INVESTMENT MANAGEMENT AGREEMENT
INVESTMENT MANAGEMENT AGREEMENT made this 7th day of April, 2015,
by and between ELKHORN ETF TRUST, a Massachusetts business trust
(the "Trust"), and ELKHORN INVESTMENTS, LLC, a Delaware limited
liability company (the "Adviser").
WHEREAS, the Trust is registered under the Investment Company
Act of 1940, as amended ("1940 Act"), as an open-end management
investment company;
WHEREAS, the Trust is authorized to issue shares in separate
series, with each such series representing interests in a
separate portfolio of securities and other assets;
WHEREAS, the Trust intends to offer shares in series as set
forth on Schedule A attached hereto and any other series as to
which this Agreement may hereafter be made applicable and set
forth on Schedule A, which may be amended from time to time
(each such series being herein referred to as a "Fund," and
collectively as the "Funds"); and
WHEREAS, the Trust desires to retain the Adviser as
investment adviser, to furnish certain investment advisory and
portfolio management services to the Trust with respect to the
Funds, and the Adviser is willing to furnish such services.
W I T N E S S E T H:
In consideration of the mutual covenants hereinafter
contained, it is hereby agreed by and between the parties hereto
as follows:
1. The Trust hereby engages the Adviser to act as the
investment adviser for, and to manage the investment and
reinvestment of the assets of, each Fund in accordance with each
Fund's investment objectives and policies and limitations, and
to administer each Fund's affairs to the extent requested by and
subject to the supervision of the Board of Trustees of the Trust
for the period and upon the terms herein set forth. The
investment of each Fund's assets shall be subject to the Fund's
policies, restrictions and limitations with respect to
securities investments as set forth in the Fund's then current
registration statement under the 1940 Act, Declaration of Trust,
By-laws of the Trust and all applicable laws and the regulations
of the Securities and Exchange Commission relating to the
management of registered open-end management investment
companies.
The Adviser accepts such employment and agrees during such
period to render such services, to furnish office facilities and
equipment and clerical, bookkeeping and administrative services
(other than such services, if any, provided by the Funds'
transfer agent, administrator or other service providers) for
the Funds, to permit any of its officers or employees to serve
without compensation as trustees or officers of the Trust if
elected to such positions, and to assume the obligations herein
set forth for the compensation herein provided. The Adviser
shall at its own expense furnish all executive and other
personnel, office space, and office facilities required to
render the investment management and administrative services set
forth in this Agreement. In the event that the Adviser pays or
assumes any expenses of a Fund not required to be paid or
assumed by the Adviser under this Agreement, the Adviser shall
not be obligated hereby to pay or assume the same or similar
expense in the future; provided, that nothing contained herein
shall be deemed to relieve the Adviser of any obligation to a
Fund under any separate agreement or arrangement between the
parties.
2. The Adviser shall, for all purposes herein provided, be
deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall neither have the
authority to act for nor represent the Trust in any way, nor
otherwise be deemed an agent of the Trust.
3. For the services and facilities described in Section 1,
each Fund will pay to the Adviser, at the end of each calendar
month, and the Adviser agrees to accept as full compensation
therefor, an investment management fee equal to the annual rate
of each Fund's average daily net assets as set forth on
Schedule A.
For the month and year in which this Agreement becomes
effective, or terminates, there shall be an appropriate
proration on the basis of the number of days that the Agreement
shall have been in effect during the month and year,
respectively. The services of the Adviser to the Trust under
this Agreement are not to be deemed exclusive, and the Adviser
shall be free to render similar services or other services to
others so long as its services hereunder are not impaired
thereby.
4. During the term of this Agreement, the Adviser shall pay
all of the expenses of each Fund of the Trust (including the
cost of transfer agency, custody, fund administration, legal,
audit and other services and license fees) but excluding the fee
payment under this Agreement, interest, taxes, brokerage
commissions and other expenses connected with the execution of
portfolio transactions, distribution and service fees payable
pursuant to a Rule 12b-1 plan, if any, and extraordinary
expenses.
5. The Adviser shall arrange for suitably qualified
officers or employees of the Adviser to serve, without
compensation from the Trust, as trustees, officers or agents of
the Trust, if duly elected or appointed to such positions, and
subject to their individual consent and to any limitations
imposed by law.
6. The Adviser is authorized to select the brokers or
dealers that will execute the purchases and sales of a Fund's
securities on behalf of the Fund, and is directed to use its
commercially reasonable efforts to obtain best execution, which
includes most favorable net results and execution of the Fund's
orders, taking into account all appropriate factors, including
price, dealer spread or commission, size and difficulty of the
transaction and research or other services provided. Subject to
approval by the Trust's Board of Trustees and to the extent
permitted by and in conformance with applicable law (including
Rule 17e-1 of the 1940 Act), the Adviser may select brokers or
dealers affiliated with the Adviser. It is understood that the
Adviser will not be deemed to have acted unlawfully, or to have
breached a fiduciary duty to the Trust, or be in breach of any
obligation owing to the Trust under this Agreement, or
otherwise, solely by reason of its having caused the Fund to pay
a member of a securities exchange, a broker or a dealer a
commission for effecting a securities transaction for the Fund
in excess of the amount of commission another member of an
exchange, broker or dealer would have charged if the Adviser
determined in good faith that the commission paid was reasonable
in relation to the brokerage or research services provided by
such member, broker or dealer, viewed in terms of that
particular transaction or the Adviser's overall responsibilities
with respect to its accounts, including the Fund, as to which it
exercises investment discretion.
In addition, the Adviser may, to the extent permitted by
applicable law, aggregate purchase and sale orders of securities
with similar orders being made simultaneously for other accounts
managed by the Adviser or its affiliates, if in the Adviser's
reasonable judgment such aggregation shall result in an overall
economic benefit to a Fund, taking into consideration the
selling or purchase price, brokerage commissions and other
expenses. In the event that a purchase or sale of an asset of a
Fund occurs as part of any aggregate sale or purchase orders,
the objective of the Adviser and any of its affiliates involved
in such transaction shall be to allocate the securities so
purchased or sold, as well as expenses incurred in the
transaction, among the Fund and other accounts in an equitable
manner. Nevertheless, each Fund acknowledges that under some
circumstances, such allocation may adversely affect the Fund
with respect to the price or size of the securities positions
obtainable or salable. Whenever a Fund and one or more other
investment advisory clients of the Adviser have available funds
for investment, investments suitable and appropriate for each
will be allocated in a manner believed by the Adviser to be
equitable to each, although such allocation may result in a
delay in one or more client accounts being fully invested that
would not occur if such an allocation were not made. Moreover,
it is possible that due to differing investment objectives or
for other reasons, the Adviser and its affiliates may purchase
securities of an issuer for one client and at approximately the
same time recommend selling or sell the same or similar types of
securities for another client.
The Adviser will not arrange purchases or sales of
securities between a Fund and other accounts advised by the
Adviser or its affiliates unless (a) such purchases or sales are
in accordance with applicable law (including Rule 17a-7 of the
0000 Xxx) and the Trust's policies and procedures, (b) the
Adviser determines the purchase or sale is in the best interests
of each Fund, and (c) the Trust's Board of Trustees have
approved these types of transactions.
To the extent a Fund seeks to adopt, amend or eliminate any
objectives, policies, restrictions or procedures in a manner
that modifies or restricts Adviser's authority regarding the
execution of the Fund's portfolio transactions, the Fund agrees
to use reasonable commercial efforts to consult with the Adviser
regarding the modifications or restrictions prior to such
adoption, amendment or elimination.
The Adviser will communicate to the officers and trustees
of the Trust such information relating to transactions for the
Funds as they may reasonably request. In no instance will
portfolio securities be purchased by or sold to the Adviser or
any affiliated person of either the Trust or the Adviser, except
as may be permitted under the 1940 Act.
The Adviser further agrees that it:
(a) will use the same degree of skill and care in
providing such services as it uses in providing services to
fiduciary accounts for which it has investment
responsibilities;
(b) will conform in all material respects to all
applicable rules and regulations of the Securities and
Exchange Commission and comply in all material respects
with all policies and procedures adopted by the Board of
Trustees for the Trust and communicated to the Adviser and,
in addition, will conduct its activities under this
Agreement in all material respects in accordance with any
applicable regulations of any governmental authority
pertaining to its investment advisory activities;
(c) will report regularly to the Board of Trustees of
the Trust (generally on a quarterly basis) and will make
appropriate persons available for the purpose of reviewing
with representatives of the Board of Trustees on a regular
basis at reasonable times the management of each Fund,
including, without limitation, review of the general
investment strategies of each Fund, the performance of each
Fund's investment portfolio in relation to relevant
standard industry indices and general conditions affecting
the marketplace and will provide various other reports from
time to time as reasonably requested by the Board of
Trustees of the Trust; and
(d) will prepare and maintain such books and records
with respect to each Fund's securities and other
transactions as required under applicable law and will
prepare and furnish the Trust's Board of Trustees such
periodic and special reports as the Board of Trustees may
reasonably request. The Adviser further agrees that all
records which it maintains for each Fund are the property
of the Fund and the Adviser will surrender promptly to the
Fund any such records upon the request of the Fund
(provided, however, that Adviser shall be permitted to
retain copies thereof); and shall be permitted to retain
originals (with copies to the Fund) to the extent required
under Rule 204-2 of the Investment Advisers Act of 1940 or
other applicable law.
7. Subject to applicable statutes and regulations, it is
understood that officers, trustees, or agents of the Trust are,
or may be, interested persons (as such term is defined in the
1940 Act and rules and regulations thereunder) of the Adviser as
officers, directors, agents, shareholders or otherwise, and that
the officers, directors, shareholders and agents of the Adviser
may be interested persons of the Trust otherwise than as
trustees, officers or agents.
8. The Adviser shall not be liable for any loss sustained
by reason of the purchase, sale or retention of any asset,
whether or not such purchase, sale or retention shall have been
based upon the investigation and research made by any other
individual, firm or corporation, if such recommendation shall
have been selected with due care and in good faith, except loss
resulting from willful misfeasance, bad faith, or gross
negligence on the part of the Adviser in the performance of its
obligations and duties, or by reason of its reckless disregard
of its obligations and duties under this Agreement.
9. Subject to obtaining the initial and periodic approvals
required under Section 15 of the 1940 Act (after taking into
effect any exemptive order, no-action assurances or other relief
upon which the respective Fund may rely), the Adviser may retain
one or more sub-advisers at the Adviser's own cost and expense
for the purpose of furnishing one or more of the services
described in Section 1 hereof with respect to a Fund. In
addition, the Adviser may adjust from time to time the duties
delegated to any sub-adviser, the portion of portfolio assets of
the Trust that the sub-adviser shall manage and the fees to be
paid to the sub-adviser pursuant to any sub-advisory agreement
or other arrangement entered into in accordance with this
Agreement, subject to the approvals set forth in Section 15 of
the 1940 Act if required including after taking into account any
exemptive order, no-action assurances or other relief upon which
the respective Fund may rely. Retention of a sub-adviser shall
in no way reduce the responsibilities or obligations of the
Adviser under this Agreement and the Adviser shall be
responsible to a Fund for all acts or omissions of any
sub-adviser in connection with the performance of the Adviser's
duties hereunder.
10. The Trust acknowledges that the Adviser intends in the
future to act as an investment adviser to other managed accounts
and as investment adviser or sub-investment adviser to one or
more other investment companies that are not a series of the
Trust. In addition, the Trust acknowledges that the persons
employed by the Adviser to assist in the Adviser's duties under
this Agreement will not devote their full time to such efforts.
It is also agreed that the Adviser may use any supplemental
research obtained for the benefit of the Trust in providing
investment advice to its other investment advisory accounts and
for managing its own accounts.
11. This Agreement, with respect to each Fund, was initially
approved, and is effective, provided it was approved by a vote
of a majority of the outstanding voting securities held by
shareholders of the respective Fund in accordance with the
requirements of the 1940 Act. This Agreement shall continue in
effect until the termination date set forth in the attached
Schedule A, unless and until terminated by either party as
hereinafter provided, and shall continue in force from year to
year thereafter, but only as long as such continuance is
specifically approved, at least annually, in the manner required
by the 1940 Act.
This Agreement shall automatically terminate in the event
of its assignment, and may be terminated at any time without the
payment of any penalty by a Trust or by the Adviser upon sixty
(60) days' written notice to the other party. Each Fund may
effect termination by action of the Board of Trustees or by vote
of a majority of the outstanding voting securities of the Fund,
accompanied by appropriate notice. This Agreement may be
terminated, at any time, without the payment of any penalty, by
the Board of Trustees of the Trust, or by vote of a majority of
the outstanding voting securities of the Trust, in the event
that it shall have been established by a court of competent
jurisdiction that the Adviser, or any officer or director of the
Adviser, has taken any action which results in a breach of the
material covenants of the Adviser set forth herein. Termination
of this Agreement shall not affect the right of the Adviser to
receive payments on any unpaid balance of the compensation,
described in Section 3, earned prior to such termination and for
any additional period during which the Adviser serves as such
for the Fund, subject to applicable law. The terms "assignment"
and "vote of the majority of outstanding voting securities"
shall have the same meanings set forth in the 1940 Act and the
rules and regulations thereunder.
12. This Agreement may be amended or modified only by a
written instrument executed by both parties.
13. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule, or otherwise, the
remainder shall not be thereby affected.
14. Any notice under this Agreement shall be in writing,
addressed and delivered or mailed, postage prepaid, to the other
party at such address as such other party may designate for
receipt of such notice.
15. All parties hereto are expressly put on notice of the
Trust's Agreement and Declaration of Trust and all amendments
thereto, a copy of which is on file with the Secretary of the
Commonwealth of Massachusetts and the limitation of shareholder
and trustee liability contained therein. This Agreement is
executed on behalf of the Trust by the Trust's officers as
officers and not individually and the obligations imposed upon
the Trust by this Agreement are not binding upon any of the
Trust's Trustees, officers or shareholders individually but are
binding only upon the assets and property of the Trust, and
persons dealing with the Trust must look solely to the assets of
the Trust and those assets belonging to the subject Trust, for
the enforcement of any claims.
16. This Agreement shall be construed in accordance with
applicable federal law and (except as to Section 15 hereof which
shall be construed in accordance with the laws of Massachusetts)
the laws of the State of Illinois.
IN WITNESS WHEREOF, the Trust and the Adviser have caused this
Agreement to be
executed on the day and year above written.
ELKHORN ETF TRUST
By
Name:
Title:
ATTEST:
Name:___________________
Title:____________________
ELKHORN INVESTMENTS, LLC
By
Name:
Title
ATTEST:
Name:___________________
Title:____________________
SCHEDULE A
(As of October 23, 2015)
FUNDS
(Information is displayed in the following order)
SERIES
ANNUAL RATE OF AVERAGE DAILY NET ASSETS
INITIAL BOARD APPROVAL DATE
SHAREHOLDER APPROVAL DATE
INITIAL EFFECTIVE DATE
TERMINATION DATE
Elkhorn S&P 500 Capital Expenditures Portfolio
0.29%
April 7, 2015
April 7, 2015
April 7, 2015
March 31, 2017
Elkhorn S&P Preferred Thoroughbreds ETF
0.47%
October 23, 2015
October 23, 2015
October 23, 2015
March 31, 2017
Elkhorn FTSE RAFI U.S. Equity Income ETF
0.39%
October 23, 2015
October 23, 2015
October 23, 2015
March 31, 2017
Elkhorn FTSE RAFI Developed ex-U.S. Equity Income ETF
0.47%
October 23, 2015
October 23, 2015
October 23, 2015
March 31, 2017
Elkhorn FTSE RAFI Emerging Equity Income ETF
0.49%
October 23, 2015
October 23, 2015
October 23, 2015
March 31, 2017
