INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT
made as of the 20th day of September, 2007, by and among Research Affiliates,
a
California limited liability company located in Pasadena, CA (the
“Sub-Advisor”), and Ascentia Capital Partners a Limited
Liability Corp. located in Reno, NV (the
“Advisor”).
WHEREAS,
Trust for Professional Managers, a Delaware statutory trust located at 000
X.
Xxxxxxxx Xxxxxx, Xxxxxxxxx XX 00000 (the “Trust”), is an
open-end management investment company registered under the Investment Company
Act of 1940, as amended (the “1940 Act”); and
WHEREAS,
the Ascentia Alternative Strategies Fund (the “Fund”) is a
separate series of the Trust having separate assets and
liabilities;
WHEREAS,
the Advisor and the Sub-Advisor are each engaged in the business of rendering
investment advice; and
WHEREAS,
the Advisor and Sub-Advisor are each registered as investment advisors under
the
Investment Advisers Act of 1940, as amended (the “Advisers
Act”); and
WHEREAS,
the Trust on behalf of the Fund has retained the Advisor to render investment
management services to the Fund pursuant to an Investment Advisory Agreement
dated as of September 20, 2007 (the “Investment Advisory Agreement”);
and
WHEREAS,
the Investment Advisory Agreement allows the Advisor to delegate certain
of its
responsibilities under the Investment Advisory Agreement to others;
and
WHEREAS,
the Advisor seeks to delegate certain of its responsibilities under the
Investment Advisory Agreement to the Sub-Advisor pursuant to this Investment
Sub-Advisory Agreement (the “Agreement”).
NOW,
THEREFORE, WITNESSETH: That it is agreed among the parties hereto as
follows:
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1.
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APPOINTMENT
OF SUB-ADVISOR.
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(a)
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Acceptance. The
Sub-Advisor is hereby appointed as a non-discretionary sub-advisor
and the
Sub-Advisor hereby accepts the appointment, on the terms herein
set forth
and for the compensation herein provided, to act as a non-discretionary
investment sub-adviser to that portion of the Fund’s portfolio designated
by the Advisor (the “Portfolio”).
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(b)
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Independent
Contractor. The Sub-Advisor shall for all purposes herein
be deemed to be an independent contractor and shall, unless otherwise
expressly provided or authorized, have no authority to act for
or be
deemed an agent of the Fund.
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(c)
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The
Sub-Advisor’s Representations. The Sub-Advisor represents,
warrants and agrees that it has all requisite power and authority
to enter
into and perform its obligations under this Agreement, and has
taken all
necessary corporate action to authorize its execution, delivery
and
performance of this Agreement.
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The
Sub-Advisor represents, warrants and agrees that it is registered as an adviser
under the Advisers Act. The Sub-Advisor will promptly notify the
Advisor of the occurrence of any event that would disqualify the Sub-Advisor
from serving as an investment adviser of an investment company pursuant to
Section 9(a) of the 1940 Act or otherwise.
The
Sub-Advisor has adopted a written code of ethics complying with the requirements
of Rule 17j-1 under the 1940 Act and, if it has not already done so, will
provide the Advisor and the Trust with a copy of such code of
ethics. On at least an annual basis, the Sub-Advisor will comply with
the reporting requirements of Rule 17j-1, which may include (i) certifying
to
the Advisor that the Sub-Advisor and its access persons have complied with
the
Sub-Advisor’s code of ethics with respect to the Portfolio, and (ii) identifying
any material violations which have occurred with respect to the
Portfolio. Upon reasonable notice from and the reasonable request of
the Advisor, the Sub-Advisor shall permit the Advisor, its employees and
its
agent to examine the reports required to be made by the Sub-Advisor pursuant
to
Rule 17j-1 and all other records relevant to the Sub-Advisor’s code of
ethics.
The
Sub-Advisor has adopted and implemented written policies and procedures,
as
required by Rule 206(4)-7 under the Advisers Act, which are reasonably designed
to prevent violations of federal securities laws by the Sub-Advisor, its
employees, officers, and agents. Upon reasonable notice to and
reasonable request, the Sub-Advisor shall provide the Advisor with access
to the
records relating to such policies and procedures as they relate to the
Portfolio. The Sub-Advisor will also provide, at the reasonable
request of the Advisor, periodic certifications, in a form reasonably acceptable
to the Advisor, attesting to such written policies and procedures.
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(d)
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The
Advisor’s Representations. The Advisor represents, warrants
and agrees that it has all requisite power and authority to enter
into and
perform its obligations under this Agreement, and has taken all
necessary
corporate action to authorize its execution, delivery and performance
of
this Agreement.
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The
Advisor further represents, warrants and agrees that it has the authority
under
the Investment Advisory Agreement to appoint the Sub-Advisor.
The
Advisor further represents and warrants that it has received a copy of
Part II of the Sub-Advisor’s Form ADV.
The
Advisor further represents and warrants that the Fund is either (i)
excluded from the definition of the term “pool” under Section 4.5 of the General
Regulations under the Commodity Exchange Act (“Rule 4.5”), or (ii) a qualifying
entity under Rule 4.5(b) for which a notice of eligibility has been
filed.
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The
Advisor has provided the Sub-Advisor with the Fund’s most current prospectus and
statement of additional information contained in the Trust’s registration
statement (collectively, the “Prospectus”) and the Trust’s Code
of Ethics and instructions, policies and directions of the Trustees pertaining
to the Advisor and the Fund, as in effect from time to time. The
Advisor shall promptly furnish to the Sub-Advisor copies of all material
amendments or supplements to the foregoing documents.
The
Advisor will provide timely information to the Sub-Advisor regarding such
matters as inflows to and outflows from the Fund and the cash requirements
of,
and cash available for investment in, the Fund.
The
Advisor will timely provide the Sub-Advisor with copies of monthly accounting
statements for the Fund, and such other information as may be reasonably
necessary or appropriate in order for the Sub-Advisor to perform its
responsibilities hereunder.
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(e)
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Plenary
authority of the Board of Trustees. The Sub-Advisor and
Advisor both acknowledge that the Fund is a mutual fund that operates
as a
series of the Trust under the authority of the Trust’s Board of Trustees
(the “Board of Trustees”).
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2.
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PROVISION
OF INVESTMENT SUB-ADVISORY
SERVICES.
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Within
the framework of the fundamental policies, investment objectives, and investment
restrictions of the Fund, and subject to the supervision and review of the
Advisor and the Board of Trustees, the Advisor shall have the sole and exclusive
responsibility for the making of all investment decisions for the Portfolio,
including purchase, retention and disposition of securities, in accordance
with
the Fund’s investment objectives, policies and restrictions as stated in the
Prospectus.
As
of the
date of this Agreement approximately 35% of the Fund’s
investable assets will be allocated to the Portfolio, and on each business
day
during the term of this Agreement the same percentage of the net cash derived
from purchases, or required for redemptions, of Fund shares will normally
be
added to or withdrawn from the Portfolio; provided, however, that the Advisor
has the right at any time to reallocate the portion of the Fund’s assets
allocated to the Portfolio pursuant to this Agreement if the Advisor deems
such
reallocation appropriate.
The
Sub-Advisor will, at its own expense:
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(a)
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advise
the Advisor in connection with investment policy decisions to be
made by
it regarding the Fund and, upon request, furnish the Advisor with
research, economic and statistical data in connection with the
Fund’s
investments and investment
policies;
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(b)
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submit
such reports and information as the Advisor or the Fund may reasonably
request to assist the Fund’s custodian (the “Custodian”), administrator or
fund accounting agent, in its or their determination of the market
value
of securities held in the Fund;
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(c)
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provide
to Advisor instructions as to the placement of orders for purchases
and
sales of portfolio investments for the
Fund;
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(d)
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maintain
and preserve the records relating to its activities hereunder required
by
applicable law to be maintained and preserved by the Sub-Advisor,
and the
Sub-Advisor hereby agrees that it shall provide to the Advisor
copies of
all records which it maintains relating to the Fund at the Advisor’s
expense upon the Fund’s request;
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(e)
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inform
the Advisor and the Board of Trustees of material changes in investment
strategy recommendations or tactics or in key
personnel;
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(f)
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furnish
to the Board of Trustees such information as may reasonably be
necessary
in order for such Trustees to evaluate this Agreement or any proposed
amendments hereto for the purpose of casting a vote pursuant to
Section 7
hereof;
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(g)
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notify
the Advisor of any material changes in its ownership within a reasonable
time prior to such changes; and
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(h)
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provide
reasonable assistance to the Trust in connection with the Trust’s
compliance with the Xxxxxxxx-Xxxxx Act and the rules and regulations
promulgated by the Securities and Exchange Commission thereunder,
and Rule
38a-1 of the 1940 Act. Such assistance shall include, but not
be limited to, (i) certifying periodically, upon the reasonable
request of
the Trust, that it is in compliance with all applicable “federal
securities laws,” as required by Rule 38a-1(e)(1) under the 1940 Act, and
Rule 206(4)-7 under the Advisers Act; and (ii) providing the Trust’s chief
compliance officer with direct access to its compliance personnel;
(iii)
providing the Trust’s chief compliance officer with periodic reports; and
(iv) promptly providing special reports to the Trust’s chief compliance
officer in the event of compliance
problems.
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3.
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ALLOCATION
OF EXPENSES.
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Each
party to this Agreement shall bear the costs and expenses of performing its
obligations hereunder. In this regard, the Advisor specifically
agrees that the Fund shall assume the expense of:
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(a)
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brokerage
commissions for transactions in the portfolio investments of the
Fund and
similar fees and charges for the acquisition, disposition, lending
or
borrowing of such portfolio
investments;
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(b)
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custodian
fees and expenses;
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(c)
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all
taxes, including issuance and transfer taxes, and reserves for
taxes
payable by the Fund to federal, state or other government agencies;
and
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(d)
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interest
payable on any Fund borrowings.
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4.
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SUB-ADVISORY
FEES.
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For
all
of the services rendered with respect to the Fund as herein provided, the
Advisor shall pay to the Sub-Advisor a fee (for the payment of which the
Fund
shall have no obligation or liability), based on the Current Net Assets of
the
Portfolio (as defined below), as set forth in Schedule A attached hereto
and
made a part hereof. Such fee shall be accrued daily and payable
monthly, as soon as practicable after the last day of each
calendar month. In the case of termination of this
Agreement with respect to the Fund during any calendar month, the fee with
respect to such Portfolio accrued to, but excluding, the date of termination
shall be paid promptly following such termination. For purposes of
computing the amount of advisory fee accrued for any day, “Current Net Assets”
shall mean the Portfolio’s net assets as of the most recent preceding day for
which the Fund’s net assets were computed.
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5.
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PORTFOLIO
TRANSACTIONS.
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In
connection with the investment and reinvestment of the assets of the Portfolio,
the Advisor is authorized to select the brokers or dealers that will execute
purchase and sale transactions for the Portfolio and to use all reasonable
efforts to obtain the best available price and most favorable execution with
respect to all such purchases and sales of portfolio securities for said
Portfolio. The Advisor shall maintain records adequate to demonstrate
compliance with the requirements of this section. Subject to the
policies as the Board of Trustees may determine and consistent with Section
28(e) of the Securities Exchange Act of 1934, as amended, the Advisor shall
have
the right to follow a policy of selecting brokers who furnish brokerage and
research services to the Fund or to the Advisor, and who charge a higher
commission rate to the Fund than may result when allocating brokerage solely
on
the basis of seeking the most favorable price and execution. The
Advisor shall determine in good faith that such higher cost was reasonable
in
relation to the value of the brokerage and research services provided and
shall
make reasonable reports regarding such determination and description of the
products and services obtained if so requested by the Fund.
The
Advisor, and not the Sub-Advisor, has the authority to direct the Custodian
to
open and maintain brokerage accounts for securities and other property,
including financial and commodity futures and commodities and options thereon
(all such accounts hereinafter called “brokerage accounts”) for and in the name
of the Fund and to execute for the Fund as its agent and attorney-in-fact
standard customer agreements with such broker or brokers as the Sub-Advisor
shall select as provided above. The Advisor may, using such of the
securities and other property in the Fund as the Advisor deems necessary
or
desirable, direct the Custodian to deposit for the Fund original and maintenance
brokerage and margin deposits and otherwise direct payments of cash, cash
equivalents and securities and other property into such brokerage accounts
and
to such brokers as the Advisor deems desirable or appropriate. The
Advisor shall cause all securities and other property purchased or sold for
the
Fund to be settled at the place of business of the Custodian or as the Custodian
shall direct. All securities and other property of the Fund shall
remain in the direct or indirect custody of the Custodian. The
Advisor shall notify the Custodian as soon as practicable of the necessary
information to enable the Custodian to effect such purchases and
sales.
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The
Sub-Advisor shall not have any authority to instruct the Custodian in any
manner.
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6.
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LIABILITY;
STANDARD
OF CARE.
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The
Sub-Advisor, its affiliates, agents and employees, shall be indemnified by
the
Advisor against all liabilities, losses or claims (including reasonable expenses
arising out of defending such liabilities, losses or claims):
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(a)
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arising
from the Fund’s or the Advisor’s directions to the Sub-Advisor or
Custodian, or brokers, dealers or others with respect to the making,
retention or sale of any investment or reinvestment hereunder;
or
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(b)
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arising
from the acts or omissions of the Advisor, the Custodian or the
Fund,
their respective affiliates, agents or
employees;
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except
for any such liability or loss which is due to the negligence, willful
misconduct, or bad faith of the Sub-Advisor, its affiliates, agents and
employees, or the Sub-Advisor’s reckless disregard of its duties and
obligations. The Sub-Advisor shall also be without liability
hereunder and shall be indemnified pursuant to this Section for any action
taken
or omitted by it in good faith and without negligence.
The
Sub-Advisor shall comply with all applicable laws and regulations in the
discharge of its duties under this Agreement; shall comply with the investment
policies, guidelines and restrictions of the Fund; shall act at all times
in the
best interests of the Fund; and shall discharge its duties with the care,
skill,
prudence and diligence under the circumstances then prevailing that a prudent
person acting in a like capacity and familiar with such matters would use
in the
conduct of a similar enterprise.
The
Sub-Advisor shall not be deemed by virtue of this Agreement to have made
any
representation or warranty that any level of investment performance or level
of
investment results will be achieved.
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7.
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TERM
AND TERMINATION OF THIS AGREEMENT; NO
ASSIGNMENT
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(a) This
Agreement shall go into effect as 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 (l) year so long as such
continuation is approved for the Fund at least annually by (i) the Board
of
Trustees or by the vote of a majority of the outstanding voting securities
of
the 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 1940 Act;
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(b) 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, by the Advisor,
or by
vote of a majority of the outstanding voting securities of the Fund without
the
payment of any penalties, upon sixty (60) days’ written notice to the
Sub-Advisor, and by the Sub-Advisor upon sixty (60) days’ written notice to the
Fund and the Advisor. In the event of a termination, the Sub-Advisor
shall cooperate in the orderly transfer of the Fund’s affairs and, at the
request of the Board of Trustees or the Advisor, transfer any and all books
and
records of the Fund maintained by the Sub-Advisor on behalf of the
Fund;
(c) This
Agreement shall terminate automatically in the event of any transfer or
assignment thereof, as defined in the 1940 Act; and
(d) This
Agreement will also terminate in the event that the Investment Advisory
Agreement is terminated.
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8.
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SERVICES
NOT
EXCLUSIVE.
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The
services of the Sub-Advisor to the Fund are not to be deemed exclusive and
it
shall be free to render similar services to others so long as its services
hereunder are not impaired thereby. It is specifically understood
that directors, officers and employees of the Sub-Advisor and of its
subsidiaries and affiliates may continue to engage in providing portfolio
management services and advice to other investment advisory
clients.
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9.
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NO
BORROWING.
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The
Sub-Advisor 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.
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10.
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AMENDMENT.
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No
provision of this Agreement may be changed, waived, discharged or terminated
orally, but only by an instrument in writing signed by all parties.
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12.
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NONPUBLIC
PERSONAL INFORMATION.
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Notwithstanding
any provision herein to the contrary, the Sub-Advisor hereto agrees on behalf
of
itself and its directors, trustees, shareholders, officers, and employees
(1) to
treat confidentially and as proprietary information of the Fund (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
Sub-Advisor. Such written approval shall not be unreasonably withheld
by the Trust and may not be withheld where the Sub-Advisor 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.
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12.
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ANTI-MONEY
LAUNDERING COMPLIANCE.
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The
Sub-Advisor 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 Sub-Advisor agrees to comply with the Trust’s Anti-Money
Laundering Policy and the AML Laws, as the same may apply to the Sub-Advisor,
now and in the future. The Sub-Advisor further agrees to provide to
the Trust and/or the Fund’s administrator such reports, certifications and
contractual assurances as may be reasonably requested by the Trust. The Trust
may disclose information regarding the Sub-Advisor 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.
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14.
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NOTICES.
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Notices
and other communications required or permitted under this Agreement shall
be in
writing, shall be deemed to be effectively delivered when actually received,
and
may be delivered by US mail (first class, postage prepaid), by facsimile
transmission, by hand or by commercial overnight delivery service, addressed
as
follows:
| ADVISOR: | ||
| Ascentia Capital Partners, LLC | ||
| 0000 Xxxxxx X Xxxx #X | ||
| Xxxx, XX 00000 | ||
| Attn: Xxxxx XxXxxxx | ||
| SUB-ADVISOR: | ||
| Research Affiliates, LLC | ||
| 000 Xxxxx Xxxx Xxxxxx, Xxxxx 000 | ||
| Xxxxxxxx, XX 00000 | ||
| Attn: Xxxxxx Xxxxxx, Principal | ||
| FUND: | ||
| Trust for Professional Managers | ||
| On behalf of the Ascentia Alternative Strategies Fund | ||
| 000 Xxxx Xxxxxxxx Xxxxxx, 0xx Xxxxx | ||
| Xxxxxxxxx, XX 00000 | ||
| Attn: Xxxxxx X. Spearo | ||
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15.
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GOVERNING
LAW.
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This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of California 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 1940
Act
and the Advisers Act and any rules and regulations promulgated
thereunder.
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16.
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ASSIGNMENT.
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This
Agreement may not be assigned by any party, either in whole or in part, without
the prior written consent of each other party.
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed as of the day first set forth above.
Ascentia
Capital Partners, LLC
By:
/s/
Xxxxxxx XxXxxxx
Name:
Xxxxxxx XxXxxxx
Title: President
Research
Affiliates, LLC
By:
/s/ Xxxxxx
Xxxxxx
Name:
Xxxxxx Xxxxxx
Title:
Principal
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SCHEDULE
A
FEES
| Series of Trust for Professional Managers | Annual Fee Rate |
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Ascentia
Alternative Strategies Fund
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1.95%
of average current net assets of the
Portfolio
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10
