SUBADVISORY AGREEMENT
Exhibit 10.1
BY AND BETWEEN:
GUIDANCE CAPITAL LLC,
an Illinois limited liability company (“Subadviser”), and |
|
ASPEN PARTNERS, LTD.,
a Delaware limited liability company
(“Adviser”), and |
|
a Delaware limited liability company
(“Fund”) |
WHEREAS, the Fund is a professionally managed investment fund;
WHEREAS, the Adviser has established the Aspen Diversified Fund, (the “Fund”) which has been established under the laws of the State of Delaware to invest in a portfolio of Investment Funds (as defined
below), which invest and trade in a broad range of securities, currencies, commodities and other financial instruments;
WHEREAS, the Adviser serves as Manager to the Fund, pursuant to an advisory agreement (the “Advisory Agreement”) by and between the Fund and Adviser, to provide discretionary investment management
services to the Fund; and
WHEREAS, Adviser desires to appoint Subadviser
to provide investment advice and certain related services to Adviser in respect
of the Fund, and Subadviser wishes to accept such appointment on the terms and
subject to the conditions set forth in this Agreement;
WHEREAS, an Investment Committee will be
established under a separate Investment Committee Operating Agreement to
oversee investment decisions of the Fund;
NOW, THEREFORE, in consideration of the premises
and for other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto, intending to be legally bound hereby, agree
as follows:
1. Appointment
of Subadviser
Adviser hereby appoints Subadviser to provide, at
Subadviser’s expense, Portfolio Management Services (as defined in Section 2)
with respect to those assets belonging to the Fund that the Adviser designates
from time to time (the “Assets”), and Subadviser hereby accepts such
appointment, on the terms and subject to the conditions set forth in this
Agreement.
Exhibit 10.1
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2. Responsibilities
of Subadviser
Subadviser acknowledges that the Fund will seek to achieve its investment objective(s) (“Fund Objective(s)”) by investing and reinvesting its assets primarily in a portfolio of equity interests issued by limited partnerships, limited liability companies, business trusts and similar business vehicles whose primary business is investing in securities and other financial instruments but that are not registered or required to register as investment companies under the Investment Company Act of 1940, as amended (the “1940 Act”) by virtue of the exclusion from the definition of “investment company” provided by Section 3(c)(1) or Section 3(c)(7) of the 1940 Act (“Investment Funds”). The Fund may also invest its assets directly pursuant to investment management agreements granting the portfolio manager (“Portfolio Manager”) of an Investment Fund discretionary investment authority on a managed account basis, or through the creation of a separate investment vehicle (any such managed account or investment vehicle, a “Portfolio Account”). Accordingly, in providing sub-advisory services to Adviser and the Fund hereunder, Subadviser shall perform the following duties, in each case based upon its professional skill, experience and judgment:
(a) obtaining and evaluating such economic, statistical and
financial data and information and undertaking such additional investment
research as shall be necessary or advisable in the judgment of Subadviser for
making recommendations regarding the management of the investment and
reinvestment of the assets belonging to the Fund in accordance with the Fund Objective(s);
(b) identifying Investment Funds and/or Portfolio Managers that Subadviser believes are appropriate for the Fund in light of the Fund
Objective(s), performing all necessary due diligence on the Portfolio Managers of such Investment Funds, and recommending such Investment Funds and/or Portfolio Managers to the Investment Committee;
(c) recommending allocations of the Assets among such
appropriate Investment Funds and/or Portfolio Accounts to the Investment
Committee in light of the Fund Objective(s);
(d) monitoring the performance of the Investment Funds in which
the Fund has invested with a view to determining whether continued investment
by the Fund in such Investment Funds is appropriate in light of the Fund
Objective(s);
(e) evaluating and recommending appropriate changes to the Fund
Objective(s) from time to time;
(f) maintaining the appropriate staff required to fulfill the
obligations of the Subadviser under this Agreement, including the hiring a
full-time analyst to provide managed futures research;
(g) maintaining all records as may be required by the Securities
and Exchange Commission, National Futures Association, Commodities Futures
Trading Commission or any other government or self-regulatory agency who may
have jurisdiction over the Fund and its policies, as such records pertain to
the responsibilities of the Subadviser;
(h) providing such other advice and services as Adviser or the
Investment Committee may from time to time reasonably request in connection
with the investment operations of the Fund which the Subadviser is designated
to manage; and
(i) regularly reporting to Adviser and the Investment Committee
with respect to the implementation of the investment policies of the Fund, and
reporting on a monthly basis to the Adviser and the Investment Committee
regarding the Portfolio Managers and/or Investment Funds recommended by the
Subadviser to which the Fund has allocated assets.
(j) providing marketing support to Adviser including
participation in conference calls, seminars and meetings as necessary, as well
as review of promotional materials, and reasonable assistance in creating
monthly commentary and periodic reports regarding timely information pertaining
to the Fund;
(k) it being understood that Subadviser’s role is limited to
making recommendations to the Investment Committee and that Subadviser shall
have no authority to select Portfolio Managers, change allocations of Fund
assets, or exercise investment discretion.
Exhibit 10.1
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3. Compensation
As compensation for its services hereunder, Adviser
shall pay Subadviser compensation calculated and payable in the manner set out
in Schedule A hereto and in accordance with the Fund’s Operating Agreement.
4. Standard
of Care/Representations
(a) Subadviser shall have no obligations to the Fund or Adviser
other than those expressly set forth in this or any other agreement between the
Adviser and Subadviser and any other obligations arising under applicable law.
(b) Subadviser shall not be liable for any error in judgment or
mistake of law or for any damage or loss suffered by the Fund in connection with the subject matter of this Agreement, including but not limited to any damage or loss incurred by reason of any act or omission of the Investment
Committee, Adviser, Sub-Adviser, the Fund’s custodian or administrator, any
bank, broker, dealer, investment manager of any Investment Fund, or any agent,
member, partner, director, officer or employee of any of them, except to the
extent such damage or loss arises from willful misfeasance, bad faith or gross
negligence on the part of Subadviser, or reckless disregard of Subadviser’s
obligations and duties hereunder.
(c) Subadviser’s responsibility under this Agreement is to
furnish Adviser with investment advisory services based upon Subadviser’s
professional skill, experience and judgment, and Subadviser makes no representation
or warranty (i) as to the accomplishment of any particular investment results
by any Investment Fund or the Fund’s portfolio as a whole, or (ii) as to the
accuracy or completeness of any information supplied by Subadviser to Adviser,
the Fund or the Fund’s custodian or administrator which is provided by an
Investment Fund (or the Portfolio Manager thereof) or other third-party to
Subadviser and conveyed by Subadviser (either in its entirety or in excerpted
format to any or all of them). Notwithstanding the foregoing, Subadviser shall
only provide to Adviser, the Fund and the Fund’s custodian or administrator
information which the Subadviser believes to be accurate and complete.
(d) Subadviser shall not: (i) have any investment
discretion with respect to the allocation of Fund assets; (ii) be responsible
for, or obligated hereunder to provide advice with respect to, the effect of
the tax laws and regulations of any jurisdiction or commodities and securities
laws and regulations of any jurisdiction; or (iii) at any time have
custody of the assets of the Fund.
(e) Subadviser represents and warrants that:
(i) it is a limited
liability company duly formed and validly existing under the laws of the State
of Illinois;
(ii) it has full
limited liability company power and authority to perform its obligations under
this Agreement;
(iii) this Agreement
has been duly and validly authorized, executed and delivered on behalf of
Subadviser and is a valid and binding agreement of Subadviser enforceable
against Subadviser in accordance with its terms;
Exhibit 10.1
-3-
(iv) the execution
and delivery of this Agreement by Subadviser, the incurrence by Subadviser of
the obligations set forth in this Agreement and the performance by Subadviser
of such obligations will not violate, or constitute a breach of or a default
under, the constituent documents of Subadviser or any agreement or instrument
by which it is bound, or, to the best of Subadviser’s knowledge, any order,
rule, law or regulation applicable to Subadviser of any court, governmental
body, administrative agency or self-regulatory authority having jurisdiction
over Subadviser;
(v) there is not
pending or, to the best of Subadviser’s knowledge, threatened, any action, suit
or proceeding before or by any court or other governmental or self-regulatory
authority to which Subadviser is a party, which might reasonably be expected to
result in any material adverse change in the financial condition or regulatory
qualifications of Subadviser;
(vi) it, and each of
its principals and employees, has all governmental, regulatory and exchange
licenses and approvals required to perform its obligations hereunder; and
(vii) it will not,
and will not permit its affiliates to, distribute offering or other materials
relating to the Fund or take any other action in the nature of a general solicitation,
public offering or advertisement of the Fund or that might call into question
the characterization as a private placement exempt from registration under the
federal securities laws of the Fund’s issuance of interests.
(f) Adviser hereby represents and warrants to Subadviser that:
(i) it is a limited
liability company duly formed and validly existing under the laws of the State
of Delaware;
(ii) it has full
limited liability company power and authority to perform its obligations under
this Agreement and the Advisory Agreement;
(iii) this Agreement
and the Advisory Agreement have been duly and validly authorized, executed and
delivered on its behalf and are its valid and binding agreements, enforceable
against it in accordance with their respective terms;
(iv) the execution
and delivery of this Agreement and the Advisory Agreement by it, the incurrence
of the obligations by it set forth herein and the performance by it of such
obligations will not violate, or constitute a breach of or default under, its
constituent documents or any agreement or instrument by which it is bound or,
to the best of its knowledge, any order, rule, law or regulation applicable to
it of any court, governmental body, administrative agency or self-regulatory
authority having jurisdiction over it;
(v) there is not
pending or, to the best of its knowledge, threatened, any action, suit or
proceeding before or by any court or other governmental or self-regulatory
authority to which it is a party, which might reasonably be expected to result
in any material adverse change in its financial condition or regulatory
qualifications; and
(vi) it, and each of
its directors, officers and employees, has all governmental, regulatory and
exchange licenses and approvals required to conduct its business and perform
its obligations hereunder and under the Advisory Agreement.
(vii) it will not,
and will not permit its affiliates to, (A) make any representations of any kind
relating to the Subadviser, or (B) use the Subadviser’s name or logo in any
marketing material which has not been approved in advance by the Subadviser in
writing.
5. Term and
Termination
This Agreement shall become effective upon its
execution, and:
Exhibit 10.1
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(a) this Agreement may be terminated at any time, without
payment of any penalty, (i) by Adviser or (ii) by the Investment Committee in
each case by not less than ninety days’ written notice delivered or mailed by
registered mail, postage prepaid, to Subadviser, or immediately in the event
that (i) senior key investment personnel leave Subadviser and Adviser concludes
that the loss of the services of such personnel could materially adversely
affect Subadviser’s performance hereunder, (ii) Subadviser or senior key
investment personnel of Subadviser are indicted for a felony involving moral
turpitude or that could cause material harm to Subadviser or its reputation,
(iii) senior key investment personnel of the Subadviser (for purposes hereof,
senior key investment personnel of the Subadviser shall be Xx. Xxxxx Xxx and
Xx. X. Xxxxxxxxxx Elliman, III) are or become ineligible to serve in the
capacities outlined herein, (iv) the commencement of enforcement proceedings
against Subadviser or any employee of Subadviser by the SEC, the Commodity
Futures Trading Commission or any state securities regulator, (v) failure of
Subadviser or its employees to maintain required licenses and registrations to
perform duties hereunder, or (vi) Subadviser commits a material breach of this
Agreement or there is a material failure by Subadviser to perform its duties
hereunder and, if such breach or failure to perform is susceptible to cure,
such breach or failure to perform is not cured within ten business days of the
Subadviser’s knowledge of such breach or failure to perform.
(b) this Agreement may be terminated by Subadviser at any time
by not less than 180 days’ written notice delivered or mailed by registered
mail, postage prepaid, to the Adviser;
(c) except as otherwise set forth in this Section 5, this
Agreement shall continue in effect for two years from the date of execution,
and thereafter shall automatically renew for successive one (1) year terms
unless terminated in accordance with sub-sections (a) and (b) above; and
(d) this Agreement shall terminate automatically as set forth in
Section 14.
In the event that this Agreement is terminated,
Subadviser agrees to cooperate with Adviser and any successor subadviser to
Subadviser and provide such information that is reasonably related to existing
investments by the Fund in order to ensure continuous, high quality services
are provided to the Fund; provided, however, that it is understood that
Subadviser shall not be responsible for any act or omission of Adviser or any
successor subadviser.
6. Nonliability
of Subadviser
Notwithstanding any other provisions of this Agreement,
in the absence of willful misfeasance, bad faith or gross negligence on the
part of Subadviser, Subadviser, including its officers, partners, employees or
agents, shall not be subject to any liability to Adviser or the Fund, or to any
investor, member, officer, director, partner or manager thereof, for any act or
omission in the course of, or connected with, rendering services hereunder.
7. Certain
Information
Subadviser shall promptly notify Adviser in writing of
the occurrence of any of the following events: (a) Subadviser shall fail to be
registered as an investment adviser under the Advisers Act and under the laws
of any jurisdiction in which Subadviser is required to be registered as an
investment adviser in order to perform its obligations under this Agreement or
any other agreement concerning the provision of investment advisory services to
the Fund; (b) Subadviser shall fail to be registered as a commodity trading
advisor under the Commodity Exchange Act and under the laws of any jurisdiction
in which Subadviser is required to be registered as a commodity trading advisor
in order to perform its obligations under this Agreement or any other agreement
concerning the provision of investment advisory services to the Fund; (c)
Subadviser shall have been served or otherwise have notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board or body, involving the affairs of the Fund; (d) a change in
control of Subadviser or any parent of Subadviser is proposed, pending,
contemplated or shall have occurred (provided that the requirement to provide
prompt notice of events identified in this clause (d) shall not require
Subadviser to disclose any confidential information or unannounced plans, and
provided further that Subadviser shall in any event provide notice of events
identified in this clause (d) by the earlier of (i) the time Subadviser or any
parent of it executes definitive documentation with respect to such an event
(unless such definitive documentation specifically prohibits Subadviser from
disclosing the agreement at such time) and (ii) the time public announcement of
such an event is made); (e) there is a material adverse change in the business
or financial condition of Subadviser (provided that Subadviser shall not be
liable for damages to the extent due to Subadviser’s failure to provide notice
of such a material adverse change); or (f) any event the occurrence of which
may permit the Adviser immediately to terminate this Agreement pursuant to
Section 5(a).
Exhibit 10.1
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8. Status of
Subadviser
The services of the Subadviser to the Fund are not to
be deemed exclusive, and the Subadviser shall be free to render similar
services to others so long as such services do not impair the services rendered
to the Adviser or the Fund. It is understood and agreed that Subadviser shall
be deemed to be an independent contractor and that, except as otherwise
provided herein, Subadviser shall not have authority to act for, represent or
bind in any way, and shall not otherwise be deemed to be an agent of, the Fund
or Adviser. Nothing contained herein (other than Adviser’s or Subadviser’s
ownership of a membership interest in the Fund) shall create or constitute
Subadviser or any Investment Fund and the Fund or Adviser as members of any
partnership, limited liability company, joint venture, association, syndicate,
unincorporated business or other separate entity, or shall be deemed to confer
on any of them any express, implied or apparent authority to incur any
obligation or liability on behalf of any other such entity (other than as set
forth in this Section 8).
9. Reports
The Subadviser shall provide
to the Adviser, on a monthly basis, a report which contains the valuation or an
estimate of such valuation for each Investment Fund. The Subadviser will also
maintain the copies of the valuation support documentation received, if any,
from Investment Funds and/or Portfolio Managers. The Subadviser shall not
incur any liability or responsibility for any determination made, advice given
or other action taken or omitted by it in good faith with respect to the
determination of the value of the Investment Funds or the value of the assets
of the Fund.
10. Indemnification
The Subadviser shall give the
Fund and the Adviser the benefit of its best judgment and efforts in rendering
services hereunder and it is agreed as an inducement to the Subadviser’s
undertaking these services that the Fund shall indemnify the Subadviser, its
affiliates, and any member, partner, shareholder, manager, director, employee
or agent of the Subadviser or any such affiliate (“Indemnitee”) against any and
all losses, claims, damages, liabilities, expenses (including reasonable legal
fees and expenses), judgments, fines, amounts paid in settlement, and other
amounts actually and reasonably or incurred by such Indemnitee in connection
with any and all claims, demands, actions, suits or proceedings (including
arbitration and mediation proceedings and actions by or in the right of the
Fund), civil, criminal, administrative or investigative, that relate, directly
or indirectly, to acts or omissions (or alleged acts or omissions) of such
Indemnitee in connection with this Agreement and in which such Indemnitee may
be involved, or is threatened to be involved, as a party, witness or otherwise,
whether or not the same shall proceed to judgment or be settled or otherwise be
brought to a conclusion (collectively, “Losses”) except to the extent that it
is finally adjudicated that an act or omission of an Indemnitee was material to
the matter giving rise to such Losses and was committed by such Indemnitee with
fraud, bad faith, gross negligence or willful misconduct. The termination of
any proceeding by judgment, order or settlement does not create a presumption
does not create a presumption that an Indemnitee did not meet the requisite
standard of care set forth in this Section 10.
Exhibit 10.1
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11. Authorized
Persons
Each party hereto will provide the other parties with a
schedule of the persons authorized to give or receive instructions on behalf of
such party hereunder, and shall amend such schedule as may be necessary from
time to time. Each party hereto may rely on the authority of any person
identified in such schedule and shall not be liable for any actions taken or
not taken hereunder in good faith reliance upon the authority of any such
person.
12. Assignment
This Agreement will terminate automatically, without
the payment of any penalty, in the event of its assignment or in the event that
the Advisory Agreement shall have terminated for any reason.
13. Amendments;
Waivers
This Agreement may be amended at any time by mutual
written consent of the parties. No waiver shall be deemed by any course of
conduct or acquiescence and no waiver shall be enforceable against any party
hereto unless in writing and signed by the party against whom such waiver is
claimed.
14. Survival
of Obligations
Provisions of this Agreement that by their terms or by
their context are to be performed in whole or in part after termination of this
Agreement shall survive any termination of this Agreement, including
obligations under Section 3 with respect to compensation earned by the
Subadviser prior to such termination but unpaid at the time of termination.
15. Miscellaneous
(a) The headings in this Agreement are included for the
convenience or reference only and in no way define or limit any of the
provisions hereof or otherwise affect their construction or effect.
(b) This Agreement shall be governed by the laws of the State of
Georgia and the laws applicable therein.
(c) Any notice required or permitted to be given hereunder shall
be deemed to be sufficiently given if such notice is delivered or sent by
facsimile as hereinafter set forth. Any notice delivered shall be deemed to
have been given on the date of delivery. Any notice sent by facsimile shall be
deemed to be delivered on the day it is sent unless it is sent on a day that is
not a business day or is sent after 4:00 p.m. (New York City time) on a
business day, in which case it shall be deemed to be delivered on the next
business day. A “business day” is a day on which the New York Stock Exchange
is open for business. Notice shall be effectively given, if delivered or sent
by facsimile to the following addresses:
(i) if to
Subadviser, to it at:
Guidance Capital L.L.C
XX Xxx 000
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
XXX
Attention: X. Xxxxxxxxxx Elliman, III
Facsimile: (000) 000-0000
XX Xxx 000
000 Xxxxxxxx Xxxx
Xxxxxxxx, XX 00000
XXX
Attention: X. Xxxxxxxxxx Elliman, III
Facsimile: (000) 000-0000
Exhibit 10.1
-7-
(ii) if to Adviser,
to it at:
Aspen Strategic Alliance LLC
000 Xxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxx, XX 00000
XXX
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
000 Xxxx Xxxxxxxxx Xxxxxx, X.X.
Xxxxx 000
Xxxxxxx, XX 00000
XXX
Attention: Xxxxxx X. Xxxxxxxx
Facsimile: (000) 000-0000
Any party may change its address
for receiving notices by giving notice in the manner set out above to the other
parties.
(d) If any term or provision of this Agreement or the
application thereof to any person or circumstances is held to be invalid,
illegal or otherwise unenforceable to any extent, then, to the fullest extent
permitted by law: (a) such invalidity, illegality or unenforceability shall
not affect any other term or provision of this Agreement; (b) all other terms
and provisions of this Agreement shall remain in full force and effect and
shall be liberally construed in order to carry out the intent of the parties
hereto as nearly as may be possible; and (c) the parties hereto shall use all
reasonable efforts to substitute a valid, legal and enforceable provision
which, insofar as practicable, implements the purposes and intent of this
Agreement.
(e) This Agreement may be executed in one or more counterparts,
which shall together constitute one and the same document.
(f) The parties hereto acknowledge and agree that the Fund shall
in no event have any liability to any party hereto or any other person for the
obligations, representations and warranties of the Adviser or Subadviser
hereunder, including, without limitation, Adviser’s obligation to compensate
Subadviser pursuant to Section 3; provided that, the Fund has duly paid all
amounts owed to the Adviser.
Exhibit 10.1
-8-
IN WITNESS WHEREOF the parties hereto have
entered into this Agreement as of the date first above written.
GUIDANCE CAPITAL L.L.C.
By: /s/ X. Xxxxxxxxxx Elliman III
X. Xxxxxxxxxx Elliman, III
Managing Member
ASPEN PARTNERS, LTD.
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
Managing Director
Xxxxxxx X. Xxxxxxx
Managing Director
By: /s/ Xxxxxx X. Xxxxxxxx
Xxxxxx X. Xxxxxxxx
Executive Vice President
Xxxxxx X. Xxxxxxxx
Executive Vice President
Exhibit 10.1
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SCHEDULE “A”
COMPENSATION
COMPENSATION
Adviser will pay to Subadviser a subadvisory allocation
(the “Subadvisory Allocation”), monthly. The Subadvisory Allocation is payable
at a rate of 50% of the Management Fee and Incentive Fee charged to the Fund by
the Adviser. The Adviser will pay to the Subadvisor the Subadvisory Allocation
within 15 days of Adviser having received payment from the Fund for Management
and Incentive Fees.
In order to ensure the Subadviser is adequately
compensated for its services, the Adviser agrees that there will be a minimum
amount of one hundred thousand dollars ($100,000.00) (“Minimum”) to be paid to
the Subadviser during the first twelve months of this Agreement. The Adviser
agrees to pay the Subadviser no less than $4,166.67 monthly during the first
twelve months of this Agreement. If at the end of the first twelve months of
this Agreement the Subadviser’s compensation from the Adviser has not totaled
the Minimum, the Adviser will make a payment to the Subadviser in an amount
equal to the Minimum less the total of all payments during the preceding twelve
months. Such payment will be made within 30 days of the end of the first
twelve months of this Agreement.
Exhibit 10.1
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