INVESTMENT ADVISORY AGREEMENT
This Investment Advisory Agreement (“Agreement”) is made and entered into as of March 5, 2019, by and between Absolute Shares Trust, a Delaware statutory trust (“Trust”), on behalf of the funds listed on Appendix A, each a series of shares of the Trust (each, a “Fund” and, collectively, “Funds”), and Millington Securities Inc., a corporation organized under the laws of the State of Illinois (“Advisor”).
(i)manage the investment and reinvestment of the assets of each Fund for the period and on the terms set forth in this Agreement;
(ii)continuously review, supervise, and administer the investment program of each Fund;
(iii)determine, in its discretion, the securities to be purchased, retained or sold (and implement those decisions) with respect to each Fund; with the assistance of the Funds’ distributor,
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determine the number of shares of the Funds that will be created or redeemed each Business Day based on the purchase orders submitted by Authorized Participant;
(iv)with the assistance of the Funds’ distributor, determine the number of shares of the Funds that will be created or redeemed each Business Day based on the purchase orders submitted by Authorized Participants;
(v)provide, in a timely manner, such information as may be reasonably requested by the Trust or its designated agents in connection with, among other things, information about each Fund sufficient for a pricing service or other entity to calculate the Intraday Indicative Value of the shares of such Fund every fifteen seconds each Business Day;
(vi)provide the Trust and the Funds with records concerning the Advisor’s activities under this Agreement which the Trust and the Funds are required to maintain; and
(vii)render regular reports to the Trust’s trustees and officers concerning the Advisor’s discharge of the foregoing responsibilities.
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information obtained pursuant to this Agreement and disclose such information only if the Trust has authorized such disclosure, or if such disclosure is required by federal or state regulatory authorities.
(f)Additional Services Provided at the Expense of the Trust. The Advisor agrees, at the expense of the Trust, (i) to prepare all required tax returns of the Trust and each Fund, (ii) to prepare and submit reports to existing shareholders, (iii) to update periodically the prospectuses and statements of additional information of the Trust and (iv) to prepare reports to be filed with the SEC and other regulatory authorities. In each case, the Advisor may cause the Sub-Advisor or another sub-adviser to perform such duties.
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and 10f-3 under the 1940 Act and the Trust’s Rule 17e-1 and Rule 10f-3 Procedures, respectively, in all respects, or any other applicable exemptive rules or orders applicable to the Advisor.
3.Expenses. During the term of this Agreement, except for (i) the fee payment under this Agreement, (ii) payments under each Fund’s 12b-1 plan, (iii) brokerage expenses, (iv) acquired fund fees and expenses, (v) taxes, (vi) interest (including borrowing costs and dividend expenses on securities sold short), (vii) compensation and expenses of the independent Trustees (including independent Trustee counsel fees), (viii) litigation expenses and other extraordinary expenses (including litigation to which the Trust or a Fund may be a party and indemnification of the Trustees and officers with respect thereto), the Advisor shall pay or cause, either directly or through its affiliated Sub-Advisor, to be paid all of the expenses of each Fund, including but not limited to:
(a)Salaries, Expenses and Fees of Certain Persons. Advisor (or its affiliates) shall pay all salaries, expenses, and fees of the Trustees and officers of the Trust who are officers, directors/trustees, partners, or employees of Advisor or its affiliates;
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(i)Trade Association Fees. Any membership fees, dues or expenses incurred in connection with the Trust’s membership in any trade association or similar organizations, as approved by the Trustees;
(l)Pricing. All expenses of pricing of the net asset value per share of each Fund, including the cost of any equipment or services to obtain price quotations.
The Trust acknowledges and agrees that the Advisor or the Sub-Advisor may obtain reimbursement for the expenses of the Funds from a third party.
4.Compensation of the Advisor. For the services rendered, the facilities furnished and expenses assumed by the Advisor, if any, each Fund shall individually pay to the Advisor at the end of each calendar month a fee calculated as a percentage of the average daily net assets of such Fund at the annual rates set forth in Appendix A of this Agreement. Appendix A shall be amended from time to time to reflect the addition and/or termination of any Fund as a Fund hereunder and to reflect any change in the advisory fees payable with respect to any Fund duly approved in accordance with Section 9 hereof. The Advisor’s fee is accrued daily at 1/365th of the applicable annual rate set forth in Appendix A. For the purpose of the fee accrual, the daily net assets of a Fund are determined in the manner and at the times set forth in the Trust’s current prospectus and, on days on which the net assets are not so determined, the net asset value computation to be used shall be as determined on the immediately preceding day on which the net assets were determined. In the event of termination of this Agreement, all compensation due through the date of termination will be calculated on a pro-rated basis through the date of termination and paid within fifteen business days of the date of termination. The Advisor may waive all or a portion of its fees provided for hereunder and such waiver will be treated as a reduction in the purchase price of its services. The Advisor shall be contractually bound under this Agreement by the terms of any publicly-announced waiver of its fee, or any limitation of a Fund’s expenses, as if such waiver or limitation were fully set forth in this Agreement. The waiver of any of the Advisor’s fee shall not obligate the Advisor to waive any of its fee on a subsequent occasion. The Advisor may delegate that a third party or affiliate may receive payment of the Advisor’s fee. As of the date of this Agreement, the Advisor has delegated its affiliate, the Sub-Advisor, to receive such Advisor’s fee in consideration of the services to be provided pursuant to the Sub-Advisory Agreement.
5.Status of Investment Advisor. The services of the Advisor to the Trust and each Fund are not to be deemed exclusive, and the Advisor shall be free to render similar services to others so long as its services to the Trust and the Funds are not impaired thereby. The Advisor shall be deemed to be an independent contractor and shall, unless otherwise expressly provided or authorized, have no authority to act for or represent the Trust or the Funds in any way or otherwise be deemed an agent of the Trust or the Funds. Nothing in this Agreement shall limit or restrict the right of any manager,
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officer or employee of the Advisor, who may also be a trustee, officer or employee of the Trust, to engage in any other business or to devote his or her time and attention in part to the management or other aspects of any other business, whether of a similar nature or a dissimilar nature.
6.Permissible Interests. Trustees, agents, and shareholders of the Trust are or may be interested in the Advisor (or any successor thereof) as managers, officers, shareholders or otherwise; and managers, officers, agents, and shareholders of the Advisor are or may be interested in the Trust as trustees, shareholders or otherwise; and the Advisor (or any successor) is or may be interested in the Trust as a shareholder or otherwise.
7.Limits of Liability; Indemnification. The Advisor assumes no responsibility under this Agreement other than to render the services called for hereunder. The Advisor shall not be liable for any error of judgment or for any loss suffered by the Trust or a Fund in connection with the matters to which this Agreement relates, except a loss resulting from a breach of fiduciary duty with respect to receipt of compensation for 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 0000 Xxx) or a loss resulting from willful misfeasance, bad faith or gross negligence on its part in the performance of, or from reckless disregard by it of its obligations and duties under, this Agreement. It is agreed that the Advisor shall have no responsibility or liability for the accuracy or completeness of the Trust’s registration statement under the 1940 Act or the Securities Act of 1933, as amended (“1933 Act”), except for information supplied by the Advisor for inclusion therein. The Trust agrees to indemnify the Advisor to the full extent permitted by the Trust’s Declaration of Trust.
8.Term. This Agreement shall remain in effect for an initial term of two (2) calendar years commencing on the date on which the first of the Funds commences operations, and from year to year thereafter provided such continuance is approved at least annually by the vote of a majority of the trustees of the Trust who are not “interested persons” (as defined in the Act) of the Trust, which vote must be cast in person at a meeting called for the purpose of voting on such approval; provided, however, that:
(a)the Trust may, at any time and without the payment of any penalty, terminate this Agreement upon 60 days written notice of a decision to terminate this Agreement by (i) the Trust’s trustees; or (ii) the vote of a majority of the outstanding voting securities of the Funds;
(b)the Agreement shall immediately terminate in the event of its assignment (within the meaning of the 1940 Act and the rules promulgated thereunder);
(c)the Advisor may, at any time and without the payment of any penalty, terminate this Agreement upon 60 days’ written notice to the Trust and the Funds; and
(d)the terms of Section 7 of this Agreement shall survive the termination of this Agreement.
9.Amendments. No provision of this Agreement may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against which enforcement
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of the change, waiver, discharge or termination is sought, and no amendment of this Agreement shall be effective with respect to a Fund until approved by (a) to the extent required by applicable law, the vote of the holders of a majority of such Fund’s outstanding voting securities and (b) a majority of those trustees of the Trust 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. Additional Funds may be added to Appendix A from time to time by written agreement of the Trust and the Advisor.
10.Applicable Law. This Agreement shall be construed in accordance with, and governed by, the laws of the State of New York without regard to the principles of the conflict of laws or the choice of laws.
(i)the Advisor is a corporation duly organized, validly existing, and in good standing under the laws of the State of Illinois and is fully authorized to enter into this Agreement and carry out its duties and obligations hereunder;
(ii)the Advisor is registered as an investment adviser with the SEC under the Advisers Act, shall maintain such registration in effect at all times during the term of this Agreement, and shall notify the Trust immediately if the Advisor ceases to be so registered; and
(iii)the Advisor has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act and will provide the Trust with a copy of that code, together with evidence of its adoption. Within 20 days of the end of each calendar quarter during which this Agreement remains in effect, the chief compliance officer of the Advisor shall certify to the Trust that the Advisor has complied with the requirements of Rule 17j-1 (as amended from time to time) during the previous quarter and that there have been no violations of the Advisor’s code of ethics or, if such a violation has occurred, that appropriate action has been taken in response to such violation. Upon written request of the Trust, the Advisor shall permit representatives of the Trust to examine the reports (or summaries of the reports) required to be made to the Advisor by Rule 17j-1(c)(1) and other records evidencing enforcement of the code of ethics.
12.Liability of Trust and Funds. It is expressly agreed that the obligations of the Trust hereunder shall not be binding upon any of the trustees, shareholders, nominees, officers, agents or employees of the Trust personally, but shall bind only the trust property of the Trust as provided in the Declaration of Trust. This Agreement shall not be deemed to have been made by any of them individually or to impose any liability on them personally. With respect to any obligation of the Trust or a Fund arising under this Agreement, the Advisor shall look for payment or satisfaction of such
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obligation solely to the assets and property of the Fund to which such obligation relates, and under no circumstances shall the Advisor have the right to set off claims relating to a Fund by applying property of any other series of the Trust. The business and contractual relationships created by this Agreement, consideration for entering into this Agreement, and the consequences of such relationship and consideration relate solely to the Trust and the Funds.
13.Use of Names. The Trust acknowledges that all rights to the name(s) “Absolute Shares”, “Absolute Shares Trust”, “Millington”, “Millington Securities”, “WBI” and “WBI Investments” and any derivatives thereof (“Names”), as well as any logos that are now or shall hereafter be associated with Names (“Logos”), belong to the Advisor and/or the Sub-Advisor, and that the Trust is being granted a limited license to use such Names and Logos in its name, the name of its series and the name of its classes of shares. In the event that this Agreement is terminated and the Advisor no longer acts as investment adviser to the Trust, the Advisor reserves the right to withdraw from the Trust and the Funds the uses of Names and Logos or any name or logo that would imply a continuing relationship between the Trust or the Funds and the Advisor or any of its affiliates.
14.Assignment. The Advisor may not assign this Agreement and this Agreement shall automatically terminate in the event of an “assignment,” as such term is defined in section 2(a)(4) of the 1940 Act. The Advisor shall notify the Trust’s administrator and Board of Trustees in writing sufficiently in advance of any proposed change of “control,” as defined in section 2(a)(9) of the 1940 Act, so as to enable the Trust to: (a) consider whether an assignment will occur, (b) consider whether to enter into a new Advisory Agreement with the Advisor, and (c) prepare, file, and deliver any disclosure document to a Fund’s shareholders as may be required by applicable law.
15.Severability. If any provision of this Agreement shall be held or made invalid by a court decision, statute, and rule or otherwise, the remainder of this Agreement shall not be affected thereby and, to this extent, the provisions of this Agreement shall be deemed to be severable.
16.Notices. All notices required to be given pursuant to this Agreement shall be delivered or mailed to the address listed below of each applicable party in person or by registered or certified mail or a private mail or delivery service providing the sender with notice of receipt or such other address as specified in a notice duly given to the other parties. Notice shall be deemed given on the date delivered or mailed in accordance with this section.
For: Millington Securities Inc.
000 Xxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx, Xx.
(000) 000-0000
000 Xxxxxx Xxxxxxx Xxxx
Xxxxx 000
Xxx Xxxx, XX 00000
Attn: Xxx Xxxxxxxxx, Xx.
(000) 000-0000
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With a copy to: K&L Gates, LLP
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, XX 00000
Attn: Xxxxx X. Xxxx, Esq.
(000) 000-0000
[Signature Page to Follow]
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By: /s/ Don Schreiber, Xx. Xxxx: Xxx Xxxxxxxxx, Xx. Title: President and Principal Executive Officer | MILLINGTON SECURITIES INC. By: /s/ Don Schreiber, Xx. Xxxx: Xxx Xxxxxxxxx, Xx. Title: Chief Executive Officer |
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Appendix A
Fund | Fee Rate (% of average daily net assets) | ||||
WBI BullBear Trend Switch US 1000 ETF | 0.65% | ||||
WBI BullBear Trend Switch US 1000 Total Return ETF | 0.65% | ||||
WBI BullBear Trend Switch US 2000 ETF | 0.65% | ||||
WBI BullBear Trend Switch US 2000 Total Return ETF | 0.65% | ||||
WBI BullBear Trend Switch US 3000 Total Return ETF | 0.65% | ||||
WBI BullBear Trend Switch US Total Return ETF | 0.65% |
As of the date of this Agreement, the Advisor has delegated its affiliate, the Sub-Advisor, to receive such Advisor’s fee in consideration of the services to be provided pursuant to the Sub-Advisory Agreement.
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