EXHIBIT L
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 1st day of
May, 2014 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 Xxxxxxx Capital Management,
LLC, a Delaware limited liability company with its principal place of business
at 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 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 May
1, 2014 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 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, 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 provided to the
Sub-Adviser, to the investment objectives, policies and restrictions of the
Fund, as each of the same shall be from time to time in effect and provided to
the Sub-Adviser, and to the investment guidelines set forth on Schedule B to
this Agreement (the "Investment Guidelines"). 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. Notwithstanding the foregoing,
the Sub-Adviser shall, upon written instructions from the Adviser, effect such
portfolio transactions for the Fund as the
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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 the event the Adviser seeks to exercise such discretion
over the assets of the Fund allocated to the Sub-Adviser, the Adviser will
provide the Sub-Adviser with prior written notice of any new or revised
policy.
(b) COMPLIANCE. The Sub-Adviser agrees to use best efforts 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 and provided to the
Sub-Adviser, of the Fund, and with any policies, Investment Guidelines,
instructions and procedures approved by the Board or the Adviser and provided
to the Sub-Adviser. In selecting the Fund's portfolio securities and performing
the Sub-Adviser's obligations hereunder, the Sub-Adviser shall use best efforts
to 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 seeking to ensure any of the foregoing, but the Sub-Adviser
shall not be responsible for such compliance to the extent that the Adviser
prescribes actions that result in the non-compliance.
(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 the Sub-Adviser's Proxy Voting Policy
and Procedures, and at all times in a manner consistent with Rule 206(4)-6
under the Advisers Act and its fiduciary responsibilities to the Fund. 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
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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 service providers 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 or in good order. 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 reasonable request and, upon request, shall be
delivered to the Trust upon the termination of this Agreement and shall be
reasonably available without delay during any day the Trust is open for
business. The Sub-Adviser may keep copies of any Fund Books and Records for the
Sub-Adviser's records that are required to be maintained by law.
(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
does not reflect fair value due to significant events. The Sub-Adviser agrees
to provide to the Adviser, upon request pursuant to the Adviser's
responsibilities under the Fund's valuation procedures established by the
Board, reasonable assistance in the determination of the fair value of any Fund
holdings for
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which market quotations are not readily available. (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 seek to 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 the Trust as to material
violations of the Code by Access Persons and the sanctions imposed by the
Sub-Adviser. The Sub-Adviser shall promptly 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 promptly upon
detection of (i) any material failure to manage any Fund in accordance with its
investment objectives and policies or any applicable law; or (ii) any material
breach of any of the Fund's or the Adviser's applicable policies, Investment
Guidelines or procedures. 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,
Investment
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Guidelines or procedures as applicable to the Sub-Adviser's obligations under
this Agreement as provided to the Sub-Adviser. 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 reasonable
request, the Sub-Adviser shall also provide the officers of the Trust with
supporting certifications, to the extent applicable, 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 or formal investigation, at law or in equity, before or by any
court, public board, or body, specifically 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 proprietary information unrelated to the services provided to
the Fund or any information related to other clients of the Sub-Adviser, except
to the extent necessary for the Adviser to receive reasonable assurance of the
absence of any material conflict of interest and compliance with any laws,
rules, Sub-Adviser policies, or regulations in the management of the Fund.
(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 due 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 of the
Fund 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
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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) CONFIDENTIALITY. The Adviser acknowledges and agrees that all
information and advice furnished by either party to this Agreement to the other
party shall be treated as confidential and will not be disclosed to third
parties except with the prior written consent of the other party or as
otherwise required by applicable law or regulation. Notwithstanding the
foregoing, the Sub-Adviser may disclose the name of the Fund and other
information about the Fund to other persons in certain circumstances,
including, without limitation, for operational, compliance, or risk management
purposes or as otherwise appropriate for the Sub-Adviser to perform its
duties.
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 or the 1934 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 best execution available under the
circumstances. It is also understood 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 or 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. 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 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
6
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 custodian designated by the Board to hold the assets of the Fund
will automatically invest any uninvested cash assets of the Fund on a daily
basis as designated by the Board or the Adviser, and the Sub-Adviser shall have
no responsibility for managing such cash assets.
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.
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. To the best of its knowledge, 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 2A as most recently updated and will, promptly after filing any other
than annual amendment to its Form ADV with the Commission or annual amendment
of its Part 2A, furnish a copy of such amendments to the Trust. To the best of
its knowledge, the information contained in the Sub-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, as provided to the Sub-Adviser for its review, those
portions of the Registration Statement, summary prospectus, prospectus,
statement of additional information, periodic reports to shareholders, reports
and schedules filed with the 7
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") that directly relate to the services
that the Sub-Adviser provides to the Fund, and will represent and warrant that,
with regard to those portions of the Disclosure Documents relating to the
Sub-Adviser's services to the Fund and provided to the Sub-Adviser for its
review, that to the best of its knowledge, such portions of the Disclosure
Documents contain or will contain no untrue statement of any material fact and
do not and will not omit any statement of material fact required to be stated
therein or necessary to make the statements therein not misleading. In the
event the Sub-Adviser becomes aware that portions of the Disclosure Documents
as presented contain, with regard to the services provided directly to the Fund
by the Sub-Adviser, any untrue statements of any material fact or omit any
statement of material fact required to be stated therein or necessary to make
the statements therein not misleading, the Sub-Adviser will promptly notify the
Adviser.
(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 written notice to
the Trust (i) of any material reductions in the amount of its insurance
policies or insurance coverage; or (ii) if any material claims are made on its
insurance policies relating to the investment management services that it
provides to clients. 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.
(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 it reasonably believes is in the best interest of the
Fund.
(g) CONFLICTS. The Sub-Adviser shall act honestly, in good faith and
in what it reasonably believes to be 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 and
at the time of delivery of the quarterly compliance report required by Section
3(a), whether or not specifically referenced in such report.
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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, as required to perform its duties
under this Agreement 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.
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.
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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, or express delivery, 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, or express delivery,
to the Adviser; or
(d) 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
(e) 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 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. Notwithstanding the foregoing, the
Sub-Adviser may keep copies of any Fund Books and Records for the Sub-Adviser's
records that are required to be maintained by law.
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
10
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, to the best of its
knowledge, for the accuracy and completeness (and liability for the lack
thereof) of statements in relevant portions of the Fund's Disclosure Documents
(as defined) relating to the services that Sub-Adviser provides directly to the
Fund and that have been provided to the Sub-Adviser for its review in advance,
as provided for in Section 7(c) above.
(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 by the Sub-Adviser in material contravention of: (i) any
Investment Guideline or any investment policy, guideline or restriction set
forth in the Registration Statement or as approved by the Board from time to
time and provided in advance 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").
(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 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: (i) a material
breach by the Sub-Adviser of this Agreement or of the representations and
warranties made by the Sub-Adviser herein; (ii) any Improper Investment, as set
forth in Section 14(b) above; (iii) any untrue statement of a material fact
contained in any portion of a Disclosure Document relating to the services that
Sub-Adviser provides directly to the Fund or the omission or alleged omission
from a portion of a Disclosure Document relating to the Sub-Adviser's services
to the Fund of a material fact required to be stated therein or necessary to
make the statements therein not misleading that was provided to the Sub-Adviser
in advance as per Section 7(c) and for which MCM was grossly negligent in not
correcting; or (iv) the Sub-Adviser's material non-performance of its duties
hereunder; provided, however, that nothing herein shall be deemed to protect the
Adviser, the Trust, or any Indemnified
11
Party who is a Trustee or officer of the Trust against any liability to the
Trust or to its shareholders to which such Indemnified 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 the Adviser, the
Trust, or such person's office with the Trust.
(d) Notwithstanding anything else in this Agreement, neither the
Sub-Adviser nor any of its officers, directors or employees make any
representations or warranties, express or implied, that any level of
performance or investment results will be achieved by the assets of the Fund
allocated to the Sub-Adviser or that the assets of the Fund allocated to the
Sub-Adviser will perform comparably with any standard or index, including other
clients of the Sub-Adviser, whether public or private.
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.
17. CHANGE IN THE ADVISER'S OWNERSHIP. The Sub-Adviser agrees that it
shall notify the Trust of any change in the ownership of the Sub-Adviser within
a reasonable time prior to such change being effected.
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 and
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 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.
12
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: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Secretary
XXXXXXX CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxxxxxxxx X. Xxxxxxx
Name: Xxxxxxxxxxx X. Xxxxxxx
Title: President
13
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED MAY 1, 2014 BETWEEN
CORNERSTONE ADVISORS INC.
AND
XXXXXXX CAPITAL MANAGEMENT, 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 Fund as may be allocated by the Adviser to
the Sub-Adviser from time to time under the following fee schedule:
FUND
Global Public Equity Fund
RATE
[REDACTED]
14
SCHEDULE B
TO THE
SUB-ADVISORY AGREEMENT
DATED ___________ ___, 20__ BETWEEN
CORNERSTONE ADVISORS INC.
AND
XXXXXXX CAPITAL MANAGEMENT, LLC
INVESTMENT GUIDELINES
The Fund is intended to invest primarily in equity securities of U.S. and
foreign companies that are selected for their long-term growth potential. The
Fund may invest in companies of any size that are economically tied to any
countries or markets throughout the world, including securities of companies
economically tied to emerging markets. The relevant benchmark for performance
comparison purposes for the Fund is the MSCI All Country World Index (ACWI).
o Equity securities will primarily consist of common stocks but may also
include warrants, rights, convertible securities, depositary receipts and
shares, preferred stocks, real estate investment trusts (REITs), limited
partnerships, exchange-traded funds and other U. S. or foreign equity
participations that behave similar to common stock securities.
o The Fund typically invests in between 30 -- 65 securities, although this
range may change over time.
o The Fund will invest in various regions and countries including the U. S.
and will own securities of entities based in at least three different
countries. Generally, the Fund will invest at least 40% of its total market
value in securities of foreign issuers. The Sub-Adviser generally
determines the domicile of a security based on a number of factors such as
the company's principal office or place of business and/or the primary
market in which the security is traded, among other considerations.
o The Fund may hold securities of companies based in emerging or frontier
markets. Emerging and frontier markets are typically considered to be those
countries included in the MSCI Emerging Markets Index and the MSCI Frontier
Markets Index.
o The Sub-Adviser will limit the Fund's investments in any one economic
industry to 25% of the total market value of the Fund. For purposes of this
limit, economic industries are those defined by Standard and Poor's Global
Industry Classification Standard (sub-industries) .
o In general, cash levels are expected to range from 0-10%, recognizing that
cash levels can be impacted by Fund transitioning, unusual market
conditions and/or cash contributions made to the Fund.
o The Fund may utilize derivative securities, such as forward currency
contracts, options and futures for hedging purposes. Derivatives are not
expected to be used on a regular basis.
15
o The Fund may invest in Initial Public Offerings ("IPOs") unless the
Adviser has informed the Sub-Adviser that the Fund is not eligible to
receive them. The Sub-Adviser may purchase for the Fund securities that
qualify for resale pursuant to Rule 144A under the Securities Act of 1933
unless the Adviser informs the Sub-Adviser that the Fund is not a Qualified
Institutional Buyer.
o The Fund will not invest in the following securities/strategies:
- Short sales;
- Fixed income securities;
- Physical commodities other than foreign currencies,
- Venture capital and all other private equity investments;
- Direct investments in oil, gas or other mineral development or
exploration programs or leases (this does not preclude purchases of
securities issued by companies engaged in those businesses); or
- Direct investments in real estate or interests in real estate (this
does not preclude purchases of securities issued by companies engaged
in those businesses, including real estate investment trusts and
similar investment vehicles).
o There are no social, sector, or industry restrictions on the Fund except
as noted above. The Fund may purchase any and all securities otherwise
permitted by these Investment Guidelines, except as the Adviser may
specifically indicate below or by advance written notice to the
Sub-Adviser. In the event of a conflict between the terms of these
Investment Guidelines and any Registration Statement covering Fund shares,
as filed with the Commission and provided to the Sub-Adviser, the terms of
such Registration Statement shall control. Any specific securities that the
Adviser wishes to restrict the Fund from purchasing will be fully
identified by correct name and ticker symbol. The Adviser should promptly
notify the Sub-Adviser of any additions or changes to the list of
restricted securities. The Sub-Adviser cannot be responsible for investing
in restricted securities that are not fully and correctly identified here
or by advance written notice to the Sub-Adviser.
Restricted securities: _________________________________________
o There are no restrictions on the brokers that may be used to execute
transactions for the Fund, except as the Adviser may specifically indicate
below or by written notice to the Sub- Adviser. The Adviser should promptly
notify the Sub-Adviser of any additions or changes to this list of broker
restrictions. The Sub-Adviser cannot be responsible for using restricted
brokers that are not fully and correctly identified here or by written
notice to the Sub- Adviser.
Restricted brokers: ___________________________________________
16
o There are no brokers or publicly traded issuers affiliated with the Trust,
Fund or Adviser, except as the Adviser may specifically indicate below or
by written notice to the Sub- Adviser. The Adviser should promptly notify
the Sub-Adviser of any additions or changes to this list of affiliated
brokers or publicly traded issuers.
Affiliated brokers/publicly traded issuers:
___________________________________________
17
