AMENDED AND RESTATED SUB-ADVISORY AGREEMENT
AMENDED AND RESTATED SUB-ADVISORY AGREEMENT, dated
June 23, 2017,between Rational Advisors, Inc., an
Ohio Corporation (the Adviser), Active Alts
Inc., a Connecticut Corporation (the Sub-Adviser)
and Strategy Shares, a Delaware statutory trust (the Trust).
WHEREAS, the Adviser acts as an investment adviser to series
of the Trust, pursuant to a Management Agreement dated as of
January 1, 2016 (the Management Agreement);
WHEREAS, the Adviser warrants and represents to the
Sub-Adviser that Adviser has full legal authority to engage
unaffiliated investment managers as sub-advisers to manage
accounts and or assets designated for the Advisers management
by the Trust;
WHEREAS, the Sub-Adviser is registered with the Securities
and Exchange Commission as an investment advisor under the
Investment Advisors Act of 1940, as amended (the Advisers Act);
WHEREAS, the Trust is an open-end management investment company
registered under the Investment Company Act of 1940, as
amended (the 1940 Act); and
WHEREAS, the Adviser desires to retain the Sub-Adviser
to render investment advisory services to the Active Alts
Contraian ETF (the Fund), a series of shares of beneficial
interest of the Trust, and the Sub-Adviser is willing to render
such services.
NOW, THEREFORE, in consideration of the premises and mutual
agreements hereinafter set forth, the parties hereto agree
as follows:
Appointment and Status of Sub-Adviser. The Adviser hereby appoints
the Sub-Adviser to provide investment advisory services to the
Fund for the period and on the terms set forth in this Agreement.
The Sub-Adviser accepts such appointment and agrees to render the
services herein set forth, for the compensation herein provided.
The Sub-Adviser shall for all purposes herein be deemed to be an
independent contractor of the Adviser and the Trust and shall,
unless otherwise expressly provided herein or authorized by the
Adviser or the Board of Trustees of the Trust from time to time,
have no authority to act for or represent the Adviser or the
Trust in any way or otherwise be deemed an agent of the Adviser
or the Trust.
Sub-Advisers Duties. Subject to the general supervision of the
Trusts Board of Trustees (the Board) and the Adviser,
the Sub-Adviser shall, employing its discretion, manage the
investment operations of the Fund and the composition of the
portfolio of securities and investments (including cash)
belonging to the Fund, including the purchase, retention
and disposition thereof and the execution of agreements
relating thereto, in accordance with the Funds investment
objective, policies and restrictions as stated in the
Funds then-current Prospectus and Statement of Additional
Information (together, the Prospectus) and subject
to the following understandings:
(a) The Sub-Adviser shall furnish a continuous investment
program for the Fund and determine from time to time what
investments or securities will be purchased,retained or sold
by the Fund and what portion of the assets belonging to
the Fund will be invested or held uninvested as cash;
(b) The Sub-Adviser shall use its best judgment
in the performance of its duties under this agreement;
(c) The Sub-Adviser, in the performance of its duties
and obligations under this agreement for the Fund, shall act
in conformity with the Trusts declaration of trust, its
by-laws and the Funds prospectus and with the reasonable
instructions and directions of the Trusts Board of Trustees
and the Adviser, and will conform to and comply with
the requirements of the 1940 Act and all other
applicable federal and state laws and regulations;
(d) The Sub-Adviser shall determine the securities
to be purchased or sold by the Fund and will place
portfolio transactions pursuant to its determinations
either directly with the issuer or with any broker
and/or dealer in such securities, subject to paragraph
heading: Execution of Purchase and Sale Orders below;
(e) The Sub-Adviser shall maintain books and records
with respect to the securities transactions of the Fund
and shall render to the adviser and the Trusts Board of
Trustees such periodic and special reports as the Adviser
or the board may reasonably request;
(f) The Sub-Adviser shall provide the Trusts
custodian and fund accountant on each business
day with information about the Funds securities
transactions, and with such other information relating
to the Trust as may be required under the terms of
the then-current custody agreement between the Trust
and the custodian;
(g) The Sub-Adviser shall respond promptly to any
request from the Adviser or the Funds fund accountant
for assistance in obtaining price sources for securities
held by the Fund or determining a price when a price
source is not available, and promptly review the prices
used by the Funds accountant to determine net asset
value and advise the Funds accountant promptly if any
price appears to be incorrect;
(h) The Sub-Adviser shall be responsible for:
(1) directing the manner in which proxies solicited
by issuers of securities beneficially owned by the
Fund shall be voted, and
(2) making any elections relative to any mergers,
acquisitions, tender offers, bankruptcy proceedings
or other type events pertaining to the securities
held by the Fund;
(i) The Sub-Adviser hereby represents that it has
adopted a written code of ethics complying with the
requirements of rule 17j-1 under the 1940 Act and will
provide the Adviser and the Trust with a copy of the
code and evidence of its adoption. Within 45 days of
the last calendar quarter of each year while this
agreement is in effect, the Sub-Adviser shall provide
to the board a written report that describes any issues
arising under the code of ethics since the last report
to the board, including, but not limited to, information
about material violations of the code and sanctions
imposed in response to the material violations; and
which certifies that the sub-adviser has adopted
procedures reasonably necessary to prevent access
persons (as that term is defined in rule 17j-1)
from violating the code;
(j) The Sub-Adviser agrees to maintain adequate
compliance procedures to ensure its compliance with
the 1940 Act, the Investment Advisers Act of 1940,
as amended, and other applicable federal and state
regulations. The Sub-Adviser shall provide to the
trusts chief compliance officer an annual written
report regarding the sub- advisers compliance program.
Custodian. The assets of the Fund shall be held by
an independent custodian, not Adviser nor Sub-Adviser.
The Sub-Adviser is authorized to give instructions
to the custodian with respect to all investment
decisions regarding the Fund and the custodian is
authorized and directed to effect transactions for
the Fund and otherwise take such actions as the
Sub-Adviser shall reasonably direct in connection
with the performance of the Sub-Advisers
obligations in respect of the Fund.
Risk Acknowledgment. Adviser acknowledges that
Sub-Adviser does not guarantee the future performance
of the Fund or any specific level of performance,
nor the success of Sub- Advisers overall management
of the Fund. Accordingly, Adviser acknowledges and
agrees that Sub-Adviser shall not have any legal or
financial responsibility for performance or losses
unless directly attributable to the gross negligence
or willful misconduct of the Sub-Adviser, including
the Sub-Advisers failure to adhere to any investment
policies and restrictions as described in the Funds
prospectus and statement of additional information.
Directions to the Sub-Adviser. Adviser will be responsible
for forwarding Adviser and/or Trust directions, notices
and instructions to Sub-Adviser, in writing, which shall
be effective upon receipt by the Sub-Adviser. The Sub-Adviser
shall be fully protected in relying upon any such direction,
notice, or instruction until it has been duly advised in
writing of changes therein.
Execution of Purchase and Sale Orders. In connection with
purchases or sales of portfolio securities for the account
of the Fund, the Sub-Adviser will arrange for the placing
of all orders for the purchase and sale of portfolio
securities for the account with brokers or dealers
selected by the Sub-Adviser, subject to review of this
selection by the Board from time to time. The Sub- Adviser
will be responsible for the negotiation and the allocation
of principal business and portfolio brokerage. In the
selection of such brokers or dealers and the placing of
such orders, the Sub-Adviser will at all times seek, for
the Funds the best qualitative execution, taking into
account such factors as price (including the applicable
brokerage commission or dealer spread), the execution
capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research
services provided by the broker or dealer.
The Sub-Adviser should generally seek favorable prices
and commission rates that are reasonable in relation
to the benefits received. In seeking best qualitative
execution, the Sub- Adviser is authorized to select
brokers or dealers who also provide brokerage and research
services to the Funds and/or the other accounts over
which it exercises investment discretion. The Sub- Adviser
is authorized to pay a broker or dealer who provides such
brokerage and research services a commission for executing
a Fund portfolio transaction that is in excess of the
amount of commission another broker or dealer would
have charged for effecting that transaction if the Sub-
Adviser determines in good faith that the amount of
the commission is reasonable in relation to the value
of the brokerage and research services provided by the
executing broker or dealer. The determination may be
viewed in terms of either a particular transaction or
the Sub-Advisers overall responsibilities with respect
to the Funds and to accounts over which the Sub-Adviser
exercises investment discretion. The Trust and the
Sub-Adviser understand and acknowledge that, although
the information may be useful to the Funds and the
Sub-Adviser, it is not possible to place a dollar
value on such information. The Board shall periodically
review the commissions paid by the Funds to determine
if the commissions paid over representative periods
of time were reasonable in relation to the benefits
to the Funds. The Sub-Adviser may not give consideration
to sales of shares of the Funds as a factor in the
selection of brokers and dealers to execute Fund
portfolio transactions.
Subject to the provisions of the 1940 Act, and
other applicable law, the Sub-Adviser, any of its
affiliates or any affiliates of its affiliates may
retain compensation in connection with effecting a
Funds portfolio transactions, including transactions
effected through others. If any occasion should arise
in which the Sub-Adviser gives any advice to clients
of the Sub-Adviser concerning the shares of the Funds,
the Sub-Adviser will act solely as investment
counsel for such client and not in any way on
behalf of the Funds. The Sub-Advisers services to
the Funds pursuant to this Agreement are not to be
deemed to be exclusive and it is understood that the
Sub-Adviser may render investment advice, management
and other services to others, including other
registered investment companies.
Books and Records. The Sub-Adviser shall keep the Trusts
books and records required to be maintained by it pursuant
to Section 2(e) of this Agreement. The Sub-Adviser agrees
that all records that it maintains for the Trust are the
property of the Trust and it will promptly surrender any
of such records to the Trust upon the Trusts request.
The Sub-Adviser further agrees to preserve for the periods
prescribed by Rule 31a-2 under the 1940 Act any such
records as are required to be maintained by the Sub-Adviser
with respect to the Trust by Rule 31a-1 under the 1940 Act.
Expenses of the Sub-Adviser. During the term of this Agreement,
the Sub-Adviser will pay all expenses (including without
limitation the compensation of all trustees or officers of
the Trust, if any, who are interested persons of the
Sub-Adviser, as defined in the 0000 Xxx) incurred by it in
connection with its activities under this Agreement other than
the cost of securities and investments purchased for the Funds
(including taxes and brokerage commissions, if any).
Notwithstanding the foregoing, the Sub-Adviser is not obligated
to pay the compensation or expenses of the Trusts Chief
Compliance Officer, regardless of whether the Chief Compliance
Officer is affiliated with the Sub-Adviser.
Compensation of the Sub-Adviser. For the services provided and
the expenses borne pursuant to this Agreement, the Fund will
pay to the Sub-Adviser as full compensation for its services
to the Fund monthly compensation at the annual rate of 1.15%
of the Funds average daily net assets. This fee for each month
will be paid to the Sub-Adviser during the succeeding month.
The Fund is solely responsible for the payment of the
Sub-Advisers fees, and the Sub-Adviser agrees not to seek
payment of its fees from the Adviser.
Liability. Neither the Sub-Adviser nor its shareholders,
members, officers, directors, employees, agents, control
persons or affiliates of any thereof, shall be liable for
any error of judgment or mistake of law or for any loss
suffered by the Funds in connection with the matters to
which this Agreement relates except a loss resulting from
a breach of fiduciary duty with respect to the 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 its duties or
from reckless disregard by it of its obligations and duties
under this Agreement.
Any person, even though also a director, officer, employee,
shareholder, member or agent of the Sub-Adviser, who may
be or become an officer, director, trustee, employee or
agent of the Trust, shall be deemed, when rendering services
to the Trust or acting on any business of the Trust
(other than services or business in connection with the
Sub-Advisers duties hereunder), to be rendering such
services to or acting solely for the Trust and not as a
director, officer, employee, shareholder, member or agent
of the Sub-Adviser, or one under the Sub-Advisers control
or direction, even though paid by the Sub-Adviser.
Duration and Termination. The term of this Agreement shall
begin on July 1, 2017 and, unless sooner terminated as
hereinafter provided, shall continue in effect for a
period of two (2) years from the commencement of operations
of the Fund. This Agreement shall continue in effect
from year to year thereafter, subject to termination
as hereinafter provided, if such continuance is approved
at least annually (a) by a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of each
Fund or by vote of the Trusts Board of Trustees, cast
in person at a meeting called for the purpose of voting
on such approval, and (b) by vote of a majority of the
Trustees of the Trust who are not parties to this
Agreement or interested persons (as defined in the
0000 Xxx) of any party to this Agreement, cast in
person at a meeting called for the purpose of voting on
such approval. The Sub-Adviser shall furnish to the
Adviser and the Trust, promptly upon their request,
such information as may reasonably be necessary to
evaluate the terms of this Agreement or any extension,
renewal or amendment thereof.
This Agreement may be terminated at any time on at least 60
days prior written notice to the Sub-Adviser, without the
payment of any penalty, (i) by vote of the Board of
Trustees, (ii) by the Adviser, (iii) by vote of a majority
of the outstanding voting securities (as defined in the
0000 Xxx) of the Fund, or (iv) in accordance with the terms
of any exemptive order obtained by the Trust or the Fund
under Section 6(c) of the 1940 Act, exempting the Trust or
the Funds from Section 15(a) and Rule 18f-2 under the 1940
Act. The Sub-Adviser may terminate this Agreement at any
time, without the payment of any penalty, on at least 60
days prior written notice to the Adviser and the Trust.
Termination of this Agreement and/or the services of the
Sub-Adviser will not affect (i) the validity of any action
previously taken by Sub-Adviser under this Agreement; (ii)
liabilities or obligations of the parties for transactions
initiated before termination of this Agreement; or (iii)
the Funds obligation to pay advisory fees to Adviser.
If this Agreement is terminated by the Adviser or
Sub-Adviser, Sub-Adviser will have no further obligation
to take any action subsequent to termination with respect
to the Fund except as may be reasonably required pursuant
to the notice of termination and in furtherance of its
role as a fiduciary in order to facilitate an orderly
transition of the management of the Fund. This Agreement
will automatically and immediately terminate in the event
of its assignment (as defined in the 1940 Act).
Non-Exclusive Management. Sub-Adviser, its officers,
employees, and agents, may have or take the same or similar
positions in specific investments for their own accounts,
or for the accounts of other clients, as the Sub-Adviser does
for the Fund. Adviser expressly acknowledges and understands
that Sub-Adviser shall be free to render investment advice to
others and that Sub- Adviser does not make its investment
management services available exclusively to Adviser or the Fund.
Nothing in this Agreement shall impose upon the Sub-Adviser
any obligation to purchase or sell, or to recommend for
purchase or sale, for the Fund any security which the
Sub-Adviser, its principals, affiliates or employees,
may purchase or sell for their own accounts or for the
account of any other client, if in the reasonable opinion
of the Sub-Adviser such investment would be unsuitable for
the Fund or if the Sub-Adviser determines in the best
interest of the Fund such purchase or sale would be impractical.
Good Standing. Adviser and Sub-Adviser hereby warrant
and represent that they are each investment advisers
in good standing that their respective regulatory filings
are current and accurately reflect their advisory operations,
and that they are in compliance with applicable state and
federal rules and regulations pertaining to investment advisers.
In addition, Adviser and Sub- Adviser further warrant and
represent that neither is (nor any of their respective
Associated Persons are) subject to any statutory
disqualification set forth in Sections 203(e) and
203(f) of the Investment Advisers Act of 1940 (or any
successor Advisers Act sections or rules), nor are they
currently the subject of any investigation or proceeding
which could result in statutory disqualification. Adviser
and Sub-Adviser acknowledge that their respective obligations
to advise the other with respect to these representations
shall be continuing and ongoing, and should any
representation change for any reason, each warrants to
advise the other immediately, together with providing the
corresponding pertinent facts and circumstances.
Amendment. This Agreement may be amended by mutual consent
of the Adviser and the Sub-Adviser, provided the Trust
approves the amendment (a) by vote of a majority of the
Trustees of the Trust, including Trustees who are not
parties to this Agreement or interested persons
(as defined in the 0000 Xxx) of any such party, cast
in person at a meeting called for the purpose of voting
on such amendment, and (b) if required under then current
interpretations of the 1940 Act by the Securities and
Exchange Commission, by vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of each
Fund affected by such amendment.
Privacy Notice/Confidentiality. The Adviser and Sub-Adviser
acknowledge prior receipt of the others Privacy Notice and
Policy. Adviser and Sub-Adviser agree to safeguard all
information pertaining to the Fund consistent with the
requirements of applicable state and federal privacy statutes
pertaining to registered investment advisers.
Notice. Whenever any notice is required or permitted to be
given under any provision of this Agreement, such notice shall
be in writing, shall be signed by or on behalf of the
party giving the notice and shall be mailed by first class
or express mail, or sent by courier or facsimile with
confirmation of transmission to the other party at the
addresses or facsimile numbers specified on page 1 or to
such other address as a party may from time to time specify
to the other party by such notice hereunder. Any such
notice shall be deemed duly given when delivered at such address.
Arbitration. Subject to the conditions and exceptions
noted below, and to the extent not inconsistent with
applicable law, in the event of any dispute pertaining
to this Agreement, Sub-
Adviser and Adviser agree to submit the dispute to arbitration
in accordance with the auspices and rules of the
American Arbitration Association (AAA), provided
that the AAA accepts jurisdiction. Sub-Adviser and
Adviser understand that such arbitration shall be final
and binding, and that by agreeing to arbitration, Adviser
and Sub-Adviser are waiving their respective rights to seek
remedies in court, including the right to a jury trial.
Indemnification. Adviser and Sub-Adviser agree to defend,
indemnify and hold harmless the other and each of their
respective officers, directors, members, employees and/or
agents from any and all claims, losses, damages,
liabilities, costs and/or expenses directly resulting
from the others violation of any of the terms of this
Agreement. Adviser and Sub-Advisers obligations under
this paragraph shall survive the termination of this Agreement.
Governing Law. (a) This Agreement shall be governed by
and construed in accordance with the laws of the State
of New York, without regard to the conflicts of laws
principles thereof, and (b) any question of interpretation
of any term or provision of this Agreement having a
counterpart in or otherwise derived from a term or provision
of the 1940 Act, shall be resolved by reference to such
term or provision of the 1940 Act and to interpretation
thereof, if any, by the United States courts or in the
absence of any controlling decision of any such court,
by rules, regulations or orders of the Securities and
Exchange Commission issued pursuant to said 1940 Act.
In addition, where the effect of a requirement of the
Act reflected in any provision of this Agreement is
revised by rule, regulation or order of the Securities
and Exchange Commission, such provision shall be
deemed to incorporate the effect of such rule,
regulation or order.
Severability. In the event any provision of this
Agreement is determined to be void or unenforceable,
such determination shall not affect the remainder
of this Agreement, which shall continue to be in force.
Counterparts. This Agreement may be executed in
one or more counterparts, each of which shall be
deemed an original, but all of which together shall
constitute one and the same instrument.
Binding Effect. Each of the undersigned expressly
warrants and represents that he has the full power
and authority to sign this Agreement on behalf of
the party indicated and that his signature will
operate to bind the party indicated to the foregoing
terms.
Captions. The captions in this Agreement are
included for convenience of reference only and
in no way define or delimit any of the provisions
hereto or otherwise affect their construction or effect.
Change of Control. The Sub-Adviser shall notify
Adviser and the Trust in writing at least 60 days
in advance of any change of control, as defined in
Section 2(a)(9) of the 1940 Act, as will enable the
Trust to consider whether an assignment, as defined
in Section 2(a)(4) of the 1940 Act, would occur.
Other Business. Except as set forth above, nothing in
this Agreement shall limit or restrict the right of any
of the Sub-Advisers directors, officers or employees
who may also be a trustee, officer, partner 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 business, whether
of a similar or a dissimilar nature, nor limit
or restrict the Sub-Advisers right to engage
in any other business or to render services of any
kind to any other corporation, firm, individual
or association.
