SUB-ADVISORY AGREEMENT
XXXXXXXXX XXXXXX ALTERNATIVE FUNDS
This Sub-Advisory Agreement (“Agreement”) is made as of May 1, 2013, by and among Xxxxxxxxx Xxxxxx Management LLC, a Delaware limited liability company (“Manager”), NB Alternative Investment Management LLC, a Delaware limited liability company (“Adviser” and together with the Manager, the “NB Parties”) and Good Hill Partners LP, a Delaware limited partnership (“Sub-Adviser”).
WITNESSETH:
WHEREAS, Xxxxxxxxx Xxxxxx Alternative Funds, a Delaware statutory trust (“Trust”) is registered under the Investment Company Act of 1940, as amended (“1940 Act”), as an open-end, diversified management investment company and has established one or more separate series of shares (“Series”) with each Series having its own assets and investment policies; and
WHEREAS, Trust has retained Manager to provide investment advisory and administrative services to certain of the Series of the Trust pursuant to a Management Agreement dated December 29, 2010, as amended (the “Management Agreement”), which agreement specifically provides for the retention of one or more sub-advisers to provide the investment advisory services described therein; and
WHEREAS, Manager has retained Adviser to provide certain investment advisory service to certain of the Series of the Trust pursuant to an Investment Advisory Agreement dated May 15, 2012 (the “Investment Advisory Agreement”), which agreement provides that Adviser is responsible for the selection and monitoring of sub-advisers for certain Series; and
WHEREAS, NB Parties desire to retain Sub-Adviser to furnish investment advisory and portfolio management services to the portion of each Series listed in Schedule A attached hereto that has been allocated to Sub-Adviser by the Adviser and to the portion of such other Series of Trust hereinafter established as agreed to from time to time by the parties (“Allocated Portion”), evidenced by an addendum to Schedule A (hereinafter “Series” shall refer to each Series which is subject to this Agreement), and the Sub-Adviser is willing to furnish such services;
NOW, THEREFORE, in consideration of the promises and mutual covenants herein contained, it is agreed between the parties hereto as follows:
1. SERVICES AND RESPONSIBILITIES OF THE SUB-ADVISER
1.1 INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser shall act as the investment sub-adviser to the Series and, as such, shall (i) obtain and evaluate such information relating to the economy, industries, businesses, securities markets and securities as it may deem necessary or useful in discharging its responsibilities hereunder,
(ii) formulate a continuing program for the investment of the assets of the Allocated Portion in a manner consistent with its investment objectives, policies and restrictions and the investment guidelines as provided in advance in writing to the Sub-Adviser, and (iii) determine from time to time on a discretionary basis and without prior consent of Manager or Adviser which securities or other assets/instruments are to be purchased, sold, exchanged, converted, retained, borrowed or lent by the Allocated Portion, and implement those decisions, including the selection of entities with or through which such purchases, sales, exchanges or loans are to be effected; provided, that the Sub-Adviser will place orders pursuant to its investment determinations either directly with the issuer or with a broker or dealer. The Sub-Adviser shall determine what portion of the Allocated Portion’s assets will be invested or held uninvested as cash consistent with the investment program formulated by the Sub-Adviser.
The NB Parties have the right to reallocate the portion of a Series’ assets allocated to the Allocated Portion pursuant to this Agreement.
The Sub-Adviser will select brokers and dealers to effect all portfolio transactions subject to the conditions set forth herein. The Sub-Adviser will place all necessary orders with brokers, dealers, or issuers, and will negotiate brokerage commissions, if applicable. The Sub-Adviser is directed at all times to seek to execute transactions for the Allocated Portion (i) in accordance with any written policies, practices or procedures that may be established by the Board of Trustees of the Trust (the “Board”) or the Manager from time to time and which have been provided to the Sub-Adviser in writing, or (ii) as described in the Series’ Prospectus and Statement of Additional Information (“SAI”), as each may be amended from time to time. In placing any orders for the purchase or sale of investments for the Series, in the name of the Allocated Portion or its nominees, the Sub-Adviser shall seek to obtain for the Allocated Portion “best execution”, considering all of the circumstances, and shall maintain records adequate to demonstrate compliance with this requirement. In no instance will portfolio securities be purchased from or sold to the Manager, Adviser or the Sub-Adviser, or any of their affiliated persons, except in accordance with the 1940 Act, the Investment Advisers Act of 1940, as amended (“Advisers Act”), and the rules under each, and all other federal and state laws or regulations applicable to the Trust and the Series.
The Sub-Adviser agrees that it will not execute any portfolio transactions for the Allocated Portion with a broker or dealer which is (i) an affiliated person of the Series, including the Manager, Adviser or any sub-adviser for the Series; (ii) a principal underwriter of the Series’ shares; or (iii) an affiliated person of such an affiliated person or principal underwriter, unless such transactions are (w) exempt under Rules 10f-3(b) or 17a-10, (x) executed in accordance with Rule 17e-1 of the 1940 Act and the Fund's Rule 17e-1 procedures, as adopted in accordance with Rule 17e-1, (y) executed in accordance with Rule 10f-3(c) of the 1940 and the Fund's Rule 10f-3(c) procedures, as adopted in accordance with Rule 10f-3, or (z) executed in accordance with Rule 17a-7 of the 1940 Act and the Fund’s Rule 17a-7, as adopted in accordance with Rule 17a-7. The Manager agrees that it will provide the Sub-Adviser with a written list of all affiliated persons of the Series, all principal underwriters of the Series’ shares and all affiliated persons of such affiliated persons or principal underwriters (other than affiliated persons of the Sub-
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Adviser) and will, from time to time, update such list as necessary. The Sub-Adviser agrees that it will provide the Manager with a written list of brokers and dealers that are affiliates of the Sub-Adviser, if any, and will, from time to time, update such list as necessary.
Subject to the appropriate policies and procedures approved by the Board, the Sub-Adviser may, to the extent authorized by Section 28(e) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) cause the Allocated Portion to pay a broker or dealer that provides brokerage or research services to the Manager, the Adviser, the Sub-Adviser and the Allocated Portion an amount of commission for effecting a Series transaction in excess of the amount of commission another broker or dealer would have charged for effecting that transaction if the Sub-Adviser determines, in good faith, that such amount of commission is reasonable in relationship to the value of such brokerage or research services provided viewed in terms of that particular transaction or the Sub-Adviser’s overall responsibilities to the Series or its other advisory clients. To the extent authorized by Section 28(e) and the Board, the Sub-Adviser shall not be deemed to have acted unlawfully or to have breached any duty created by this Agreement or otherwise solely by reason of such action. Subject to seeking best execution, the Board or the Manager may direct the Sub-Adviser to effect transactions in portfolio securities through broker-dealers in a manner that will help generate resources to pay the cost of certain expenses that the Trust is required to pay or for which the Trust is required to arrange payment.
On occasions when the Sub-Adviser deems the purchase or sale of a security to be in the best interest of the Allocated Portion as well as other clients of the Sub-Adviser, the Sub-Adviser to the extent permitted by applicable laws and regulations, may, but shall be under no obligation to, aggregate the securities to be purchased or sold to treat multiple clients equivalently, or to attempt to obtain a more favorable price or lower brokerage commissions and efficient execution. Allocation of the securities so purchased or sold, as well as the expenses incurred in the transaction, will be made by the Sub-Adviser in the manner which the Sub-Adviser considers to be the most equitable and consistent with its fiduciary obligations to the Allocated Portion and to its other clients over time.
The Sub-Adviser shall provide reasonable assistance to the Manager, the custodian or recordkeeping agent for the Trust in determining or confirming, consistent with the procedures and policies stated in the Trust’s registration statement on Form N-1A with respect to the Series (“Registration Statement”), the value of any portfolio securities or other assets of the Allocated Portion for which the Manager, custodian or recordkeeping agent seeks assistance from the Sub-Adviser or identifies for review by the Sub-Adviser. This assistance includes (but is not limited to): (i) designating and providing access to one or more employees of the Sub-Adviser who are knowledgeable about the security/issuer, its financial condition, trading and/or other relevant factors for valuation, which employees shall be available for consultation when the Manager’s Valuation Committee convenes; (ii) assisting the Manager or the custodian in obtaining bids and offers or quotes from broker/dealers or market-makers with respect to securities held by the Allocated Portion, upon the reasonable request of the Manager or custodian; (iii) upon the request of the Manager or the custodian, confirming pricing and providing
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recommendations for fair valuations; and (iv) maintaining adequate records and written backup information with respect to the securities valuation assistance provided hereunder, and providing such information to the Manager or the Trust upon request, with such records being deemed Trust records.
The Trust, on behalf of the Series, hereby authorizes any entity or person associated with the Sub-Adviser which is a member of a national securities exchange to effect or execute any transaction on the exchange for the account of the Series which is permitted by Section 11(a) of the Exchange Act and Rule 11a2-2(T) thereunder, and the Series hereby consents to the retention of compensation for such transactions in accordance with Rule 11a2-2(T)(a)(2)(iv).
The Sub-Adviser shall discharge the foregoing responsibilities in compliance with applicable laws and regulations and consistent with the investment objectives, policies and restrictions of the Series as adopted by the Trustees of the Trust and as set forth in the Series’ Prospectus and SAI, and subject to such further limitations as the Trust may from time to time impose on the Series by advance written notice to the Sub-Adviser.
The Sub-Adviser will be an independent contractor and will have no authority to act for or represent the Trust, Series or the NB Parties in any way or otherwise be deemed an agent of the Trust, Series or the NB Parties except as expressly authorized in this Agreement or another writing by the Trust, the NB Parties and the Sub-Adviser.
The NB Parties and the Trust recognize that the Sub-Adviser and its affiliates have investments of their own and are acting as investment managers for others. The NB Parties and the Trust also recognize that the Sub-Adviser may be or become associated with other investment entities and engage in investment management for others. Except to the extent necessary to perform its obligations hereunder, nothing herein shall be deemed to require the Sub-Adviser to devote any minimum amount of time or attention to the management of the Allocated Portion or to limit or restrict the right of the Sub-Adviser to engage in, or to devote time and attention to the management of any other business, whether of a similar or dissimilar nature, or to render services of any kind to any other corporation, firm, individual or association. The Sub-Adviser may on occasion give advice or take action with respect to other investment entities that it manages that differs from the advice given with respect to the Allocated Portion.
1.2 ADMINISTRATIVE SERVICES. The Sub-Adviser shall:
1.2.1 BOOKS AND RECORDS. Assure that all of its records required to be maintained and preserved by Trust and/or the Series with respect to securities transactions are maintained and preserved by it or on its behalf in accordance with applicable laws and regulations.
1.2.2 REPORTS AND FILINGS. Provide reasonable assistance as needed in the preparation of (but not pay for) all periodic reports by Trust or the Series to shareholders of the Series and all reports and filings required to maintain the registration and
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qualification of the Series, or to meet other regulatory or tax requirements applicable to the Series, under federal and state securities and tax laws. Sub-Adviser shall review draft reports to shareholders, Registration Statements or portions thereof that relate to the Series or the Sub-Adviser and other documents provided to the Sub-Adviser, provide comments on such drafts on a timely basis, and provide certifications or sub-certifications on a timely basis as to the accuracy of the information contained in such reports or other documents. Sub-Adviser will prepare and cause to be filed in a timely manner Form 13F and, if required, Schedule 13G with respect to securities held in the Allocated Portion. Sub-Adviser shall have no responsibility for Form 13F or Schedule 13G reports required to be filed by an NB Party.
1.2.3 REPORTS TO THE MANAGER, THE ADVISER AND THE BOARD OF TRUSTEES. Prepare and furnish to Manager, Adviser and/or the Board such reports, statistical data and other information in such form and at such intervals as Manager, Adviser and/or the Board may reasonably request. Sub-Adviser shall also make available to the Manager, Adviser and the Board at reasonable times and with reasonable advance notice its portfolio managers and other appropriate personnel as mutually agreed by the Manager, Adviser and Sub-Adviser, either in person or, at the mutual convenience of the Manager, Adviser the Board and the Sub-Adviser, by telephone or other electronic media, in order to review the investment policies, performance and other matters relating to the management of the Allocated Portion;
1.2.4 NOTIFICATIONS AND CERTIFICATIONS TO MANAGER. The Sub-Adviser shall:
(i) Promptly notify the NB Parties in the event that the Sub-Adviser or any of its affiliates becomes aware that the Sub-Adviser: (a) is subject to a statutory disqualification that prevents the Sub-Adviser from serving as investment adviser pursuant to this Agreement; (b) fails to be registered as an investment adviser under the Advisers Act or under the laws of any jurisdiction in which the Sub-Adviser is required to be registered as an investment adviser in order to perform its obligations under this Agreement; (c) is the subject of an administrative proceeding or enforcement action by the SEC or other regulatory authority; or (d) 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, or governmental authority of competent jurisdiction, involving the affairs of the Trust, the Sub-Adviser, or the NB Parties; The Sub-Adviser further agrees to notify the Trust and the NB Parties promptly of any material fact known to the Sub-Adviser respecting or relating to the Sub-Adviser or the Allocated Portion’s investment strategy or tactics that is not contained in the Trust’s Registration Statement, as amended and supplemented from time to time, regarding the Series, or any amendment or supplement thereto, but that is required to be disclosed therein, and of any statement contained therein respecting or relating to the Sub-Advisor or the Allocated Portion’s investment strategy or tactics that becomes untrue in any material respect. The Sub-Adviser will notify the Trust, the NB Parties and the Board if its chief executive officer or any member of the portfolio management team named in the Registration Statement for the Series changes,
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or if there is an actual change in control or management of the Sub-Adviser within the meaning of Rules 2a-6 and 202(a)(1)-1 under the 1940 Act and Advisers Act, respectively, in both cases either prior to or immediately after such event. The Sub-Adviser will promptly notify the Trust, the NB Parties and the Board of any change in the Sub-Adviser’s financial condition that would reasonably be expected to impact its abilities to perform its duties hereunder and of any reduction in the amount of coverage under the Sub-Adviser’s errors and omissions or professional liability insurance coverage.
(ii) Provide the NB Parties, the Trust or the Board with such information and assurances (including certifications and sub-certifications) as the Manager, the Trust or the Board may reasonably request from time to time in order to assist it in complying with applicable laws, rules and regulations, including requirements in connection with the NB Parties’ the Sub-Adviser’s or the Board’s fulfillment of its responsibilities under Section 15(c) of the 1940 Act and the preparation and/or filing of the Trust’s Registration Statement, Form N-CSRs and Form N-Qs;
(iii) As reasonably requested by the Trust on behalf of the Trust’s officers and in accordance with the scope of Sub-Adviser’s obligations and responsibilities contained in this Agreement (i.e., with respect to the Allocated Portion and the Sub-Adviser’s provision of portfolio management services hereunder), Sub-Adviser will provide reasonable assistance to the Trust in connection with the Trust’s compliance with the Xxxxxxxx-Xxxxx Act and the rules and regulations promulgated by the SEC thereunder, and Rule 38a-1 of the 1940 Act. Specifically, the Sub-Adviser agrees to (a) certify periodically, upon the reasonable request of the Trust, that with respect to the Allocated Portion and the Sub-Adviser’s provision of portfolio management services hereunder, it is in material compliance with all applicable “federal securities laws”, as required by Rule 38a-1 under the 1940 Act, and Rule 206(4)-7 under the Advisers Act; (b) upon request and reasonable prior notice, cooperate with third-party audits arranged by the Trust to evaluate the effectiveness of the Trust’s compliance controls; (c) upon request and reasonable prior notice, provide the Trust’s chief compliance officer with direct access to its chief compliance officer (or his/her designee); (d) upon request, provide the Trust’s chief compliance officer with periodic reports and (e) promptly provide notice of any material compliance matters; and
(iv) Within forty-five days of the end of the last calendar quarter of each year that this Agreement is in effect, and as otherwise requested, provide the NB Parties with a certification from the president, chief operating officer or a vice-president of the Sub-Adviser that the Sub-Adviser has complied with the requirements of Rule 17j-1 under the 1940 Act during the previous year and that there has been no material violation of the Sub-Adviser’s code of ethics or, if such a material violation has occurred, that appropriate action was taken in response to such violation. Upon the reasonable written request of the NB Parties, the Sub-Adviser shall permit the NB Parties, their employees or agents to examine the reports required to be made to the Sub-Adviser by Rule 17j-1(c)(1) and all other records relevant to the Sub-Adviser’s code of ethics.
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1.2.5 OTHER SERVICES. The Sub-Adviser shall perform such other functions of management and supervision as may be reasonably requested by the NB Parties and agreed to by the Sub-Adviser.
2. REPRESENTATIONS
2.1 REPRESENTATIONS OF THE SUB-ADVISER. The Sub-Adviser represents, warrants and agrees that:
(i) It has all requisite power and authority to enter into and perform its obligations under this Agreement, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Agreement, and this Agreement has been duly executed and delivered by the Sub-Adviser;
(ii) It is registered as an investment adviser under the Advisers Act and will continue to be so registered during the term of this Agreement;
(iii) It has adopted and implemented a written code of ethics complying with the requirements of Rule 17j-1 under the 1940 Act (the “Code of Ethics”) and, if it has not already done so, will provide the Adviser and the Trust with a copy of such Code of Ethics and any amendments thereto;
(iv) It has adopted and implemented written policies and procedures, as required by Rule 206(4)-7 under the Advisers Act, which are reasonably designed to prevent violations of federal securities laws by the Sub-Adviser, its employees, officers, and agents (“Compliance Procedures”) and, the Adviser and the Trust have been provided a copy of a summary of the Compliance Procedures and any amendments thereto;
(v) It has delivered to the NB Parties copies of its Form ADV as most recently filed with the SEC and will provide the Adviser and the Trust with a copy of any future filings of Form ADV or any amendments thereto;
(vi) It is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by this Agreement and will promptly notify the Adviser and the Trust of the occurrence of any event that would disqualify the Sub-Adviser from serving as an investment adviser to a Series pursuant to Section 9(a) of the 1940 Act or other applicable law, rule or regulation;
(vii) It shall use no material, non-public information concerning portfolio companies that may be in, or come into, its possession or the possession of any of its affiliates or employees in violation of applicable law or regulation, nor will the Sub-Adviser seek to obtain any such information, in providing investment advice or investment management services to the Series; and
(viii) It maintains an appropriate level of errors and omissions or professional liability insurance coverage from an insurance company that has a minimum credit rating of A- from at least one national recognized credit rating agency.
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2.2 REPRESENTATIONS OF THE NB PARTIES: The NB Parties each represent, warrant and agree that:
(i) It has all requisite power and authority to enter into and perform its obligations under this Agreement, and has taken all necessary corporate action to authorize its execution, delivery and performance of this Agreement and this Agreement has been duly executed and delivered by each of the NB Parties;
(ii) It is registered as an investment adviser under the Advisers Act and will continue to be so registered during the term of this Agreement;
(iv) It has adopted and implemented written policies and procedures, as required by Rule 206(4)-7 under the Advisers Act, which are reasonably designed to prevent violations of federal securities laws by such NB Party, its employees, officers, and agents (“Compliance Procedures”) and, the Trust has been provided a copy of a summary of the Compliance Procedures and any amendments thereto;
(vi) This Agreement has been properly approved according to applicable laws, rules and regulations; and
(vii) It is not prohibited by the 1940 Act or the Advisers Act from performing the services contemplated by the Management Agreement and the Investment Advisory Agreement, as applicable, and will promptly notify the Sub-Adviser of the occurrence of any event that would disqualify such NB Party from serving as an investment adviser to a Series pursuant to Section 9(a) of the 1940 Act or other applicable law, rule or regulation.
3. SUB-ADVISORY FEE
3.1 FEE. As compensation for all services rendered, facilities provided and expenses paid or assumed by the Sub-Adviser under this Agreement, Manager shall pay the Sub-Adviser a fee with respect to each Series’ Allocated Portion computed at the applicable annual percentage rate set forth in Schedule B to this Agreement.
3.2 COMPUTATION AND PAYMENT OF FEE. The sub-advisory fee with respect to each Series shall be accrued daily and payable quarterly in arrears within 30 days following the last day of each calendar quarter (i.e., March 31, June 30, September 30 and December 31). The daily fee accruals shall be computed by multiplying the fraction of one divided by the number of days in the calendar year by the applicable annual percentage rate (as set forth in Schedule B hereto), and multiplying this product by the net assets of the Allocated Portion, determined in the manner established by the Trustees, as of the close of business on the last preceding business day on which the Series' net asset value was determined. In the event that with respect to a Series this Agreement becomes effective after the beginning of a calendar quarter or terminates prior to the end of a calendar quarter, the sub-advisory fee payable with respect to such Series for such quarter will be pro-rated based upon the number of days in such quarter for which this Agreement was effective bears to the total number of days in such quarter.
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3.3 EXPENSES
During the term of this Agreement, Sub-Adviser will pay all expenses incurred by it in connection with its activities under this Agreement other than the cost of securities (including brokerage commissions, if any) purchased for any Series. The Sub-Adviser shall be responsible for all the costs associated with any special meetings of the Trustees or shareholders convened for the primary benefit of the Sub-Adviser (including, but not limited to, the legal fees associated with preparing a proxy statement and associated mailing and solicitation costs).
4. OWNERSHIP AND HOLDING PERIOD OF RECORDS
All records required to be maintained and preserved by the Series pursuant to the rules or regulations under Section 31(a) of the 1940 Act and maintained and preserved by the Sub-Adviser on behalf of the Series are the property of the Series and shall be surrendered by the Sub-Adviser promptly on request by the Series or the NB Parties; provided, that the Sub-Adviser may at its own expense make and retain copies of any such records. The Sub-Adviser agrees to preserve for the periods prescribed by Rule 31a-2 under the 1940 Act any such records required to be maintained by Rule 31a-1 under the 1940 Act.
5. TRANSACTIONS AND CUSTODY
The Sub-Adviser shall have the authority to instruct the custodian designated by the Trust (the "Custodian"): (i) to pay cash for securities and other property delivered to the Custodian, (ii) to deliver securities and other property against payment for the Allocated Portion, and (iii) to transfer assets and funds to such brokerage accounts as the Sub-Adviser may designate, all consistent with the powers, authorities and limitations set forth herein. For avoidance of doubt, the Sub-Adviser shall have no responsibility or obligation to segregate, or to instruct the Custodian to segregate, liquid assets of the Series to the extent required to prevent any instrument or position taken by the Sub-Adviser in respect of the Allocated Portion from being deemed a “senior security” within the meaning of Section 18 of the 0000 Xxx. The Sub-Adviser shall not have authority to cause the Custodian to deliver securities and other property, or pay cash to the Sub-Adviser except as expressly provided herein. All transactions will be consummated by payment to or delivery by the Custodian, or such depositories or agents as may be designated by the Custodian in writing, of all cash and/or securities due to or from the Allocated Portion, and the Sub-Adviser shall not have possession or custody thereof. The Sub-Adviser shall advise the Custodian and confirm in writing to the Trust, to the NB Parties and any other designated agent of the Trust, including the Trust’s Administrator, all investment orders for the Allocated Portion placed by it with brokers and dealers at the time and in the manner set forth in Rule 31a-1 under the 1940 Act. For purposes of the foregoing sentence, communication via electronic means will be acceptable as agreed to in writing from time to time by the NB Parties. The Trust shall issue to the Custodian
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such instructions as may be appropriate in connection with the settlement of any transaction initiated by the Sub-Adviser.
Sub-Adviser shall provide an NB Party with any and all documentation or information that it receives relating to any claim or potential claim in any bankruptcy proceedings, class action securities litigation, or other litigation or proceeding affecting securities held at any time in the Allocated Portion, including, without limitation, proofs of claim or other documents related to such proceedings. Sub-Advisor shall have no responsibility or obligation to take any further action with respect to such claims or litigation.
6. REPORTS TO SUB-ADVISER
NB Parties shall furnish or otherwise make available to the Sub-Adviser such copies of the Registration Statement, Trust organizational documents, investment guidelines, financial statements, proxy statements, reports, and other information relating to the Series' business and affairs as the Sub-Adviser may, at any time or from time to time, reasonably require in order to discharge its obligations under this Agreement.
Until the NB Parties deliver or otherwise notify and make available to the Sub-Advisor the documents described in this Section 6 and any applicable supplements or amendments to such documents or otherwise inform the Sub-Advisor of the content of such applicable supplements or amendments to such, the Sub-Advisor shall be fully protected in relying on the most recent versions of such documents previously furnished to the Sub-Advisor , unless Sub-Adviser has been made aware that such documents are no longer effective or have been amended.
7. CONFIDENTIALITY
Sub-Adviser will not disclose or use any records or information obtained pursuant to this Agreement in any manner whatsoever except as expressly authorized in this Agreement or as reasonably required to execute transactions on behalf of the Series, and will keep confidential any non-public information obtained directly as a result of this service relationship, and the Sub-Adviser shall disclose such non-public information only if the NB Parties or the Trustees have authorized such disclosure by prior written consent, or if such information is or hereafter otherwise is known by the Sub-Adviser or has been disclosed, directly or indirectly, by the Manager, Adviser or the Trust to others or if such information becomes ascertainable from public or published information or trade sources, or if such disclosure is expressly required or requested by applicable federal or state regulatory authorities, self-regulatory authorities or other judicial process or to the extent such disclosure is reasonably required by auditors or attorneys of the Sub-Adviser in connection with the performance of their professional services or as may otherwise be contemplated by this Agreement. Sub-Adviser shall not disclose information regarding characteristics of the Series or Allocated Portion, trading history, portfolio holdings, performance information or any other related information to any third-party, except in compliance with the Trust’s policies on disclosure of portfolio holdings and/or as required by applicable law or regulation. Notwithstanding the foregoing, the Sub-Adviser may disclose the existence of the relationship with the Manager, the total return earned
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by the Allocated Portion and may include such total return in the calculation of composite performance information.
Sub-Adviser may not consult with any other sub-adviser of the Series concerning transactions in securities or other assets for any investment portfolio of the Trust, including the Series, except that such consultations are permitted between the current and successor sub-advisers of a Series in order to effect an orderly transition of sub-advisory duties so long as such consultations are not concerning transactions prohibited by Section 17(a) of the 1940 Act.
No NB Party may use, nor may it allow any investor in the Series to use, the information provided by the Sub-Adviser to trade for their own account or for the account of any other person or try to “reverse engineer” the investment and trading methodologies and strategies of the Sub-Adviser. Except as is otherwise publicly known or ascertainable from public sources, the NB Parties will keep confidential and will not disclose to any person the amount and rate of the sub-advisory fee payable with respect to each Series’ Allocated Portion and any other non-public information regarding the Sub-Adviser and its affiliated persons, except to the extent that such disclosure is expressly required or legally necessary for the operation of the Fund or requested by applicable federal, state or other governmental regulatory authorities or any self-regulatory organizations or judicial authority.
8. SERVICES TO OTHER CLIENTS
The Sub-Advisor shall not enter into an agreement after the execution of this Agreement to manage assets of any other multi-manager open-ended mutual fund registered under the 1940 Act in substantially the same investment strategy used in managing the Allocated Portion; provided, however, such limitation shall only apply to the extent that Sub-Advisor is managing at least $100 million in the Allocated Portion under this Agreement and not limitation shall apply after December 31, 2013.
9. PROXY VOTING
The NB Parties grant discretionary authority to the Sub-Adviser to vote or abstain from voting, and the Sub-Adviser is hereby directed to vote or abstain from voting until an NB Party gives the Sub-Adviser written instructions to the contrary all proxies solicited by or with respect to the issuers of securities in which the assets of the Allocated Portion may be invested in accordance with the Sub-Adviser’s proxy voting policies and procedures and in a manner that complies with applicable law; maintain records of all proxies voted on behalf of the Series in respect of the Allocated Portion; and provide information to the Trust, Manager or their designated agent in a manner that is sufficiently complete and timely to ensure the Trust’s compliance with its filing obligations under Rule 30b1-4 of the 1940 Act. Each NB Party shall instruct the Custodian, the Series’ Administrator, and other parties providing services to a Series to promptly forward misdirected proxy statements relating to the Allocated Portion to the Sub-Adviser.
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10. USE OF NAMES AND LOGOS
The Sub-Adviser hereby consents to the use of its name and the names of its affiliates in the Trust’s disclosure documents, shareholder communications, advertising, sales literature and similar communications so long as such disclosure is in compliance with all applicable SEC regulations. The Sub-Adviser shall not use the name or any tradename, trademark, trade device, service xxxx, symbol or any abbreviation, contraction or simulation thereof of the Manager, the Trust, the Series or any of their affiliates in its marketing materials unless it first receives prior written approval of the Manager. It is understood that the name of each party to this Agreement, and any derivatives thereof or logos associated with that name, is the valuable property of the party in question and its affiliates, and that each other party has the right to use such names pursuant to the relationship created by, and in accordance with the terms of, this Agreement only so long as this Agreement shall continue in effect. Upon termination of this Agreement, the parties shall forthwith cease to use the names of the other parties (or any derivative or logo) as appropriate and to the extent that continued use is not required by applicable laws, rules and regulations.
11. LIMITATION OF LIABILITY; INDEMNIFICATION
The Sub-Adviser is not, and shall not be, responsible for any operations of the Series or any direct or indirect subsidiary of the Series, (including, without limitation, any actions or omissions of the Board or of an NB Party or any broker, dealer, underwriter, administrator or other service provider to the Series or any direct or indirect subsidiary of the Series, except those actions or omissions that result from the Sub-Adviser's instructions or actions or omissions) except as expressly set forth in this Agreement. Neither the Sub-Adviser nor any partner (whether limited or general), director, officer controlling person, affiliated person, agent or employee of the Sub-Adviser performing services for the Series in connection with the Sub-Adviser's discharge of its obligations hereunder shall be liable for any error of judgment or mistake of law or for any loss suffered by the NB Parties, the Trust or a Series in connection with any matter to which this Agreement relates; provided, that nothing herein contained shall be construed to protect the Sub-Adviser or any partner (whether limited or general) director, officer, controlling person, affiliated person, agent or employee of the Sub-Adviser against any liability to the Trust or a Series or its shareholders to which the Sub-Adviser would otherwise be subject by reason of (i) the Sub-Adviser's willful misfeasance, bad faith, or gross negligence in the performance of the Sub-Adviser's duties, or by reason of the Sub-Adviser's reckless disregard of its obligations and duties under this Agreement, or (ii) any untrue statement of a material fact contained in the Prospectus and SAI, Registration Statement, proxy materials, reports, advertisements, sales literature, or other materials pertaining to the Allocated Portion or the Sub-Adviser or the omission to state therein a material fact known to the Sub-Adviser which was required to be stated therein or necessary to make the statements therein not misleading, if such statement or omission was made in reliance upon information furnished to the Manager or the Trust by the Sub-Adviser or any partner (whether limited or general), director, officer, controlling person, affiliated person, agent or employee of the Sub-Adviser for use therein Each NB Party acknowledges and agrees that the Sub-Adviser makes no representation or warranty,
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express or implied, that any level of performance or investment results will be achieved by the Allocated Portion or that the Allocated Portion or a Series will perform comparably with any standard or index or on an absolute basis, including other clients of Sub-Adviser, whether public or private.
The Sub-Adviser agrees to indemnify and hold harmless the Trust and the NB Parties and its affiliates and each of their directors, officers, agents and employees against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the NB Parties or its affiliates or such directors, officers, agents or employees are subject, which are caused by Sub-Adviser’s disabling conduct as provided in (i) and (ii) of the above paragraph; provided, however, that in no case is the Sub-Adviser’s indemnity in favor of any person deemed to protect such person against any liability to which such person would otherwise be subject by reasons of willful misfeasance, bad faith, or gross negligence in the performance of his, her or its duties or by reason of his, her or its reckless disregard of obligations and duties under to the Trust or its Series.
The Sub-Adviser shall not be liable to the NB Parties, their members, managers, officers, directors, agents, employees, controlling persons or shareholders or to the Trust or its shareholders for (i) any acts of the NB Parties or any other sub-adviser to the Series with respect to the portion of the assets of the Series not managed by the Sub-Adviser and (ii) acts of the Sub-Adviser which result from or are based upon acts of the NB Parties, including, but not limited to, a failure of the NB Parties to provide accurate and current information with respect to any records maintained by NB Parties or any other sub-adviser to the Series, which records are not also required to be independently generated, prepared or maintained by the Sub-Adviser or, to the extent such records relate to the portion of the assets managed by the Sub-Adviser, otherwise available to the Sub-Adviser upon reasonable request. The NB Parties and Sub-Adviser each agree that the Sub-Adviser shall manage the Allocated Portion as if it was a separate operating portfolio and shall comply with Section 1 of this Sub-Advisory Agreement (including, but not limited to, the investment objectives, policies and restrictions applicable to the Series and qualifications of the Series as a regulated investment company under the Code) only with respect to the Allocated Portion.
The NB Parties shall indemnify and hold harmless the Sub-Adviser and its affiliated persons and controlling persons and each of their respective members, partners (whether limited or general), shareholders, managers, directors, officers, agents and employees (collectively, the “Sub-Adviser Indemnified Parties”) against any and all losses, claims, damages, liabilities or litigation (including reasonable legal and other expenses), to which the Sub-Adviser or a Sub-Adviser Indemnified Party is subject, arising from or allegations involving the conduct or alleged conduct of the NB Parties
12. ANTI-MONEY LAUNDERING
Each NB Party has procedures in place which are reasonably designed to comply with all relevant anti-money laundering and privacy principles applicable to it, and any
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solicitations and other activities by an NB Party in connection with the Trust have been and will be conducted in accordance with applicable laws, rules and regulations.
13. TERM OF AGREEMENT
The term of this Agreement shall begin on the date first above written with respect to each Series listed in Schedule A on that date and, unless sooner terminated as hereinafter provided, this Agreement shall remain in effect through October 31, 2015. With respect to each Series added by execution of an Addendum to Schedule A, the term of this Agreement shall begin on the date of such execution and, unless sooner terminated as hereinafter provided, this Agreement shall remain in effect through the second October 31, following the date of execution. Thereafter, in each case, this Agreement shall continue in effect with respect to each Series from year to year, subject to the termination provisions and all other terms and conditions hereof, provided, such continuance with respect to a Series is approved at least annually by vote of the holders of a majority of the outstanding voting securities of the Series or by the Trustees, provided, that in either event such continuance is also approved annually by the vote, cast in person at a meeting called for the purpose of voting on such approval, of a majority of the Trustees who are not parties to this Agreement or interested persons of either party hereto; and provided further that neither party hereto shall have notified the other party in writing at least sixty (60) days prior to the first expiration date hereof or at least sixty (60) days prior to any subsequent expiration date hereof of any year thereafter that it does not desire such continuation. The Sub-Adviser shall furnish to the NB Parties, promptly upon its request, such information as the Trustees of the Trust deem reasonably necessary to evaluate the terms of this Agreement or any extension, renewal or amendment thereof.
14. AMENDMENT OR ASSIGNMENT OF AGREEMENT
Any amendment to this Agreement shall be in writing signed by the parties hereto; provided, that no such amendment shall be effective unless authorized on behalf of any Series (i) by resolution of the Trustees, including the vote or written consent of a majority of the Trustees who are not parties to this Agreement or interested persons of either party hereto, and (ii), as and to the extent required under the 1940 Act, by vote of a majority of the outstanding voting securities of the applicable Series. This Agreement shall terminate automatically and immediately in the event of its assignment.
15. TERMINATION OF AGREEMENT
This Agreement may be terminated at any time with respect to any Series by a vote of a majority of the Trustees, or by vote of a majority of the outstanding voting securities (as defined in the 0000 Xxx) of the Series, voting separately from any other series of the Trust, or by the NB Parties, without the payment of any penalty, on not less than 30 nor more than sixty (60) days' prior written notice to the Sub-Adviser. This Agreement shall terminate automatically and immediately with respect to a Series if the Management Agreement between the Trust and Manager terminates with respect to that Series. This Agreement may be terminated by the Sub-Adviser at any time, without the payment of any penalty, on 60 days’ prior written notice to the NB Parties and the Trust. The
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termination of this Agreement with respect to any Series or the addition of any Series to Schedule A hereto (in the manner required by the Act) shall not affect the continued effectiveness of this Agreement with respect to each other Series subject hereto.
16. INTERPRETATION AND DEFINITION OF TERMS
Any question of interpretation of any term or provision of this Agreement having a counterpart in or otherwise derived from a term or provision of the 1940 Act shall be resolved by reference to such term or provision of the 1940 Act and to interpretation thereof, if any, by the United States courts or, in the absence of any controlling decision of any such court, by rules, regulations or orders of the Securities and Exchange Commission validly issued pursuant to the 1940 Act. Specifically, the terms “vote of a majority of the outstanding voting securities,” “interested person,” “assignment” and “affiliated person,” as used in this Agreement shall have the meanings assigned to them by Section 2(a) of the 1940 Act. In addition, when the effect of a requirement of the 1940 Act reflected in any provision of this Agreement is modified, interpreted or relaxed by a rule, regulation or order of the Securities and Exchange Commission, whether of special or of general application, such provision shall be deemed to incorporate the effect of such rule, regulation or order.
17. CHOICE OF LAW
This Agreement is made and to be principally performed in the State of New York and except insofar as the 1940 Act or other federal laws and regulations may be controlling, this Agreement shall be governed by, and construed and enforced in accordance with, the internal laws of the State of New York.
18. CAPTIONS
The captions in this Agreement are included for convenience of reference only and in no way define or delineate any of the provisions hereof or otherwise affect their construction or effect.
19. EXECUTION IN COUNTERPARTS
This Agreement may be executed simultaneously in counterparts, each of which shall be deemed an original, but all of which together shall constitute one and the same instrument.
20. NOTICES
All notices required to be given pursuant to this Agreement shall be (i) delivered or mailed to the business address of the applicable party set forth below in person or by
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registered mail or a private mail or delivery service providing the sender with notice of receipt or (ii) sent by facsimile transmission to the other party at the following facsimile numbers and followed by written confirmation of such notice delivered in accordance with clause (i) of this Section 20. Notice shall be deemed given on the date delivered, received by mail or sent by facsimile transmission in accordance with this paragraph.
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Xxxxxxxxx Xxxxxx Management LLC
000 Xxxxx Xxxxxx
Xxx Xxxx, XX 00000
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Attn: President – Xxxxxxxxx Xxxxxx Absolute Return Multi-Manager Fund
Copy to: General Counsel – mutual funds
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21. SEVERABILITY
If any term or provision of this Agreement or the application thereof to any person or circumstances is held to be invalid or unenforceable to any extent, the remainder of this Agreement or the application of such provision to other persons or circumstances shall not be affected thereby and shall be enforced to the fullest extent permitted by law.
[Signature page follows]
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be signed by their respective officers thereunto duly authorized as of the day and year first above written.
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XXXXXXXXX XXXXXX MANAGEMENT LLC
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Name:
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Title:
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NB ALTERNATIVE INVESTMENT MANAGEMENT LLC
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Name:
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Title:
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GOOD HILL PARTNERS LP
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Name:
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Title:
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XXXXXXXXX XXXXXX ALTERNATIVE FUNDS
SCHEDULE A
SERIES OF XXXXXXXXX XXXXXX ALTERNATIVE FUNDS
Xxxxxxxxx Xxxxxx Absolute Return Multi-Manager Fund
Date: May 1, 2013
XXXXXXXXX XXXXXX ALTERNATIVE FUNDS
SCHEDULE B
RATE OF COMPENSATION
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SERIES
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ANNUAL PERCENTAGE RATE OF
COMPENSATION BASED ON EACH SERIES’
AVERAGE DAILY NET ASSETS OF THE
ALLOCATED PORTION
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Xxxxxxxxx Xxxxxx Absolute Return Multi-Manager Fund
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Date: May 1, 2013
