SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT
made this 11th day of September, 2018, between Aspiration Fund Adviser, LLC (the “Investment Adviser”), a Delaware limited liability company registered as an investment adviser under the Investment Advisers Act of 1940, as amended (the
“Advisers Act”), and Emerald Separate Account Management, LLC (the “Sub-Adviser”), a Delaware corporation registered as an investment adviser under the Advisers Act, with respect to the Aspiration Flagship Fund (the “Fund”), a series of Aspiration
Funds (the “Trust”).
WHEREAS,
the Trust is registered as an open-end, management investment company under the Investment Company Act of 1940, as amended (the “1940 Act”);
WHEREAS,
the Investment Adviser serves as investment adviser for the Fund pursuant to an Investment Advisory Agreement between the Trust, on behalf of the Fund, and the Investment Adviser dated as of the January 24, 2014, as amended (the “Advisory
Agreement”);
WHEREAS,
the Advisory Agreement permits the Investment Adviser to delegate certain of its duties under the Advisory Agreement to other investment advisers, subject to the requirements of the 1940 Act;
WHEREAS,
the Investment Adviser desires to retain Sub-Adviser to assist it in the provision of a continuous investment program for that portion of the Fund’s assets that the Adviser will assign to the Sub-Adviser, and Sub-Adviser is willing to render such
services subject to the terms and conditions set forth in this Agreement; and
WHEREAS,
the Adviser has received (and has provided to the Trust), at least 48 hours prior to the execution of this Agreement, a copy of Part II of the Sub-Adviser’s Form ADV, as amended;
NOW,
THEREFORE, in consideration of the premises and mutual covenants herein contained, it is agreed between the parties hereto as follows:
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1.
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Appointment. The Investment Adviser
hereby appoints the Sub-Adviser to act as investment adviser to the Fund for the period and on the terms set forth in this Agreement. The Sub-Adviser accepts such appointment and agrees to furnish the services herein set forth for the
compensation herein provided.
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2.
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Delivery of Documents. The Investment
Adviser has furnished the Sub-Adviser with copies, properly certified or authenticated, of each of the following:
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(a)
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resolutions of the Trust’s Board of Trustees authorizing the appointment of the Sub-Adviser as sub-adviser of the Fund and
approving this Agreement;
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(b)
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if and to the extent the Fund has any shareholders and to the extent required, (i) proof of shareholder approval of the appointment
of the Sub-Adviser, or (ii) a copy of any applicable orders of exemption issued by the Securities and Exchange Commission concerning shareholder approval requirements;
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(c)
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the most recent Prospectus, Summary Prospectus and Statement of Additional Information relating to any class of Shares representing
interests in the Fund (such Prospectus, Summary Prospectus and Statement of Additional Information, as presently in effect, and all amendments and supplements thereto, are herein collectively referred to as the “Prospectus”);
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(d)
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The Fund’s Advisory Agreement;
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(e)
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The Trust’s most recent effective registration statement and financial statements as filed with the Securities and Exchange
Commission (if any);
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(f)
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The Trust’s Agreement and Declaration of Trust and By-Laws; and
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(g)
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Any policies, procedures or instructions adopted or approved by the Trust’s Board of Trustees relating to obligations and services
provided by the Sub-Adviser.
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The Investment Adviser will furnish the Sub-Adviser from time to time with copies of all amendments
of or supplements to the foregoing.
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3.
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Management. Subject to the supervision
of the Investment Adviser, the Sub-Adviser will provide a continuous investment program for the Fund, including investment research and management with respect to the portion of the securities and investments and cash equivalents in the
Fund. The Sub-Adviser will determine from time to time what securities and other investments will be purchased, retained or sold by the Fund and place, from
time to time, orders for all purchases and sales made for the Fund. The Sub-Adviser will provide the services under this Agreement in accordance with
the Fund’s investment objectives, policies, and restrictions as stated in the Prospectus and resolutions of the Trust’s Board of Trustees, provided
that the Sub-Adviser has notice or knowledge of any changes by the Board of Trustees to such investment objectives, policies or restrictions.
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The Sub-Adviser is authorized on behalf of the Fund to (i) enter into agreements and execute any
documents required to meet the obligations of the Fund with respect to any investments made for the Fund Account which shall include any market and/or industry standard documentation and the standard representations contained therein; and (ii)
acknowledge the receipt of brokers’ risk disclosure statements, electronic trading disclosure statements and similar disclosures. The Sub-Adviser further shall have authority to instruct the Trust to: (i) pay cash for securities and other property
delivered for the Fund, and (ii) deposit margin or collateral which shall include the transfer of money, securities or other property to the extent necessary to meet the obligations of the Fund with respect to any investments made for the Fund
account. The Sub-Adviser shall not have the authority to cause the Trust to deliver securities and other property, or pay cash to the Sub-Adviser other than payment of the management fee provided for in this Agreement.
The Sub-Adviser further agrees that it:
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(a)
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will use the same skill and care in providing such services as it uses in providing services to its other accounts for which it has
investment responsibilities;
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(b)
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will conform with all applicable Rules and Regulations of the Securities and Exchange Commission (the “Commission”) under the 1940
Act and, in addition, will conduct its activities under this Agreement in accordance with any applicable regulations of any governmental authority pertaining to the investment advisory activities of the Investment Adviser;
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(c)
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will place or cause to be placed orders for a Fund either directly with the issuer or with any broker or dealer. Subject to the
provisions of Section 28(e) of the Securities Exchange Act of 1934, as amended, the Sub-Adviser may affect securities transactions which cause the Fund to pay an amount of commission in excess of the amount of commission another broker or
dealer would have charged, provided that the Investment Adviser determined in good faith that such amount of commission is reasonable in relation to the value of brokerage and research services provided by the broker or dealer utilized by
the Investment Adviser. However, a broker or dealer’s sale or promotion of Fund shares shall not be a factor considered by the Sub-Adviser or its personnel responsible for selecting brokers or dealers to effect securities transactions on
behalf of the Fund(s), nor shall the Sub-Adviser enter into any agreement or understanding under which it will direct brokerage transactions or revenue generated by those transactions to brokers or dealers to pay for distribution of Fund
shares. In no instance will portfolio securities be purchased from or sold to the Trust’s principal underwriter, the Investment Adviser, the Sub-Adviser or any affiliated person of the Trust, the Trust’s principal underwriter, Investment
Adviser or Sub-Adviser, except to the extent permitted by the 1940 Act and the Commission;
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(d)
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will maintain all books and records with respect to the securities transactions of the Fund and will furnish the Trust’s Board of
Trustees with such periodic and special reports as the Board may request; and
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(e)
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will treat confidentially and as proprietary information of the Trust all records and other information relative to the Trust and
the Fund, including a Fund’s portfolio holdings, and will not use such records and information for any purpose other than performance of its responsibilities and duties hereunder, except after prior notification to and approval in writing
by the Trust, which approval shall not be unreasonably withheld and may not be withheld where the Sub-Adviser 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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Notwithstanding any other provision to the contrary, the Sub-Adviser shall have no obligation to perform the following
services or to have employees of the Sub-Adviser perform the following roles, as applicable: (a) shareholder services or support functions, such as responding to shareholders’ questions about the Fund or its investments or strategies; (b) providing
employees of the Sub-Adviser to serve as officers of the Trust; (c) providing employees of the Sub-Adviser to serve as the Trust’s Chief Compliance Officer and associated staff.
The Sub-Adviser may delegate portfolio management and administrative and back office duties to its affiliates and may share such information as necessary to accomplish these purposes. In all cases, the Sub-Adviser shall remain liable as if such services were provided directly. No additional fees shall be imposed for such services except as otherwise agreed.
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4.
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Objective, Policies and Restrictions.
The Investment Adviser will, or will cause the Trust to, on an ongoing basis, notify the Sub-Adviser in advance in writing of each change in the fundamental and non-fundamental investment policies of the Fund and will provide the
Sub-Adviser with such further information concerning the investment objective, policies, restrictions and such other information applicable thereto as the Sub-Adviser may from time to time reasonably request for performance of its
obligations under this Agreement.
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5.
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Transaction Procedures. All
transactions will be consummated by payment to or delivery by the custodian designated by the Trust (the “Custodian”), or such depositories or agents as may be designated by the Custodian in writing, of all cash and/or securities due to
or from the Fund, and the Sub-Adviser shall not have possession or custody thereof. The Sub-Adviser shall advise the Custodian and confirm in writing to the Trust and to the administrator designated by the Trust or any other designated
agent of the Trust, all investment orders for the Fund placed by it with brokers and dealers. The Trust shall issue to the Custodian such instructions as may be appropriate in connection with the settlement of any transaction initiated
by the Sub-Adviser. The Trust shall be responsible for all custodial arrangements and the payment of all custodial charges and fees, and, the Sub-Adviser shall have no responsibility or liability with respect to custodial arrangements or
the acts, omissions or other conduct of the Custodian.
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6.
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Proxies. The Investment Adviser hereby
delegates to the Sub-Adviser the Investment Adviser’s discretionary authority to exercise voting rights with respect to the securities and other investments. The Sub-Adviser shall have the power to vote, either in person or by proxy, all
securities in which the Fund may be invested from time to time. The Sub-Adviser will provide the Investment Adviser with a copy of the Sub-Adviser’s proxy voting policies and procedures and establish a process for the timely distribution
of the Sub-Adviser’s voting record with respect to the Fund’s securities and other information necessary for the Fund to complete information required by Form N-1A under the 1940 Act and the Securities Act of 1933, as amended, Form N-PX
under the 1940 Act, and Form N-CSR under the Xxxxxxxx-Xxxxx Act of 2002, as amended, respectively.
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7.
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Agent. Subject to any other written
instructions of the Investment Adviser or the Trust, the Sub-Adviser is hereby appointed as agent and attorney-in-fact for the Fund for the limited purposes of executing account documentation, agreements, contracts and other documents as
the Sub-Adviser shall be requested by brokers, dealers, counterparties and other persons in connection with its management of the Fund. The Sub-Adviser agrees to provide the Investment Adviser and the Trust with copies of any such
agreements executed specifically on behalf of the Fund.
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8.
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Services Not Exclusive.
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(a)
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The Sub-Adviser and its officers may act and continue to act as investment managers for others, and nothing in this Agreement shall
in any way be deemed to restrict the right of the Sub-Adviser to perform investment management or other services for any other person or entity, and the performance of such services for others shall not be deemed to violate or give rise
to any duty or obligation to the Fund or the Trust.
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(b)
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Nothing in this Agreement shall limit or restrict the Sub-Adviser, affiliates, or any of either of their respective members,
partners, officers, or employees from buying, selling or trading in any securities for its or their own account. The Investment Adviser acknowledges (and represents that the Trust has acknowledged) that the Sub-Adviser, its affiliates and
their respective members, partners, officers, employees and other clients may, at any time, have, acquire, increase, decrease, or dispose of positions in investments which are at the same time being acquired or disposed of for the Fund.
The Sub-Adviser shall have no obligation to acquire for the Fund a position in any investment which the Sub-Adviser, any affiliate, or any of their respective members, partners, officers, or employees may acquire for its or their own
accounts or for the account of another client, so long as it continues to be the policy and practice of the Sub-Adviser not to favor or disfavor consistently or consciously any client or class of clients in the allocation of investment
opportunities so that, to the extent practical, such opportunities will be allocated among clients over a period of time on a fair and equitable basis.
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(c)
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The Sub-Adviser agrees that this Section does not constitute a waiver by the Trust or the Investment Adviser of the obligations
imposed upon the Sub- Adviser to comply with Sections 17(d) and 17(j) of the 1940 Act, and the rules thereunder, nor constitute a waiver by the Trust or the Investment Adviser of the obligations imposed upon the Sub-Adviser under Section
206 of the Investment Advisers Act of 1940 and the rules thereunder. Further, the Sub-Adviser agrees that this does not constitute a waiver by the Trust or the Investment Adviser of the fiduciary obligation of the Sub-Adviser arising
under federal or state law, including Section 36 of the 1940 Act. The Sub-Adviser agrees that this Section 8 shall be interpreted consistent with the provisions of Section 17(i) of the 1940 Act.
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9.
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Books and Records. In compliance with
the requirements of Rule 31a-3 under the 1940 Act, the Sub-Adviser hereby agrees that all records which it maintains for the Fund are the property of the Trust and further agrees to surrender promptly to the Trust any of such records upon
the Trust’s request, provided, however, that the Sub-Adviser may retain a copy of such records. The Sub-Adviser further agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act the records required to be maintained
by Rule 31a-1 under the 1940 Act.
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10.
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Expenses. During the term of this
Agreement, the Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement. Notwithstanding anything to the contrary, the Sub-Adviser shall, for absence of doubt, not (i) pay for the cost of
securities (including brokerage commissions, if any, taxes, borrowing costs (such as dividend expenses on securities sold short and interest)) purchased for the Fund, or (ii) be required to pay any other expenses of or for the Trust or
the Fund that have not been expressly assumed by the Investment Adviser or of which the Sub-Adviser has been provided less than 60 days advance notice.
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11.
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Compensation. For the services provided
pursuant to this Agreement, the Investment Adviser will pay the Sub-Adviser and the Sub-Adviser will accept as full compensation therefor a fee as set forth on Schedule A hereto. Such fee will be paid quarterly.
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12.
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Limitation of Liability. The
Sub-Adviser, shall not be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with the performance of this Agreement, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services or a loss resulting from willful misfeasance, bad faith or gross negligence on the part of the Sub-Adviser in the performance of its duties or from reckless disregard by it of its obligations
and duties under this Agreement.
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13.
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Duration and Termination. Unless sooner
terminated, this Agreement shall continue for an initial period of no more than two years from the date above, and thereafter shall continue automatically for successive annual periods with respect to the Fund, provided such continuance
is specifically approved at least annually (a) by the vote of a majority of those members of the Trust’s Board of Trustees who are not parties to this Agreement or interested persons of any party to this Agreement, cast in person at a
meeting called for the purpose of voting on such approval, and by the vote of a majority of the Trust’s Board of Trustees or (b) by a vote of the “vote of a majority of the outstanding voting securities” of the Fund, which means the
lesser of (i) 67% of the shares of the Fund represented at a meeting if holders of more than 50% of the outstanding shares of the Fund are present in person or by proxy or (ii) more than 50% of the outstanding shares of the Fund.
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14.
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Termination. Notwithstanding the
foregoing, this Agreement may be terminated, without the payment of any penalty,:
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(a)
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by the Trust by vote of the Trust’s Board of Trustees or by a vote a majority of the outstanding voting securities of the Fund;
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(b)
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by the Investment Adviser or the Sub-Adviser at any time on 60 days’ written notice;
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(c)
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by any party hereto upon written notice to the other party in the event of a breach of any provision of this Agreement by the other
party if the breach is not cured within 20 days of written notice of the breach; or
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(d)
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Immediately in the event of its assignment.
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15.
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Sub-Adviser’s Representations. The
Sub-Adviser hereby represents and warrants that it is willing and possesses all requisite legal authority to provide the services contemplated by this Agreement without violation of applicable law and regulations. The Sub-Adviser further
represents the following:
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(a)
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The Sub-Adviser is registered as an investment adviser under the Advisers Act;
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(b)
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The Sub-Adviser is a limited liability company duly organized and properly registered and operating 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 and as proposed to be conducted hereunder;
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(c)
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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 actions of its directors or shareholders, 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 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 violation of, or a material 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; and
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(d)
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The Form ADV provided to the Investment Adviser and the Trust by the Sub-Adviser is a true and complete copy of the form, and the
information contained therein is accurate and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not
misleading.
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16.
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Confidentiality. Without the prior
consent of the other party, no party shall disclose Confidential Information (as defined below) of any other party received in connection with the services provided under this Agreement. The receiving party shall use the same degree of
care as it uses to protect its own confidential information of like nature, but no less than a reasonable degree of care, to maintain in confidence the Confidential Information of the disclosing party. The foregoing provisions shall not
apply to any information that (i) is, at the time of disclosure, or thereafter becomes, part of the public domain through a source other than the receiving party, (ii) is subsequently learned from a third party that, to the knowledge of
the receiving party, is not under an obligation of confidentiality to the disclosing party, (iii) was known to the receiving party at the time of disclosure, or (iv) is generated independently by the receiving party, or (v) is disclosed
pursuant to applicable law, subpoena, applicable professional standards, request of a governmental or regulatory agency, or other process after reasonable notice to the other party. The parties further agree that a breach of this
provision would irreparably damage the other party and accordingly agree that each of them is entitled, in addition to all other remedies at law or in equity, to an injunction or injunctions without bond or other security to prevent
breaches of this provision.
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17.
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Amendment of this Agreement. No
provision of this Agreement may be changed, waived, discharged or terminated orally, and no amendment of this Agreement shall be effective until approved by the Board, including a majority of the trustees who are not interested persons of
the Adviser or of the Trust, cast in person at a meeting called for the purpose of voting on such approval, and (if required under interpretations of the 1940 Act by the Securities and Exchange Commission or its staff) by vote of the
holders of a majority of the outstanding voting securities of the Fund to which the amendment relates.
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18.
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Governing Law. This Agreement shall be
governed by and its provisions shall be construed in accordance with the laws of the State of Delaware.
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19.
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Notice. Any notice that is required to
be given by the parties to each other under the terms of this Agreement shall be in writing, delivered, or mailed postpaid to the other parties, or transmitted by facsimile with acknowledgment of receipt, to the parties at the following
addresses or email addresses, which may from time to time be changed by the parties by notice to the other party:
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If to the Sub-Adviser:
ATTN: Xxxxx Xxxxxx
Title: Chief Compliance Officer
Emerald Separate Account Management, LLC
0000 Xxxxxx Xxxx
Xxxxx, XX 00000
Email: xxxxxxxx@xxxxxxxxxxx.xxx
If to the Investment Adviser:
Xxxxxx Xxxxxx
Chief Executive Officer
Aspiration Fund Adviser, LLC
0000 Xxxxxxx Xxxxxx
Xxxxxx Xxx Xxx, XX 00000
Email: xxxxxxx@xxxxxxxxxx.xxx
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20.
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Survival. Sections 15 and 16,
respectively, shall survive for the duration of this Agreement and the Sub-Adviser shall promptly notify the Investment Adviser in writing upon becoming aware that any of the foregoing representations and warranties are no longer true or
accurate in all material effects.
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21.
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Counterparts. This Agreement may be
executed in one or more counterparts, each of which shall be deemed an original, all of which shall together constitute one and the same instrument.
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22.
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Captions. The captions herein are
included for convenience of reference only and shall be ignored in the construction or interpretation hereof.
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23.
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Severability. If any provision of this
Agreement shall be held or made invalid by a court decision or applicable law, the remainder of the Agreement shall not be affected adversely and shall remain in full force and effect.
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24.
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Entire Agreement. This Agreement,
together with all exhibits, attachments and appendices, contains the entire understanding and agreement of the parties with respect to the subject matter hereof.
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[remainder of page intentionally left blank]
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be executed by their officers designated below as
of the day and year first above written.
Aspiration Fund Adviser, LLC
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: President
Emerald Separate Account Management, LLC
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Executive VP
SCHEDULE A
TO THE
BETWEEN
ASPIRATION FUND ADVISER, LLC
AND
EMERALD SEPARATE ACCOUNT MANAGEMENT LLC
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Name of Fund
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Compensation
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Aspiration Flagship Fund
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Annual rate of 30% of fees received, in arrears, by Aspiration Fund Adviser, LLC for Advisory Services to the Aspiration Flagship
Fund calculated after Aspiration donates 10% of fees it receives to charity.
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Aspiration Fund Adviser, LLC
By: /s/ Xxxxxx Xxxxxx
Name: Xxxxxx Xxxxxx
Title: President
Emerald Separate Account Management, LLC
By: /s/ Xxx Xxxxx
Name: Xxx Xxxxx
Title: Executive VP
