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1.
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APPOINTMENT OF ADVISER. The Fund hereby employs the Adviser and the Adviser hereby accepts such employment, to render investment advice and
related services, including the oversight of the portfolio management services to be rendered by any Sub-Advisers and the purchase and sale of securities held in the portfolio of the Fund, with respect to the assets of the Fund for the
period and on the terms set forth in this Agreement, subject to the supervision and direction of the Fund’s Board of Trustees (the “Board of Trustees” or “Trustees”).
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2.
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DUTIES OF ADVISER
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(a)
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GENERAL DUTIES. The Adviser shall act as investment adviser to the Fund and shall supervise investments of the Fund on behalf of the Fund in
accordance with the investment objectives, policies and restrictions of the Fund as set forth in the Fund’s governing documents, including, without limitation, the Fund’s Declaration of Trust and By-Laws; the Fund’s prospectus, statement of
additional information and undertakings; and such other limitations, policies and procedures as the Trustees may impose from time to time in writing to the Adviser (collectively, the “Investment Policies”). In providing such services, the
Adviser may also manage and oversee delegated sub-advisory services to be rendered by the Sub-Advisers to the Fund and shall at all times adhere to the provisions and restrictions contained in the federal securities
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(b)
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BROKERAGE. The Adviser shall be responsible for, but may delegate, decisions to buy and sell securities for the Fund, for broker-dealer selection,
and for negotiation of brokerage commission rates, provided that the Adviser shall not direct orders to an affiliated person of the Adviser without general prior authorization to use such affiliated broker or dealer from the Board of
Trustees. In selecting a broker-dealer to execute each particular transaction, the Adviser may rely on a list of Adviser-approved brokers or dealers selected based on criteria, including: the broker’s integrity, ethics and trustworthiness
regarding any relations and agreements with the Adviser and its clients; the broker’s ability to generate investment ideas that consistently lead to value creation for the Adviser’s clients; the broker’s speed and quality of trade execution
to minimize market price impact and maximize value for the Adviser’s clients; the broker’s capability to provide services at the lowest possible cost to the Adviser’s clients; availability of and the Adviser’s direct access to broker
research analysts and strategists; sufficient, competent broker personnel and support staff; the quality, depth and effectiveness of the broker’s investment research; the quality and effectiveness of trading ideas and their evaluation
after-the-fact; the timely acknowledgement and correction of trade errors; the efficient clearance and settlement of trades; and the broker’s overall ability to provide best execution for the Adviser’s clients. The price to the Fund in any
transaction may be less favorable than that available from another broker-dealer if the difference is reasonably justified by other aspects of the portfolio execution services offered.
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3.
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REPRESENTATIONS OF THE ADVISER
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(a)
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The Adviser shall use its best judgment and efforts in rendering the advice and services to the Fund as contemplated by this Agreement.
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(b)
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The Adviser shall maintain all licenses and registrations necessary to perform its duties hereunder in good order.
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(c)
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The Adviser shall conduct its operations at all times in conformance with the Advisers Act, the Investment Company Act, and any other applicable state and/or self-regulatory organization
regulations.
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(d)
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The Adviser shall maintain errors and omissions insurance in an amount at least equal to that disclosed to the Board of Trustees in connection with their approval of this Agreement.
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4.
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INDEPENDENT CONTRACTOR. The Adviser shall, for all purposes herein, be deemed to be an independent contractor, and shall, unless otherwise
expressly provided and authorized to do so, have no authority to act for or represent the Fund in any way, or in any way be deemed an agent for the Fund. It is expressly understood and agreed that the services to be rendered by the Adviser
to the Fund under the provisions of this Agreement are not to be deemed exclusive, and the Adviser shall be free to render similar or different services to others so long as its ability to render the services provided for in this Agreement
shall not be impaired thereby.
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5.
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ADVISER’S PERSONNEL
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(a)
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The Adviser shall, at its own expense, maintain such staff and employ or retain such personnel and consult with such other persons as it shall from time to time determine to be necessary
to the performance of its obligations under this Agreement. Without limiting the generality of the foregoing, the staff and personnel of the Adviser shall be deemed to include persons employed or retained by the Adviser to furnish
statistical information, research, and other factual information, advice regarding economic factors and trends, information with respect to technical and scientific developments, and such other information, advice and assistance as the
Adviser or the Board of Trustees may desire and reasonably request and any compliance staff and personnel required by the Adviser.
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(b)
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As stated above, at its own expense, the Adviser may carry out any of its obligations under this Agreement by retaining, subject to the direction and control of the Board, one or more
Sub-Advisers. The Adviser may with respect to the Fund: (i) evaluate, select, and recommend Sub-Advisers to manage all or a portion of the Fund’s assets; (ii) allocate and, when appropriate, reallocate the Fund’s assets among multiple
Sub-Advisers; (iii) terminate any Fund Sub-Adviser; (iv) monitor and evaluate each Sub-Adviser’s
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6.
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EXPENSES
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(a)
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With respect to the operation of the Fund, the Adviser shall be responsible for: (i) providing the personnel, office space and equipment reasonably necessary for the operation of the
Fund; (ii) the expenses of printing and distributing extra copies of the Fund’s prospectus, statement of additional information, and sales and advertising materials (but not the legal, auditing or accounting fees attendant thereto) to
prospective investors (but not to existing shareholders); (iii) the costs of any special Board of Trustees meetings or shareholder meetings convened for the primary benefit of the Adviser; (iv) the fees of any Sub-Advisers; and (v) any
costs of liquidating or reorganizing the Fund (unless such cost is otherwise allocated by the Board of Trustees). If the Adviser has agreed to limit the operating expenses of the Fund, the Adviser also shall be responsible on a monthly
basis for any operating expenses that exceed the agreed upon expense limit.
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(b)
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The Fund is responsible for and has assumed the obligation for payment of all of its expenses, other than as stated in Subparagraph 6(a) above, including but not limited to: fees and
expenses incurred in connection with the issuance, registration and transfer of its shares; brokerage and commission expenses; all expenses of transfer, receipt, safekeeping, servicing and accounting for the cash, securities and other
property of the Fund including all fees and expenses of its custodian, shareholder services agent and accounting services agent; interest charges on any borrowings; costs and expenses of pricing and calculating its daily net asset value and
of maintaining its books of account required under the Investment Company Act; taxes, if any; a pro rata portion of expenditures in connection with meetings of the Fund’s shareholders and the Board of Trustees that are properly payable by
the Fund; salaries and expenses of officers of the Fund, including without limitation the Fund’s Chief Compliance Officer, and fees and expenses of members of the Board of Trustees or members of any advisory board or committee who are not
members of, affiliated with or interested persons of the Adviser; insurance premiums on property or personnel of the Fund which inure to its benefit, including liability and fidelity bond insurance; the cost of preparing and printing
reports, proxy statements, prospectuses and statements of additional information of the Fund or other communications for distribution to existing shareholders; legal, auditing and accounting fees; all or any portion of trade association
dues or educational program expenses determined appropriate by the Board of Trustees; fees and expenses (including legal fees) of registering and maintaining registration of its shares for sale under federal and applicable state and foreign
securities laws; fees and expenses (including legal fees) of registering and maintaining registration of its shares for listing on the New York Stock Exchange or such other exchange on which the Fund’s shares may be listed; all expenses of
maintaining and servicing shareholder accounts, including all charges for transfer, shareholder recordkeeping, dividend disbursing and reinvesting, share repurchases, and other agents for the benefit of the Fund, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring expenses, except as herein otherwise prescribed.
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(c)
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The Adviser may voluntarily or contractually absorb certain Fund expenses.
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(d)
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To the extent the Adviser incurs any costs by assuming expenses which are an obligation of the Fund as set forth herein, the Fund shall promptly reimburse the Adviser for such costs and
expenses, except to the extent the Adviser has otherwise agreed to bear such expenses. To the extent the services for which the Fund is obligated to pay are performed by the Adviser, the Adviser shall be entitled to recover from the Fund to
the extent of the Adviser’s actual costs for providing such services. In determining the Adviser’s
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7.
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INVESTMENT ADVISORY AND MANAGEMENT FEE
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(a)
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The Fund shall pay to the Adviser, and the Adviser agrees to accept, as full compensation for all services furnished or provided to the Fund pursuant to this Agreement, an annual management
fee at a rate of 1.35% of the Fund’s average daily Managed Assets, as such term is defined herein. For purposes of calculating the management fee, “Managed Assets” means the total assets of the Fund (including any assets attributable to
borrowings for investment purposes) minus the sum of the Fund’s accrued liabilities (other than Fund liabilities representing borrowings for investment purposes).
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(b)
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The management fee shall be accrued daily by the Fund and paid to the Adviser on the first business day of the succeeding month.
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(c)
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The initial fee under this Agreement shall be payable on the first business day of the first month following the effective date of this Agreement and shall be prorated as set forth below.
If this Agreement is terminated prior to the end of any month, the fee to the Adviser shall be prorated for the portion of any month in which this Agreement is in effect which is not a complete month according to the proportion which the
number of calendar days in the month during which the Agreement is in effect bears to the number of calendar days in the month, and shall be payable within ten (10) days after the date of termination.
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(d)
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The fee payable to the Adviser under this Agreement will be reduced to the extent of any receivable owed by the Adviser to the Fund and as required under any expense limitation applicable
to the Fund.
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(e)
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The Adviser voluntarily may reduce any portion of the compensation or reimbursement of expenses due to it pursuant to this Agreement and may agree to make payments to limit the expenses
which are the responsibility of the Fund under this Agreement. Any such reduction or payment shall be applicable only to such specific reduction or payment and shall not constitute an agreement to reduce any future compensation or
reimbursement due to the Adviser hereunder or to continue future payments. Any such reduction will be agreed to prior to accrual of the related expense or fee and will be estimated daily and reconciled and paid on a monthly basis.
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(f)
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Any such reductions made by the Adviser in its fees or payment of expenses which are the Fund’s obligation are subject to reimbursement by the Fund to the Adviser, if so requested by the
Adviser, in subsequent fiscal years if the aggregate amount actually paid by the Fund toward the operating expenses for such fiscal year (taking into account the reimbursement) does not exceed the applicable limitation on Fund expenses.
Under the expense limitation agreement, the Adviser may recoup reimbursements made in any fiscal year of the Fund over the following three fiscal years. Any such reimbursement is also contingent upon Board of Trustees review and approval at
the time the reimbursement is made. Such reimbursement may not be paid prior to the Fund’s payment of current ordinary operating expenses.
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(g)
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The Adviser may agree not to require payment of any portion of the compensation or reimbursement of expenses otherwise due to it pursuant to this Agreement. Any such agreement shall be
applicable only with respect to the specific items covered thereby and shall not constitute an agreement not to require payment of any future compensation or reimbursement due to the Adviser hereunder.
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8.
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NO SHORTING; NO BORROWING. The Adviser agrees that neither it nor any of its officers or employees shall take any short position in the shares of
the Fund. This prohibition shall not prevent the purchase of such shares by any of the officers or employees of the Adviser or any trust, pension, profit-sharing or other benefit plan for such persons or affiliates thereof, at a price not
less than the net asset value
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9.
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CONFLICTS WITH FUND’S GOVERNING DOCUMENTS AND APPLICABLE LAWS.
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10.
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REPORTS AND ACCESS. The Adviser agrees to supply such information to the Fund’s administrator and to permit such compliance inspections by the
Fund’s administrator as shall be reasonably necessary to permit the administrator to satisfy its obligations and respond to the reasonable requests of the Board of Trustees.
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11.
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ADVISER’S LIABILITIES AND INDEMNIFICATION
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(a)
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The Adviser shall have responsibility for the accuracy and completeness (and liability for the lack thereof) of the statements in the Fund’s offering materials (including the prospectus,
the statement of additional information, advertising and sales materials), except for information supplied by the administrator or the Fund or another third party for inclusion therein.
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(b)
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The Adviser shall be liable to the Fund for any loss (including brokerage charges) incurred by the Fund as a result of any improper investment made by the Adviser in contradiction of the
Investment Policies.
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(c)
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In the absence of willful misfeasance, bad faith, gross negligence, or reckless disregard of the obligations or duties hereunder on the part of the Adviser, the Adviser shall not be subject
to liability to the Fund or to any shareholder of the Fund for any act or omission in the course of, or connected with, rendering services hereunder or for any losses that may be sustained in the purchase, holding or sale of any security by
the Fund. Notwithstanding the foregoing, federal securities laws and certain state laws impose liabilities under certain circumstances on persons who have acted in good faith, and therefore nothing herein shall in any way constitute a
waiver or limitation of any rights which the Fund or any shareholder of the Fund may have under any federal securities law or state law.
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(d)
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Each party to this Agreement shall indemnify and hold harmless the other party and the shareholders, directors, officers and employees of the other party (any such person, an
“Indemnified Party”) against any loss, liability, claim, damage or expense (including the reasonable cost of investigating and defending any alleged loss, liability, claim, damage or expenses and reasonable counsel fees incurred in
connection therewith) arising out of the Indemnified Party’s performance or non-performance of any duties under this Agreement provided, however, that nothing herein shall be deemed to protect any Indemnified Party against any liability to
which such Indemnified Party would otherwise be subject by reason of willful misfeasance, bad faith or gross negligence in the performance of duties hereunder or by reason of reckless disregard of obligations and duties under this
Agreement.
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(e)
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No provision of this Agreement shall be construed to protect any Trustee or officer of the Fund, or officer of the Adviser, from liability in violation of Sections 17(h) and (i) of the
Investment Company Act.
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12.
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NON-EXCLUSIVITY; TRADING FOR ADVISER’S OWN ACCOUNT. The Fund’s
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14.
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RIGHT TO USE NAME
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15.
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TERMINATION; NO ASSIGNMENT
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(a)
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This Agreement may be terminated by the Fund at any time without payment of any penalty, by the Board of Trustees or by vote of a majority of the outstanding voting securities of the
Fund, upon 60 days’ written notice to the Adviser, and by the Adviser upon 60 days’ written notice to the Fund. In the event of a termination, the Adviser shall cooperate in the orderly transfer of the Fund’s affairs and, at the request of
the Board of Trustees, transfer any and all books and records of the Fund maintained by the Adviser on behalf of the Fund.
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(b)
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This Agreement shall terminate automatically in the event of any transfer or assignment thereof, as defined in the Investment Company Act.
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16.
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NONPUBLIC PERSONAL INFORMATION. Notwithstanding any provision herein to the contrary, the Adviser agrees on behalf of itself and its managers,
members, officers, and employees: (1) to treat confidentially and as proprietary information of the Fund (a) all records and other information relative to the Fund’s prior, present, or potential shareholders (and clients of said
shareholders) and (b) any Nonpublic Personal Information, as defined under Section 248.3(t) of Regulation S-P (“Regulation S-P”), promulgated under the Gramm-Leach-Bliley Act (the “G-L-B Act”); and (2) except after prior notification to and
approval in writing by the Fund, not to use such records and information for any purpose other than
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17.
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ANTI-MONEY LAUNDERING COMPLIANCE. The Adviser acknowledges that, in compliance with the Bank Secrecy Act, as amended, the USA PATRIOT Act, and any
implementing regulations thereunder (together, “AML Laws”), the Fund has adopted an Anti-Money Laundering Policy. The Adviser agrees to comply with the Fund’s Anti-Money Laundering Policy and the AML Laws, as the same may apply to the
Adviser, now and in the future. The Adviser further agrees to provide to the Fund and/or the Fund’s administrator such reports, certifications and contractual assurances as may be reasonably requested by the Fund. The Fund may disclose
information regarding the Adviser to governmental and/or regulatory or self-regulatory authorities to the extent required by applicable law or regulation and may file reports with such authorities as may be required by applicable law or
regulation.
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18.
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CERTIFICATIONS; DISCLOSURE CONTROLS AND PROCEDURES. The Adviser
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19.
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SEVERABILITY. If any provision of this Agreement shall be held or made invalid by a court decision, statute or rule, or shall be otherwise
rendered invalid, the remainder of this Agreement shall not be affected thereby.
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21.
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CAPTIONS. The captions in this Agreement are included for convenience of reference only and in no way define or limit any of the provisions hereof
or otherwise affect their construction or effect.
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22.
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GOVERNING LAW. This Agreement shall be governed by, and construed in accordance with, the laws of the State of Delaware without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be construed to preempt, or to be inconsistent with, any federal law, regulation or rule, including the Investment Company Act and the Advisers Act and any rules and
regulations promulgated thereunder.
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ANGEL OAK FINANCIAL STRATEGIES INCOME TERM TRUST
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ANGEL OAK CAPITAL ADVISORS, LLC
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By:
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/s/ Chase Eldredge
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By:
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/s/ Chase Eldredge
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Name:
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Chase Eldredge
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Name:
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Chase Eldredge
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Title:
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Chief Compliance Officer
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Title:
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Chief Compliance Officer
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