SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement (this "AGREEMENT") is made as of
July 17, 2014, between Rothschild Larch Lane Management Company, a Delaware
limited liability company located at 000 Xxxxxxxxxxx Xxx., X-000, Xxx Xxxxx, XX
00000 (the "MANAGER"), and Karya Capital Management LP, a Delaware, limited
partnership located at 0000 Xxxxxx xx xxx Xxxxxxxx, Xxxxx 000, Xxx Xxxx, XX
00000 (the "SUB-ADVISER").
WITNESSETH:
WHEREAS, The Advisors' Inner Circle Fund III, a Delaware statutory
trust (the "TRUST") is registered under the Investment Company Act of 1940, as
amended ("1940 ACT"), as an open-end management investment company and has
established one or more separate series of shares (the "SERIES") with each
Series having its own assets and investment policies; and
WHEREAS, Trust has retained the Manager to provide investment
advisory and administrative services to certain of the Series of the Trust
pursuant to an Investment Advisory Agreement dated July 17, 2014, which
agreement specifically provides for the retention of one or more sub-advisers
to provide the investment advisory services described therein; and
WHEREAS, the Manager desires, and the Board of Trustees of the Trust
(the "BOARD") has granted the Manager the authority, to retain the Sub-Adviser
to furnish investment advisory and portfolio management services to the portion
of each Series listed on Schedule A hereto that has been allocated to the
Sub-Adviser by the Manager 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 premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows:
1. SERVICES AND RESPONSIBILITIES OF THE SUB-ADVISER
INVESTMENT MANAGEMENT SERVICES. Subject to the general oversight of
the Manager, and in accordance with the Series' investment objectives, policies
and restrictions as provided herein on Schedule B, as may be amended by the
Manager from time to time, the Sub-Adviser shall act as the investment
subadviser 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
the Series' investment objectives, policies and restrictions and the investment
guidelines, and (iii) determine from time to time securities or other
assets/instruments to be purchased, sold, retained, borrowed or lent by the
Allocated Portion, and implement those decisions, including the selection of
entities with or through which such purchases, sales or loans are to be
effected; provided, that the Sub-Adviser will place orders pursuant to its
investment determinations either directly with the issuer, a broker or dealer,
or with a futures commission merchant ("FCM"). The Sub-Adviser shall determine
what portion
of the Allocated Portion's assets will be invested or held uninvested as cash.
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 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.
The Manager has the right at any time to reallocate the portion of a
Series' assets allocated to the Allocated Portion pursuant to this Agreement if
the Manager deems such reallocation appropriate.
The Sub-Adviser will select brokers, dealers and FCMs to effect all
portfolio transactions subject to the conditions set forth herein. The
Sub-Adviser will place all necessary orders with brokers, dealers, FCMs or
issuers, and will negotiate commissions, if applicable. The Sub-Adviser is
directed at all times to seek to execute transactions for the Allocated Portion
in accordance with any written policies, practice or procedures that may be
established by the Board or the Manager from time to time and which have been
provided to the Sub-Adviser, consistent with those 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 use commercially reasonable efforts 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 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.
Unless specifically permitted by the 1940 Act (and the rules
thereunder) and procedures adopted by the Board, on behalf of the Series, the
Sub-Adviser agrees that it will not execute any portfolio transactions for the
Allocated Portion with a broker, dealer or FCM that is (i) an affiliated person
of the Series, including the Manager 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. The Sub-Adviser agrees that
it will provide the Manager with a written list of brokers, dealers and FCMs
that are affiliates of the Sub-Adviser and will, from time to time, update such
list as necessary.
- 2 -
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 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. 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.
To the extent applicable, 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 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 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, as amended and supplemented
from time to time ("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), to the extent applicable: (i) designating and providing reasonable
access to one or more employees of the Sub-Adviser who are knowledgeable about
the security, issuer or asset, its financial condition, trading and/or other
relevant factors for valuation, which employees shall be reasonably available
for consultation when the Trust'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 or other assets 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 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 parties acknowledge that the Sub-Adviser and the custodian or
recordkeeping agent of the Series may use different pricing vendors, which may
result in valuation discrepancies.
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
- 3 -
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 Board, the investment guidelines set forth in Schedule B hereto and subject
to such further limitations as the Trust may from time to time impose on the
Series by 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 Manager in any way
or otherwise be deemed an agent of the Trust, Series or the Manager except as
expressly authorized in this Agreement or another writing by the Trust, the
Manager and the Sub-Adviser. The services of the Sub-Adviser to the Manager and
the Trust are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory or other services to others and to engage in
other activities. It is understood and agreed that, except as otherwise
prohibited by this Agreement, the directors, officers, and employees of the
Sub-Adviser are not prohibited from engaging in any other business activity or
from rendering services to any other person, or from serving as partners,
officers, directors, trustees, or employees of any other firm or corporation.
1.1 ADMINISTRATIVE SERVICES. The Sub-Adviser shall:
1.1.1 BOOKS AND RECORDS. Assure that all records required to
be maintained and preserved by Trust and/or the Series with respect to
transactions in respect of the Allocated Portion are maintained and preserved by
it or on its behalf in accordance with applicable laws and regulations.
1.1.2 REPORTS AND FILINGS. As they relate to the
Allocated Portion, 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
qualification of the Series, or to meet other regulatory or tax requirements
applicable to the Series, under federal and state securities and tax laws. The
Sub-Adviser shall review draft reports to shareholders, Registration Statements
or portions thereof that relate to the Allocated Portion 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. To the extent applicable, with respect to the Allocated Portion, the
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.
1.1.3 REPORTS TO THE MANAGER AND THE BOARD OF TRUSTEES.
Prepare and furnish to Manager and/or the Board such reports, statistical data
and other information in such form and at such intervals as Manager and/or the
Board may reasonably request. The Sub-Adviser shall also make available to the
Manager and the Board at reasonable times its portfolio managers and other
appropriate personnel as mutually agreed by the Manager
- 4 -
and the Sub-Adviser, either in person or, at the mutual convenience of the
Manager, 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 Series.
1.1.4 NOTIFICATIONS AND CERTIFICATIONS TO MANAGER. The Sub-
Adviser shall:
(i) Promptly notify the Manager in the event that
the Sub-Adviser or any of its affiliates becomes aware that the Sub-Adviser: (a)
is, or will likely be, 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 U.S. Securities and Exchange Commission (the "SEC") or
other regulatory authority; (d) is, or to the Sub-Adviser's actual knowledge
will likely be, 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, involving the affairs of
the Trust, the Sub-Adviser, the Manager or any of their affiliates; or (e) is
involved in any pending litigation or administrative proceeding brought against
the Sub-Adviser or any of its management persons (as defined in Form ADV). The
Sub-Adviser further agrees to notify the Series and the Manager promptly of any
material fact known to the Sub-Adviser respecting or relating to the Sub-Adviser
or the Series' investment strategy or tactics that is not contained in the
Registration Statement regarding the Series, or any amendment or supplement
thereto, but that is required to be disclosed therein, and of any statement
contained therein that becomes untrue in any material respect. The Sub-Adviser
will notify the Trust, the Manager 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, or if there is, or there is expected to be, 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.
The Sub-Adviser will promptly notify the Trust, the Manager and the Board of any
change in the Sub-Adviser's financial condition which could 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 Manager, 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
Manager's, the Sub-Adviser's or the Board's fulfillment of its responsibilities
under Section 15(c) of the 1940 Act and the Manager's or the Board's
preparation and/or filing of the 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 the
Sub-Adviser's obligations and responsibilities contained in this Agreement, the
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,
- 5 -
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 compliance with
all applicable "federal securities laws", as required by Rule 38a-l 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 and internal
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; (e) promptly provide notice of any material
compliance matters; and (f) upon reasonable notice to and reasonable request,
provide the Manager with access to the records relating to such compliance
policies and procedures of the Sub-Adviser as they relate to the Series; andThe
Sub-Adviser has adopted a written code of ethics that it reasonably believes
complies with the requirements of Rule 17j-1 under the 1940 Act, which it has
provided to the Adviser and the Trust. The Sub-Adviser shall ensure that its
Access Persons (as defined in the Sub-Adviser's Code of Ethics) comply in all
material respects with the Sub-Adviser's Code of Ethics, as in effect from time
to time. Upon request, the Sub-Adviser shall provide the Trust with (i) a copy
of the Sub-Adviser's current Code of Ethics, as in effect from time to time,
and (ii) a certification that it has adopted procedures reasonably necessary to
prevent Access Persons from engaging in any conduct prohibited by the
Sub-Adviser's Code of Ethics. Annually, the Sub-Adviser shall furnish a written
report, which complies with the requirements of Rule 17j-1, concerning the
Sub-Adviser's Code of Ethics to the Adviser and the Trust's Board. The
Sub-Adviser shall respond to requests for information from the Adviser and the
Trust as to violations of the Code by Access Persons and the sanctions imposed
by the Sub-Adviser. The Sub-Adviser shall immediately notify the Adviser and
the Trust of any material violation of the Code, whether or not such violation
relates to a security held by any Fund.
1.1.5 OTHER SERVICES. The Sub-Adviser shall perform such
other functions of management and supervision as may be reasonably requested by
the Manager or the Trust, 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;
(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
(a "CODE OF ETHICS") and has provided the Manager and the Trust with a copy of
such Code of Ethics and will provide copies of any future amendments thereto;
- 6 -
(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 Manager and the Trust have been provided a copy or a
summary of the Compliance Procedures and will be provided with any future
amendments thereto;
(v) It has delivered to the Manager copies of its
Form ADV as most recently filed with the SEC and will provide the Manager 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 Manager and the Trust of the occurrence of any event
that could 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 not violate any applicable laws or
regulations regarding xxxxxxx xxxxxxx;
(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; and
(ix) It (a) is a member of the National Futures
Association ("NFA") and is registered with the U.S. Commodity Futures Trading
Commission ("CFTC") as a commodity trading advisor, (b) will comply in all
material respects with applicable NFA and CFTC rules and regulations with
respect to its obligations under this Agreement, and (c) will notify the
Adviser of any change in its status with respect to the foregoing sub-section
(a) or failure to comply with respect to the foregoing sub-section (b).
2.2 The Sub-Adviser has reviewed, and will in the future review, the
Registration Statement, summary prospectus, prospectus, statement of additional
information, periodic reports to shareholders, reports and schedules filed with
the Commission (including any amendment, supplement or sticker to any of the
foregoing) and advertising and sales material relating to the Fund
(collectively the "Disclosure Documents") as and when furnished to the
Sub-Adviser by the Fund or the Fund's service providers and represents and
warrants that, with respect to disclosure about the Sub-Adviser, the manner in
which the Sub-Adviser manages the Fund and information relating directly or
indirectly to the Sub-Adviser (the "Sub-Adviser Disclosure"), such 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.
2.3 REPRESENTATIONS OF THE MANAGER: The Manager represents warrants
and agrees that:
- 7 -
(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;
(ii) It has been duly authorized by the Board to
enter into sub-advisory agreements, including this Agreement, and to delegate
to the Sub-Adviser the provision of investment services to the Allocated
Portion as contemplated hereby;
(iii) It is registered as an investment adviser
under the Advisers Act and will continue to be so registered during the term of
this Agreement and will promptly notify the Sub-Adviser of the occurrence of
any event that would disqualify it from serving as investment manager of an
investment company pursuant to Section 9(a) of the 1940 Act or otherwise;
(iv) The Investment Advisory Agreement contains a
representation to the Trust that the Manager will comply, and cause the Series
to comply, in all material respects with the 1940 Act, the Advisers Act and all
other applicable laws and regulation to which it or the Series may be subject,
including, without limitation, Subchapter M of the Internal Revenue Code of
1986, as amended, subject in each case to the obligations of SEI Investments
Global Funds Services ("SEI") as set forth in one or more agreements by and
among SEI and the Trust and/or SEI and the Manager; and
(v) It has adopted and implemented a Code of
Ethics and has provided the Trust with a copy of such Code of Ethics and will
provide copies of any future amendments thereto;
(vi) 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 Manager, its employees, officers, and agents, and the Trust has been
provided a copy or a summary of such policies and procedures and will be
provided with any future amendments thereto; and
(vii) It (a) is a member of the NFA and is
registered with the CFTC as a commodity pool operator, (b) will comply in all
material respects with applicable NFA and CFTC rules and regulations with
respect to its management of each Series, and (c) will notify the Sub-Adviser
of any change in its status with respect to the foregoing sub-section (a) or
failure to comply with respect to the foregoing sub-section (b).
3. SUB-ADVISORY FEE
The Adviser shall pay to the Sub-Adviser, as compensation for the Sub-Adviser's
services hereunder, a fee, determined as described in Schedule C 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 Adviser. A Fund shall have no
responsibility for any fee payable to the Sub-Adviser.
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 a 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
- 8 -
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.
3.1 EXPENSES
During the term of this Agreement, the 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 the Allocated Portion and investment-related expenses reasonably
incurred by the Sub-Adviser that are directly related to portfolio transactions
and positions for the Allocated Portion (including direct expenses associated
with the Allocated Portion's investments, transfer taxes and premiums, taxes
withheld on foreign dividends, investment-related interest expense, borrowing
charges on securities sold short, dividends on securities sold but not yet
purchased and margin fees).
The Sub-Adviser shall be responsible for all the costs associated
with any special meetings of the Board 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 Manager; 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 Series, 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. 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 Manager and any other designated agent of the Series, including the Series'
administrator, all investment orders for the Allocated Portion placed by it
with issuers, brokers, dealers and/or FCMs in the manner set forth in Rule
31a-1 under the 1940 Act and as soon as practicable after the close of business
each day but no later
- 9 -
than 11:00 a.m. Eastern time the following business day. For purposes of the
foregoing sentence, communication via electronic means will be acceptable as
agreed to in writing from time to time by the Manager. The Trust shall issue to
the Custodian such instructions as may be appropriate in connection with the
settlement of any transaction initiated by the Sub-Adviser.
6. REPORTS TO SUB-ADVISER
Manager shall furnish or otherwise make available to the Sub-Adviser
such copies of the Registration Statement, 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.
7. CONFIDENTIALITY
7.1 SUB-ADVISER CONFIDENTIALITY. Subject to Section 7.2 hereunder,
the 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 Manager or the Board
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 or the Trust to others, or
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, 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 or as required by applicable law or regulation.
Notwithstanding the foregoing, the Sub-Adviser may, to the extent permitted by
law, disclose the total return earned by the Allocated Portion of each Series
and may include such total return in the calculation of composite performance
information, without any attribution to, or mention of, the Series.
7.2 OTHER SUB-ADVISERS. The 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
- 10 -
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.
8. PROXY VOTING
To the extent applicable, the Manager hereby delegates to the
Sub-Adviser authority, and Sub-Adviser hereby agrees, to: (i) vote 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, as presented to the Trust, and in a
manner that the Sub-Adviser reasonably believes best serves the interests of
the Series' shareholders and that complies with applicable law; (ii) maintain
records of all proxies voted on behalf of the Series in respect of the
Allocated Portion; and (iii) 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.
9. 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 and shareholder
communications and, subject to the prior written consent of the Sub-Adviser, in
advertising, sales literature and similar communications, which consent shall
not be unreasonably withheld. 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, except as required by law or regulation. 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.
10. LIMITATION OF LIABILITY; INDEMNIFICATION
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of Disclosure Documents with
respect to Sub-Adviser disclosure.
(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 Adviser in contravention of: (i) any investment policy,
guideline or restriction set forth in the Registration Statement or as approved
by the Board from time to time and provided to the Sub-Adviser; or (ii)
applicable law, including but not limited to the 1940 Act and the Code
(including but not limited to the Fund's failure to satisfy the diversification
or source of income requirements of Subchapter M of the Code) (the investments
described in this subsection (b) collectively are referred to as "Improper
Investments").
- 11 -
(c) The Sub-Adviser shall indemnify and hold harmless the Trust with
respect to each Fund managed by the Sub-Adviser, 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 breach by
the Adviser of this Agreement or of the representations and warranties made by
the Adviser herein; (ii) any Improper Investment; (iii) the Adviser's
performance or non-performance of its duties hereunder to the extent that the
Adviser has acted with willful misfeasance, bad faith, or negligence or with
reckless disregard of its obligations and duties hereunder or (iv) any untrue
statement or alleged untrue statement of a material fact contained in any
Disclosure Document or the omission or alleged omission from a Disclosure
Document of a material fact required to be stated therein or necessary to make
the statements therein not misleading, for purposes of this Section 14(c)(iv)
solely with respect to the Sub-Adviser Disclosure (it being understood,
however, that this indemnification and agreement to hold harmless shall not
apply to the extent that any such untrue statement, alleged untrue statement,
omission or alleged omission is the result of any change made to any applicable
Disclosure Document without the written consent or other acknowledgment of the
Adviser from and after the time that such Disclosure Document has been reviewed
by the Adviser, as contemplated in Section 7(c) hereof); provided, however,
that nothing herein shall be deemed to protect any Indemnified 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 such person's office with
the Trust.
(d) For purposes of clarification, and subject to the above
provisions of this Section 14, except with respect to Sub-Adviser Disclosure or
Improper Investments, the Sub-Adviser shall not be liable for any error of
judgment or mistake of law, or for any loss arising out of any investment or
for any act or omission in the execution of securities transactions for the
Fund, provided that nothing in this Agreement shall protect the Sub-Adviser
against any liability to the Fund to which the Sub-Adviser would otherwise be
subject by reason of willful misfeasance, bad faith, or negligence in the
performance of its duties hereunder or by reason of its reckless disregard of
its obligations and duties hereunder
11. 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 Board, including
the vote or written consent of a majority of the Board 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.
- 12 -
12. TERM AND TERMINATION OF AGREEMENT
12.1 This Agreement shall become effective as of the date executed
and shall remain in full force and effect continually thereafter, subject to
renewal as provided in Section 12(c) and unless terminated automatically as set
forth in Section 11 hereof or until terminated as follows:
(a) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to the Fund, upon the affirmative vote
of a majority of the outstanding voting securities of the Fund; or
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Sub-Adviser; or
(c) The Sub-Adviser may at any time terminate this Agreement by not
more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser; or
(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.
13. 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
- 13 -
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
SEC 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 SEC, whether of special or of general application, such provision shall be
deemed to incorporate the effect of such rule, regulation or order.
14. 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 without reference or giving effect to the principles of conflict of
laws other than Section 5-1401 of the General Obligations Law of the State of
New York.
15. FORCE MAJEURE
Notwithstanding any other term or condition of this
Agreement, neither party shall be obligated to perform or observe its
obligations undertaken in this Agreement (except for obligations to make
payments hereunder) if prevented or hindered from doing so by any circumstances
found to be beyond its control, including, without limitation: nationalization,
expropriation, devaluation, seizure, or similar action by any governmental
authority, de facto or de jure; or enactment, promulgation, imposition or
enforcement by any such governmental authority of currency restrictions,
exchange controls, levies or other charges affecting the Trust's property; or
the breakdown, failure or malfunction of any utilities or telecommunications
systems; or any order or regulation of any banking or securities industry
including changes in market rules and market conditions affecting the execution
or settlement of transactions; or acts of war, terrorism, insurrection or
revolution; or acts of God, or any other similar event.
16. CHANGE IN THE ADVISER'S OWNERSHIP. The Sub-Adviser agrees that it
shall notify the Trust of any anticipated or otherwise reasonably foreseeable
change in the ownership of the Sub-Adviser within a reasonable time prior to
such change being effected.
17. 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.
- 14 -
18. AUTHORITY TO EXECUTE TRANSACTION DOCUMENTS
Subject to any other written instructions of the Manager or the
Trust, the Sub-Adviser is hereby appointed agent and attorney-in-fact for the
limited purposes of executing on behalf of each Series specified on Schedule A
hereto (with respect to the Allocated Portion): account documentation,
transaction term sheets and confirmations, certifications regarding the Series'
status as an accredited investor, qualified institutional buyer, qualified
purchaser or qualified eligible person and certifications regarding other
factual matters as may be requested by FCMs or counterparties in connection
with the Sub-Adviser's management of the Series' assets pursuant to this
Agreement.
19. 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.
20. EXECUTION IN COUNTERPARTS; ELECTRONIC DELIVERY
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. Signatures on this Agreement may be communicated by
electronic transmission (which shall include facsimile or email) and shall be
binding upon the parties so transmitting their signatures.
21. CFTC DISCLOSURE
PURSUANT TO AN EXEMPTION UNDER CFTC RULES IN CONNECTION WITH ACCOUNTS
OF QUALIFIED ELIGIBLE PERSONS, THIS BROCHURE OR ACCOUNT DOCUMENT IS NOT REQUIRED
TO BE, AND HAS NOT BEEN, FILED WITH THE CFTC. THE CFTC DOES NOT PASS UPON THE
MERITS OF PARTICIPATING IN A TRADING PROGRAM OR UPON THE ADEQUACY OR ACCURACY OF
COMMODITY TRADING ADVISOR DISCLOSURE. CONSEQUENTLY, THE CFTC HAS NOT REVIEWED OR
APPROVED THIS TRADING PROGRAM OR THIS BROCHURE OR ACCOUNT DOCUMENT.
[SIGNATURE PAGE FOLLOWS]
- 15 -
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be signed by their respective officers thereunto duly authorized and their
respective seals to be hereunto affixed, as of the day and year first above
written.
ROTHSCHILD LARCH LANE MANAGEMENT
COMPANY
By: /s/ Xxxx Xxxxxxxx
--------------------------------------------------
Name: Xxxx Xxxxxxxx
Title: Manager
KARYA CAPITAL MANAGEMENT LP
By: Karya Capital Inc., its general partner
By: /s/ Xxxxx Xxxxx
--------------------------------------------------
Name: Xx. Xxxxx Xxxxx
Title: CEO
- 16 -
SUB-ADVISORY AGREEMENT
SCHEDULE A
SERIES OF THE ADVISORS' INNER CIRCLE FUND III
Rothschild Larch Lane Alternatives Fund
