EXHIBIT C
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this ___ day of
___________, 20__ by and between Cornerstone Advisors Inc., a Washington
corporation with its principal place of business at 225 -- 000xx Xxxxxx XX,
Xxxxx 000, Xxxxxxxx, Xxxxxxxxxx 00000-0000 (the "Adviser"), and AlphaSimplex
Group, LLC, a Delaware limited liability company with its principal place of
business at Xxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxxxxxx 00000 (the
"Sub-Adviser").
W I T N E S S E T H
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of THE ADVISORS' INNER CIRCLE FUND (the "Trust") on
behalf of the series set forth on Schedule A to this Agreement (the "Fund") and
pursuant to the provisions of the Investment Advisory Agreement dated as of
___________ ___, 20__ between the Adviser and the Fund (the "Management
Agreement"), the Adviser has selected the Sub-Adviser to act as sub-investment
adviser of the Fund and to provide certain related services, as more fully set
forth below, and to perform such services under the terms and conditions
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Adviser and the Sub-Adviser do hereby agree as follows:
1. THE SUB-ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser
shall act as sub-investment adviser with respect to the Fund. In such capacity,
the Sub-Adviser shall, subject to the supervision of the Adviser and the Board,
regularly provide the Fund with investment research, advice and supervision and
shall furnish continuously an investment program for such Fund assets as may be
allocated by the Adviser to the Sub-Adviser (the "Assets"), consistent with the
investment objectives and policies of the Fund. The Sub-Adviser shall determine,
from time to time, what investments shall be purchased for the Fund and what
such securities shall be held or sold by the Fund, subject always to the
provisions of the Trust's Agreement and Declaration of Trust, By-Laws and its
registration statement on Form N-1A (the "Registration Statement") under the
Investment Company Act of 1940, as amended (the "1940 Act"), and under the
Securities Act of 1933, as amended (the "1933 Act"), covering Fund shares, as
filed with the Securities and Exchange Commission (the "Commission"), and to the
investment objectives, policies and restrictions of the Fund, as each of the
same shall be from time to time in effect. As used herein, the term "securities"
shall include, but not be limited to, equities and equity-related instruments,
derivative instruments, commodity interests (including futures and options
thereon) and currency forwards. To carry out such obligations, the Sub-Adviser
shall exercise full discretion and act for the Fund in the same manner and with
the same force and effect as the Fund itself might or could do with respect to
purchases, sales or other transactions, as well as with respect to all other
such things necessary or incidental to the furtherance or conduct of such
purchases, sales or other transactions, including but not limited to (i)
entering into agreements with respect to
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securities and other investments, for the Fund in the name of the Fund and at
the sole risk of the Fund, (ii) arranging for the delivery of and payment for
any such investments and (iii) making investment representations on behalf of
the Fund. Notwithstanding the foregoing, the Sub-Adviser shall, upon written
instructions from the Adviser, effect such portfolio transactions for the Fund
as the Adviser may from time to time direct; provided however, that the
Sub-Adviser shall not be responsible for any such portfolio transactions
effected upon written instructions from the Adviser. No reference in this
Agreement to the Sub-Adviser having full discretionary authority over the
Fund's investments shall in any way limit the right of the Adviser, in its sole
discretion, to establish or revise policies in connection with the management
of the Fund's assets or to otherwise exercise its right to control the overall
management of the Fund's assets.
In performance of its duties and obligations under this Agreement, the
Sub-Adviser shall not consult with any other sub-adviser to the Fund or a
sub-adviser to a portfolio that is under common control with the Fund
concerning the Assets, except as permitted by the policies and procedures of
the Fund. The Sub-Adviser shall not provide investment advice to any assets of
the Fund other than the Assets.
(b) COMPLIANCE. The Sub-Adviser agrees to comply with the
requirements of the 1940 Act, the Investment Advisers Act of 1940, as amended
(the "Advisers Act"), the 1933 Act, the Securities Exchange Act of 1934, as
amended (the "1934 Act"), the Commodity Exchange Act and the respective rules
and regulations thereunder, as applicable, as well as with all other applicable
federal and state laws, rules, regulations and case law that relate to the
services and relationships described hereunder and to the conduct of its
business as a registered investment adviser. The Sub-Adviser also agrees to
comply with the objectives, policies and restrictions set forth in the
Registration Statement, as amended or supplemented, of the Fund and provided to
the Sub-Adviser, and with any policies, guidelines, instructions and procedures
approved by the Board or the Adviser and provided to the Sub-Adviser; provided,
however, that any modifications or amendments to the relevant objectives,
policies, instructions, procedures and/or restrictions shall not be binding on
the Sub-Adviser without at least thirty (30) days' written notice to the
Sub-Adviser. In selecting the Fund's portfolio securities and performing the
Sub-Adviser's obligations hereunder, the Sub-Adviser shall cause the Fund to
comply with the diversification and source of income requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. The Sub-Adviser shall maintain
compliance procedures that it reasonably believes are adequate to ensure the
compliance with the foregoing. No supervisory activity undertaken by the
Adviser shall limit the Sub-Adviser's full responsibility for any of the
foregoing. Notwithstanding the foregoing, the Sub-Adviser shall not be
responsible for monitoring the overall compliance of the Fund and/or Trust,
including, without limitation, the oversight of third parties, including, the
Adviser and the other sub-advisers.1
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(1) Please confirm how the Adviser and/or the Fund intend to comply with the
revised regulations relating to commodity pools and their operators.
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(c) PROXY VOTING. Pursuant to Board authority, the Adviser has the
authority to determine how proxies with respect to securities that are held by
the Fund shall be voted, and the Adviser may delegate the authority and
responsibility to vote proxies for the Fund's securities to the Sub-Adviser. So
long as proxy voting authority for the Fund has been delegated to the
Sub-Adviser, the Adviser shall provide such assistance to the Sub-Adviser with
respect to the voting of proxies for the Fund as the Sub-Adviser may from time
to time reasonably request, and the Adviser shall promptly forward to the
Sub-Adviser any information or documents necessary for the Sub-Adviser to
exercise its proxy voting responsibilities. The Sub-Adviser shall carry out
such responsibility in accordance with any instructions that the Board or the
Adviser shall provide from time to time, and at all times in a manner
consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary
responsibilities to the Trust. The Sub-Adviser shall provide periodic reports
and keep such records relating to proxy voting as the Board may reasonably
request or as may be necessary for the Fund to comply with the 1940 Act and
other applicable law. Any such delegation of proxy voting responsibility to the
Sub-Adviser may be revoked or modified by the Board or the Adviser at any
time.
The Sub-Adviser is authorized to instruct the Fund's custodian and/or broker(s)
to forward promptly to the Sub-Adviser or designated service provider copies of
all proxies and shareholder communications relating to securities held in the
portfolio of a Fund (other than materials relating to legal proceedings against
the Fund). The Sub-Adviser may also instruct the Fund's custodian and/or
broker(s) to provide reports of holdings in the portfolio of the Fund. The
Sub-Adviser has the authority to engage a service provider to assist with
administrative functions related to voting Fund proxies. The Trust shall
direct the Fund's custodian and/or broker(s) to provide any assistance
requested by the Sub-Adviser in facilitating the use of a service provider. In
no event shall the Sub-Adviser have any responsibility to vote proxies that are
not received on a timely basis. The Trust acknowledges that the Sub-Adviser,
consistent with the Sub-Adviser's written proxy voting policies and procedures,
may refrain from voting a proxy if, in the Sub-Adviser's discretion, refraining
from voting would be in the best interests of the Fund and its shareholders.
(d) RECORDKEEPING. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Sub-Adviser
to supply to the Adviser, the Trust or its Board the information required to be
supplied under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Fund's assets advised by the Sub-Adviser required
by Rule 31a-1 under the 1940 Act (other than those records being maintained by
the Adviser, or any administrator custodian or transfer agent appointed by the
Fund) relating to its responsibilities provided hereunder with respect to the
Fund, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and
Records"). The Fund Books and Records shall be available to the Adviser and the
Board at any time upon request shall be delivered to the
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Trust upon the termination of this Agreement and shall be available without
delay during any day the Trust is open for business.
(e) HOLDINGS INFORMATION AND PRICING. The Sub-Adviser shall provide
regular reports regarding the Fund's holdings, and may, on its own initiative,
furnish the Adviser, the Trust and its Board from time to time with whatever
information the Sub-Adviser believes is appropriate for this purpose. The
Sub-Adviser agrees to notify the Adviser and the Board promptly if the
Sub-Adviser reasonably believes that the value of any security held by a Fund
may not reflect fair value. The Sub-Adviser agrees to provide upon request any
pricing information of which the Sub-Adviser is aware to the Adviser, Trust,
its Board and/or any Fund pricing agent to assist in the determination of the
fair value of any Fund holdings for which market quotations are not readily
available or as otherwise required in accordance with the 1940 Act or the Fund
valuation procedures for the purpose of calculating the Trust's net asset value
in accordance with procedures and methods established by the Board.
(f) COOPERATION WITH AGENTS OF THE ADVISER AND THE TRUST. The
Sub-Adviser agrees to cooperate with and provide reasonable assistance to the
Adviser, the Trust and any Trust custodian or foreign sub-custodians, any Trust
pricing agents and all other agents and representatives of the Adviser and the
Trust with respect to such information regarding the Fund as such entities may
reasonably request from time to time in the performance of their obligations,
provide prompt responses to reasonable requests made by such persons and
establish appropriate interfaces with each so as to promote the efficient
exchange of information and compliance with applicable laws and regulations.
(g) CONSULTATION WITH OTHER SUB-ADVISERS. In performance of its
duties and obligations under this Agreement, the Sub-Adviser shall not consult
with any other sub-adviser to the Fund or a sub-adviser to a portfolio that is
under common control with the Fund concerning transactions for the Fund, except
as permitted by the policies and procedures of the Fund. The Sub-Adviser shall
not provide investment advice to any assets of the Fund other than the assets
managed by the Sub-Adviser.
2. CODE OF ETHICS. The Sub-Adviser has adopted a written code of
ethics that it reasonably believes complies with the requirements of Rule 17j-1
under the 1940 Act, which it has provided to the Adviser and the Trust. The
Sub-Adviser shall ensure that its Access Persons (as defined in the
Sub-Adviser's Code of Ethics) comply in all material respects with the
Sub-Adviser's Code of Ethics, as in effect from time to time. Upon request, the
Sub-Adviser shall provide the Trust with (i) a copy of the Sub-Adviser's
current Code of Ethics, as in effect from time to time, and (ii) a
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Sub-Adviser's
Code of Ethics. Annually, the Sub-Adviser shall furnish a written report, which
complies with the requirements of Rule 17j-1, concerning the Sub-Adviser's Code
of Ethics to the Adviser and the Trust's Board. The Sub-Adviser shall respond
to requests for information from the Adviser and
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the Trust as to violations of the Code by Access Persons and the sanctions
imposed by the Sub-Adviser. The Sub-Adviser shall immediately notify the
Adviser and the Trust of any material violation of the Code, whether or not
such violation relates to a security held by any Fund.
3. INFORMATION AND REPORTING. The Sub-Adviser shall provide the
Adviser, the Trust, and their respective officers with such periodic reports
concerning the obligations the Sub-Adviser has assumed under this Agreement as
the Adviser and the Trust may from time to time reasonably request.
(a) NOTIFICATION OF BREACH / COMPLIANCE REPORTS. The Sub-Adviser
shall notify the Trust's Chief Compliance Officer and Adviser immediately upon
detection of (i) any material failure of the Sub-Adviser to manage the Fund in
accordance with the applicable investment objectives and policies or any
applicable law; or (ii) any material breach of any of the Fund's or the
Adviser's policies, guidelines or procedures relating to the Fund's assets
managed by the Sub-Adviser. In addition, the Sub-Adviser shall provide a
quarterly report regarding the Fund's compliance with its investment objectives
and policies, applicable law, including, but not limited to the 1940 Act and
Subchapter M of the Code, and the Fund's and the Adviser's policies, guidelines
or procedures as applicable to the Sub-Adviser's obligations under this
Agreement. The Sub-Adviser acknowledges and agrees that the Adviser may, in its
discretion, provide such quarterly compliance certifications to the Board. The
Sub-Adviser agrees to correct any such failure promptly and to take any action
that the Board and/or the Adviser may reasonably request in connection with any
such breach. Upon request, the Sub-Adviser shall also provide the officers of
the Trust with supporting certifications in connection with such certifications
of Fund financial statements and disclosure controls pursuant to the
Xxxxxxxx-Xxxxx Act. The Sub-Adviser will promptly notify the Trust in the event
(i) the Sub-Adviser is served or otherwise receives notice of any action, suit,
proceeding, inquiry or investigation, at law or in equity, before or by any
court, public board, or body, involving the affairs of the Trust (excluding
class action suits in which a Fund is a member of the plaintiff class by reason
of the Fund's ownership of shares in the defendant) or the compliance by the
Sub-Adviser with the federal or state securities laws or (ii) an actual change
in control of the Sub-Adviser resulting in an "assignment" (as defined in the
1940 Act) has occurred or is otherwise proposed to occur.
(b) INSPECTION. Upon reasonable request, the Sub-Adviser agrees to
make its records and premises (including the availability of the Sub-Adviser's
employees for interviews) to the extent that they relate to the conduct of
services provided to the Fund or the Sub-Adviser's conduct of its business as
an investment adviser reasonably available for compliance audits by the Adviser
or the Trust's officers, employees, accountants or counsel; in this regard, the
Trust and the Adviser acknowledge that the Sub-Adviser shall have no obligation
to make available (i) proprietary information unrelated to the services
provided to the Fund, (ii) any information related to other clients of the
Sub-Adviser or the investments of such clients, (iii) any information subject
to a
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confidentiality agreement or (iv) proprietary information relating to the
Sub-Adviser's investment-related models, strategies, or code, whether related
to the Fund or not. .
(c) BOARD AND FILINGS INFORMATION. The Sub-Adviser will also provide
the Adviser and Trust with any information reasonably requested regarding its
management of the Fund required for any meeting of the Board, or for any
shareholder report, Form N-CSR, Form N-Q, Form N-PX, Form N-SAR, amended
registration statement, proxy statement, or prospectus supplement to be filed
by the Trust with the Commission. The Sub-Adviser will make its officers and
employees available to meet with the Board from time to time on reasonable
notice to review its investment management services to the Fund in light of
current and prospective economic and market conditions and shall furnish to the
Board such information as may reasonably be necessary in order for the Board to
evaluate this Agreement or any proposed amendments thereto.
(d) TRANSACTION INFORMATION. The Sub-Adviser shall furnish to the
Adviser and the Trust such information concerning portfolio transactions as may
be necessary to enable the Adviser, Trust or their designated agents to perform
such compliance testing on the Fund and the Sub-Adviser's services as the
Adviser and the Trust may, in their sole discretion, determine to be
appropriate. The provision of such information by the Sub-Adviser to the
Adviser, Trust or their designated agents in no way relieves the Sub-Adviser of
its own responsibilities under this Agreement.
(e) ADDITIONS AND WITHDRAWALS. The Adviser may make additions to or
cause withdrawals to be made from the Fund at such times and in such amounts as
the Adviser shall determine; provided, however, that the Adviser shall promptly
notify the Sub-Adviser in writing of any additions to the Fund, including the
amounts thereof, and the Adviser shall not cause a withdrawal to be made from
the Fund without delivery to the Sub-Adviser, at least two (2) business days
prior to such withdrawal, written notice of such intended withdrawal and the
amount thereof.
4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Sub-Adviser nor any of its
directors, officers or employees will act as a principal or agent or receive any
commission except as permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Sub-Adviser shall arrange for the
placing of all orders for the purchase and sale of securities for a Fund's
account with brokers or dealers selected by the Sub-Adviser. In the selection
of such brokers or dealers and the placing of such orders, the Sub-Adviser is
directed at all times to seek for a Fund the most favorable execution and net
price available under the circumstances, taking into account factors including,
but not limited to, pricing terms, the size and type of the transactions, the
nature and character of the market for the particular types of securities being
traded, the full range, quality, and reliability of brokerage services, and any
other relevant factors, as described more fully in the Sub-Adviser's Form ADV
Part 2. The Sub-Adviser is not responsible for any acts or omissions by any
broker. It is also understood
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that it is desirable for the Fund that the Sub-Adviser have access to brokerage
and research services provided by brokers who may execute brokerage
transactions at a higher cost to the Fund than may result when allocating
brokerage to other brokers, consistent with section 28(e) of the 1934 Act and
any Commission staff interpretations thereof. Therefore, the Sub-Adviser is
authorized to place orders for the purchase and sale of securities for the Fund
with such brokers, subject to review by the Adviser and the Board from time to
time with respect to the extent and continuation of this practice. It is
understood that the services provided by such brokers may be useful to the
Sub-Adviser in connection with its or its affiliates' services to other
clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Sub-Adviser deems
the purchase or sale of a security to be in the best interest of a Fund as well
as other clients of the Sub-Adviser, the Sub-Adviser may, to the extent
permitted by applicable law and regulations, aggregate the order for securities
to be sold or purchased. In such event, the Sub-Adviser will allocate
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, in the manner the Sub-Adviser reasonably considers
to be equitable and consistent with its fiduciary obligations to a Fund and to
such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Sub-Adviser
seek to obtain best execution and price within the policy guidelines determined
by the Board and set forth in a Fund's current Registration Statement; (b) the
provisions of the 1940 Act; (c) the provisions of the Advisers Act; (d) the
provisions of the 1934 Act; and (e) other provisions of applicable law. These
brokerage services are not within the scope of the duties of the Sub-Adviser
under this Agreement. Subject to the requirements of applicable law and any
procedures adopted by the Board, the Sub-Adviser or its affiliates may receive
brokerage commissions, fees or other remuneration from a Fund for these
services in addition to the Sub-Adviser's fees for services under this
Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Sub-Adviser
to take or receive physical possession of cash, securities or other investments
of a Fund. The Sub-Adviser will not serve as the custodian to the Fund and (ii)
the Sub-Adviser will not be liable for any act or omission of any custodian.
The Sub-Adviser shall have no responsibility for determining or negotiating the
custodial costs. The Fund and/or the Adviser, as applicable, will execute
custodial and other agreements as may be necessary to open an account with
futures clearing brokers and, if necessary, ISDA agreements with an
over-the-counter foreign currency forward prime broker.
6. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Adviser will bear its
own costs of providing services hereunder. Other than as herein specifically
indicated, the Sub-Adviser shall not be responsible for a Fund's or the
Adviser's expenses, including brokerage and other expenses incurred in placing
orders for the purchase and sale of securities and other investment
instruments.
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7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Sub-Adviser is registered as an
investment adviser under the Advisers Act, and will remain so registered for the
duration of this Agreement. The Sub-Adviser is not prohibited by the Advisers
Act or the 1940 Act from performing the services contemplated by this Agreement,
and to the best knowledge of the Sub-Adviser, there is no proceeding or
investigation that is reasonably likely to result in the Sub-Adviser being
prohibited from performing the services contemplated by this Agreement. The
Sub-Adviser agrees to promptly notify the Trust of the occurrence of any event
that would disqualify the Sub-Adviser from serving as an investment adviser to
an investment company. The Sub-Adviser is in compliance in all material respects
with all applicable federal and state law in connection with its investment
management operations.
(b) ADV DISCLOSURE. The Sub-Adviser has provided the Trust with a
copy of Part 1 of its Form ADV as most recently filed with the Commission and
its Part 2 as most recently updated and will, promptly after filing any
amendment to its Form ADV with the Commission or updating its Part 2, furnish a
copy of such amendments or updates to the Trust. The information contained in
the Adviser's Form ADV 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.
(c) FUND DISCLOSURE DOCUMENTS. The Sub-Adviser has reviewed and will
in the future review, the Registration Statement, summary prospectus,
prospectus, statement of additional information, periodic reports to
shareholders, reports and schedules filed with the Commission (including any
amendment, supplement or sticker to any of the foregoing) and advertising and
sales material relating to the Fund (collectively the "Disclosure Documents")
and represents and warrants that any information or materials provided by the
Sub-Adviser which is included in, or used for the preparation of, such
Disclosure Documents, will contain no untrue statement of any material fact and
will not omit any statement of material fact required to be stated therein or
necessary to make the Sub-Adviser's statements therein not misleading.
(d) USE OF THE NAME "CORNERSTONE ADVISORS." The Sub-Adviser has the
right to use the name "Cornerstone Advisors" in connection with its services to
the Trust. The Sub-Adviser is not aware of any threatened or existing actions,
claims, litigation or proceedings that would adversely affect or prejudice the
rights of the Sub-Adviser or the Trust to use the name "Cornerstone Advisors."
(e) INSURANCE. The Sub-Adviser maintains errors and omissions
insurance coverage in an appropriate amount and shall provide prior written
notice to the Trust (i) of any material changes in its insurance policies or
insurance coverage; or (ii) if any material claims will be made on its
insurance policies. Furthermore, the Sub-Adviser shall, upon reasonable
request, provide the Trust with any information it may reasonably require
concerning the amount of or scope of such insurance.
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(f) NO DETRIMENTAL AGREEMENT. The Sub-Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Sub-Adviser with respect to its
selection of securities for a Fund, and that all selections shall be done in
accordance with what is in the best interest of the Fund.
(g) CONFLICTS. The Sub-Adviser shall act honestly, in good faith and
in the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Fund first,
ahead of their own interests, in all personal trading scenarios that may
involve a conflict of interest with the Fund, consistent with its fiduciary
duties under applicable law.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed.
8. THE NAME "CORNERSTONE ADVISORS." The Adviser has granted to the
Trust a license to use the name "Cornerstone Advisors" (collectively, the
"Name") as part of the name of the Fund. The foregoing authorization by the
Adviser to the Trust to use the Name as part of the name of the Fund is not
exclusive of the right of the Adviser itself to use, or to authorize others to
use, the Name; the Sub-Adviser acknowledges and agrees that as between the
Sub-Adviser and the Adviser, the Adviser has the right to use, or authorize
others to use, the Name and the Sub-Adviser agrees to take such action as may
reasonably be requested by the Adviser to give full effect to the provisions of
this section. Without limiting the generality of the foregoing, the Sub-Adviser
agrees that, upon any termination of this Agreement, the Sub-Adviser will not
thereafter transact any business using the name "Cornerstone Advisors."
9. SUB-ADVISER'S COMPENSATION. The Fund shall pay to the
Sub-Adviser, as compensation for the Sub-Adviser's services hereunder, a fee,
determined as described in Schedule A that is attached hereto and made a part
hereof. Such fee shall be computed daily and paid not less than monthly in
arrears by the Fund.
The Sub-Adviser will be compensated based on the portion of Fund
assets allocated to the Sub-Adviser by the Adviser. The method for determining
net assets of the Fund for purposes hereof shall be the same as the method for
determining net assets for purposes of establishing the offering and redemption
prices of Fund shares as described in the Fund's prospectus. In the event of
termination of this Agreement, the fee provided in this Section shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month.
10. INDEPENDENT CONTRACTOR. In the performance of its duties
hereunder, the Sub-Adviser 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, the Trust or the
Adviser in any way or otherwise be deemed to be an agent of the Fund, the Trust
or the Adviser. If any occasion should arise in which the Sub-Adviser gives any
advice to its clients concerning the shares of a Fund, the Sub-Adviser will act
solely as investment counsel for such clients and not in any way on behalf of
the Fund.
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11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, (i) in the event of its
assignment (as defined in section 2(a)(4) of the 0000 Xxx) or (ii) in the event
of the termination of the Management Agreement; provided that such termination
shall not relieve the Adviser or the Sub-Adviser of any liability incurred
hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
This Agreement shall become effective as of the date executed and
shall remain in full force and effect continually thereafter, subject to renewal
as provided in Section 12(c) and unless terminated automatically as set forth in
Section 11 hereof or until terminated as follows:
(a) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to the Fund, upon the affirmative vote
of a majority of the outstanding voting securities of the Fund; or
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Sub-Adviser; or
(c) The Sub-Adviser may at any time terminate this Agreement by not
more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser; or
This Agreement shall automatically terminate two years from the date
of its execution unless its renewal is specifically approved at least annually
thereafter by (i) a majority vote of the Trustees, including a majority vote of
such Trustees who are not interested persons of the Trust, the Adviser or the
Sub-Adviser, at a meeting called for the purpose of voting on such approval; or
(ii) the vote of a majority of the outstanding voting securities of the Fund;
provided, however, that if the continuance of this Agreement is submitted to
the shareholders of the Fund for their approval and such shareholders fail to
approve such continuance of this Agreement as provided herein, the Sub-Adviser
may continue to serve hereunder as to the Fund in a manner consistent with the
1940 Act and the rules and regulations thereunder; and
(d) Termination of this Agreement pursuant to this Section shall be
without payment of any penalty.
In the event of termination of this Agreement for any reason, the Sub-Adviser
shall, immediately upon notice of termination or on such later date as may be
specified in such notice, cease all activity on behalf of the Fund and with
respect to any of its assets, except as expressly directed by the Adviser, or
if the Adviser is no longer serving as an adviser
10
to the Fund, the Board, or as otherwise required by any fiduciary duties of the
Sub-Adviser under applicable law. In addition, the Sub-Adviser shall deliver
the Fund's Books and Records to the Adviser by such means and in accordance
with such schedule as the Adviser shall direct and shall otherwise cooperate,
as reasonably directed by the Adviser, in the transition of portfolio asset
management to any successor of the Sub-Adviser, including the Adviser.
13. CERTAIN DEFINITIONS. FOR THE PURPOSES OF THIS AGREEMENT:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the Commission under
the 1940 Act or any interpretations of the Commission staff.
(b) "Interested persons" 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 Commission under the 1940 Act or any interpretations of
the Commission staff.
14. LIABILITY OF THE SUB-ADVISER.
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of statements in the Fund's
Disclosure Documents regarding the Sub-Adviser.
(b) The Sub-Adviser shall be liable to the Fund for any loss
(including transaction costs) incurred by the Fund as a result of any
investment made, which due to the Sub-Adviser's negligence of its duties
hereunder, is in contravention of: (i) any investment policy, guideline or
restriction set forth in the Registration Statement or as approved by the Board
from time to time and provided to the Sub-Adviser; or (ii) applicable law,
including but not limited to the 1940 Act and the Code (including but not
limited to the Fund's failure to satisfy the diversification or source of
income requirements of Subchapter M of the Code) (the investments described in
this subsection (b) collectively are referred to as "Improper Investments").
Notwithstanding the foregoing, the Sub-Adviser shall not be liable for any loss
(including transaction costs) incurred by the Fund which is caused by the Fund,
the Adviser, the Board or any of the Fund's other sub-advisers.
(c) The Sub-Adviser shall indemnify and hold harmless the Trust, each
affiliated person of the Trust within the meaning of Section 2(a)(3) of the
1940 Act, and each person who controls the Trust within the meaning of Section
15 of the 1933 Act (any such person, an "Indemnified Trust Party") against any
and all losses, claims, damages, expenses or liabilities (including the
reasonable cost of investigating and defending any alleged loss, claim, damage,
expense or liability and reasonable counsel fees incurred in connection
therewith) to which any such person may become subject under the 1933 Act, the
1934 Act, the 1940 Act or other federal or state statutory law or regulation,
at common law or otherwise, insofar as such losses, claims, damages,
11
expenses or liabilities (or actions in respect thereof) arise out of or are
based upon: (i) a breach by the Sub-Adviser of this Agreement or of the
representations and warranties made by the Sub-Adviser herein; (ii) any
Improper Investment which was due to the Sub-Adviser's negligence; (iii) any
untrue statement or alleged untrue statement of a material fact regarding the
Sub-Adviser contained in any Disclosure Document or the omission or alleged
omission from a Disclosure Document of a material fact regarding the
Sub-Adviser required to be stated therein or necessary to make the statements
regarding the Sub-Adviser therein not misleading; or (iv) the Sub-Adviser's
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties hereunder; provided, however, that nothing herein shall be deemed to
protect any Indemnified Trust Party who is a Trustee or officer of the Trust
against any liability to the Trust or to its shareholders to which such
Indemnified Trust Party would otherwise be subject by reason or willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of such person's office with the Trust.
(d) The Adviser and the Fund shall indemnify and hold harmless the
Sub-Adviser, its officers, directors, managers, employees, and affiliates (any
such person, an "Indemnified Sub-Adviser Party") against any and all losses,
claims, damages, expenses or liabilities (including the reasonable cost of
investigating and defending any alleged loss, claim, damage, expense or
liability and reasonable counsel fees incurred in connection therewith) to
which any such person may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon the (i) material
breach of this Agreement by the Adviser and/or the Fund or (ii) Adviser or the
Fund's willful misfeasance, bad faith, gross negligence or reckless disregard
of its duties hereunder; provided, however, that nothing herein shall be deemed
to protect any Indemnified Sub-Adviser Party against any liability to which
such Indemnified Sub-Adviser Party would otherwise be subject by reason or
willful misfeasance, bad faith, gross negligence or reckless disregard of its
duties hereunder.
15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
16. LIMITATION OF LIABILITY. The parties to this Agreement
acknowledge and agree that all litigation arising hereunder, whether direct or
indirect, and of any and every nature whatsoever shall be satisfied solely out
of the assets of the affected Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Fund shall be personally liable for any of
the foregoing liabilities. The Trust's Certificate of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Certificate of Trust and the Trust's
Agreement and Declaration of Trust describe in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
12
18. JURISDICTION. This Agreement shall be governed by and construed
in accordance with the substantive laws of the Commonwealth of Massachusetts
and the Sub-Adviser consents to the jurisdiction of courts, both state or
federal, in Massachusetts, with respect to any dispute under this Agreement.
19. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
20. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
13
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
CORNERSTONE ADVISORS INC.
By:___________________________
Name:
Title:
ALPHASIMPLEX GROUP, LLC
By:___________________________
Name:
Title:
14
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED ___________ ___, 20__ BETWEEN
CORNERSTONE ADVISORS INC.
AND
ALPHASIMPLEX GROUP, LLC
The Fund will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered, a fee, computed daily at an annual rate based on the average
daily net assets of the respective portfolio strategy (e.g., Managed Futures or
Diversifying Strategies) as may be allocated by the Adviser to the Sub-Adviser
from time to time under the following fee schedule:
[REDACTED]
15
