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Form 485BPOS Advisors Preferred Trust

December 23, 2021 11:19 AM EST

SUBADVISORY AGREEMENT

THIS "AGREEMENT" is made and entered into with effect as of December 20, 2021, by and between Advisors Preferred, LLC (the "Adviser"), a Maryland limited liability company registered under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), and Flexible Plan Investments, Ltd., a Michigan corporation (the "Subadviser") (the Adviser and the Subadviser, collectively, the "Parties") and also registered under the Advisers Act, with respect to QAIF Fund Limited, an Exempted Company incorporated in the Cayman Islands with Limited Liability (the "Fund").

WITNESSETH:

WHEREAS, the Fund is, or will be, wholly-owned by Quantified Alternative Investment Fund (the "US Fund") which is a series of Advisors Preferred Trust, a Delaware Statutory Trust, registered with the U.S. Securities and Exchange Commission (the "SEC") as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "1940 Act");

 

WHEREAS, the Fund is authorized to issue participating shares; and

 

WHEREAS, the Adviser and Subadviser are each registered as an investment adviser under the Investment Advisers Act of 1940 (the “Advisers Act”); and

 

WHEREAS, the Adviser has, pursuant to an Investment Advisory Agreement with the Fund (the "Advisory Agreement"), been retained to act as investment adviser for the Fund;

 

WHEREAS, the Adviser represents that the Advisory Agreement permits the Adviser to delegate certain of its duties under the Advisory Agreement to other investment advisers, subject to the requirements of the 1940 Act; and

WHEREAS, the Adviser desires to retain Subadviser to assist it in the provision of a continuous investment program for that portion of the Fund's assets that the Adviser will assign to the Subadviser, and Subadviser is willing to render such services subject to the terms and conditions set forth in this Agreement,

NOW, THEREFORE, the parties do mutually agree and promise as follows with respect to each Fund:

1. Appointment as Subadviser. The Adviser hereby appoints the Subadviser to act as investment adviser for and to manage all of the assets of the Fund (the "Subadviser Assets") subject to the supervision of the Adviser and the Board of Directors of the Fund and subject to the terms of this Agreement; and the Subadviser hereby accepts such appointment. In such capacity, the Subadviser shall be responsible for the investment management of the Subadviser Assets. It is recognized

 

that the Subadviser and certain of its affiliates may act as investment adviser to one or more other private pooled investment vehicles and other managed accounts and that the Adviser and the Fund do not object to such activities.

 

2. Duties of Subadviser.

 

(a) Investments. The Subadviser is hereby authorized and directed and hereby agrees, subject to the stated investment policies and restrictions of the Fund as set forth in the Fund's Offering Memorandum ("Prospectus") or similar document as currently in effect and, as soon as practical after the Fund or the Adviser notifies the Subadviser thereof, as supplemented or amended from time to time and subject to the directions of the Adviser and the Fund's Board of Directors, to monitor on a continuous basis the performance of the Subadviser Assets and to conduct a continuous program of investment, evaluation and, if appropriate, sale and reinvestment of the Subadviser Assets. The Adviser agrees to provide the Subadviser with such assistance as may be reasonably requested by the Subadviser in connection with the Subadviser's activities under this Agreement, including, without limitation, providing information concerning the Fund, its funds available, or to become available, for investment and generally as to the conditions of the Fund's affairs.

 

Adviser acknowledges that Subadviser cannot guarantee investment success. The securities markets are volatile and Subadviser may underperform various market indexes, funds and the investments themselves on an unmanaged basis. These are normal market risks and are the risks of the Fund. Past performance cannot guarantee future results. Subadviser relies on services, systems, information, programs and data provided by third parties including, without limitation, broker/dealers, registered representatives, insurance agents, investment advisers, custodians, insurance companies, transfer agents, solicitors and the employees and agents of each of them (all of such third parties referred to as "Service Providers"). The Service Providers are believed to be reliable but such reliability cannot be guaranteed. Subadviser is not responsible for any Service Provider's failure or delay in performance of its responsibilities. This limitation applies to any action or inaction on the part of any Service Provider however caused, including delays, failures or inaccuracies in any electronic system, computer system, software application or communication system and understands the scope of Subadviser's responsibility as so limited, and covenants with Subadviser that Adviser will not attempt to hold Subadviser liable for any loss or expense attributable in whole or in part to any Service Provider's failure or delay.

 

(b) Compliance with Applicable Laws and Governing Documents. In the performance of its services under this Agreement, the Subadviser shall act in conformity with the Prospectus as currently in effect and, as soon as practical after the Fund or the Adviser notifies the Subadviser thereof, as supplemented, amended and/or restated from time to time and with the instructions and directions received in writing from the Adviser or the Directors of the Fund and will conform to, and comply with, the requirements of the 1940 Act, the Internal Revenue Code of 1986, as amended (the "Code"), and all other applicable federal and state laws and regulations. Without limiting the preceding sentence, the Adviser promptly shall notify the Subadviser as to

 

any act or omission of the Subadviser hereunder that the Adviser reasonably deems to constitute or to be the basis of any noncompliance or nonconformance with any of the Fund's Memorandum and Articles of Association, the Prospectus, the instructions and directions received in writing from the Adviser or the Directors of the Fund, the 1940 Act (as applicable), the Code, and all other applicable federal and state laws and regulations. Notwithstanding the foregoing, the Adviser shall remain responsible for ensuring the Fund's overall compliance with the 1940 Act, the Code and all other applicable federal and state laws and regulations and the Subadviser is only obligated to comply with its obligations under this subsection (b) with respect to the Subadviser Assets. The Adviser timely will provide the Subadviser with a copy of the minutes of the meetings of the Board of Directors of the Fund to the extent they may affect the Fund or the services of the Subadviser, copies of any financial statements or reports made by the Fund to its shareholders, and any further materials or information which the Subadviser may reasonably request to enable it to perform its functions under this Agreement.

 

The Adviser shall perform quarterly and annual tax compliance tests to ensure that the Fund is in compliance with Subchapter M of the Code. In this regard, the Adviser acknowledges that the Subadviser shall rely completely upon the Adviser's determination of whether and to what extent the Fund is in compliance with Subchapter M of the Code and that the Subadviser has no separate and independent responsibility to test the Fund for such compliance. In connection with such compliance tests, the Adviser shall inform the Subadviser at least ten (10) business days prior to a calendar quarter end; (i) if the Subadviser Assets are out of compliance with the diversification requirements under Subchapter M, and (ii) the specifics associated with Adviser’s conclusion that the Subadviser Assets are out of compliance with the diversification requirements under Subchapter M. If the Adviser notifies the Subadviser that the Subadviser Assets are not in compliance with such requirements noted above, the Subadviser will take prompt action to bring the Subadviser Assets back into compliance within the time permitted under the Code thereunder.

The Adviser will provide the Subadviser with as much notice as reasonably practical of any change in the Fund's investment objectives, policies and restrictions as stated in the Prospectus and the Subadviser shall, in the performance of its duties and obligations under this Agreement, manage the Subadviser Assets consistent with such changes, provided that the Subadviser has received prompt notice of the effectiveness of such changes from the Fund or the Adviser. In addition to such notice, the Adviser shall provide to the Subadviser a copy of a modified Prospectus reflecting such changes. The Adviser acknowledges and will ensure that the Prospectus will at all times be in compliance with all disclosure requirements under all applicable federal and state laws and regulations relating to the Fund, including, without limitation, the 1940 Act, and the rules and regulations thereunder, and that the Subadviser shall have no liability in connection therewith, except as to the accuracy of material information furnished in writing by the Subadviser to the Fund or to the Adviser specifically for inclusion in the Prospectus. The Subadviser hereby agrees to provide to the Adviser in a timely manner such information relating to the Subadviser and its relationship to, and actions for, the Fund as may be required to be contained in the

 

Prospectus, any amendments thereto, Annual Report, Semi-Annual Report, and such other reports and materials as the Adviser may reasonably request. Upon request of the Adviser, the Subadviser also agrees: to review those portions of the Prospectus, and Annual Report, Semi-Annual Report, and such other reports and materials as the Adviser may reasonably request, relating to the Subadviser and its relationship to, and actions for, the Fund; to notify the Adviser of any material inadequacy; and, to further notify the Adviser if it becomes aware that any relevant portions thereof have become materially inaccurate.

It is further acknowledged and agreed that Subadviser may rely completely on Adviser’s determinations that the Fund and its associated persons are in full compliance with the mandates of the Commodities Futures Trading Commission and with the rules and regulations associated with the operation and maintenance of a passive foreign investment company.

(c) Voting of Proxies. The Adviser shall be responsible for the voting of proxies for which the Adviser will establish a written procedure for proxy voting in compliance with current applicable rules and regulations, including but not limited to Rule 30b1-4 under the 1940 Act.

 

(d) Brokerage. Except as mutually agreed upon in writing between the Adviser and Subadviser, the Adviser shall be responsible to establish and maintain accounts on behalf of the Fund with, and place orders for the investment and reinvestment, including without limitation purchase and sale of the Subadviser Assets with or through, such persons, brokers (including, to the extent permitted by applicable law, any broker affiliated with the Subadviser) or dealers (collectively "Brokers") as Adviser may elect and negotiate commissions to be paid on such transactions. The Adviser, however, is not required to obtain the consent of the Fund's Board of Directors prior to establishing any such brokerage account. The Adviser shall place all orders for the purchase and sale of portfolio investments for the Fund's account with Brokers selected by the Adviser. In the selection of such Brokers and the placing of such orders, the Adviser shall seek to obtain for the Fund the best execution available. In using its reasonable efforts to obtain for the Fund the best execution available, the Adviser, bearing in mind the best interests of the Fund at all times, shall consider all factors it deems relevant, including (without limitation) price, the size of the transaction, the breadth and nature of the market for the security, the difficulty of the execution, the amount of the commission, if any, the timing of the transaction, market prices and trends, the reputation, experience and financial stability of the Broker involved, and the quality of service rendered by the Broker in other transactions. The Adviser shall not consider a Broker's sale of Fund shares when selecting the Broker to execute trades. Subject to such policies as the Directors may determine, or as may be mutually agreed to by the Adviser and the Subadviser, the Adviser is authorized but not obligated to cause, and shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of its having caused, the Fund to pay a Broker that provides brokerage and research services (within the meaning of Section 28(e) of the Securities Exchange Act of 1934) to the Adviser an amount of commission for effecting a Subadviser Assets investment transaction that is in excess of

 

the amount of commission that another Broker would have charged for effecting that transaction if, but only if, the Adviser determines in good faith that such commission was reasonable in relation to the value of the brokerage and research services provided by such Broker viewed in terms of either that particular transaction or the overall responsibility of the Adviser with respect to the accounts as to which it exercises investment discretion.

 

It is recognized that the services provided by such Brokers may be useful to the Adviser in connection with the Adviser's services to other clients. On occasions when the Adviser deems the purchase or sale of a security to be in the best interests of the Fund with respect to the Adviser Assets as well as other clients of the Adviser, the Adviser, to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be sold or purchased in order to obtain the most favorable price or lower brokerage commissions and efficient execution. In such event, allocation of securities so sold or purchased, as well as the expenses incurred in the transaction, will be made by the Adviser in the manner the Adviser considers to be the most equitable and consistent with its fiduciary obligations to the Fund and to such other clients. It is recognized that in some cases, this procedure may adversely affect the price paid or received by the Fund or the size of the position obtainable for, or disposed of by, the Fund with respect to the Adviser Assets.

(e) Securities Transactions. The Subadviser and any affiliated person of the Subadviser will not purchase securities or other instruments from or sell securities or other instruments to the Fund; provided, however, the Subadviser or any affiliated person of the Subadviser may purchase securities or other instruments from or sell securities or other instruments to the Fund if such transaction is permissible under applicable laws and regulations, including, without limitation, the 1940 Act and the Advisers Act and the rules and regulations promulgated thereunder.

 

The Subadviser, on its own behalf and with respect to its Access Persons (as defined in subsection (e) of Rule 17j-1 under the 1940 Act), agrees to observe and comply with Rule 17j-1 and its Code of Ethics (which shall comply in all material respects with Rule 17j-1), as the same may be amended from time to time. On at least an annual basis, the Subadviser will comply with the reporting requirements of Rule 17j-1, which include (i) certifying to the Adviser and the Fund that the Subadviser and its Access Persons have complied with the Subadviser's Code of Ethics with respect to the Subadviser Assets and (ii) identifying any violations which have occurred with respect to the Subadviser Assets. The Subadviser will have also submitted its Code of Ethics for its initial approval by the Fund's Board of Directors no later than the date of execution of this agreement and subsequently within six months of any material change thereto.

(f) Books and Records. The Subadviser shall maintain separate detailed records as are required by applicable laws and regulations of all matters hereunder pertaining to the Subadviser Assets (the "Fund's Records"). The Subadviser acknowledges that the Fund's Records are property of the Fund; except to the extent that the Subadviser is required to maintain the Fund's Records under the Advisers Act or other applicable law and except that the Subadviser, at its own expense, is entitled to

 

make and keep a copy of the Fund's Records for its internal files. The Fund's Records shall be available to the Adviser or the Fund at any time upon reasonable request during normal business hours and shall be available for telecopying promptly to the Adviser during any day that the Fund is open for business as set forth in the Prospectus.

(g) Information Concerning Subadviser Assets and Subadviser. From time to time as the Adviser or the Fund reasonably may request in good faith, the Subadviser will furnish the requesting party reports on portfolio transactions and reports on the Subadviser Assets, all in such reasonable detail as the parties may reasonably agree in good faith. The Subadviser will also inform the Adviser in a timely manner of material changes in portfolio managers responsible for Subadviser Assets, any changes in the ownership or management of the Subadviser, or of material changes in the control of the Subadviser. Upon the Fund's or the Adviser's reasonable request, the Subadviser will make available its officers and employees to meet with the Fund's Board of Directors to review the Subadviser Assets via telephone on a quarterly basis and on a less frequent basis as agreed upon by the parties in person.

 

Subject to the other provisions of this Agreement, the Subadviser will also provide such information or perform such additional acts with respect to the Subadviser Assets as are reasonably required for the Fund or the Adviser to comply with their respective obligations under applicable laws, including without limitation, the Code, the 1940 Act, the Advisers Act, and the Securities Act, and any rule or regulation thereunder.

(h) Custody Arrangements. The Fund or the Adviser shall notify the Subadviser of the identities of its custodian banks and the custody arrangements therewith with respect to the Subadviser Assets and shall give the Subadviser written notice of any material changes in such custodian banks or custody arrangements. The Subadviser shall have no liability for the acts or omissions of the authorized custodian(s), unless such act or omission is required by and taken in reliance upon instructions given to the authorized custodian(s) by a representative of the Subadviser properly authorized (pursuant to written instruction by the Adviser) to give such instructions. Subadviser shall not directly or indirectly take custody of the assets of the Fund; such assets shall always be held in the name of the custodian, or in street name, as determined by the custodian of the Fund selected by the Trust or the Adviser.

 

Adviser, through the selected custody arrangements of the Fund or otherwise, shall be responsible, to provide facility to:

 

(a) provide an independent custodian of the Subadviser Assets to take, hold, invest and re-invest mutual fund assets at the direction of Subadviser;

(b) provide a security trade execution on-line electronic facility;

(c) provide a current and updated listing of securities available for investment;

(d) review and approve all security trades directed by Subadviser and process approved trades;

(e) provide email confirmation that trade directives were received and processed within one business day after receipt of directive;

 

(f) manage the Subadviser Assets including collection of dividends, interest, proceeds of sale and other monies due and collectable therefor;

(g) provide Subadviser with a daily schedule of assets file, in electronic format, which, at a minimum, details the cusip, security name, number of shares and total dollar value as of close of business on the immediately previous business day for each security then owned;

(h) provide Subadviser with a daily accounting of the net asset value of the Fund, in electronic format, including detail regarding all relevant fees inclusive of the Compensation payable hereunder;

(i) provide, in electronic format, on a basis not less frequent than monthly, industry standard reports that contain the account balances for all positions and cash, cost basis, current market values and time weighted return reports;

(j) provide, in electronic format, Subadviser with a "Computation of Investment Counsel Fees" monthly detailing the compensation payable hereunder to Subadviser;

(k) provide, in electronic format, all trade exceptions identified; the same to be researched and cleared immediately and daily reports rendered in respect thereof.

 

3. Independent Contractor. In the performance of its services hereunder, the Subadviser is and shall be an independent contractor and unless otherwise expressly provided herein or otherwise authorized in writing, shall have no authority to act for or represent the Fund or the Adviser in any way or otherwise be deemed an agent of the Fund or the Adviser.

 

4. Expenses. During the term of this Agreement, Subadviser will pay all expenses incurred by it in connection with its activities under this Agreement. The Subadviser shall, at its sole expense, employ or associate itself with such persons as it believes to be particularly fitted to assist it in the execution of its duties under this Agreement. Except as provided in Schedule A of this Agreement, or as otherwise mutually agreed in writing by the relevant parties, the Subadviser shall not be responsible for the Fund's or Adviser's expenses, which shall include, but not be limited to, the cost of securities, commodities and other investments (including brokerage commissions and other transaction charges, if any) purchased for the Fund and any losses incurred in connection therewith, expenses of holding or carrying Subadviser Assets, including, without limitation, expenses of dividends on stock borrowed to cover a short sale and interest, fees or other charges incurred in connection with leverage and related borrowings with respect to the Subadviser Assets, organizational and offering expenses (which include, but are not limited to, out-of-pocket expenses, but not overhead or employee costs of the Subadviser); expenses for legal, accounting and auditing services; taxes and governmental fees; dues and expenses incurred in connection with membership in investment company organizations; costs of printing and distributing shareholder reports, proxy materials, prospectuses, stock certificates and distribution of dividends; charges of the Fund's custodians and sub-custodians, administrators and sub-administrators, registrars, transfer agents, dividend disbursing agents and dividend reinvestment plan agents; payment for portfolio pricing services to a pricing agent, if any; registration and filing fees of the SEC; expenses of registering or qualifying securities of the Fund for sale in the various states; freight and other charges

 

in connection with the shipment of the Fund's portfolio securities; fees and expenses of non-interested Directors; salaries of shareholder relations personnel; costs of shareholders meetings; insurance; interest; brokerage costs; and litigation and other extraordinary or non-recurring expenses. Except as otherwise mutually agreed upon in writing by the relevant parties, the Fund or the Adviser, as the case may be, shall reimburse the Subadviser for any expenses of the Fund or the Adviser as may be reasonably incurred by such Subadviser on behalf of the Fund or the Adviser. The Subadviser shall keep and supply to the Fund and the Adviser reasonable records of all such expenses.

 

5. Investment Analysis and Commentary. Upon request, the Subadviser will provide quarterly performance analysis and market commentary (the "Investment Report") during the term of this Agreement. The Investment Reports are due within ten (10) days after the end of each quarter. In addition, interim Investment Reports shall be issued at such times as may be mutually agreed upon by the Adviser and Subadviser; provided however, that any such interim Investment Report will be due within ten (10) days of the end of the month in which such agreement is reached between the Adviser and Subadviser. The subject of each Investment Report shall be mutually agreed upon. The Adviser is freely able to publicly distribute the Investment Report.

 

6. Compensation. For the services provided pursuant to this Agreement, the Subadviser is entitled to no fee.

 

7. Exclusivity. The Subadviser will not subadvise or license the Fund's investment strategy for another regulated investment company as defined in the Code under Subchapter M, during the term of this Agreement without consent of the Adviser. Notwithstanding the foregoing, Subadviser and persons controlled by or under common control with Subadviser have and may have advisory, management service or other agreements with other organizations and persons, and may have other interests and businesses. Nothing in this Agreement is intended to preclude such other business relationships; provided, however, that Subadviser agrees to use its best efforts to resolve conflicts and to allocate investment opportunities fairly among its clients and the Fund. It is understood that Subadviser, its officers, employees and agents may own investments in the same or different securities or insurance products as the Fund and that their management of same may differ from Subadviser's management of the assets of the Fund.

 

8. Representations and Warranties of Subadviser. The Subadviser represents and warrants to the Adviser and the Fund as follows:

 

(a) The Subadviser is registered as an investment adviser under the Advisers Act and maintains compliance policies and procedures consistent with Rule 206(4)-7 under the Advisers Act and Rule 38a-1 under the 1940 Act (to the extent applicable);

(b) The Subadviser is a corporation duly organized and properly registered and operating under the laws of the State of Michigan with the power to own and

 

possess its assets and carry on its business as it is now being conducted and as proposed to be conducted hereunder;

 

(c) The execution, delivery and performance by the Subadviser of this Agreement are within the Subadviser's powers and have been duly authorized by all necessary actions of its directors or shareholders, and no action by, or in respect of, or filing with, any governmental body, agency or official is required on the part of the Subadviser for execution, delivery and performance by the Subadviser of this Agreement, and the execution, delivery and performance by the Subadviser of this Agreement do not contravene or constitute a violation of, or a material default under, (i) any provision of applicable law, rule or regulation, (ii) the Subadviser's governing instruments, or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon the Subadviser; and

 

(d) The Form ADV of the Subadviser provided to the Adviser and the Fund is a true and complete copy of the form, including that part or parts of the Form ADV filed with the SEC, that part or parts maintained in the records of the Subadviser, and/or that part or parts provided or offered to clients, in each case as required under the Advisers Act and rules thereunder, and the information contained therein is accurate and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading.

 

9. Representations and Warranties of Adviser. The Adviser represents and warrants to the Subadviser as follows:

 

(a) The Adviser is registered as an investment adviser under the Advisers Act;

(b) The Adviser is a limited liability company duly organized and validly existing under the laws of the State of Maryland with the power to own and possess its assets and carry on its business as it is now being conducted and as proposed to be conducted hereunder;

 

(c) The execution, delivery and performance by the Adviser of this Agreement are within the Adviser's powers and have been duly authorized by all necessary action on the part of its directors, shareholders or managing unitholder, and no action by, or in respect of, or filing with, any governmental body, agency or official is required on the part of the Adviser for the execution, delivery and performance by the Adviser of this Agreement, and the execution, delivery and performance by the Adviser of this Agreement do not contravene or constitute a violation of, or a material default under, (i) any provision of applicable law, rule or regulation, (ii) the Adviser's governing instruments, or (iii) any agreement, judgment, injunction, order, decree or other instrument binding upon the Adviser;

 

(d) The Form ADV of the Adviser provided to the Subadviser and the Fund is a true and complete copy of the form, including that part or parts of the Form ADV filed with the SEC, that part or parts maintained in the records of the Adviser, and/or

 

that part or parts provided or offered to clients, in each case as required under the Advisers Act and rules thereunder, and the information contained therein is accurate and complete in all material respects and does not omit to state any material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading;

 

(e) The Adviser acknowledges that it received a copy of the Subadviser's Form ADV prior to the execution of this Agreement; and

 

(f) The Adviser and the Fund have duly entered into the Advisory Agreement pursuant to which the Fund authorized the Adviser to delegate certain of its duties under the Advisory Agreement to other investment advisers, including without limitation, the appointment of a subadviser with respect to assets of the Fund, including without limitation the Adviser's entering into and performing this Agreement.

 

10. Survival of Representations and Warranties; Duty to Update Information. All representations and warranties made by the Subadviser and the Adviser pursuant to the recitals above and Sections 8 and 9, respectively, shall survive for the duration of this Agreement and the parties hereto shall promptly notify each other in writing upon becoming aware that any of the foregoing representations and warranties are no longer true or accurate in all material effects.

 

11. Liability and Indemnification.

 

(a) Liability. The Subadviser shall exercise its best judgment in rendering its services in accordance with the terms of this Agreement, but otherwise, in the absence of willful misfeasance, bad faith or gross negligence on the part of the Subadviser or a reckless disregard of its duties hereunder, the Subadviser, each of its affiliates and all respective partners, officers, directors and employees ("Affiliates") and each person, if any, who within the meaning of the Securities Act controls the Subadviser ("Controlling Persons"), if any, shall not be subject to any expenses or liability to the Adviser or the Fund or any of the Fund's shareholders, in connection with the matters to which this Agreement relates, including without limitation for any losses that may be sustained in the purchase, holding or sale of Subadviser Assets. The Adviser shall exercise its best judgment in rendering its obligations in accordance with the terms of this Agreement, but otherwise (except as set forth in Section 11(c) below), in the absence of willful misfeasance, bad faith or gross negligence on the part of the Adviser or a reckless disregard of its duties hereunder, the Adviser, any of its Affiliates and each of the Adviser's Controlling Persons, if any, shall not be subject to any liability to the Subadviser, for any act or omission in the case of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of Subadviser Assets. Notwithstanding the foregoing, nothing herein shall relieve the Adviser and the Subadviser from any of their obligations under applicable law, including, without limitation, the federal and state securities laws.

 

(b) Indemnification. The Subadviser shall indemnify the Adviser and the Fund, and their respective Affiliates and Controlling Persons for any liability and

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expenses, including without limitation reasonable attorneys' fees and expenses, which the Adviser and/or the Fund and their respective Affiliates and Controlling Persons may sustain as a result of the Subadviser's willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the federal and state securities laws. Unless otherwise obligated under applicable law, the Subadviser shall not be liable for indirect, punitive, special or consequential damages arising out of this Agreement.

 

The Adviser shall indemnify the Subadviser, its Affiliates and its Controlling Persons, for any liability and expenses, including without limitation reasonable attorneys' fees and expenses, which may be sustained as a result of the Adviser's willful misfeasance, bad faith, gross negligence, reckless disregard of its duties hereunder or violation of applicable law, including, without limitation, the federal and state securities laws.

(c) The Subadviser shall not be liable to the Adviser for acts of the Subadviser which result from acts of the Adviser, including, but not limited to, a failure of the Adviser to provide accurate and current information with respect to any records maintained by the Adviser, which records are not also maintained by or otherwise available to the Subadviser upon reasonable request.

 

12. Duration and Termination.

 

(a) Duration. Unless sooner terminated, this Agreement shall continue for an initial period of no more than two years following the date of execution, and thereafter shall continue automatically for successive annual periods with respect to the Fund, provided such continuance is specifically approved at least annually by the Fund's Board of Directors or vote of the lesser of (a) 67% of the shares of the Fund represented at a meeting if holders of more than 50% of the outstanding shares of the Fund are present in person or by proxy or (b) more than 50% of the outstanding shares of the Fund; provided that in either event its continuance also is approved by a majority of the Fund's Directors who are not "interested persons" (as defined in the 1940 Act) of any party to this Agreement, by vote cast in person at a meeting called for the purpose of voting on such approval.

 

(b) Termination. Notwithstanding whatever may be provided herein to the contrary, this Agreement may be terminated at any time with respect to the Fund, without payment of any penalty:

 

(i) By vote of a majority of the Fund's Board of Directors, or by "vote of a majority of the outstanding voting securities" of the Fund (as defined in the 1940 Act), or by the Adviser, in each case, upon sixty 60 days' written notice to the Subadviser;

(ii) By any party hereto upon written notice to the other party in the event of a breach of any provision of this Agreement by the other party if the breach is not cured within 15 days of notice of the breach; or

 

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(iii) By the Subadviser upon sixty 60 days' written notice to the Adviser and the Fund.

 

This Agreement shall not be assigned by either party (as such term is defined in the 1940 Act) without the express written consent of the other party and shall terminate automatically in the event of its assignment without such consent or upon the termination of the Advisory Agreement.

13. Duties of the Adviser. The Adviser shall continue to have responsibility for all services to be provided to the Fund pursuant to the Advisory Agreement and shall oversee and review the Subadviser's performance of its duties under this Agreement. Nothing contained in this Agreement shall obligate the Adviser to provide any funding or other support for the purpose of directly or indirectly promoting investments in the Fund.

 

14. Reference to Adviser and Subadviser.

 

(a) The Subadviser grants, subject to the conditions below, the Adviser non-exclusive rights to use, display and promote trademarks of the Subadviser in conjunction with any activity associated with the Fund. In addition, the Adviser may promote the identity of and services provided by the Subadviser to the Adviser, which references shall not differ in substance from those included in the Prospectus and this Agreement, in any advertising or promotional materials. The Adviser shall protect the goodwill and reputation of the Subadviser in connection with marketing and promotion of the Fund. The Adviser shall submit to the Subadviser for its review and approval all such public informational materials relating to the Fund that refer to any recognizable variant or any registered mark or logo or other proprietary designation of the Subadviser. Approval shall not be unreasonably withheld by the Subadviser and notice of approval or disapproval will be provided in a timely manner. Subsequent advertising or promotional materials having very substantially the same form as previously approved by the Subadviser may be used by the Adviser without obtaining the Subadviser's consent unless such consent is withdrawn in writing by the Subadviser.

 

(b) Neither the Subadviser nor any Affiliate or agent of Subadviser shall make reference to or use the name of the Adviser or any of its Affiliates, or any of their clients, except references concerning the identity of and services provided by the Adviser to the Fund or to the Subadviser, which references shall not differ in substance from those included in the Prospectus and this Agreement, in any advertising or promotional materials without the prior approval of Adviser, which approval shall not be unreasonably withheld or delayed. The Subadviser hereby agrees to make all reasonable efforts to cause any Affiliate of the Subadviser to satisfy the foregoing obligation.

 

15. Amendment. This Agreement may be amended by mutual consent of the parties, provided that the terms of any material amendment shall be approved by: (a) the Fund's Board of Directors or by a vote of a majority of the outstanding voting securities of the Fund (as required by the 1940 Act), and (b) the vote of a majority of those Directors of the Fund who are not "interested persons" of any party to this

12 
 

Agreement cast in person at a meeting called for the purpose of voting on such approval, if such approval is required by applicable law.

 

16. Confidentiality. Subject to the duties of the Adviser, the Fund and the Subadviser to comply with applicable law, including any demand of any regulatory or taxing authority having jurisdiction, the parties hereto shall treat as confidential and shall not disclose any and all information pertaining to the Fund and the actions of the Subadviser, the Adviser and the Fund in respect thereof; except to the extent:

 

(a) Authorized. The Subadviser, Adviser or the Fund has authorized such disclosure;

 

(b) Court or Regulatory Authority. Disclosure of such information is expressly required or requested by a court or other tribunal of competent jurisdiction or applicable federal or state regulatory authorities;

 

(c) Publicly Known Without Breach. Such information becomes known to the general public without a breach of this Agreement or a similar confidential disclosure agreement regarding such information;

 

(d) Already Known. Such information already was known by the party prior to the date hereof;

 

(e) Received From Third Party. Such information was or is hereafter rightfully received by the party from a third party (expressly excluding the Fund's custodian, prime broker and administrator) without restriction on its disclosure and without breach of this Agreement or of a similar confidential disclosure agreement regarding them; or

 

(f) Independently Developed. The party independently developed such information.

In addition, the Subadviser and its officers, directors and employees are prohibited from receiving compensation or other consideration, for themselves or on behalf of the Fund, as a result of disclosing the Fund's portfolio holdings. The Subadviser agrees, consistent with its Code of Ethics, that neither it nor its officers, directors or employees may engage in personal securities transactions based on non-public information about the Fund's portfolio holdings.

 

In addition, Adviser agrees that any proprietary, financial or other nonpublic information that it obtains directly or indirectly as the result of its working with Subadviser in connection with this Agreement regarding Subadviser, including, but not limited to, the methodology employed by Subadviser to solicit its customers, and the identity of Subadviser's solicitor referral agents and/or their respective broker/dealer and/or RIA affiliations, its investment selection, trading or marketing methods and techniques, or Subadviser's actual or potential customers (collectively, the "Information") shall be "confidential" as of the date that Adviser obtains such information regardless of whether the information is received prior to, contemporaneously with, or subsequent to the execution of the Agreement. Such information will include, but not be

13 
 

limited to, "nonpublic personal information" as that term is defined in Subtitle A of the Title V of the Gramm-Leach-Bailey Act (the "Act") and the implementing interagency Privacy Regulations, as may be amended from time to time.

 

Adviser agrees that it will use the Information solely for the purposes for which the information is disclosed to it by Subadviser or as otherwise permitted by law or the implementing Privacy Regulations, in the ordinary course of business to carry out the purposes for which Subadviser disclosed the information to Adviser.

 

17. Notice. Any notice that is required to be given by the parties to each other under the terms of this Agreement shall be in writing, delivered, or mailed postpaid to the other parties, or transmitted by facsimile with acknowledgment of receipt, to the parties at the following addresses or facsimile numbers, which may from time to time be changed by the parties by notice to the other party:

 

(a) If to the Subadviser:

 

Flexible Plan Investments, Ltd.

Jerry C. Wagner

3883 Telegraph Road, Suite 100

Bloomfield Hills, MI 48302

Phone: 248-642-6640

Email: [email protected]

 

(b) If to the Adviser:

 

ADVISORS PREFERRED, LLC

Catherine Ayers-Rigsby

1445 Research Boulevard, Ste. 530

Rockville, MD 20850

Phone: 240-223-1998

Email: [email protected]

18. Jurisdiction. This Agreement shall be governed by and construed in accordance with the substantive laws of the State of Maryland without reference to choice of law principles thereof and in accordance with the 1940 Act. In the case of any conflict, the 1940 Act shall control.

 

19. Counterparts. This Agreement may be executed in one or more counterparts, each of which shall be deemed an original, all of which shall together constitute one and the same instrument.

 

20. Certain Definitions. For the purposes of this Agreement and except as otherwise provided herein, "interested person," "affiliated person," and "assignment" shall have their respective meanings as set forth in the 1940 Act, subject, however, to such exemptions as may be granted by the SEC.

 

14 
 

21. Captions. The captions herein are included for convenience of reference only and shall be ignored in the construction or interpretation hereof.

 

22. Severability. If any provision of this Agreement shall be held or made invalid by a court decision or applicable law, the remainder of the Agreement shall not be affected adversely and shall remain in full force and effect.

 

23. Entire Agreement. This Agreement, together with all exhibits, attachments and appendices, contains the entire understanding and agreement of the parties with respect to the subject matter hereof.

 

[ Signature Page Follows ]

 

15 
 

 

IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the day and year first written above.

 

ADVISORS PREFERRED LLC

 

By: /s/___________________

Name: Catherine Ayers-Rigsby

Title: Chief Executive Officer

 

 

 

FLEXIBLE PLAN INVESTMENTS, LTD.

 

By: /s/___________________

Name: Jerry C. Wagner

Title: President

 

 

Schedule A

 

Fund expenses to be paid by the Subadviser - None.

 

 

 

 

16 

INVESTMENT ADVISORY AGREEMENT

Between

QAIF Fund Limited

and

ADVISORS PREFERRED LLC

 

 

AGREEMENT, made as of December 20, 2021 between QAIF Fund Limited, an Exempted Company incorporated in the Cayman Islands with Limited Liability (the "Fund"), and Advisors Preferred LLC, a Maryland limited liability company (the "Adviser") located at 1445 Research Blvd, Suite 530, Rockville, MD 20850.

 

RECITALS:

 

WHEREAS, the Fund is, or will be, wholly-owned by Quantified Alternative Investment Fund (the "US Fund") which is a series of Advisors Preferred Trust, a Delaware Statutory Trust, registered with the U.S. Securities and Exchange Commission (the "SEC") as an open-end management investment company and is registered as such under the Investment Company Act of 1940, as amended (the "Act");

 

WHEREAS, the Fund is authorized to issue participating shares; and

 

WHEREAS, the Adviser is registered as an investment adviser under the Investment Advisers Act of 1940; and

 

WHEREAS, the Fund desires to retain the Adviser to render investment advisory services to the Fund in the manner and on the terms and conditions hereinafter set forth;

 

NOW, THEREFORE, the parties hereto agree as follows:

 

1. Services of the Adviser.

 

1.1 Investment Advisory Services. The Adviser shall act as the investment adviser to the Fund and, as such, shall directly or through as sub-adviser (i) obtain and evaluate such information relating to the economy, industries, business, securities markets and securities as it may deem necessary or useful in discharging its responsibilities hereunder, (ii) formulate a continuing program for the investment of the assets of the Fund in a manner consistent with its investment objective(s), policies and restrictions, and (iii) determine from time to time securities to be purchased, sold, retained or lent by the Fund, and implement those decisions, including the selection of entities with or through which such purchases, sales or loans are to be effected; provided, that the Adviser will place orders pursuant to its investment determinations either directly with the issuer or with a broker or dealer, and if with a broker or dealer, (a) will attempt to obtain the best price and execution of its orders, and (b) may nevertheless in its discretion purchase and sell portfolio securities from and to brokers who provide the Adviser with research, analysis, advice and similar services and pay such brokers in return a higher commission than may be charged by other brokers.

 

 

The Fund hereby authorizes any entity or person associated with the Adviser or any sub-adviser retained by the Adviser pursuant to Section 9 of this Agreement, which is a member of a national securities exchange, to effect any transaction on the exchange for the account of the Fund which is permitted by Section 11(a) of the Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder, and the Fund hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).

 

The Adviser shall carry out its duties with respect to the Fund's investments in accordance with applicable law and the investment objectives, policies and restrictions set forth in the Fund's then-current Offering Memorandum or similar document, and subject to such further limitations as the Fund may from time to time impose by written notice to the Adviser.

 

1.2 Administrative Services. The Fund has engaged the services of an administrator. The Adviser shall provide such additional administrative services as reasonably requested by the Board of Directors or officers of the Fund; provided, that the Adviser shall not have any obligation to provide under this Agreement any direct or indirect services to Fund shareholders, any services related to the distribution of Fund shares, or any other services which are the subject of a separate agreement or arrangement between the Fund and the Adviser. Subject to the foregoing, in providing administrative services hereunder, the Adviser shall:

 

1.2.1 Office Space, Equipment and Facilities. Provide such office space, office equipment and office facilities as are adequate to fulfill the Adviser's obligations hereunder.

 

1.2.2 Personnel. Provide, without remuneration from or other cost to the Fund, the services of individuals competent to perform the administrative functions which are not performed by employees or other agents engaged by the Fund or by the Adviser acting in some other capacity pursuant to a separate agreement or arrangement with the Fund.

 

1.2.3 Agents. Assist the Fund in selecting and coordinating the activities of the other agents engaged by the Fund, including the any shareholder servicing agent, custodian, administrator, independent auditors and legal counsel.

 

1.2.4 Directors and Officers. Authorize and permit the Adviser's directors, officers and employees who may be elected or appointed as Directors or officers of the Fund to serve in such capacities, without remuneration from or other cost to the Fund.

 

1.2.5 Books and Records. Assure that all financial, accounting and other records required to be maintained and preserved by the Adviser on behalf of the Fund are maintained and preserved by it in accordance with applicable laws and regulations.

 

1.2.6 Reports and Filings. Assist in the preparation of all periodic reports by the Fund to its shareholders and all reports and filings required to maintain the registration

 

and qualification of Fund shares, or to meet other regulatory or tax requirements applicable to the Fund, under federal and state securities and tax laws.

 

1.3 Additional Series. In the event that the Fund establishes one or more series after the effectiveness of this Agreement ("Additional Series"), Appendix A to this Agreement may be amended to make such Additional Series subject to this Agreement upon the approval of the Board of Directors of the Fund and the shareholder(s) of the Additional Series. The Fund or the Adviser may elect not to make any such series subject to this Agreement.

 

1.4 Change in Management or Control. The Adviser shall provide at least sixty (60) days' prior written notice to the Fund of any change in the ownership or management of the Adviser, or any event or action that may constitute a change in "control," as that term is defined in Section 2 of the Act. The Adviser shall provide prompt notice of any change in the portfolio manager(s) responsible for the day-to-day management of the Funds.

 

2. Expenses of the Fund.

 

2.1 Expenses to be Paid by Adviser. The Adviser shall pay all salaries, expenses and fees of the officers, Directors and employees of the Fund who are officers, directors, members or employees of the Adviser.

 

In the event that the Adviser pays or assumes any expenses of the 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 any similar expense in the future; provided, that nothing herein contained shall be deemed to relieve the Adviser of any obligation to the Fund under any separate agreement or arrangement between the parties.

 

2.1.2 The Adviser shall not bear expenses of the Fund's operation, except those specifically noted under this agreement or under any separate agreement between the Fund and the Adviser.

 

2.1.3 Custody. All charges of depositories, custodians, and other agents for the transfer, receipt, safekeeping, and servicing of the Fund's cash, securities, and other property shall be borne by the Fund.

 

2.1.4 Shareholder Servicing. Expenses of maintaining and servicing shareholder accounts, including but not limited to the charges of any shareholder servicing agent, sub-dividend disbursing agent, sub-transfer agent or other agent engaged by the Fund to service shareholder accounts shall be borne by the Fund.

 

2.1.5 Shareholder Reports. All expenses of preparing, setting in type, printing and distributing reports and other communications to shareholders shall be borne by the Fund.

 

 

2.1.6 Offering Documents. All expenses of preparing, filing with the Cayman Authorities or other appropriate regulatory body, setting in type, printing and mailing annual or more frequent revisions of the Fund's Offering Documents and any supplements thereto and of supplying them to shareholders shall be borne by the Fund.

 

2.1.7 Pricing and Portfolio Valuation. All expenses of computing the Fund's net asset value per share, including any equipment or services obtained for the purpose of pricing shares or valuing the Fund's investment portfolio shall be borne by the Fund.

 

2.1.8 Communications. All charges for equipment or services used for communications between the Adviser or the Fund and any custodian, shareholder servicing agent, portfolio accounting services agent, or other agent engaged by the Fund shall be borne by the Fund.

 

2.1.9 Legal and Accounting Fees. All charges for services and expenses of the Fund's legal counsel and independent accountants shall be borne by the Fund.

 

2.1.10 Directors' Fees and Expenses. All compensation of Directors shall be borne by the Adviser, all expenses incurred in connection with Directors' services as Directors, and all other expenses of meetings of the Directors and committees of the Directors shall be borne by the Adviser.

 

2.1.11 Shareholder Meetings. All expenses incidental to holding meetings of shareholders, including the printing of notices and proxy materials, and proxy solicitations therefor shall be borne by the Fund.

 

2.1.12 Cayman Registration Fees. All fees and expenses of registering and maintaining the registration of the Fund under the laws of the Cayman Islands, including all fees and expenses incurred in connection with the preparation, setting in type, printing, and filing of any Registration Statement, Offering Documents or other Fund Documents, and any amendments or supplements that may be made from time to time shall be borne by the Fund.

 

2.1.13 Confirmations. All expenses incurred in connection with the issue and transfer of Fund shares, including the expenses of confirming all share transactions shall be borne by the Fund.

 

2.1.14 Bonding and Insurance. All expenses of bond, liability, and other insurance coverage required by law or regulation or deemed advisable by the Directors of the Fund, including, without limitation, such bond, liability and other insurance expenses that may from time to time be allocated to the Fund in a manner approved by its Directors.

 

2.1.15 Compliance Fees. All charges for services and expenses of the Fund's Chief Compliance Officer shall be borne by the Fund.

 

2.2 Additional Expenses to be Paid by the Fund. The Fund shall bear all expenses of its operation, except those specifically allocated to the Adviser under this Agreement or

 

under any separate agreement between the Fund and the Adviser. Subject to any separate agreement or arrangement between the Fund and the Adviser, the expenses hereby allocated to the Fund, and not to the Adviser, include but are not limited to:

 

2.2.1 Brokerage Commissions. All brokers' commissions and other charges incident to the purchase, sale or lending of the Fund's portfolio securities.

 

2.2.2 Taxes. All taxes or governmental fees payable by or with respect to the Fund to federal, state or other governmental agencies, domestic or foreign, including stamp or other transfer taxes.

 

2.2.3 Trade Association Fees. All fees, dues and other expenses incurred in connection with the Fund's membership in any trade association or other investment organization.

 

2.2.4 Nonrecurring and Extraordinary Expenses. Such nonrecurring and extraordinary expenses as may arise including the costs of actions, suits, or proceedings to which the Fund is a party and the expenses the Fund may incur as a result of its legal obligation to provide indemnification to its officers, Directors and agents.

 

3. Management Fee.

 

As compensation for all services rendered, facilities provided and expenses paid or assumed by the Adviser under this Agreement, the Fund shall pay the Adviser on the last day of each month, or as promptly as possible thereafter, a fee calculated by applying a monthly rate, based on an annual percentage rate, to the Fund's average daily net assets for the month. The annual percentage rate applicable to the Fund is set forth in Appendix A to this Agreement, as it may be amended from time to time in accordance with Section 1.3 of this Agreement. If this Agreement shall be effective for only a portion of a month with respect to the Fund, the aforesaid fee shall be prorated for the portion of such month during which this Agreement is in effect for the Fund.

 

4. Proxy Voting.

 

The Adviser will vote, or make arrangements to have voted, all proxies solicited by or with respect to the issuers of securities in which assets of the Fund may be invested from time to time. Such proxies will be voted in a manner that you deem, in good faith, to be in the best interest of the Fund and in accordance with your proxy voting policy. You agree to provide a copy of your proxy voting policy to the Fund prior to the execution of this Agreement, and any amendments thereto promptly.

 

5. Records.

 

5.1 Tax Treatment. Both the Adviser and the Fund shall maintain, or arrange for others to maintain, the books and records of the Fund in such a manner that treats each Fund as a separate entity for federal income tax purposes.

 

 

5.2 Ownership. All records required to be maintained and preserved by the Fund pursuant to the provisions or rules or regulations of the Securities and Exchange Commission under Section 31(a) of the Act and maintained and preserved by the Adviser on behalf of the Fund are the property of the Fund and shall be surrendered by the Adviser promptly on request by the Fund; provided, that the Adviser may at its own expense make and retain copies of any such records.

 

6. Reports to Adviser.

 

The Fund shall furnish or otherwise make available to the Adviser such copies of each Fund 's Offering Documents, financial statements, proxy statements, reports and other information relating to its business and affairs as the Adviser may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.

 

7. Reports to the Fund.

 

The Adviser shall prepare and furnish to the Fund such reports, statistical data and other information in such form and at such intervals as the Fund may reasonably request.

 

8. Code of Ethics.

 

The Adviser has adopted a written code of ethics complying with the requirements of Rule 17j-1 under the Act and will provide the Fund 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 Adviser will provide to the Board of Directors of the Fund a written report that describes any issues arising under the code of ethics since the last report to the Board of Directors, 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 Adviser has adopted procedures reasonably necessary to prevent "access persons" (as that term is defined in Rule 17j-1) from violating the code.

 

9. Retention of Sub-Adviser.

 

Subject to the Fund's obtaining the initial and periodic approvals required under Section 15 of the Act, the Adviser may retain one or more sub-advisers, at the Adviser's own cost and expense, for the purpose of managing the investments of the assets of one or more Funds. Retention of one or more sub-advisers shall in no way reduce the responsibilities or obligations of the Adviser under this Agreement and the Adviser shall, subject to Section 11 of this Agreement, be responsible to the Fund for all acts or omissions of any sub-adviser in connection with the performance of the Adviser's duties hereunder.

 

10. Services to Other Clients.

 

 

Nothing herein contained shall limit the freedom of the Adviser or any affiliated person of the Adviser to render investment management and administrative services to other investment companies, to act as investment adviser or investment counselor to other persons, firms or corporations, or to engage in other business activities.

 

11. Limitation of Liability of Adviser and its Personnel.

 

Neither the Adviser nor any director, manager, officer or employee of the Adviser performing services for the Fund at the direction or request of the Adviser in connection with the Adviser's discharge of its obligations hereunder shall be liable for any error of judgment or mistake of law or for any loss suffered by the Fund in connection with any matter to which this Agreement relates, and the Adviser shall not be responsible for any action of the Directors of the Fund in following or declining to follow any advice or recommendation of the Adviser or any sub-adviser retained by the Adviser pursuant to Section 9 of this Agreement; PROVIDED, that nothing herein contained shall be construed (i) to protect the Adviser against any liability to the Fund or its shareholders to which the Adviser would otherwise be subject by reason of willful misfeasance, bad faith, or gross negligence in the performance of the Adviser's duties, or by reason of the Adviser's reckless disregard of its obligations and duties under this Agreement, or (ii) to protect any director, manager, officer or employee of the Adviser who is or was a Director or officer of the Fund against any liability of the Fund or its shareholders to which such person would otherwise be subject by reason of willful misfeasance, bad faith, gross negligence or reckless disregard of the duties involved in the conduct of such person's office with the Fund.

 

12. Effect of Agreement.

 

Nothing herein contained shall be deemed to require to the Fund to take any action contrary to its Charter Documents or any applicable law, regulation or order to which it is subject or by which it is bound, or to relieve or deprive the Directors of the Fund of their responsibility for and control of the conduct of the business and affairs of the Fund.

 

13. Term of Agreement.

 

The term of this Agreement shall begin as of the date of execution, and unless sooner terminated as hereinafter provided, this Agreement shall remain in effect for a period of two years. Thereafter, this Agreement shall continue in effect with respect to the Fund from year to year, subject to the termination provisions and all other terms and conditions hereof; PROVIDED, such continuance with respect to the Fund is approved at least annually by vote of the holders of a majority of the outstanding voting securities of the Fund or by the Directors of the Fund; PROVIDED, that in either event such continuance is also approved annually by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Directors of the Fund who are not parties to this Agreement or interested persons of either party hereto. The Adviser shall furnish to the Fund, promptly upon its request, such information as may

 

reasonably be necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.

 

14. Amendment or Assignment of Agreement.

 

Any amendment to this Agreement shall be in writing signed by the parties hereto; PROVIDED, that no such amendment shall be effective unless authorized (i) by resolution of the Directors of the Fund, including the vote or written consent of a majority of the Directors of the Fund who are not parties to this Agreement or interested persons of either party hereto, and (ii) by vote of a majority of the outstanding voting securities of the Fund affected by such amendment as required by applicable law. This Agreement shall terminate automatically and immediately in the event of its assignment.

 

15. Termination of Agreement.

 

This Agreement may be terminated as to any Fund at any time by either party hereto, without the payment of any penalty, upon sixty (60) days' prior written notice to the other party; PROVIDED, that in the case of termination by any Fund, such action shall have been authorized (i) by resolution of the Fund's Board of Directors, including the vote or written consent of Directors of the Fund who are not parties to this Agreement or interested persons of either party hereto, or (ii) by vote of majority of the outstanding voting securities of the Fund.

 

16. Use of Name.

 

The Fund is named the QAIF Fund Limited and may be, but not required to be, identified, in part, by the name "QAIF Fund Ltd."

 

17. Memorandum and Articles of Association (the "Charter Documents").

 

The Adviser is hereby expressly put on notice of the limitation of shareholder liability as set forth in the Fund's Charter Documents and agrees that the obligations assumed by the Fund pursuant to this Agreement shall be limited in all cases to the Fund and its assets, and the Adviser shall not seek satisfaction of any such obligation from the shareholders or any shareholder of the Fund. In addition, the Adviser shall not seek satisfaction of any such obligations from the Directors or any individual Director. The Adviser understands and agrees that the Adviser must look solely to the assets of the Fund for the enforcement or satisfaction of any claims against the Fund.

 

18. Confidentiality.

 

The Adviser agrees to treat all records and other information relating to the Fund and the securities holdings of the Fund as confidential and shall not disclose any such records or information to any other person unless (i) the Board of Directors of the Fund has approved the disclosure or (ii) such disclosure is compelled by law. In addition, the Adviser and the Adviser's officers, directors and employees are prohibited from receiving compensation or other consideration, for themselves or on behalf of the Fund, as a result of disclosing the Fund's portfolio holdings. The Adviser agrees that,

 

consistent with the Adviser's Code of Ethics, neither the Adviser nor the Adviser's officers, directors, members or employees may engage in personal securities transactions based on nonpublic information about the Fund's portfolio holdings.

 

19. This Agreement shall be governed and construed in accordance with the laws of the State of Maryland.

 

20. Interpretation and Definition of Terms.

 

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 Act shall be resolved by reference to such term or provision of the 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 validly issued pursuant to the Act. Specifically, the terms "vote of a majority of the outstanding voting securities," "interested persons," "assignment" and "affiliated person," as used in this Agreement shall have the meanings assigned to them by Section 2(a) of the Act. In addition, when the effect of a requirement of the Act reflected in any provision of this Agreement is modified, interpreted or relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.

 

21. Captions.

 

The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.

 

22. Execution in Counterparts.

 

This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but both of which together shall constitute one and the same instrument.

 

IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the date and year first above written.

 

 

QAIF FUND LIMITED

 

By: /s/______________________

Name: Catherine Ayers-Rigsby

Title: President

 

ADVISORS PREFERRED LLC

 

By: /s/______________________

Name: Catherine Ayers-Rigsby

Title: Chief Executive Officer

 

 

 

 

 

 

 

QAIF FUND LIMITED

 

INVESTMENT ADVISORY AGREEMENT

 

APPENDIX A

 

As of December 20, 2021

 

   

 

NAME OF FUND

ANNUAL MANAGEMENT FEE AS A % OF

AVERAGE NET ASSETS OF THE FUND

QAIF FUND LIMITED 0.00%

 

The Adviser also serves as Adviser to the Quantified Alternative Investment Fund (the US Fund) and the US Fund wholly owns the Fund.

 

 

10 

LOAN AGREEMENT

 

This LOAN AGREEMENT (as amended, restated, supplemented or otherwise modified from time to time, the "Loan Agreement" or the "Agreement") is made and entered into effective as of the 4th day of November, 2021 by and between ADVISORS PREFERRED TRUST, a Delaware statutory trust (the "Trust"), not individually but solely on behalf of its Funds as set forth on Exhibit A, separately and not jointly (each such Fund a "Borrower" or "Borrowing Fund" and collectively the "Borrowers" or "Borrowing Funds"), with its address at 225 Pictoria Drive, Suite 450, Cincinnati, Ohio 45246 and U.S. BANK NATIONAL ASSOCIATION, a national banking association with its address at 425 Walnut Street, Cincinnati, Ohio 45202 (the "Bank").

 

1.            (a) Definitions. The following terms shall have the meanings specified below:

"Act" shall mean the Investment Company Act of 1940, as amended.

"Advisor" shall mean the investment advisors for the Trust and the Borrowing Funds as identified in Section 7(m).

"Anti-Corruption Laws" means all laws, rules, and regulations of any jurisdiction applicable to the Trust or Borrowing Funds from time to time concerning or relating to bribery or corruption.

"Applicable Law" shall mean and include laws, statutes, ordinances, and rules and regulations thereunder, and interpretations thereof by any Governmental Authority charged with the administration or the interpretation thereof, common law and orders, requests, directives, instructions and notices of any Governmental Authority having the force of law, and all related orders, writs, judgments, injunctions, decrees or awards to which the Trust or any Borrowing Fund shall or may be subject, including without limitation, any environmental laws, Anti-Corruption Laws and applicable Sanctions.

"Authorized Officer" shall have the meaning set forth in Section 6(a)(i)(C).

"Bank" shall have the meaning set forth in the preamble.

"Borrowing Fund" shall mean the particular Fund for which a Loan hereunder has been requested.

"Borrowing Fund Limit" shall mean with respect to any Borrowing Fund at any time, the lesser of (i) an amount which, when added to the principal amount of all other Loans then outstanding, would not cause the Maximum Amount to be exceeded, or (ii) twenty percent (20%) of such Fund's gross market value, or (iii) thirty-three and thirty-three hundredths percent (33.33%) of the net market value of such Fund's unencumbered assets, such net market value determined solely by the Bank using consistently-applied

 
 

valuation methods disclosed to the Trust and Borrowing Fund and applied to the assets of such Fund which (A) are recorded on the Borrower's books and records as belonging solely to such Fund, and (B) are not subject to segregation or any special purpose usage, and (C) as to which no third party has any pledge, security interest, lien or any other rights, and (D) are subject to a fully perfected, first priority security interest in favor of the Bank, and (E) are held by the Bank as sole Custodian.

"Business Day" shall mean any day excluding Saturday, Sunday and any day on which banking institutions in the State of Ohio are authorized or required by law or other government actions to close.

"Change In Law" shall have the meaning set forth in Section 3(c).

"Change of Control" means (a) the acquisition by any Person, or two or more Persons acting in concert, of beneficial ownership (within the meaning of Rule 13d-3 of the U.S. Securities and Exchange Commission under the Securities Exchange Act of 1934) of twenty-five percent (25%) or more of the outstanding shares of voting equity interests of the Advisor on a fully diluted basis; or (b) occupation of a majority of the seats on the board of trustees (or other governing body) of the Trust or the Advisor by Persons who were neither (x) nominated by the board of trustees (or other governing body) of such Trust or Advisor nor (y) appointed or approved by trustees so nominated.

"Collateral" shall have the meaning set forth in the Pledge and Security Agreement.

"Custodian" shall mean the Bank, as custodian, pursuant to the Custody Agreements.

"Custody Agreements" shall mean those certain Custody Agreements now in effect between the Fund and the Bank, as they may be amended, restated, modified or supplemented from time to time.

"Declaration of Trust" of the Trust shall mean the declaration of trust creating such Trust.

"Default" shall mean any event, act or condition which with notice or lapse of time, or both, would constitute an Event of Default.

"Dollar" and "$" shall mean the lawful currency of the United States of America.

"Effective Date" shall have the meaning set forth in Section 6(a).

"E-SIGN" means the Federal Electronic Signatures in Global and National Commerce Act, as amended from time to time, and any successor statute, and any regulations promulgated thereunder from time to time.

"Event of Default" shall have the meaning set forth in Section 7.

"Fund" shall mean a specific Series under a Trust which may undertake Loans

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hereunder, and "Funds" shall mean the complete list of all such Series specified in Exhibit A attached hereto and made a part hereof, regardless of name changes to, and including all subaccounts and all assets of, replacements or substitutions for such specified Series for which the Bank is Custodian, now existing or added in the future.

"Fund Statement" shall mean each Fund's Statement of Additional Information now in effect, as they may be amended, restated, modified or supplemented from time to time.

"GAAP" shall mean generally accepted accounting principles in the United States consistently applied in accordance with past practices.

"Governmental Authority" shall mean any foreign, federal, state, regional, local, municipal or other government, or any department, commission, board, bureau, agency, public authority or instrumentality thereof, or any court.

"Indebtedness" of any person shall mean all of the obligations of such person which, in accordance with GAAP, would be included as liabilities on the balance sheet of such person including, without limitation, (i) any indebtedness, obligation or liability of any kind or nature whatsoever and (ii) any guarantee, indemnity, endorsement, suretyship or other contingent obligation of any kind or nature whatsoever in respect of the obligations of another person.

"Investment" shall mean, when used with respect to any person, any direct or indirect purchase or other acquisition by such person of a beneficial interest in capital stock, bonds, notes, debentures or other securities issued by any other person or any direct or indirect advance, loan or other extension of credit or capital contribution by such person to any other person.

"Lien" shall mean any mortgage, pledge, security interest, charge, hypothecation, collateral assignment, deposit arrangement, encumbrance, lien (statutory or other), or other security agreement of any kind or nature whatsoever.

"Loan" and "Loans" shall have the meaning set forth in Section 2(a).

"Loan Documents" shall mean this Agreement, the Note, the Pledge and Security Agreement, the Securities Account Control Agreement and all other documents and instruments executed in connection herewith and with the Loans, as each of the same may be amended, restated, supplemented or otherwise modified from time to time.

"Loan Request" shall have the meaning set forth in Section 2(c).

"Maturity Date" shall mean, with respect to each Loan, the earlier of (a) the date that is forty-five (45) Business Days after the making of such Loan, or (b) November 3, 2022 (or the date of any extension of this Agreement or such Maturity Date in a writing signed by the Bank).

"Maximum Amount" shall mean Fifteen Million Dollars ($15,000,000) in the aggregate for all Funds under this facility.

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"Net Assets" of any Borrowing Fund shall mean from time to time, the net assets of such Borrowing Fund, calculated by taking the sum of the market value of such Fund's securities plus any cash and other assets (including dividends and interest accrued but not collected) less all liabilities, including accrued expenses, allocable to such Fund.

"Non-Excluded Taxes" shall have the meaning set forth in Section 3(d).

"Note" shall have the meaning set forth in Section 2(b).

"Obligations" of any Borrowing Fund shall mean all of such Borrowing Fund's liabilities, obligations and indebtedness to the Bank hereunder, under the applicable Note and the other Loan Documents, or otherwise incurred in connection with such Fund, whether heretofore, now or hereafter arising and howsoever evidenced, whether primary, secondary, contingent or fixed or arising under oral or written agreement or by operation of law.

"OFAC" means the U.S. Department of the Treasury's Office of Foreign Assets Control, and any successor thereto. "Officer's Certificate" shall mean a certificate signed in the name of the Trust by an Authorized Officer containing the information noted in Section 6(a)(i) hereof, and any amendment and/or restatement of same.

"Officer's Certificate" shall mean a certificate signed in the name of the Trust (on behalf of the Borrowing Funds) by an Authorized Officer containing the information noted in Section 6(a)(i), and any amendment, restatement, supplement to or modification of same.

"PATRIOT Act" means the USA PATRIOT Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001)), as amended from time to time, and any successor statute.

"Permitted Indebtedness" shall mean as to any Fund (i) liabilities incurred in the ordinary course of business which are not past due (except for those taxes which are being contested in good faith by appropriate proceedings and for which adequate reserves in conformity with GAAP have been provided), (ii) liabilities such Fund is permitted to incur under the applicable Fund Statement or Prospectus, (iii) the Obligations of such Fund, and (iv) other obligations, liabilities and indebtedness owed by such Fund to the Bank.

"Person" shall mean any natural person, corporation, firm, joint venture, partnership, limited liability company, association, enterprise, trust or other entity or organization, or any Governmental Authority.

"Pledge and Security Agreement" shall mean a Pledge and Security Agreement between the Trust (on behalf of its Borrowing Funds) and the Bank substantially in the form of Exhibit B, attached hereto and made a part hereof, as the same may be amended, restated, supplemented or otherwise modified from time to time.

"Prime Rate" shall mean the rate, which the Bank announces as its prime-lending rate, as in effect from time to time. The Prime Rate is determined solely by the Bank

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pursuant to market factors and its own operating needs and does not necessarily represent the lowest or best rate actually charged to any customer. The Bank may make commercial or other loans at rates of interest at, above or below the Prime Rate.

"Prospectus" shall mean the Prospectus of each of the Funds now in effect, as they may be amended, restated, modified or supplemented from time to time.

"Sanctioned Country" means, at any time, any country or territory which is itself the subject or target of any comprehensive Sanctions.

"Sanctioned Person" means, at any time, (a) any person, entity or group listed in any Sanctions-related list of designated persons, entities or groups maintained by OFAC or the U.S. Department of State, the United Nations Security Council, the European Union or any EU member state, (b) any person, entity or group operating, organized or resident in a Sanctioned Country, (c) any agency, political subdivision or instrumentality of the government of a Sanctioned Country, or (d) any person, entity or group 50% or more owned, individually or in the aggregate, directly or indirectly, by any of the above.

"Sanctions" means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State or (b) the United Nations Security Council, the European Union or Her Majesty's Treasury (or otherwise relevant sanctions authority) of the United Kingdom.

"Securities Account Control Agreement" shall mean a Securities Account Control Agreement between the Trust (on behalf of its Borrowing Funds), the Bank and the Custodian substantially in the form of Exhibit C, attached hereto and made a part hereof, as the same may be amended, supplemented or otherwise modified from time to time.

"Series" shall mean a separate series established by the Trust's trustees pursuant to the Declaration of Trust.

"UETA" means the Uniform Electronic Transactions Act as in effect in the State of Ohio, as amended from time to time, and any successor statute, and any regulations promulgated thereunder from time to time.

(b)          General Provisions Relating to Definitions. Terms for which meanings are defined in this Agreement shall apply equally to the singular and plural forms of the terms defined. Whenever the context may require, any pronoun shall include the corresponding masculine, feminine and neuter forms. The term "including" means including, without limiting the generality of any description preceding such term. Each reference herein to any person shall include a reference to such person's permitted successors and assigns. For all purposes under the Loan Documents, in connection with any division or plan of division under Delaware law (or any comparable event under a different jurisdiction's laws): (a) if any asset, right, obligation, or liability of any Person becomes the asset, right, obligation or liability of a different Person, then it shall be deemed to have been transferred from the original Person to the subsequent Person, and

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(b) if any new Person comes into existence, such new Person shall be deemed to have been organized on the first date of its existence by the holders of its equity interests at such time.

(c)          Cross-References. Unless otherwise specified, references in this Agreement and in each Loan Document to any Section are references to such Section of this Agreement or such Loan Document, as the case may be, and unless otherwise specified, references in any Section or definition to any clause are references to such clause of such Section or definition.

2.            Loan Facility.

(a)          Loans. Subject to the terms and conditions set forth herein, and subject to the satisfaction of the conditions set forth in Section 6 hereof, the Bank may, in its sole discretion, lend and relend to one or more Borrowing Funds, during the period from the Effective Date to the earlier of (i) the Maturity Date, or (ii) the date of the occurrence of an Event of Default in respect of such Fund or Funds, unless waived in a writing signed by the Bank, such amounts as the Trust may from time to time request for such Borrowing Fund hereunder (each individually a "Loan" and collectively, the "Loans") up to an aggregate principal amount outstanding at any time not to exceed either the Borrowing Fund Limit for each such Borrowing Fund or the Maximum Amount. If the aggregate amount of Loans made to any Borrowing Fund hereunder and outstanding at any one time exceeds such limits, then such Borrowing Fund shall, within five (5) days thereof, repay a sufficient amount of the Loans to bring the outstanding Loan amount within such limits. The proceeds of Loans may only be used by the Borrowing Fund for short term liquidity in connection with shareholder redemptions permitted under the Fund Statement and Prospectus. Because of such limited usage, it is contemplated by both parties hereto that this facility shall consist of term Loans due in forty-five (45) Business Days.

This Agreement does not establish a commitment or obligation of the Bank to lend money to any Borrowing Fund hereunder. The decision of whether or not to make any Loan shall be made by the Bank in its sole and absolute discretion. As noted above, it is contemplated by both parties hereto that this facility shall consist of (a) an initial term Loan due in forty-five (45) Business Days, as to which the Bank may, but is not obligated to, relend prepaid amounts up to the Borrowing Fund Limit during such terms, followed by (b) additional term Loans up to such Borrowing Fund Limit with identical forty-five (45) Business Day terms. For purposes of clarity, any second or additional Loans to the same Borrowing Fund allowed by the Bank during the 45-day term of an outstanding Loan is due at the same time as such outstanding Loan (i.e. at the end of its 45-day term).

(b)          Note. The Loans to each Borrowing Fund shall be evidenced by a promissory note given by the Trust to the Bank on behalf of the Trust's Borrowing Funds, and substantially in the form of Exhibit D, attached hereto and made a part hereof (as such note may be extended, amended, restated, supplemented or otherwise modified from time to time, and together with any one or more notes which may be issued in exchange for such note, the "Note"). The Bank is hereby authorized to enter from time

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to time the principal balance of the Loans to each Borrowing Fund and all payments thereon on the reverse of the Note or in the Bank's regularly maintained data processing records, and the aggregate unpaid amount of the Loans to such Borrowing Fund set forth thereon or therein shall be presumptive evidence of the amount owing to the Bank and unpaid thereon, absent manifest error. The Trust further authorizes the Bank to charge any account of a Borrowing Fund at the Bank (regardless of and including all account numbers related to that Fund) or charge or increase any loan balance of such Borrowing Fund for the amount of any payments due to the Bank hereunder from such Borrowing Fund.

(c)          Loan Requests. The Trust, on behalf of a Borrowing Fund, shall notify, by written notice or e-mail in the form of Exhibit F, attached hereto and made a part hereof (each such notice, a "Loan Request"), to such person at the Bank as the Bank may, from time to time, instruct the Trust, by 2:00 p.m. (Eastern Time) on each day on which the Trust desires that a Fund obtain a Loan hereunder, which day must be a Business Day, specifying the amount of the Loan desired and the Fund borrowing the Loan. Any such e-mail shall be only from the confirmed e-mail address of an Authorized Officer who is an executive officer of the Trust (or other person designated by such an Authorized Officer as authorized to request advances and direct repayments under the Loan Agreement) and include approval by such Authorized Officer (or such other authorized person) of an attached Loan Request (whether or not signed, and if not signed being deemed to incorporate as accepted by the Borrowing Fund all terms and conditions of such Loan Request form). Notwithstanding the foregoing sentence, the Trust may verbally request a Loan hereunder, whether up to the initial Maturity Date or for a new Maturity Date, provided that the Trust shall, on the same day, send the Bank by e-mail or telecopy a follow-up Loan Request in respect thereof. The Bank may rely upon, and shall incur no liability for relying upon, any oral or written request the Bank believes to be genuine and to have been signed, sent or made by such an Authorized Officer or such other authorized person. In no event shall the Trust request any loan which, if advanced, would cause the aggregate principal amount of all Loans outstanding to exceed the applicable Borrowing Fund Limit or Maximum Amount. Each e-mail or verbal request for a Loan hereunder shall be deemed to include, and each written request shall include, a representation that all of the representations and warranties made by the Trust with respect to the applicable Fund in the Loan Documents are and will be, after giving effect to the requested Loan, true and correct, that all the conditions precedent to such Loan as set forth in Section 6 hereof have been satisfied, and that the proceeds of the Loan will not be used for any purpose that is not permitted hereunder. Each advance of Loan proceeds hereunder shall be in a minimum amount of $1,000.00.

(d)          Disbursement of Funds. Each Loan shall be effectuated by the Bank crediting a trust account maintained by the Bank for the designated Borrowing Fund, all as further specified in Exhibit A hereto.

(e)          Interest.

(i)            Each Borrowing Fund shall pay interest on the outstanding principal balance of such Borrowing Fund's Loan at a rate per annum equal to the greater

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of zero percent (0%) or the Prime Rate, which interest shall be payable monthly, in arrears, commencing on December 1, 2021 and on the first day of each month thereafter and on the date specified in clause (b) of the definition of Maturity Date; provided that a Borrowing Fund may at its option pay such interest whenever all or any part of its Loans are due, whether on the Maturity Date, by virtue of a mandatory prepayment, or by reason of demand, acceleration or otherwise (on the amount then due) and whenever such Borrowing Fund repays all or part of such Borrowing Fund's Loan as a voluntary prepayment. The Bank will invoice the Trust on a monthly basis for interest due on Loans to its Borrowing Funds for the previous month.

(ii)          Upon the occurrence and during the continuance of any Event of Default hereunder by a Borrowing Fund, at the option of the Bank, the Loans and other outstanding Obligations of the defaulting Borrowing Fund to the Bank shall bear interest (computed and adjusted in the same manner, and with the same effect, as interest on the Loans to such Borrowing Fund prior to the occurrence of such Event of Default) payable on demand at a rate equal to three percent (3%) per annum in excess of the otherwise applicable rate (the "Default Rate").

(iii)         Interest on the Loans shall be computed on the basis of a year consisting of three hundred sixty (360) days but applied to the actual number of days elapsed.

(iv)         If any payment by a Borrowing Fund is not made within ten (10) days after the date due, such Borrowing Fund shall pay the Bank an amount equal to five percent (5%) of such payment or $50.00, whichever is greater.

(f)           Maximum Outstanding Period. Notwithstanding anything herein to the contrary, no Loan shall be outstanding for more than forty-five (45) Business Days after the date that the first Loan during such forty-five (45) Business Day period is made.

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3.            Payments.

(a)          Mandatory Prepayments.

(i)            If (A) the aggregate principal amount of all Loans outstanding exceeds the Maximum Amount at any time or (B) the aggregate principal amount of the Loans outstanding to a Borrowing Fund exceeds the Borrowing Fund Limit with respect to such Borrowing Fund at any time, such excess shall be immediately due and payable to the Bank and (x) all Borrowing Funds having outstanding Loans, pro rata based on the outstanding principal amount of such Loans in the case of clause (A) above, or (y) the applicable Borrowing Fund in the case of clause (B) above, as applicable, shall repay such excess.

(ii)          Each Borrowing Fund shall repay each of its Loans in full in cash together with interest accrued thereon and any other fees and charges hereunder on the Maturity Date of such Loan and, if earlier, the date on which such Loans become due, whether by virtue of a mandatory prepayment provision, by demand, acceleration or otherwise.

(b)          Voluntary Prepayments. Each Borrowing Fund may prepay its Loans in whole or in part from time to time without premium or penalty; provided, however, that each prepayment shall designate the Loan being repaid and be in an amount equal to, or greater than, $1,000.00 or, if less, the outstanding balance of such Loan, and shall be made with interest accrued thereon to the date of payment.

(c)          Increased Costs. If there shall occur any Change in Law which shall have the effect of imposing on the Bank (or the Bank's holding company) any increase or expansion of or any new: tax (excluding taxes on its overall income and franchise taxes), charge, fee, assessment or deduction of any kind whatsoever, or reserve, capital adequacy, special deposits or similar requirements against credit extended by, assets of, or deposits with or for the account of the Bank or other conditions affecting the extensions of credit under this Agreement; then Borrower shall pay to the Bank such additional amounts as the Bank deems necessary to compensate the Bank for any increased costs to the Bank attributable to the extension(s) of credit under this Agreement and/or for any reduction in the rate of return on the Bank's capital and/or the Bank's revenue attributable to such extension(s) of credit. "Change in Law" means the occurrence, after the date of this Agreement, of any of the following: (a) the adoption or taking effect of any, law, rule, regulation or treaty, (b) any change in any law, rule, regulation or treaty or in the administration, interpretation, implementation, or application thereof by any governmental authority or (c) the making or issuance of any request, rule, guidance or directive (whether or not having the force of law) by any governmental authority; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed

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to be a "Change in Law," regardless of the date enacted, adopted or issued. The Bank's determination of the additional amount(s) due under this paragraph shall be binding in the absences of manifest error, and such amount(s) shall be payable within 10 days of demand and, if recurring, as otherwise billed by the Bank. Failure or delay on the part of the Bank to demand compensation pursuant to this Section 3(c) shall not constitute waiver of the Bank's right to demand such compensation.

(d)          Taxes. All payments made by the Borrowing Funds under this Agreement and the Note shall be made free and clear of, and without deduction or withholding for or on account of, any present or future income, stamp or other taxes imposed, levied, collected, withheld or assessed by any Governmental Authority, excluding net income taxes and franchise taxes (imposed in lieu of net income taxes). If any such non-excluded taxes, levies, imposts, duties, charges, fees, deductions or withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts payable to the Bank hereunder or under the Note, such amounts shall be increased to the extent necessary to yield to the Bank (after payment of all Non-Excluded Taxes) interest or any such other amounts payable hereunder at the rates or in the amounts specified in this Agreement and the Note. Whenever any Non-Excluded Taxes are payable by a Borrowing Fund, as promptly as possible thereafter the Trust shall send to the Bank a certified copy of an original official receipt received by such Borrowing Fund or the Trust, as the case may be, showing payment thereof. If a Borrowing Fund fails to pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails to remit to the Bank the required receipts or other required documentary evidence, such Borrowing Fund shall indemnify the Bank for any incremental taxes, interest or penalties that may become payable by the Bank as a result of any such failure.

(e)          Place of Payment. All payments of principal and interest hereunder shall be made in immediately available funds to the Bank at 425 Walnut Street, Cincinnati, OH 45202, or at such other place as may be designated by the Bank to the Trust in writing.

(f)           Business Day Payments. Whenever any of the terms and provisions of this Agreement or the other Loan Documents provides that any payment to be made shall be due on a day which is not a Business Day, such payment shall be made on the next succeeding Business Day and such extension of time shall be included in computing interest, if any, in connection with such payment.

(g)          Application of Payment. Any payments received by the Bank from the Borrowers on account of the Obligations will be applied in such order as the Bank may elect in its sole discretion.

4.            Representations and Warranties. To induce the Bank to enter into this Agreement, the Trust, as to itself and its Funds, represents and warrants to the Bank as follows:

(a)          Existence. The Trust is duly organized, validly existing and in good standing as statutory trust under the laws of Delaware and is registered as an investment company under the Act.

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(b)          Authority. The Trust and each Fund have full power and authority to own their respective properties and to conduct their business as investment companies and to execute, deliver and perform, and cause each of its Borrowing Funds to perform, its obligations under this Agreement and the other Loan Documents.

(c)          Authorization. The execution, delivery and performance by the Trust and its Funds of this Agreement and the other Loan Documents: (i) have been duly authorized by all requisite trust action; (ii) do not and will not violate (A) any law, regulation, order, writ, judgment, decree, determination or award currently in effect and applicable to the Trust, (B) its Declaration of Trust or other organizational or governing documents of the Trust or any Fund Statement or Prospectus, (C) any provision of any agreement to which the Trust is a party, or by which it or any of its properties or assets are bound, and (D) any franchise, license, permit, certificate, authorization, qualification, accreditation or other similar right, consent or approval of or applicable to the Trust; and (iii) do not and will not result in the creation or imposition of any Lien upon any of the properties or assets of any Fund of the Trust, except in favor of the Bank (except as may be required to facilitate a Borrowing Fund’s derivative transactions). No consents, licenses, permits, applications or authorizations of, notices or reports to, or registrations, filings or declarations with, any Governmental Authority or other third party are required to be obtained in connection with the execution, delivery or performance by the Trust or its Funds, as the case may be, of any of the Loan Documents.

(d)          Enforceability. This Agreement and the other Loan Documents have been duly executed and delivered by the Trust on behalf of itself and its Funds, and constitute the legal, valid and binding obligations of the Trust and its Borrowing Funds, as the case may be, enforceable against the Trust and its Borrowing Funds, as the case may be, in accordance with their terms.

(e)          Financial Information; Adverse Change. The Trust has provided, or prior to the Effective Date will provide, the Bank with (i) its audited financial statements for its most recent fiscal year ended and (ii) the related up to date Prospectus for each Fund of such Trust. No Fund of the Trust has any contingent liabilities not provided for or disclosed in such financial statements. Such financial statements present fairly, in all respects, the financial condition of the Trust in accordance with GAAP. There has been no material adverse change in the business or financial condition of the Trust or Funds since the date of such financial statements.

(f)           Indebtedness. The Borrowing Funds of the Trust have no Indebtedness other than Permitted Indebtedness.

(g)          Investments. None of the Funds of the Trust have Investments which such Fund is not authorized to have or which are inconsistent with or conflict with the provisions of the Prospectus relating to such Fund or for which it or such Fund is required to obtain shareholder approval unless such approval was obtained. The Funds are being operated and managed consistent with such Prospectus.

(h)          Litigation. There is no litigation or other action or proceeding or order

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of any court or Governmental Authority pending or, to the best of the knowledge of the Trust after diligent investigation, threatened against or affecting the Advisor or the Trust or any of its Funds.

(i)            Title to Property. Each Fund of the Trust has good, indefeasible and merchantable title to and ownership of all of its assets, including without limitation the Collateral, free and clear of all Liens except those in favor of the Bank (except as may be required to facilitate a Borrowing Fund’s derivative transactions).

(j)            Compliance. The Trust and, to the best of knowledge of the Trust after diligent investigation, the Advisor are in compliance with the Act and all other Applicable Laws.

(k)          Anti-Corruption Laws; Anti-Terrorism Laws. (1) The Trust and the Borrowing Funds (and their respective officers and employees and to the knowledge of the Trust and the Borrowing Funds any related directors and agents) are in compliance with Anti-Corruption Laws and applicable Sanctions in all material respects. Neither the Trust nor the Borrowing Funds (or to the knowledge of the Trust and the Borrowing Funds any related directors, officers or employees) are a Sanctioned Person. No Loan, use of the proceeds of any Loan, or other transactions contemplated hereby will violate Anti-Corruption Laws or applicable Sanctions; (2) Neither the making of the Loans hereunder nor the use of the proceeds thereof will violate the PATRIOT Act, the Trading with the Enemy Act, as amended, or any of the foreign assets control regulations of the United States Treasury Department (31 C.F.R., Subtitle B, Chapter V, as amended) or any enabling legislation or executive order relating thereto or successor statute thereto. The Trust and the Borrowing Funds are in compliance in all material respects with the PATRIOT Act.

(l)            No Default. No default (or event which, with notice or lapse of time, or both, would constitute a default) exists under any agreement or instrument to which any Fund of the Trust is a party or pursuant to which any property of such Fund is encumbered.

(m)        Taxes. The Trust has filed all federal, state and local tax returns and other reports which it is required by law to file, has paid all taxes, assessments and other similar charges that are due and payable, except to the extent that any such taxes or charges are being contested in good faith by appropriate proceedings and for which adequate reserves in accordance with GAAP have been set aside on its books and records, and has withheld all employee and similar taxes which it is required by law to withhold.

(n)          Licenses, Etc. The Trust has obtained and holds in full force and effect, all franchises, licenses, permits, certificates, authorizations, qualifications, accreditations, and other consents, rights and approvals which are necessary for the operation of its business. The Trust is not in violation of the terms of any such franchise, license, permit, certificate, authorization, qualification, accreditation, consent, right or approval.

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(o)          Broker's Fees. No brokerage, finder's or similar fee or commission is due to any party by reason of the Funds of the Trust entering into this Agreement or by reason of any of the transactions involving the Trust or its Funds contemplated hereby, and such Funds of the Trust shall indemnify and hold the Bank harmless from all such fees and commissions arising from the Funds of the Trust entering into this Agreement.

(p)          Solvency. Immediately after giving effect to the execution and delivery of the Loan Documents and the making of the Loans hereunder to its Borrowing Funds and at all times thereafter while such Loans or any portion thereof are outstanding, such Borrowing Funds shall be solvent, shall be able to pay their debts and obligations as they become due, and shall have capital sufficient to carry on their respective businesses.

5.            Covenants. The Trust and the Borrowing Funds, as applicable, agree with the Bank that, from the date of this Agreement and until the Loans are paid in full and all obligations under this Agreement and the other Loan Documents are fully performed and this Agreement has been terminated:

(a)          Books and Records; Inspection. The Trust shall keep and maintain complete books, records and files with respect to its business in accordance with GAAP and shall accurately and completely record all transactions therein. The Trust shall permit the officers, employees and designated representatives of the Bank, from time to time, to inspect the Trust's property and to inspect and make copies of or extracts from the books, records and files of the Trust, and the Trust shall make the same available to the Bank and its agents and representatives for such purposes at such reasonable times as the Bank shall request. Any such inspection and copying shall be at the Bank's sole cost and expense so long as no Event of Default relating to the Trust has occurred and is continuing.

(b)          Financial Statements; Reports. The Trust shall furnish to the Bank: (i) within one hundred twenty (120) days after the last day of each fiscal year of such Trust, a copy of the annual audit report of the Trust prepared in accordance with GAAP and consisting of at least a statement of assets and liabilities for each of the Series (including the Funds) of the Trust as at the close of such fiscal year, a Schedule of Investments for each of the Series (including the Funds) of the Trust as at the close of such fiscal year, a statement of operations for each of the Series (including the Funds) of the Trust for such fiscal year and a statement of changes in net assets for each of the Series (including the Funds) of the Trust for such fiscal year, and certified by an independent certified public accountant reasonably satisfactory to the Bank; (ii) with respect to any Fund having a Loan outstanding, statements (including market value) of such Fund's Net Assets, whether or not held by the Custodian, on a daily basis whenever such Loans are outstanding hereunder and otherwise upon the Bank's request; (iii) promptly upon transmission thereof, copies of all regular and periodic financial information, proxy materials and other information and reports, if any, which the Trust shall file with the Securities and Exchange Commission or any governmental agencies substituted therefor or which the Trust shall send to holders of interests in its Funds generally; (iv) promptly, any amendments to or restatements of the Fund Statement

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(including without limitation any Statement of Additional Information) or Prospectus for, or Custodial Agreements relating to, each Fund of the Trust and (v) such other reports and information as the Bank may reasonably request from time to time. Bank agrees that the Trust shall have no obligation to deliver any document, report or financial statement to the Bank hereunder if the same is publicly available through the SEC's EDGAR system or similar system.

(c)          Taxes. The Trust shall file all federal, state and local tax returns and other reports the Trust is required by law to file, and shall pay when due all taxes, assessments and other liabilities except for those contested in good faith by appropriate proceedings for which adequate reserves in conformity with GAAP will be provided and shall withhold all employee and similar taxes which it is required by law to withhold.

(d)          Existence and Status. The Trust shall maintain its existence as a statutory trust in good standing under the laws of Delaware and shall continue to be registered as an investment company under the Act.

(e)          Compliance with Law. The Trust shall comply at all times with the Act and all other Applicable Laws. The Trust will maintain in effect and enforce policies and procedures designed to ensure compliance by the Trust, its subsidiaries, the Borrowing Funds, and their respective trustees, officers, employees and agents, with Anti-Corruption Laws and applicable Sanctions.

(f)           PATRIOT Act Compliance. The Trust and each Borrowing Fund shall provide such information and take such actions as are reasonably requested by the Bank in order to assist the Bank in maintaining compliance with the PATRIOT Act.

(g)          Fund's Coverage Ratio. No Borrowing Fund shall permit the ratio of its (i) total assets minus total liabilities (other than liabilities of any kind or nature whatsoever for borrowed money and such Borrowing Fund's liabilities in respect of overdrafts in any account (whether trust, demand deposit or other account) maintained by or on behalf of such Borrowing Fund) to (ii) total liabilities of any kind or nature whatsoever for borrowed money and such Borrowing Fund's liabilities in respect of overdrafts in any account (whether trust, demand deposit or other account) maintained by or on behalf of such Borrowing Fund to be less than 300% at any time.

(h)          Licenses. The Trust shall have, acquire and maintain all franchises, licenses, permits, certificates, authorizations, qualifications, accreditations, and other consents, rights and approvals which are required by law or are necessary for the operation of its business.

(i)            Notice. The Trust shall notify the Bank in writing, promptly upon the Trust's learning thereof, of: (i) any litigation, suit or administrative proceeding which may affect the operations, financial condition or business of the Advisor, the Trust or any of its Funds (including without limitation any order of a court or Governmental Authority affecting the Trust, any Fund or the Advisor); (ii) any default by a Fund under any note, indenture, loan agreement, mortgage, lease, deed or other agreement to which such

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Fund is a party or by which such Fund or its assets are bound, which default may affect the operations, financial condition or business of such Fund; (iii) a Default or an Event of Default by the Trust or any of its Funds under this Agreement; and (iv) any default by any obligor under any note or other evidence of Indebtedness payable to such Fund.

(j)            Use of Proceeds. No Borrowing Fund shall use proceeds of its Loans for any purpose that is not permitted under the relevant Fund Statement and Prospectus. Each and every Loan made hereunder will be used for a business purpose consistent with this Loan Agreement. No Borrowing Fund will request any Loan, and no Borrowing Fund shall use (and the Trust and the Borrowing Fund shall ensure that its directors, officers, employees and agents shall not use) the proceeds of any Loan in furtherance of an offer, payment, promise to pay, or authorization of the payment or giving of money, or anything else of value, to any person in violation of any Anti-Corruption Laws. Neither the Trust nor any Borrowing Fund will, directly or indirectly use the proceeds of Loan, or lend, constitute or otherwise make available such proceeds to any subsidiary, joint venture, partner or other individual or entity (1) to fund any activities or business of or with any individual or entity, or in any territory, that at the time of such founding is, or whose government is, the subject of Sanctions, or (2) in any other manner that would result in the violation of any applicable Sanctions by any individual or entity.

(k)          Liens. No Fund shall create or permit to exist any Liens with respect to any of its assets or property, including without limitation the Collateral, whether now owned or hereafter acquired, except Liens in favor of the Bank (except as may be required to facilitate a Borrowing Fund’s derivative transactions).

(l)            Investments. No Fund shall make, agree to make, or hold any Investment which it is not permitted to make without shareholder approval unless such approval has been obtained and shall make only those Investments which conform with the provisions of the relevant Prospectus. Without limiting the generality of the foregoing, no Fund shall make, agree to make, or hold any Investment which it is not permitted to make without shareholder (or other owner-member) approval (unless such approval has already been obtained) and shall comply in all respects with, and shall make only those Investments which conform with, the provisions of the Prospectus relating to such Fund.

(m)        Transfer of Property. No Fund shall sell, transfer, convey or lease, any of the assets or property of such Fund, including without limitation the Collateral, other than in the ordinary course of business and in accordance with the Prospectus..

(n)          Change in Structure; Change in Business. The Trust shall not enter into any business which is substantially different from that presently conducted by the Trust. Each Fund shall maintain itself as a Series separate and apart from any other Series except as otherwise permitted by the Trust's Declaration of Trust; provided that a Fund may merge with another Fund or Funds to the extent approved by the shareholders (or other owner-members) of such Funds (but only on ten (10) days' prior written notice to the Bank). No Fund shall enter into a division or any plan of division under Delaware law (or any comparable event under a different jurisdiction's laws).

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(o)          Indebtedness. No Fund shall incur or permit to exist any Indebtedness other than Permitted Indebtedness.

(p)          Bank Accounts. Other than accounts with U.S. Bank, the Trust shall not make or maintain deposits on behalf of the Funds with any bank or similar institution which has any right of setoff, bankers' lien, combination or consolidation of accounts, counterclaim or other similar right under Applicable Law with respect to such deposit.

(q)          Compliance with Agreements. The Trust shall, and shall cause its Funds to, comply with all agreements and instruments to which they are a party or pursuant to which any of their property is encumbered.

(r)           Contracts. The Trust shall not, and shall not permit any Fund to enter into any agreement, contract or arrangement which would impair or materially adversely affect the Collateral or the Trust's or such Fund's right and/or ability to carry on their business (as if such Fund was a separate business) as now conducted.

(s)          Insurance. The Trust shall maintain such insurance as is typically maintained by prudent companies in the same line of business as the Trust, and, without limitation of the generality of the foregoing, shall maintain all insurance required under the Act.

(t)           Waiver. Any variance from the covenants of the Trust or the Funds pursuant to this Section 5 shall be permitted only with the prior written consent and/or waiver of the Bank. Any such variance by consent and/or waiver shall relate solely to the variance addressed in such consent and/or waiver, and shall not operate as the Bank's consent and/or waiver to any other variance of the same covenant or other covenants, nor shall it preclude the exercise by the Bank of any power or right under this Agreement, other than with respect to such variance.

(u)          Further Assurances. The Trust shall take all such further actions and execute all such further documents and instruments as the Bank may at any time reasonably determine may be necessary or desirable hereunder.

6.            Conditions Precedent.

(a)          Conditions Precedent to the Effective Date. This Agreement shall become effective on the date (the "Effective Date") on which the following conditions precedent shall have been satisfied or waived by the Bank in its sole and absolute discretion:

(i)            Proof of Action; Incumbency. The Bank shall have received an Officer's Certificate from the Trust dated the Effective Date and certifying (A) that attached thereto is a true and complete copy of the Declaration of Trust or other organizational and governing documents of the Trust as in effect as of the Effective Date, (B) that attached thereto is the true and correct copy of the records of all action taken by the Trust to authorize its execution and delivery of this Agreement and the other Loan

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Documents (and the Loans to its Funds contemplated hereby and thereby), and (C) as to the incumbency, the name and specimen signature of each individual who shall be authorized (each an "Authorized Officer") (1) to request Loans, sign, in the name of the Trust and its Funds, this Agreement and the other Loan Documents, and (2) to give certificates and notices (including without limitation, new Officer's Certificates) and to take other action on its behalf and on behalf of its Funds under this Agreement. Only Authorized Officers who are duly elected executive officers of the Trust are authorized to (provide the Bank with the names of such Authorized Officers to be added to or deleted from status as such Authorized Officers, or the names of others authorized to undertake Loan requests hereunder.

(ii)          Loan Documents. The Bank shall have received (A) a fully executed Note by the Trust on behalf of each Borrowing Fund, (B) a fully executed Pledge and Security Agreement and (C) a fully executed Securities Account Control Agreement, the latter two documents providing the Bank with a first-priority lien (except as may be required to facilitate a Borrowing Fund’s derivative transactions) on Collateral therein specified supporting and securing the Loans and the Note as set forth therein.

(iii)         Representations and Warranties. The Bank shall have received from the Trust an Officer's Certificate to the effect that each of the representations and warranties made by the Trust in this Agreement and in the other Loan Documents is true and correct, all in the form of Exhibit E attached hereto and made a part hereof.

(iv)         No Default. The Bank shall have received from the Trust an Officer's Certificate to the effect that no Default or Event of Default of such Trust or its Funds is continuing on the Effective Date, or would result from the transactions contemplated to occur on the Effective Date.

(v)          Opinion. The Trust shall have delivered to the Bank an opinion of counsel reasonably acceptable to the Bank dated the Effective Date, substantially in the form of Exhibit G attached hereto and made a part hereof.

(vi)         Form U-1. To the extent applicable, the Trust shall have executed and delivered to the Bank in connection herewith a Federal Reserve Form U-1, in form and substance satisfactory to the Bank ("Form U-1").

(vii)        Expenses. The Trust and/or its Funds shall have paid to the Bank the fees, expenses and disbursements required to be paid pursuant to Section 8(d) hereof.

(viii)       Financial Statements. The Trust shall have provided the Bank with (A) its audited financial statements for its most recent fiscal years ended, (B) the then current forms of Prospectuses and (C) the then current Fund Statements (which may be provided electronically in the manner specified in the second paragraph of Section 5(b)).

(b)          Conditions Precedent to Each Loan. The making of each Loan to a

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Borrowing Fund is subject to the sole discretion of the Bank and the satisfaction of each of the following conditions precedent, unless waived by the Bank in its sole and absolute discretion:

(i)            Loan Request. The Bank shall have received a request for such Loan in compliance with Section 2(c) hereof.

(ii)          Default. Before and after giving effect to such Loan, or any portion thereof, no Default or Event of Default with respect to the requesting Borrowing Fund or the Trust shall have occurred and be continuing.

(iii)         Representations and Warranties. Before and after giving effect to such Loan or any portion thereof, the representations and warranties of such Borrowing Fund and the Trust in respect of itself and such Borrowing Fund set forth herein and in the other Loan Documents shall be true and correct as though made on the date of such Loan.

(iv)         Adverse Change. There shall have been no material adverse change in the business or financial condition of the Trust or the requesting Borrowing Fund [or in the validity or enforceability or priority of any Collateral] since the Effective Date.

(v)          Form U-1. To the extent applicable, the Trust shall have delivered to the Bank as a supplement to Form U-1 a current list of the assets of such Borrowing Fund which adequately supports the credit extended under this Agreement to such Borrowing Fund.

(vi)         Other Actions. The Trust shall take such other actions and deliver to the Bank such other documents, certificates and instruments as the Bank may reasonably request to evidence, protect or perfect the Loan to such Borrowing Fund or any Collateral therefor.

7.            Events of Default. If any of the following events (each, an "Event of Default") shall occur as to the Trust or a Borrowing Fund of the Trust, then the Bank may without further notice or demand, accelerate the Loans to such Borrowing Fund in question and declare them to be, and thereupon such Loans shall become, immediately due and payable (except that upon the occurrence of an Event of Default as described in Section 7(h) or (i) below, such Loans shall be automatically due and payable) and the Borrowing Fund in question or, at the option of the Bank, any other or all Borrowing Funds hereunder, may not request further Loans hereunder (or if already requested, such Borrowing Fund or any other or all Borrowing Funds hereunder, as the case may be, may not receive the proceeds of any Loans hereunder), and, regardless of whether or not such Loans shall have been accelerated, the Bank shall have all rights provided herein and in any of the other Loan Documents or otherwise provided by law including without limitation to realize on the Collateral:

(a)          The Borrowing Fund in question shall not have paid or repaid to the

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Bank any principal of or any interest on the Loans to it or any other obligation of such Fund hereunder or under any of the other Loan Documents when due, whether by reason of demand, acceleration or otherwise; or

(b)          There shall have occurred any other violation or breach or any covenant, agreement or condition contained herein or in any other Loan Document by such Borrowing Fund or the Trust except that (i) in the event of a Default of the Trust's obligation to deliver the daily statements in respect of such Borrowing Fund required under Section 5(b)(ii), such Default shall not constitute an Event of Default hereunder unless the Bank has notified the Trust of such Default and the Trust has not cured such Default within thirty-six (36) hours of receiving such notice; or

(c)          The Borrowing Fund in question shall not have paid when due any other Indebtedness, or the holder of such other Indebtedness shall have declared such Indebtedness due prior to its stated maturity because of such Borrowing Fund's default thereunder or such Borrowing Fund shall have failed to perform any of its obligations under agreements relating to Indebtedness which failure would, if not cured, give the holder of such Indebtedness the right to accelerate the maturity of such Indebtedness; or

(d)          There shall have occurred any violation or breach of any covenant, agreement or condition contained in any other agreement between the Borrowing Fund in question and the Bank or between the Trust and the Bank; or

(e)          The Borrowing Fund in question or the Trust shall not have performed their obligations under any agreement material to its business; or

(f)           Any representation or warranty made or deemed made herein or in any other Loan Document or writing furnished in connection with this Agreement by the Trust in question as to itself or such Borrowing Fund shall have proven to be false when made or when deemed to have been made; or

(g)          The Borrowing Fund in question shall have been unable to pay its debts as due; or

(h)          The Borrowing Fund in question shall have made an assignment for the benefit of creditors; or

(i)            The Borrowing Fund in question shall have applied for the appointment of a trustee or receiver for any part of its assets or shall have commenced any proceedings relating to such Borrowing Fund under any bankruptcy, reorganization, arrangement, insolvency, readjustment of debt, dissolution or other liquidation law of any jurisdiction; or any such application shall have been filed, or any such proceedings shall have commenced, against such Borrowing Fund, and either such Borrowing Fund (or the Trust on its behalf) shall have indicated its approval, consent or acquiescence thereto or such proceedings shall not have been dismissed within sixty (60) days; or an order shall have been entered appointing such trustee or receiver, or adjudicating such Borrowing Fund bankrupt or insolvent, or approving the petition in any such proceedings; or

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(j)            Any material part of the operation of the Borrowing Fund in question (or the operations of the Trust in respect of such Borrowing Fund) shall have ceased; or

(k)          Any final judgment which, together with other outstanding judgments against the Borrowing Fund in question, causes the aggregate of such judgments to exceed One Hundred Thousand Dollars ($100,000), shall have been rendered against such Borrowing Fund; or

(l)            There shall have occurred any material adverse change in the business or financial condition of the Trust or the Borrowing Fund in question or its ability to repay the Loans to it or a material adverse change in respect of the value of the Collateral provided by such Borrowing Fund or validity or enforceability or priority of any Liens granted to the Bank by or on behalf of such Borrowing Fund under the Loan Documents; or

(m)        Advisors Preferred LLC shall no longer be the Advisor to the Trust; or

(n)          The Advisor fails to comply with Applicable Law in managing any of the Funds or if the Advisor, Trust or any Fund becomes subject to any court or Governmental Authority order; or

(o)          Any Change of Control occurs; or

(p)          The Bank shall no longer be the Custodian of the assets of such Borrowing Fund (or such Fund or the Trust has evidenced any intent to remove the Bank as Custodian).

8.            Miscellaneous.

(a)          Lien; Right of Set-Off. Each Borrowing Fund hereby grants to the Bank a continuing lien and security interest in and to any and all moneys, securities and other properties of such Fund and the proceeds thereof now or hereafter held or received by or in transit to the Bank from or for the account of such Fund, whether for safekeeping, pledge, transmission, collection or otherwise, and also upon any and all deposits (general and special), account balances and credits of such Fund with the Bank at any time existing (except as may be required to facilitate a Borrowing Fund’s derivative transactions). In addition to all statutory rights of the Bank, the Bank is hereby authorized at any time and from time to time after the occurrence and during the continuance of an Event of Default by a Borrowing Fund, without prior notice to such Borrowing Fund or the Trust, to set-off, appropriate, apply and enforce said lien and security interest in any and all items of such Borrowing Fund hereinbefore in this clause (a) referred to (and including all account members related thereto) against all obligations of such Borrowing Fund arising under this Agreement or any of the other Loan Documents (as they apply to such Borrowing Fund), and such Borrowing Fund shall continue to be liable to the Bank for any deficiency with interest at the rate set forth herein.

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(b)          Delay. No delay, omission or forbearance on the part of the Bank in the exercise of any power or right shall operate as a waiver thereof, nor shall any single or partial delay, omission or forbearance in the exercise of any other power or right. The rights and remedies of the Bank herein provided are cumulative, shall be interpreted in all respects in favor of the Bank, and are not exclusive of any other rights and remedies provided by law.

(c)          Notice. Except as otherwise expressly provided in this Agreement, any notice hereunder shall be in writing and shall be given by personal delivery, telecopy, e-mail or overnight courier or registered or certified mail, postage prepaid, and addressed to the parties at their addresses set forth below:

 

 

[remainder of page left intentionally blank]

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Bank:

U.S. Bank National Association

425 Walnut Street

Mail Location CN-OH-W6TC

Cincinnati, Ohio 45202

Attention: Shelly Allen

Telephone: (513) 639-6404

Fax: (866) 351-8893

E-Mail: [email protected]

 

Trust or its Funds:

Advisors Preferred Trust

225 Pictoria Drive, Suite 450

Cincinnati, Ohio 45246

Attention: Catherine Ayers-Rigsby

President

Telephone: (240) 223-1998

E-Mail: [email protected]

 

 

The Trust or the Bank may, by written notice to the other as provided herein, designate another address or number for purposes of giving notices hereunder. All notices and other communications given to any party hereto in accordance with the provisions of this Agreement shall be deemed to have been given: (i) on the date of receipt if delivered by hand or overnight courier service, (ii) when delivered (or if not given during normal business hours for the recipient, at the opening of business on the next business day for the recipient) if given by telecopy or e-mail, and (iii) on the date five (5) Business Days after dispatch by certified or registered mail if mailed (or, if sooner, on the date of actual receipt), in each case delivered, sent or mailed (properly addressed) to such party as provided in this Section 8(c) or in accordance with the latest unrevoked direction from such party given in accordance with this Section 8(c).

(d)          Expenses; Indemnity. The Borrowing Funds (or, if related only to a certain Borrowing Fund or Funds, such related Borrowing Funds) shall, pro rata based on the respective outstanding Loan amounts, pay or reimburse the Bank for all reasonable out-of-pocket expenses of the Bank and its employees (including reasonable attorney's fees, charges and other legal expenses of outside counsel (determined on the basis of such attorney's generally approved rates, which may be higher than the rates such attorneys charge the Bank in certain unrelated matters), but excluding the salaries of the Bank's own employees) incurred by the Bank in entering into and closing this Agreement, preparing the documentation in connection herewith, and administering or enforcing the obligations of the Borrowing Funds hereunder or under any of the other Loan Documents, and the Trust agree to cause the Funds to pay the Bank upon demand for the same. Each Borrowing Fund further agrees to defend, indemnify and hold the Bank harmless from any liability, obligation, cost, damage or expense, including attorney's fees and legal expenses for taxes, fees or third party claims which may arise or be related to the execution, delivery or performance of this Agreement or any of the other Loan Documents by or on behalf of such Borrowing Fund, except in the case of gross negligence or willful

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misconduct on the part of the Bank.

(e)          Survival. All covenants and agreements of any Borrowing Fund and the Trust made herein or otherwise in connection with the transactions contemplated hereby shall survive the execution and delivery of this Agreement and the other Loan Documents, and shall remain in effect so long as any obligations of such Borrowing Fund are outstanding hereunder or under any of the other Loan Documents. The obligations set forth in Sections 3(c), 3(d) and 8(d) shall survive the termination of this Agreement and repayment of the Obligations.

(f)           Severability. Any provision of this Agreement or any of the other Loan Documents which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition of enforceability without invalidating the remaining portions hereof or affecting the validity or enforceability or such provision in any other jurisdiction.

(g)          Governing Law. The Loans shall be deemed made in Ohio and this Agreement and all of the other Loan Documents, and all of the rights and obligations of the Borrowing Funds, the Trust and the Bank hereunder and thereunder, shall in all respects be governed by and construed in accordance with the laws of the State of Ohio, including all matters of construction, validity and performance. Without limitation on the ability of the Bank to exercise all of its set-off rights or to initiate and prosecute any action or proceeding in any applicable jurisdiction related to loan repayment, the Borrowing Funds, the Trust and the Bank agree that any action or proceeding commenced by or on behalf of the parties arising out of or relating to the Loans and/or this Agreement and/or any of the other Loan Documents shall be commenced and maintained exclusively in the District Court of the United States for the Southern District of Ohio, or any other court of applicable jurisdiction located in Cincinnati, Ohio. The Borrowing Funds, the Trust and the Bank also agree that a summons and complaint commencing an action or proceeding in any such Ohio courts by or on behalf of such parties shall be properly served and shall confer personal jurisdiction on a party to which said party consents, if (i) served personally or by registered or certified mail to the other party at any of its addresses noted herein, or (ii) as otherwise provided under the laws of the State of Ohio. The Borrowing Funds, the Trust and the Bank hereby waive all rights to trial by jury in any proceeding arising out of or related to the transactions contemplated hereunder or under any of the other Loan Documents. The interest rate and all other terms of the Loans negotiated with the Borrowing Funds are, in part, related to the aforesaid provisions on jurisdiction, which the Bank deems a vital part of this loan arrangement.

(h)          Successors. This Agreement shall be binding upon and inure to the benefit of the Borrowing Funds, the Trust and the Bank and their respective successors and assigns. The Borrowing Funds and the Trust shall not assign their respective rights or delegate their respective duties hereunder or under any other Loan Document without the prior written consent of the Bank. The Bank may at any time, without the consent of the Trust and/or any Borrower, sell, assign, transfer, grant participations in, or otherwise dispose of any portion of its rights and obligations under the Loan Documents to any other Person and may provide information regarding the Trust, any Borrower, the Loan

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Documents and/or the Obligations to prospective assignees, transferees and participants.

(i)            Amendment. This Agreement may not be modified or amended except in writing signed by authorized officers of the Bank and the Trust.

(j)            Headings. The descriptive headings of the several Sections of this Agreement are inserted for convenience only and do not constitute a part of this Agreement.

(k)          Limitations. (1) Notwithstanding anything to the contrary contained herein or in any other Loan Document, the parties hereto acknowledge and agree that the facility hereunder and under the other Loan Documents is intended to function as if each Fund had entered into a separate, unrelated facility with Bank and no cross-default or cross-collateralization shall exist with respect to the obligations of any Borrowing Fund in relation to any other Fund (subject, however, to the right of the Bank as noted in Section 7 above, at its option upon any Event of Default by one Borrowing Fund hereunder to deny further Loans to other Borrowing Funds). In no event shall the rights, obligations or remedies of Bank with respect to a particular Fund constitute a right, obligation or remedy applicable to any other Fund. Specifically, and without otherwise limiting the scope of this paragraph: (i) Bank's remedies under this Agreement and the other Loan Documents upon the occurrence of an Event of Default shall be determined as if each Fund had entered into a separate loan facility with Bank; and (ii) no assets held by the Bank by or on behalf of any Fund shall secure the obligations of any other Fund under this Agreement and the other Loan Documents and Bank shall have no right to set off claims related to Loans entered into by a particular Fund against claims related to Loans entered into by any other Fund. (2) It is further acknowledged and agreed that the Trust is entering into this Agreement and the other Loan Documents solely on behalf of its Funds and the Loan Documents are not intended to create obligations of the Trust independent of such Funds, the obligations of the Trust under the Loan Documents being limited to causing its Funds to comply with the terms and conditions thereof, except for obligations specifically imposed upon the Trust pursuant to the terms of the Loan Documents.

(l)            USA PATRIOT Act Notification. The following notification is provided to the Trust and the Borrowing Funds Borrower pursuant to Section 326 of the PATRIOT Act: The Bank hereby notifies the Trust and Borrowing Fund (each a "Loan Party") that pursuant to the requirements of the PATRIOT Act, it is required to obtain, verify and record information that identifies such Loan Party, which information includes the name and address of such Loan Party and other information that will allow the Bank to identify such Loan Party in accordance with the PATRIOT Act.

(m)        Counterparts. This Agreement may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract. The foregoing sentence shall also apply to each other Loan Document.

(n)          Document Imaging; Telecopy and PDF Signatures; Electronic Signatures. Without notice to or consent of the Trust or any Borrower, the Bank may

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create electronic images of any Loan Documents and destroy paper originals of any such imaged documents. Such images have the same legal force and effect as the paper originals and are enforceable against the Borrowers and any other parties thereto. The Bank may convert any Loan Document into a "transferrable record" as such term is defined under, and to the extent permitted by, UETA, with the image of such instrument in the Bank's possession constituting an "authoritative copy" under UETA. If the Bank agrees, in its sole discretion, to accept delivery by telecopy or PDF of an executed counterpart of a signature page of any Loan Document or other document required to be delivered under the Loan Documents, such delivery will be valid and effective as delivery of an original manually executed counterpart of such document for all purposes. If the Bank agrees, in its sole discretion, to accept any electronic signatures of any Loan Document or other document required to be delivered under the Loan Documents, the words "execution," "signed," and "signature," and words of like import, in or referring to any document so signed will deemed to include electronic signatures and/or the keeping of records in electronic form, which will be of the same legal effect, validity and enforceability as a manually executed signature and/or the use of a paper-based recordkeeping system, to the extent and as provided for in any applicable law, including UETA, E-SIGN, or any other states laws based on, or similar in effect to, such acts. The Bank may rely on any such electronic signatures without further inquiry.

(o)          Confession of Judgment. Any Borrowing Fund hereby irrevocably authorizes and empowers any attorney-at-law to appear for such Fund in any action upon or in connection with this Agreement at any time after the Loan and/or other obligations of such Fund hereunder become due, as herein provided, in any court in or of the State of Ohio or elsewhere, and waive the issuance and service of process with respect thereto, and irrevocably authorizes and empowers any such attorney-at-law to confess judgment in favor of Bank against such Fund in the amount due thereon or hereon, plus interest as herein provided, and all costs of collection, and waive and release all errors in any said proceedings and judgments and all rights of appeal from the judgment rendered. Such Fund agrees and consents that the attorney confessing judgment on behalf of such Fund hereunder may also be counsel to the Bank and/or the Bank's affiliates, and such Fund hereby further waives any conflicts of interest which might otherwise arise and consents to the Bank paying such confessing attorney a legal fee or allowing such attorneys' fees to be paid from proceeds of collection of this Agreement.

 

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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed by their respective officers thereunto duly authorized as of the date first above written.

THE BANK:

 

U.S. BANK NATIONAL ASSOCIATION

 

 

By: /s/                                                       

Shelly Allen

Senior Vice President

 

 

WARNING – BY SIGNING THIS PAPER YOU GIVE UP YOUR RIGHT TO NOTICE AND COURT TRIAL. IF YOU DO NOT PAY ON TIME A COURT JUDGMENT MAY BE TAKEN AGAINST YOU WITHOUT YOUR PRIOR KNOWLEDGE AND THE POWERS OF A COURT CAN BE USED TO COLLECT FROM YOU REGARDLESS OF ANY CLAIMS YOU MAY HAVE AGAINST THE BANK.

 

 

 

ADVISORS PREFERRED TRUST

not individually but solely on behalf of

its Funds listed on Exhibit A to this

Agreement, separately and not jointly

 

By: /s/                                              

Catherine Ayers-Rigsby

President

 

 

 

 

EXHIBITS:

A - Listing of Borrowing Funds

 

-26- 
 

 

EXHIBIT A

To Loan Agreement

 

 

 

Fund Name

Pledge Account

Identification Number*

Quantified Managed Income Fund [____]
Quantified Alternative Investment Fund [____]
Quantified Common Ground Fund [____]

*Suppressed for security reasons.

 

 

 

 

 

 

 

 

October 21, 2021

 

Advisors Preferred Trust

1445 Research Boulevard, Suite 530

Rockville, MD 20850

 

Re: Advisors Preferred Trust File Nos. 333-184169 and 811-22756

 

Trustees:

A legal opinion (the "Legal Opinion") that we prepared was filed with Post-Effective Amendment No. 147 to the Advisors Preferred Trust Registration Statement (the "Registration Statement"). We hereby give you our consent to incorporate by reference the Legal Opinion into Post-Effective Amendment No. 164 to the Registration Statement (the "Amendment"). We also consent to all references to us in the Amendment.

 

 

 

 

Very truly yours,

 

/s/

THOMPSON HINE LLP

 

 

 

4877-9614-0544

 

 

 

 

 

 

 

 

 

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 

We hereby consent to the incorporation by reference in this Registration Statement on Form N-1A of our report dated August 27, 2021, relating to the financial statements and financial highlights of Quantified Alternative Investment Fund and the consolidated financial statements and consolidated financial highlights of Quantified Evolution Plus Fund (the “Funds”), each a series of Advisors Preferred Trust, for the year ended June 30, 2021, and to the references to our firm under the headings “Financial Highlights” and “Independent Registered Public Accounting Firm” in the Prospectus and “Organization and Management of Wholly Owned Subsidiary” and “Independent Registered Public Accounting Firm” in the Statement of Additional Information.

 

/s/ COHEN & COMPANY, LTD.

 

COHEN & COMPANY, LTD.

Chicago, Illinois

December 22, 2021

 

 

 

 



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