PORTFOLIO RESEARCH CONSULTANT AGREEMENT
THIS
AGREEMENT
is made
and entered into as of this 28th day of April, 2006, by and between Alternative
Investment Partners, LLC, a Delaware limited liability company (the “Adviser”),
the Underlying Funds Trust, a Delaware statutory trust (the “Trust”) and Trust
Advisors LLC, a Delaware limited liability company (the “PRC”) regarding each
series of the Trust (the “Funds”).
WHEREAS,
the
Funds are registered as an open-end, management investment companies under
the
Investment Company Act of 1940, as amended (the” 1940 Act”); and
WHEREAS,
the
Adviser has been appointed investment adviser to the Funds, pursuant to an
Investment Advisory Agreement dated April 28, 2006, which has been approved
by
the Funds’ Board of Trustees (the “Advisory Agreement”); and
WHEREAS,
the
Adviser desires to retain the PRC to assist the Adviser in providing a
continuous investment program for each Fund’s portfolio and the PRC is willing
to do so; and
WHEREAS,
the
Board of Trustees of the Funds has approved this Agreement, and the PRC is
willing to furnish such services upon the terms and conditions herein set
forth.
NOW,
THEREFORE,
in
consideration of the premises and mutual covenants herein contained, it is
agreed between the parties hereto as follows:
1. Appointment.
The
Adviser and the Trust hereby appoint the PRC to serve as consultant to the
Adviser with respect to the Funds. Intending to be legally bound, the PRC
accepts such appointment and agrees to render the services herein set forth
for
the compensation herein provided.
2. Advisory
Services.
Subject
to the supervision of the Trust’s Board of Trustees, the PRC will assist the
Adviser in providing a continuous investment program for the Funds, including
investment research and management with respect to the Adviser’s selection of
sub-advisers to the Adviser (the “Sub-Advisers”), allocations of Fund assets to
Sub-Advisers, security types and investment strategies comprising the Funds.
The
PRC will provide services under this Agreement m accordance with each Fund’s
investment objective, policies and restrictions as stated in the Funds’
Prospectus and resolutions of the Trust’s Board of Trustees applicable to the
Funds (as attached hereto on Annex I).
Without
limiting the generality of the foregoing, the PRC further agrees that
it:
(a) will
provide the Adviser with background information and other such research on
Sub-Advisers and prospective sub-advisers, assist the Adviser in conducting
a
comprehensive review of each Sub-Adviser, its investment process and
organization, provide the Adviser with research on a wide range of factors
on
each Sub-Adviser including, but not limited to, past investment performance
during various market conditions, investment strategies and processes used,
structures of portfolios and risk management procedures, reputation, experience
and training of key personnel, correlation of results with other Sub-Advisers
and assets under management and number of clients, and conduct interviews of
each Sub-Advisers’ personnel as well as interviews with third party references
and industry sources;
1
(b) will
assist in determining from time to time what security types and investments
strategies will be pursued by the Funds, and monitor in consultation with the
Adviser the execution of its investment strategy by each
Sub-Adviser;
(c) will
provide to the Adviser various performance, volatility and style execution
analytics of the investment strategy of each Sub-Adviser;
(d) will
consult with the Adviser on a continuous basis as to the Funds’ total assets
which shall be invested in each Sub-Adviser’s Separate Account;
(e) will
attend regular business and investment-related meetings with the Trust’s Board
of Trustees and the Adviser if requested to do so by the Trust and/or the
Adviser; and
(f) will
maintain statistical data with respect to various performance and analytical
data for the Funds and Sub-Advisers, furnish to the Adviser and the Trust’s
Board of Trustees such periodic and special reports as they may request with
respect to the Funds, and provide in advance to the Adviser all reports made
to
the Board of Trustees for examination and review within a reasonable time prior
to the Trust’s Board meetings.
Notwithstanding
anything contained herein, nothing contained herein shall be construed to
obligate the PRC to supervise or otherwise enter into any contractual
relationship with any Sub-Adviser. The Adviser is solely responsible for (i)
the
selection and supervision of all Sub-Advisers, and entering into contracts
with
Sub-Advisers, (ii) determination of amounts of assets to allocate to
Sub-Advisers, (iii) determinations as to compensation of; and termination of,
Sub-Advisers, and (iv) all other matters relating to the Sub-Advisers. The
PRC
makes no representation or warranty as to, and shall have no responsibility
whatsoever with respect to, any information provided by or on behalf of; or
the
current or future performance of; any Sub-Adviser, any prospective sub-adviser,
or any assets allocated thereto by the Adviser.
3. Covenants
by the PRC.
The PRC
agrees with respect to the services provided to the Adviser that the
PRC:
(a) will
maintain its status as a Registered Investment Adviser with the Securities
and
Exchange Commission;
(b) will
conform with all Rules and Regulations of the Securities and Exchange
Commission,
(c) will
treat confidentially and as proprietary information of the Funds all records
and
other information relative to the Funds and prior, present or potential
shareholders, and will not use such records and information for any purpose
other than performance of its responsibilities and duties hereunder (except
after prior notification to and approval in writing by the Trust, which approval
shall not be unreasonably withheld, and may not be withheld and will be deemed
granted where the PRC may be exposed to civil or criminal contempt proceedings
for failure to comply, when requested to divulge such information by duly
constituted authorities, or when so requested by the Trust).
2
4. Services
Not Exclusive.
The
services furnished by the PRC hereunder are deemed not to be exclusive, and
nothing in this Agreement shall (i) prevent the PRC or any employee, agent,
manager or affiliated person (as defined in the ▇▇▇▇ ▇▇▇) of the PRC or any
affiliated person of such person from acting as investment adviser, consultant
or manager for any other person or persona, including other management
investment companies or investment vehicles or accounts of any type with
investment objectives and policies the same as or similar to those of the Funds
or (ii) limit or restrict the PRC or any such employee, agent, manager or
affiliated person from buying, selling or trading any securities or other
investments (including any securities or other investments which the Funds
are
eligible to buy) for its or their own accounts or for the accounts of others
for
whom it or they may be acting; provided
however
that the
PRC agrees that it will not undertake any activities which, in its reasonable
judgment, will adversely affect the performance of its material obligations
under this Agreement.
5. Covenants
of the Adviser.
The
Adviser agrees with respect to the services provided to the Adviser hereunder
that the Adviser will conform with the applicable Rules and Regulations of
the
Securities and Exchange Commission.
6. Certain
Representations and Warranties.
Each of
the parties hereto represents and warrants to the other that, as of the date
hereof; this Agreement has been duly and validly authorized by all necessary
action (corporate, limited liability company or otherwise) on the part of such
party, has been duly executed and delivered by such party and constitutes the
valid and legally binding obligation of such party, enforceable against such
party in accordance with its terms and conditions
7. Books
and Records.
In
compliance with the requirements of Rule 31 a-3 under the 1940 Act, the PRC
hereby agrees that all records which it maintains with respect to its services
hereunder are the property of the Trust and further agrees to surrender promptly
to the Trust any originals of such records upon the Trust’s request. The PRC
further agrees to preserve for the periods prescribed by Rule 31a-2 under the
1940 Act any records required to be maintained by Rule 31a-l under the 1940
Act.
8. Expenses.
During
the term of this Agreement, the PRC will pay all expenses incurred by it in
connection with its activities under this Agreement; provided, however, that
the
Adviser shall reimburse the PRC for reasonable out-of-pocket travel and other
similar expenses associated with attending meetings (including due diligence
meetings) with Sub-Advisers or prospective sub-advisers, solely to the extent
approved in advance by the Adviser. Nothing herein, however, shall be deemed
to
require the PRC to pay any expenses of the Funds or the Adviser.
9. Compensation.
In
consideration of the services rendered pursuant to this Agreement, the Adviser
will pay to the PRC, as compensation for the services provided by the PRC under
this Agreement, a monthly fee of 0.25% (on
an
annualized basis) of the average net assets of the Funds. The Adviser shall
pay
the PRC as soon as practical after the last day of each calendar month, but
no
later than 5 business days after the end of each month. In case of termination
or expiration of this Agreement during any calendar month, the fee with respect
to such month shall be reduced proportionately based upon the number of calendar
days during which it is in effect and the fee shall be computed upon the average
net assets of the Funds in accordance with the prospectus.
3
10. Standard
of Care: Limitation of Liability Limited Indemnity.
The PRC
shall exercise due care and diligence and use the same skill and care in
providing its services hereunder as it uses in providing services to other
investment companies, accounts and customers, but shall not be liable for any
action taken or omitted by the PRC in the absence of bad faith, willful
misconduct, gross negligence or reckless disregard of its duties. The Adviser
further agrees to indemnify, defend and hold the PRC, and its managers,
officers, directors, equityholders, employees and agents (“Related Persons”),
harmless from and against all losses, claims, damages, liabilities, costs and
expenses arising by reason of being or having been PRC to the Adviser, or in
connection with the past or present performance of services to the Adviser
in
accordance with this Agreement, except to the extent that the loss, claim,
damage, liability, cost or expense was caused by reason of willful misfeasance,
bad faith, gross negligence, or reckless disregard of the duties on the part
of
the PRC in the performance of its duties and obligations under this Agreement.
These losses, claims, damages, liabilities, costs and expenses include, but
are
not limited to, amounts paid in satisfaction of judgments, in compromise, or
as
fines or penalties, and counsel fees and expenses, incurred in connection with
the defense or disposition of any action, suit, investigation or other
proceeding, whether civil or criminal, before any judicial, arbitral,
administrative or legislative body, in which the indemnity may be or may have
been involved as a party or otherwise, or with which such indemnity may be
or
may have been threatened, while in office or thereafter. Federal and various
state securities laws may afford the Adviser and/or the Funds certain rights
and
remedies under certain circumstances, even in the absence of bad faith, willful
misconduct, gross negligence or reckless disregard by the PRC or its Related
Persons, and nothing contained herein shall in any way constitute a waiver
or
limitation of any such rights and remedies that the Adviser and/or the Funds
may
have under any such federal or state securities laws.
11. Reference
to the PRC.
Neither
the Adviser nor any affiliate or agent of it shall make reference to this
Agreement, or use the name of the PRC or any of its affiliates, (except
references in regulatory filings and communications with shareholders concerning
the identity of and services provided by the PRC to the Funds, which references
shall not differ in substance from those typically included in a proxy statement
or annual report of the Funds, or the Funds’ current registration statements;
provided that the Adviser shall give the PRC a reasonable opportunity to review
such references in advance and to comment thereon), in any advertising or
promotional materials without the prior approval of the PRC, which approval
shall not be unreasonably withheld or delayed. The Adviser hereby agrees to
make
all reasonable efforts to cause the Funds and any affiliate thereof to satisfy
the foregoing obligation.
12. Duration
and Termination.
Unless
sooner terminated, this Agreement shall be for an initial period of two years,
and thereafter shall continue automatically for successive annual periods,
provided such continuance is specifically approved at least annually by the
Funds’ Board of Trustees provided that its continuance also is approved by a
majority of the Funds’ Trustees who are not “interested persons” (as defined in
the ▇▇▇▇ ▇▇▇) of any party to this Agreement, by vote cast in person at a
meeting called for the purpose of voting on such approval. This Agreement is
terminable at any time without penalty, on sixty (60) days’ notice, by the
Funds’ Board of Trustees, by the Adviser or by the PRC or by vote of a majority
of the outstanding voting securities of the Fund. This Agreement will terminate
automatically in the event of its assignment (as defined in the 1940 Act).
Termination or expiration of this Agreement, however caused, shall be without
prejudice to any compensation accrued to the date of termination or expiration
and Sections 3(c), 7, 8, 9, 10 and 11 shall survive any termination or
expiration.
4
13. Amendment
of this Agreement.
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 of the change, waiver, discharge or termination is sought, and
no
amendment of this Agreement shall be effective until approved by the Board
of
Trustees of the Funds, including a majority of the Trustees who are not
interested persons of the Adviser or the PRC, cast in person at a meeting called
for the purpose of voting on such approval.
14. Notice.
Any notice,
advice or report to be given pursuant to this Agreement shall be delivered
or
mailed:
To
the
PRC at:
Trust
Advisors LLC
▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
To
the
Adviser at:
Alternative
Investment Partners, LLC
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
To
the
Funds at:
Alternative
Investment Funds
▇▇▇
▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
with
a
copy to:
Blank
Rome LLP
▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇
▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇
|
Attention:
|
▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, Esq.
|
15. Miscellaneous.
Neither
the holders of Shares of the Funds nor the Trustees shall be personally liable
hereunder. The captions in this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions hereof
or
otherwise affect their construction or effect. If any provision 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. This
Agreement may be executed simultaneously in two or more counterparts, each
of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument.
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16.Governing
Law.
This
Agreement constitutes the entire agreement of the parties, shall be binding
upon
and shall inure to the benefit of the parties hereto and their respective
successors and shall be governed by New York law in a manner not in conflict
with the provisions of the 1940 Act.
17. Counterparts.
This
Agreement may be executed in two or more counterparts, each of which shall
be
deemed an original, but all of which together shall constitute one and the
same
instrument.
IN
WITNESS WHEREOF,
each of
the parties hereto has caused this Agreement to be duly executed by its
authorized officer.
Trust
Advisors LLC
By:
________________________
Name:
Title:
Alternative
Investment Partners, LLC
By:
________________________
Name:
▇▇▇
▇▇▇▇▇▇▇▇▇▇
Title:
Chief Executive Officer
By:
________________________
Name:
▇▇▇
▇▇▇▇▇▇▇▇▇▇
Title:
President
6
APPENDIX
A
Separate
Series of the Underlying Funds Trust
| Ø |
Convertible
Bond Arbitrage - 1
|
| Ø |
Fixed
Income Arbitrage - 1
|
| Ø |
Merger
Arbitrage - 1
|
| Ø |
Long/Short
Equity - Earnings Revision - 1
|
| Ø |
Long/Short
Equity - Momentum - 1
|
| Ø |
Long/Short
Equity - Deep Discount Value - 1
|
| Ø |
Long/Short
Equity - International - 1
|
| Ø |
Long/Short
Equity - Global - 1
|
| Ø |
Long/Short
Equity - REIT - 1
|
| Ø |
Distressed
& Special Situations - 1
|
| Ø |
Distressed
& Special Situations - 2
|
| Ø |
Distressed
& Special Situations - 3
|
7