investment advisory agreement relating to the Fund remain in effect; (ii) has appointed a Chief Compliance Officer under Rule 206(4)-7 under the Advisers Act; (iii) has adopted written policies and procedures that are reasonably designed to prevent violations of the Advisers Act; (iv) has materially met and will seek to continue to materially meet for so long as this Agreement remains in effect, any other applicable federal or state requirements, or the applicable requirements of any regulatory or industry self-regulatory agency, to the extent that such requirements relate to the duties and obligations of the Advisor under this Agreement; and (v) will promptly notify the Sub-Advisor of the occurrence of any event that would disqualify the Advisor from serving as an investment adviser of a registered investment company pursuant to Section 9(a) of the 1940 Act;
(e) as to the Advisor, but not to the Fund, that the Advisor will provide the Sub-Advisor with a list of its affiliated broker-dealers, if any, and furnish such updates to that list as necessary during the term of this Agreement.
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The Sub-Advisor shall place orders for the purchase and sale of portfolio securities
for the Separate Account and will solicit broker-dealers to execute transactions in accordance with the Fund’s policies and restrictions regarding brokerage allocations. If applicable, the Sub-Advisor shall place orders pursuant to its investment determinations for the Separate Account either directly with the issuer or with any broker or dealer. If it executes portfolio transactions and selects brokers or dealers, the Sub-Advisor shall use its reasonable best efforts to seek the most favorable execution of orders, after taking into account all factors the Sub-Advisor deems relevant, including the breadth of the market in the security, the price of the security, the financial condition and execution capability of the broker or dealer, and the reasonableness of the commission, if any, both for the specific transaction and on a continuing basis. Consistent with this obligation, the Sub-Advisor may, to the extent permitted by law, purchase and sell portfolio securities to and from brokers and dealers who provide brokerage and/or research services (within the meaning of Section 28(e) of the Securities Exchange Act of 1934) to or for the benefit of the Separate Account and/or other accounts over which the Sub-Advisor or any of its affiliates exercises investment discretion. The Sub-Advisor is authorized to pay to a broker or dealer who provides such brokerage and/or research services a commission for executing a portfolio transaction for the Separate Account which is in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Advisor determines in good faith that such commission was reasonable in relation to the value of the brokerage and/or research services provided by such broker or dealer, viewed in terms of either that particular transaction or the Sub-Advisor’s overall responsibilities to the Fund. In no instance will portfolio securities be purchased from or sold to the Advisor or the Sub-Advisor or any affiliated person of either thereof; except as permitted by Rules and Regulations of the Securities and Exchange Commission.
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In addition, each of the Sub-Advisor and the Advisor shall promptly provide notice to the other of any inspection, notice or inquiry from any governmental, administrative or self-regulatory agency, including any deficiency letter, response to deficiency letter or similar communication or action, to the extent that such inspection, notice or inquiry may relate to the Separate Account or the services to be provided under this Agreement. To the extent that such inspection, notice, or inquiry relates to the Separate Account or the Fund, the Fund, the Trust, the Sub-Advisor or the Advisor, as applicable, shall promptly make available such documents to the Advisor or the Sub-Advisor, as applicable.
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To the Sub-Advisor at:
Mountaineer Partners Management, LLC
000 Xxxx 00xx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, XX 00000
Attn: Xxxx Xxx, Managing Member
E-mail: xxxx@xxxxxxxxxxxxxxxxxxx.xxx
Facsimile: (000) 000-0000
To the Advisor at:
Hatteras Funds, LLC
0000 Xxx Xxxxx Xxxx, 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 Board of Trustees or the Fund at:
0000 Xxx Xxxxx Xxxx, Xxxxx 000
Xxxxxxx, XX 00000-0000
Facsimile: (000) 000-0000
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with a copy to:
Drinker Xxxxxx & Xxxxx, LLP
Xxx Xxxxx Xxxxxx, Xxxxx 0000
Xxxxxxxxxxxx, XX 00000-0000
Attn: Xxxxxx X. Xxxxxxxx, Esq.
The effective date of any notice shall be (i) the date such notice is sent if such delivery is effected by hand or facsimile; (ii) one business day after the date such notice is sent if such delivery is effected by national overnight courier; or (iii) the fifth (5th) business day after the date of the mailing thereof.
The Sub-Advisor shall have no responsibility for making, arranging or otherwise facilitating the preparation or filing of the Fund’s reports on Form N-PX. Notwithstanding the foregoing, the Sub-Advisor will provide, upon request, furnish to the Advisor, the Fund or any of their respective agents or representatives, any necessary records of proxies voted by the Sub-Advisor with respect to securities in the Separate Account in connection with the Fund’s filing of its proxy voting record on such Form N-PX.
19. Binding Arbitration. The parties hereto agree that any dispute between or among any of the parties arising out of, relating to or in connection with this Agreement or the Fund or the Trust, shall be resolved exclusively through binding arbitration conducted in accordance with the commercial arbitration rules of the American Arbitration Association (the “AAA”) to the fullest extent permitted by law. Both the Advisor and Sub-Advisor, understand that Arbitration is final and binding on both parties and that each party in executing this agreement is waiving their rights to seek remedies in court, including the right to jury trial. The arbitration hearing shall be held in Raleigh, North Carolina. Disputes shall not be resolved in any other forum or venue. Each party will agree to the appointment of a single arbitrator within 30 business days after notice from the AAA of the filing of the demand for arbitration. If the two parties fail to agree on an arbitrator within the 30-day period, then each party will jointly appoint one arbitrator within 30 business days following the 30-day period. The two arbitrators nominated by the parties will attempt to agree on a third arbitrator within 30 business days of the appointment of the second arbitrator. If the two arbitrators fail to agree on the third arbitrator within the 30-day period, then the AAA will appoint the third arbitrator within 30 business days following the expiration of the second 30-day period. Any award rendered by the arbitrators will be final and binding on the parties hereto, and judgment upon the award may be entered in the courts of the state of North Carolina and/or the U.S. District Court for the Eastern District of North Carolina, or any other court having jurisdiction over the award or having jurisdiction over the parties or their assets. The arbitration agreement contained in this Section 19 will not be construed to deprive any court of its jurisdiction to grant provisional relief (including by injunction or order of attachment) in aid of arbitration proceedings or enforcement of an award. In the event of arbitration as provided in this Section 19, the arbitrators will be governed by and will apply the substantive (but not procedural) law of Delaware, to the exclusion of the principles of the conflicts of law of Delaware. The arbitration will be conducted in accordance with the procedures set out in the commercial arbitration rules of the AAA. If those rules are silent with respect to a particular matter, the procedure will be as agreed by the parties, or in the absence of agreement among or between the parties, as established by the arbitrators. Notwithstanding any other provision of this Agreement, this Section 19 will be construed to the maximum extent possible to comply with the laws of the State of Delaware, including the Uniform Arbitration Act (10 Del. C ss. 5701 et seq.) (the “Delaware Arbitration Act”). If, nevertheless, it is determined by a court of competent jurisdiction that any provision or wording of this Section 19, including any rules of the AAA, are invalid or unenforceable under the Delaware Arbitration Act or other applicable law, such invalidity will not invalidate all of this Section 19. In that case, this Section 19 will be construed so as to limit any term or provision so as to make it valid or enforceable within the requirements of the Delaware Arbitration Act or other applicable law, and, in the event such term or provision cannot be so limited, this Section 19 will be construed to omit such invalid or unenforceable provision.
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26. 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 Delaware law in a manner not in conflict with the provisions of the 1940 Act.
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IN WITNESS WHEREOF, each of the parties hereto has caused this Agreement to be duly executed by its authorized officer.
Mountaineer Partners Management, LLC
By: /s/ Xxxx Xxx
Name: Xxxx Xxx
Title: Managing Member
Hatteras Funds, LLC
By: /s/ J. Xxxxxxx Xxxxxx
Name: J. Xxxxxxx Xxxxxx
Title: Chief Operating Officer
By: /s/ J. Xxxxxxx Xxxxxx
Name: J. Xxxxxxx Xxxxxx
Title: Secretary
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