SUB-ADVISORY AGREEMENT
Exhibit (d)(2)
AGREEMENT made this 3rd day of June, 2008 by and between SPA ETF, Inc. (the
“Adviser”), and Xxxxxxxx Partners, LLC (the “Sub-adviser”).
1. Duties of Sub-adviser. The Adviser hereby appoints the Sub-adviser to act as
investment Sub-adviser to each series listed on Appendix A hereto (a “Series”) of SPA ETF
Trust, a Delaware business trust (the “Registrant”), for the period and on such terms as
are set forth in this Agreement. The Adviser employs the Sub-adviser to manage the investment and
reinvestment of the assets of the Series, to continuously review, supervise and administer the
investment program of the Series, to determine in its discretion the securities to be purchased or
sold and the portion of the Series’ assets to be held uninvested, to designate the identity and
weighting of the Securities in the Deposit Securities and the Fund Securities (as such terms are
defined in the Registration Statement), to provide the Adviser and the Registrant with records
concerning the Subadviser’s activities which the Registrant is required to maintain, and to render
regular reports to the Adviser, the Registrant’s officers and Board of Trustees concerning the
Sub-adviser’s discharge of the foregoing responsibilities.
The Sub-adviser will oversee the maintenance of all books and records with respect to the
securities transactions of each Series, and will furnish the Board with such periodic and special
reports as the Board reasonably may request. In compliance with the requirements of Rule 31 a-3
under the 1940 Act, the Sub-adviser agrees that all records which it maintains for the Registrant
are the property of the Registrant, agrees to preserve for the periods prescribed by Rule 31 a-2
under the 1940 Act any records which it maintains for the Registrant and which are required to be
maintained by Rule 31 a-1 under the 1940 Act and further agrees to surrender promptly to the
Registrant any records which it so maintains, upon request by the Registrant. The Sub-adviser
shall discharge the foregoing responsibilities subject to the control of the Adviser and the
officers and the Board of Trustees of the Registrant, and in compliance with the objectives,
policies and limitations set forth in the Registrant’s Registration Statement (Nos. 811-22103;
333-1448565, including the Series’ prospectus and statement of additional information, applicable
laws and regulations. In carrying out its responsibilities hereunder, the Sub-adviser will consult
with the Adviser on a continuous basis regarding the management of the Series. The Sub-adviser
accepts such employment and agrees to render the services and to provide, at its own expense, the
office space, furnishings and equipment (including computer equipment (software and hardware)), and
the personnel required by it to perform the services on the terms and for the compensation provided
therein.
2. Portfolio Transactions. The Sub-adviser is authorized to select the brokers or
dealers that will execute the purchases and sales of securities for the Series and is directed to
use its best efforts to obtain the best available price and most favorable execution. The
Sub-adviser may, on occasions when it deems the purchase or sale of a security to be in the best
interests of the Series as well as its other customers aggregate, to the extent permitted by
applicable laws and regulations, the securities to be sold or purchased in order to obtain the best
net price and the most favorable 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
Sub-adviser in the manner it considers to be the most equitable and consistent with its fiduciary
obligations. The execution of such transactions shall not be deemed to represent an unlawful act
or breach of any duty created by this Agreement or otherwise. The Sub-adviser will promptly
communicate to the Adviser and the officers and Trustees of the Registrant such information
relating to Series transactions as they may reasonably request.
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3. Compensation of the Sub-adviser. For the services to be rendered by the
Sub-adviser as provided in Section I of this Agreement, the Adviser shall pay to the Sub-adviser at
the end of each month an advisory fee accrued daily and payable monthly based on an annual
percentage rate of each Series’ average daily net assets. The annual percentage rate for each
Series is set forth on Appendix A hereto. Neither the Registrant nor the Series shall be
responsible for any portion of the compensation payable to the Sub-adviser hereunder. In addition,
the Adviser shall be responsible for extraordinary expenses incurred by the Sub-adviser in
performing its services hereunder, including, without limitation, expenses incurred with respect to
proxy voting execution, advice and reporting.
In the event of termination of this Agreement, the fee provided in this Section shall be
computed on the basis of the period ending on the last business day on which this Agreement is in
effect, subject to a pro rata adjustment based on the number of days elapsed in the month as a
percentage of the total number of days in such month.
4. Reports. The Adviser agrees to furnish to the Sub-adviser current prospectuses,
proxy statements, reports to shareholders, financial statements and such other information relating
to the Series as the Sub-adviser may reasonably request. The Sub-adviser agrees to furnish to the
Adviser and to the Registrant such information concerning its own affairs as the Adviser or the
Registrant may reasonably request, including copies of its Form ADV and any other filings of the
Sub-adviser with the U.S. Securities and Exchange Commission and certified copies of its financial
statements.
5. Status of Sub-adviser. The services of the Sub-adviser to the Adviser and the
Series are not to be deemed exclusive, and the Sub-adviser shall be free to render similar services
to others.
6. Liability of Sub-adviser. (a) In the absence of (i) willful misfeasance, bad faith
or gross negligence on the part of the Sub-adviser in performance of its obligations and duties
hereunder, (ii) reckless disregard by the Sub-adviser of its obligations and duties hereunder or
(iii) a loss resulting from a breach of fiduciary duty by the Sub-adviser with respect to the
receipt of compensation for its services (in which case any award of damages shall be limited to
the period and the amount set forth in Section 36(b)(3) of the Investment Company Act of 1940 (the
“1940 Act”), the Subadviser shall not be subject to any liability whatsoever to the Adviser
of the Series, the Registrant, or to any shareholder of the Series, for any error of judgment,
mistake of law or any other act or omission in the course of, or connected with, rendering services
hereunder including, without limitation, for any losses that may be sustained in connection with
the purchase, holding, redemption or sale of any security on behalf of the Series, (b) in no event
shall the Sub-adviser be liable for (i) for acting in accordance with instructions from Adviser,
(ii) for special, consequential or punitive damages, or (iii) or for any losses due to forces
beyond the control of the Sub-adviser including, without limitation, strikes, work stoppages, acts
of war or terrorism, insurrection, revolution, nuclear or natural catastrophes or acts of God, and
interruptions, loss or malfunctions of utilities or communications services, (c) Adviser shall
indemnify Sub-adviser and hold it harmless against any and all claims, losses, liabilities, damages
or expenses, including attorneys’ fees and expenses, howsoever arising from or in connection with
this Agreement or the performance of its own duties hereunder, provided that nothing contained
herein shall require that Subadviser be indemnified for its gross negligence or willful misconduct.
7. Permissible Interests. Subject to and in accordance with the Declaration of Trust
of the Registrant and applicable law and regulation, Trustees, officers, agents and shareholders of
the Registrant and/or the Adviser are or may be interested in the Sub-adviser (or any successor
thereof) as Trustees, officers, agents, shareholders or otherwise; Trustees, officers, agents and
shareholders of the Sub-adviser are or may be interested in the Registrant and/or the Adviser as
Trustees, officers, shareholders or otherwise; and the Sub-adviser (or any successor) is or may be
interested in the Registrant and/or the
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Adviser as a shareholder or otherwise; and the effect of any such interrelationships shall be
governed by said Declaration of Trust and applicable law and regulations, including the provisions
of the 1940 Act.
8. Duration and Termination. This Agreement shall be effective as of the date (the
“Effective Date”) this Agreement has been approved (i) by a vote of the majority of those
members of the Board of Trustees of the Registrant who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the purpose of voting
on such approval, and (ii) by a vote of a majority of the outstanding securities of each Series.
Unless sooner terminated as provided herein, this Agreement shall continue for two years from the
Effective Date and thereafter shall continue for periods of one year so long as such continuance is
specifically approved at least annually (a) by the Adviser and (b) (1) by the vote of a majority of
the members of the Board of Trustees of the Registrant who are not parties to this Agreement or
interested persons of any such party, cast in person at a meeting called for the purpose of voting
on such approval, and (2) by the Board of Trustees of the Registrant or by vote of a majority of
the outstanding voting securities of the Series. This Agreement may be terminated by the Adviser
or by the Series at any time, without the payment of any penalty (in the case of termination by the
Series, by vote of a majority of the entire Board of Trustees of the Registrant or by vote of a
majority of the outstanding voting securities of the Series), on 60 days’ written notice to the
Sub-adviser and, in the case of termination by the Adviser, to the Registrant. This Agreement may
be terminated by the Sub-adviser at any time, without the payment of any penalty, upon 60 days’
written notice to the Adviser and the Series. This Agreement will automatically and immediately
terminate in the event of its assignment. Any notice under this Agreement shall be given in
writing, addressed and delivered or mailed postpaid, to the other party at any office of such party
and shall be deemed given when received by the addressee. As used in this Section 9, the terms
“assignment”, “interested persons”, and “a vote of a majority of the outstanding voting securities”
shall have the respective meanings set forth in Section 2(a)(4), Section 2(a)(19) and Section
2(a)(42) of the 1940 Act.
9. Amendment of Agreement. This Agreement may be amended by mutual consent of the
parties, but the consent of the Registrant must also be obtained, which consent must be approved
(a) by vote of majority of those members of the Board of Trustees of the Registrant who are not
parties to this Agreement or interested persons of any such party, cast in person at a meeting
called for the purpose of voting on such amendment, and (b) by “vote of a majority of the
outstanding voting securities of the Series.
10. Severability. If any provisions of this Agreement shall be held or made invalid
by a court decision, statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
11. Applicable Law. This Agreement shall be construed in accordance with the laws of
the State of New York, provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
12. Counterparts. This Agreement may be executed in one or more counterparts, each of
which shall be deemed to be an original.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their officers
thereunto duly authorized as of the day and year first written above.
| SPA ETF, INC. | Xxxxxxxx Partners | |||||||||
By:
|
/s/ Xxxxxx Xxxxx Drain
|
By: | /s/ Xxxx X. Xxxxxxxx
|
|||||||
Name:
|
Xxxxxx Xxxxx Drain | Name: | Xxxx X. Xxxxxxxx | |||||||
Title:
|
Director | Title: | President | |||||||
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Appendix A
Company agrees to pay Sub-Adviser under the following schedule:
Advisory fee Schedule:
To be calculated on the total combined SPA ETF Inc assets under management by the Sub-adviser.
$0 to $100,000,000 Assets Under Management (AUM)
|
= 5bps | |
$100,000,000 to $200,000,000 AUM
|
= 4bps | |
$200,000,000+ AUM
|
= 3bps |
Subject to a minimum relationship fee per year (Computed quarterly) of $2,500.00 per fund under
management. This will be pro-rated across all the funds based upon the AUM of the individual funds
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