SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 14th day of
August, 2012 by and between Cornerstone Advisors Inc., a Washington corporation
with its principal place of business at 225 -- 000(xx) Xxxxxx XX, Xxxxx 000,
Xxxxxxxx, Xxxxxxxxxx 00000-0000 (the "Adviser"), and AQR Capital Management,
LLC a Delaware limited liability company with its principal place of business
at Two Xxxxxxxxx Xxxxx, 0(xx) Xxxxx, Xxxxxxxxx, XX 00000 (the "Sub-Adviser")
and solely for the purpose of paying the fee in Section 9, The Advisors' Inner
Circle Fund, a Massachusetts voluntary association with its principal place of
business at Xxx Xxxxxxx Xxxxxx Xxxxx, Xxxx, XX 00000 (the "Trust").
W I T N E S S E T H
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of the "Trust on behalf of the series set forth on
Schedule A to this Agreement (the "Fund") and pursuant to the provisions of the
Investment Advisory Agreement dated as of June 22, 2012 between the Adviser
and the Fund (the "Management Agreement"), the Adviser has selected the
Sub-Adviser to act as sub-investment adviser of the Fund and to provide certain
related services, as more fully set forth below, and to perform such services
under the terms and conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Adviser and the Sub-Adviser do hereby agree as follows:
1. THE SUB-ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser
shall act as sub-investment adviser with respect to the Fund. In such capacity,
the Sub-Adviser shall, subject to the supervision of the Adviser and the Board,
regularly provide the Fund with investment research, advice and supervision and
shall furnish continuously an investment program for such Fund assets as may be
allocated by the Adviser to the Sub-Adviser from time to time pursuant to
Schedule B to this Agreement (each, a "Portfolio"), consistent with the
investment objectives and policies of the Fund as stated in the Fund's
Registration Statement (defined below). The Sub-Adviser shall determine, from
time to time, what investments and/or instruments shall be purchased for the
Portfolio, what such investments or instruments shall be held or sold by the
Portfolio and what portion of the Portfolio's assets will be invested or held
un-invested in cash, including with respect to the investment or redemption of
assets to or from any wholly-owned Subsidiary of the Fund for which Sub-Adviser
also serves as sub-investment adviser, subject always to the provisions of the
Trust's Agreement and Declaration of Trust, By-Laws and the Fund's registration
statement on Form N-1A (the "Registration Statement") under the Investment
Company Act of 1940, as amended (the "1940 Act"), and under the Securities Act
of 1933, as amended (the "1933 Act"), covering Fund shares, as filed with the
Securities and Exchange Commission (the "Commission"), and to the investment
objectives, policies and restrictions of the Fund as stated in the Fund's
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Registration Statement, as each of the same shall be from time to time in
effect (collectively, the "Fund Documentation and Policies"). To carry out such
obligations, the Sub-Adviser shall exercise full discretion and act for the
Portfolio 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 Portfolio as the Adviser may from time to time direct; provided however,
that the Sub-Adviser shall not be responsible or liable for any such portfolio
transactions effected upon written instructions from the Adviser and
Sub-Adviser shall not be required to follow any such instruction that will
cause Sub-Adviser to breach any legal, tax or regulatory requirement applicable
to Sub-Adviser or the Portfolio. 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.
(b) COMPLIANCE. The Sub-Adviser agrees to comply with the requirements
of the 1940 Act, the Investment Advisers Act of 1940, as amended (the "Advisers
Act"), the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934
Act"), the Commodity Exchange Act and the respective rules and regulations
thereunder, as applicable, as well as with all other applicable federal and
state laws, rules, regulations and case law that relate to the services and
relationships described hereunder and to the conduct of its business as a
registered investment adviser. The Sub-Adviser also agrees to comply with the
Fund's objectives, policies and restrictions set forth in the Registration
Statement, as amended or supplemented, of the Fund, and with any policies,
guidelines, instructions and procedures approved by the Board or the Adviser and
provided to the Sub-Adviser. In selecting the Portfolio's portfolio securities
and performing the Sub-Adviser's obligations hereunder, the Sub-Adviser shall
cause the Portfolio to comply with the diversification and source of income
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended
(the "Code"), for qualification as a regulated investment company. The
Sub-Adviser shall have no responsibility for the segregation requirements of the
1940 Act or other applicable law other than to notify the custodian of
investments that require segregation and appropriate assets for segregation. The
Sub-Adviser shall maintain compliance procedures that it reasonably believes are
adequate to ensure the compliance with the foregoing. No supervisory activity
undertaken by the Adviser shall limit the Sub-Adviser's responsibility for any
of the foregoing, subject to the terms and conditions of this Agreement.
Adviser hereby agrees to promptly provide Sub-Adviser with the Fund
Documentation and Policies, guidelines, policies and procedures of the Fund,
Trust or Adviser applicable to the Sub-Adviser's duties and responsibilities
hereunder, including any supplements or amendments thereto, prior to the
implementation thereof. Notwithstanding anything to the contrary contained in
this Agreement, Sub-Adviser shall
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not be responsible for following any provision of the Fund Documentation and
Policies; any instruction provided by the Adviser, the Board, or the Trust; or
any policies, guidelines, instructions or procedures approved by the Board or
the Adviser, including any amendment or supplement to any of such
documentation, unless Sub-Adviser has been provided with a copy of such
document, policy or guideline and has been given a reasonable amount of time to
implement the terms of such document, policy, guideline or any instruction
provided by the Adviser, Board or the Trust.
(c) PROXY VOTING. Pursuant to Board authority, the Adviser has the
authority to determine how proxies with respect to securities that are held by
the Fund shall be voted, and the Adviser may delegate the authority and
responsibility to vote proxies for the Portfolio's securities to the
Sub-Adviser. So long as proxy voting authority for the Portfolio has been
delegated to the Sub-Adviser, the Adviser shall provide such assistance to the
Sub-Adviser with respect to the voting of proxies for the Portfolio as the
Sub-Adviser may from time to time reasonably request, and the Adviser shall
promptly forward to the Sub-Adviser any information or documents necessary for
the Sub-Adviser to exercise its proxy voting responsibilities. The Sub-Adviser
shall carry out such responsibility in accordance with any instructions that
the Board or the Adviser shall provide from time to time, and at all times in a
manner consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary
responsibilities to the Trust. The Sub-Adviser shall provide periodic reports
and keep such records relating to proxy voting on behalf of the Portfolio as
the Board may reasonably request or as may be necessary for the Fund to comply
with the 1940 Act and other applicable law. Any such delegation of proxy voting
responsibility to the Sub-Adviser may be revoked or modified by the Board or
the Adviser at any time.
The Sub-Adviser is authorized to instruct the Fund's custodian and/or broker(s)
to forward promptly to the Sub-Adviser or designated service provider copies of
all proxies and shareholder communications relating to securities held in the
Portfolio (other than materials relating to legal proceedings against the
Fund). The Sub-Adviser may also instruct the Fund's custodian and/or broker(s)
to provide reports of holdings in the Portfolio. The Sub-Adviser has the
authority to engage a service provider to assist with administrative functions
related to voting Portfolio proxies. The Trust shall direct the Fund's
custodian and/or broker(s) to provide any assistance requested by the
Sub-Adviser in facilitating the use of a service provider. In no event shall
the Sub-Adviser have any responsibility to vote proxies that are not received
on a timely basis. The Trust acknowledges that the Sub-Adviser, consistent
with the Sub-Adviser's written proxy voting policies and procedures, may
refrain from voting a proxy if, in the Sub-Adviser's discretion, refraining
from voting would be in the best interests of the Fund and its shareholders.
(d) RECORDKEEPING. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund or
Portfolio, except as otherwise provided herein or as may be necessary for the
Sub-Adviser to supply to the Adviser, the Trust or its Board the information
required to be supplied under this Agreement.
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The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Portfolio's assets advised by the Sub-Adviser
required by Rule 31a-1 under the 1940 Act (other than those records being
maintained by the Adviser, or any administrator custodian or transfer agent
appointed by the Fund) relating to its responsibilities provided hereunder with
respect to the Portfolio, and shall preserve such records for the periods and
in a manner prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund
Books and Records"). The Fund Books and Records shall be available to the
Adviser and the Board at any time upon reasonable request, shall be delivered
to the Trust upon the termination of this Agreement (provided that Sub-Adviser
may maintain copies of the books and records for regulatory purposes) and shall
be available without unreasonable delay during any day the Trust is open for
business.
(e) HOLDINGS INFORMATION AND PRICING. The Sub-Adviser shall provide
regular reports regarding the Portfolio's holdings, and may, on its own
initiative, furnish the Adviser, the Trust and its Board from time to time with
whatever information the Sub-Adviser believes is appropriate for this purpose.
The Sub-Adviser agrees to provide upon request any pricing information of which
the Sub-Adviser is aware to the Adviser, Trust, its Board and/or any Fund
pricing agent to assist in the determination of the fair value of any Portfolio
holdings for which market quotations are not readily available or as otherwise
required in accordance with the 1940 Act or the Fund valuation procedures for
the purpose of calculating the Trust's net asset value in accordance with
procedures and methods established by the Board.
(f) COOPERATION WITH AGENTS OF THE ADVISER AND THE TRUST. The
Sub-Adviser agrees to cooperate with and provide reasonable assistance to the
Adviser, the Trust and any Trust custodian or foreign sub-custodians, any Trust
pricing agents and all other agents and representatives of the Adviser and the
Trust with respect to such information regarding the Portfolio as such entities
may reasonably request from time to time in the performance of their
obligations, provide responses to reasonable requests made by such persons
within a reasonable amount of time from the date of such request and establish
appropriate interfaces with each so as to promote the efficient exchange of
information and compliance with applicable laws and regulations.
(g) CONSULTATION WITH OTHER SUB-ADVISERS. In performance of its
duties and obligations under this Agreement, the Sub-Adviser shall not consult
with any other sub-adviser to the Fund or a sub-adviser to a portfolio that is
under common control with the Fund concerning transactions for the Fund, except
as permitted by the policies and procedures of the Fund. The Sub-Adviser shall
not provide investment advice to any assets of the Fund other than the assets
managed by the Sub-Adviser.
2. CODE OF ETHICS. The Sub-Adviser has adopted a written code of
ethics that it reasonably believes complies with the requirements of Rule 17j-1
under the 1940 Act, which it has provided to the Adviser and the Trust. The
Sub-Adviser shall provide reasonable assurance 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,
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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
Portfolio.
3. INFORMATION AND REPORTING. The Sub-Adviser shall provide the
Adviser, the Trust, and their respective officers with such reasonable periodic
reports concerning the obligations the Sub-Adviser has assumed under this
Agreement with respect to the Portfolio as the Adviser and the Trust may from
time to time reasonably request.
(a) NOTIFICATION OF BREACH / COMPLIANCE REPORTS. The Sub-Adviser
shall notify the Trust's Chief Compliance Officer and Adviser as soon as
reasonably practicable upon detection of (i) any material failure to manage any
Portfolio in accordance with its investment objectives and policies as
disclosed in the Fund's Registration Statement or any applicable law; or (ii)
any material breach of any of the Fund's or the Adviser's policies, guidelines
or procedures that have been provided to Sub-Adviser. In addition, the
Sub-Adviser shall provide a quarterly report regarding the Portfolio's
compliance with the Fund's investment objectives and policies disclosed in the
Fund's Registration Statement, applicable law, including, but not limited to
the 1940 Act and Subchapter M of the Code, and the Fund's and the Adviser's
policies, guidelines or procedures provided to Sub-Adviser, as applicable to
the Sub-Adviser's obligations under this Agreement. The Sub-Adviser
acknowledges and agrees that the Adviser may, in its discretion, provide such
quarterly compliance certifications to the Board. The Sub-Adviser agrees to
correct any such failure promptly and to take any action that the Board and/or
the Adviser may reasonably request in connection with any such breach, provided
that such action does not cause Sub-Adviser to breach any legal, tax or
regulatory requirement applicable to Sub-Adviser or the Fund. Upon reasonable
request, the Sub-Adviser shall also provide the officers of the Trust with
supporting certifications in connection with such certifications of Fund
financial statements and disclosure controls pursuant to the Xxxxxxxx-Xxxxx
Act, provided that the content of such certifications relates only to the
duties and obligations of the Sub-Adviser provided hereunder. The Sub-Adviser
will as soon as reasonably practicable, but in no event sooner than it is
legally able to do so, notify the Trust in the event (i) the Sub-Adviser is
served or otherwise receives notice of any action, suit, proceeding, inquiry or
investigation, at law or in equity, before or by any court, public board, or
body, involving the affairs of the Trust (excluding class action suits in which
a Fund is a member of the plaintiff class by reason of the Fund's ownership of
shares in the defendant) or the compliance by the Sub-Adviser with the federal
or state securities laws or (ii) an actual change in control of the Sub-Adviser
resulting in an "assignment" (as defined in the 1940 Act) has occurred or is
otherwise proposed to occur.
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(b) INSPECTION. Upon reasonable request, the Sub-Adviser agrees to
make its records and premises (including the availability of the Sub-Adviser's
employees for interviews) to the extent that they relate to the conduct of
services provided to the Portfolio or the Sub-Adviser's conduct of its business
as an investment adviser reasonably available for compliance audits by the
Adviser or the Trust's officers, employees, accountants or counsel; in this
regard, the Trust and the Adviser acknowledge that the Sub-Adviser shall have
no obligation to make available proprietary information unrelated to the
services provided to the Portfolio or any information related to other clients
of the Sub-Adviser.
(c) BOARD AND FILINGS INFORMATION. The Sub-Adviser will also provide
the Adviser and Trust with any information reasonably requested regarding its
management of the Portfolio required for any meeting of the Board, or for any
shareholder report required by the 1940 Act, 1933 Act or 1934 Act, Form N-CSR,
Form N-Q, Form N-PX, Form N-SAR, amended registration statement, proxy
statement, or prospectus supplement to be filed by the Trust with the
Commission. The Sub-Adviser will make its officers and employees available to
meet with the Board from time to time on due notice to review its investment
management services to the Portfolio in light of current and prospective
economic and market conditions and shall furnish to the Board such information
as may reasonably be necessary in order for the Board to evaluate this
Agreement or any proposed amendments thereto.
(d) TRANSACTION INFORMATION. The Sub-Adviser shall furnish to the
Adviser and the Trust such information concerning portfolio transactions of the
Portfolio as may be necessary to enable the Adviser, Trust or their designated
agents to perform such compliance testing on the Fund and the Sub-Adviser's
services as the Adviser and the Trust may, in their sole discretion, determine
to be appropriate. The provision of such information by the Sub-Adviser to the
Adviser, Trust or their designated agents in no way relieves the Sub-Adviser of
its own responsibilities under this Agreement.
(e) Notwithstanding any provision to the contrary contained in this
Agreement, the Sub-Adviser shall not be required to fulfill any request made by
the Adviser, Fund, Board or Trust for reports (including the format thereof) or
information regarding the Portfolio, Sub-Adviser and/or services provided under
this Agreement unless Sub-Adviser has been given a reasonable amount of time to
compile such requested report or information (as applicable) and providing such
information or reporting will not cause (i) the Sub-Adviser to breach any
legal, tax or regulatory requirement applicable to it; and/or (ii) any loss,
damage, liability or competitive disadvantage to any other fund or account
managed by Sub-Adviser with a similar investment strategy.
4. BROKERAGE.
(a) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Portfolio, neither the Sub-Adviser nor any of
its directors, officers or
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employees will act as a principal or agent or receive any commission except as
permitted by the 1940 Act.
(b) PLACEMENT OF ORDERS. The Sub-Adviser shall arrange for the
placing of all orders for the purchase and sale of securities or instruments
for a Portfolio's account with brokers or dealers selected by the Sub-Adviser.
In the selection of such brokers or dealers and the placing of such orders, the
Sub-Adviser is directed at all times to seek for a Portfolio the most favorable
execution available under the circumstances. It is also understood that it is
desirable for the Fund that the Sub-Adviser have access to brokerage and
research services provided by brokers who may execute brokerage transactions at
a higher cost to the Fund than may result when allocating brokerage to other
brokers, consistent with section 28(e) of the 1934 Act and any Commission staff
interpretations thereof. Therefore, the Sub-Adviser is authorized to place
orders for the purchase and sale of securities for the Portfolio with such
brokers, subject to review by the Adviser and the Board from time to time with
respect to the extent and continuation of this practice. It is understood that
the services provided by such brokers may be useful to the Sub-Adviser in
connection with its or its affiliates' services to other clients.
(c) AGGREGATED TRANSACTIONS. On occasions when the Sub-Adviser deems
the purchase or sale of a security or instrument to be in the best interest of
a Portfolio as well as other clients of the Sub-Adviser, the Sub-Adviser may,
to the extent permitted by applicable law and regulations, aggregate the order
for securities or instruments to be sold or purchased. In such event, the
Sub-Adviser will allocate securities or instruments so purchased or sold, as
well as the expenses incurred in the transaction, in the manner the Sub-Adviser
reasonably considers to be equitable and consistent with its fiduciary
obligations to a Fund and to such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or other
investments for a Portfolio, subject to: (a) the requirement that the
Sub-Adviser seek to obtain best execution and price within the policy
guidelines determined by the Board and set forth in a Fund's current
Registration Statement; (b) the provisions of the 1940 Act; (c) the provisions
of the Advisers Act; (d) the provisions of the 1934 Act; and (e) other
provisions of applicable law. These brokerage services are not within the scope
of the duties of the Sub-Adviser under this Agreement. Subject to the
requirements of applicable law and any procedures adopted by the Board, the
Sub-Adviser or its affiliates may receive brokerage commissions, fees or other
remuneration from a Fund for these services in addition to the Sub-Adviser's
fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Sub-Adviser
to take or receive physical possession of cash, securities or other investments
of a Fund. The Sub-Adviser is authorized, as agent of the Fund, to give
instructions to the custodian with respect to the Portfolio in order to carry
out its duties under this Agreement, including with respect to delivery of
securities and other investments and payments of cash for the account of the
Portfolio. The Sub-Adviser shall have no liability for the acts or omissions of
any custodian of the Fund's assets.
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6. ALLOCATION OF CHARGES AND EXPENSES. The Sub-Adviser will bear its
own costs of providing services hereunder. Other than as herein specifically
indicated, the Sub-Adviser shall not be responsible for a Fund's, the Trust's
or the Adviser's expenses, including without limitation: (i) brokerage and
other expenses incurred in placing orders for the purchase and sale of
securities and other investment instruments; (ii) interest and taxes; and (iii)
custodian fees and expenses.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(a) PROPERLY REGISTERED. The Sub-Adviser is registered as an
investment adviser under the Advisers Act, and will remain so registered for
the duration of this Agreement. The Sub-Adviser is not prohibited by the
Advisers Act or the 1940 Act from performing the services contemplated by this
Agreement, and to the best knowledge of the Sub-Adviser, there is no proceeding
or investigation that is reasonably likely to result in the Sub-Adviser being
prohibited from performing the services contemplated by this Agreement. The
Sub-Adviser agrees to promptly notify the Trust of the occurrence of any event
that would disqualify the Sub-Adviser from serving as an investment adviser to
an investment company. The Sub-Adviser is in compliance in all material
respects with all applicable federal and state law in connection with its
investment management operations.
(b) ADV DISCLOSURE. The Sub-Adviser has provided the Trust with a
copy of Part I of its Form ADV as most recently filed with the Commission and
its Part II as most recently updated.
(c) FUND DISCLOSURE DOCUMENTS. Upon reasonable request of Adviser,
the Sub-Adviser will review, the Fund's (i) Registration Statement (including
summary prospectus, prospectus and statement of additional information), (ii)
periodic reports to shareholders, (iii) reports and schedules filed with the
Commission (including any amendment, supplement or sticker to any of the
foregoing) and (iv) advertising and sales material relating to the Portfolio
(collectively the "Disclosure Documents") and shall notify Adviser as soon as
reasonably practicable after such request if such Disclosure Documents contain
or will contain any untrue statement of a material fact regarding Sub-Adviser,
or omit any statement of material fact regarding Sub-Adviser required to be
stated therein or necessary to make the statements therein not misleading.
(d) USE OF THE NAME "CORNERSTONE ADVISORS." The Sub-Adviser has the
right to use the name "Cornerstone Advisors" in connection with its services to
the Trust. The Sub-Adviser is not, as of the date hereof, aware of any
threatened or existing actions, claims, litigation or proceedings that would
adversely affect or prejudice the rights of the Sub-Adviser or the Trust to use
the name "Cornerstone Advisors."
(e) INSURANCE. The Sub-Adviser maintains errors and omissions
insurance coverage in an appropriate amount and shall provide prior written
notice to the Trust (i) of any material changes in its insurance policies or
insurance coverage; or (ii) if any
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material claims will be made on its insurance policies. Furthermore, the
Sub-Adviser shall, upon reasonable request, provide the Trust with any
information it may reasonably require concerning the amount of or scope of such
insurance.
(f) NO DETRIMENTAL AGREEMENT. The Sub-Adviser represents and warrants
that it has no arrangement or understanding with any party, other than the
Trust, that would influence the decision of the Sub-Adviser with respect to its
selection of securities for a Portfolio, and that all selections shall be done
in accordance with the Sub-Adviser's fiduciary duties under applicable law.
(g) CONFLICTS. The services of the Sub-Adviser hereunder are not to
be deemed exclusive and nothing in this Agreement shall limit or restrict the
right of Sub-Adviser or any of its affiliates, partners, officers, or employees
to engage in any other business or to devote his or her time and attention to
the management or other aspects of any business, whether of a similar or a
dissimilar nature, or limit or restrict Sub-Adviser's right to engage in any
other business or to render services of any kind to any other fund, account
(including proprietary accounts), corporation, firm, individual, or
association. Sub-Adviser acts as adviser to other clients and may, subject to
compliance with its fiduciary obligations, give advice, and take action, with
respect to any of those which may differ from the advice given, or the timing
or nature of action taken, with respect to the Portfolio. Subject to its
fiduciary obligation to the Fund, Sub-Adviser shall have no obligation to
purchase or sell for the Portfolio, or to recommend for purchase or sale by the
Portfolio, any security which Sub-Adviser, its principals, affiliates or
employees may purchase or sell for themselves or for any other clients.
(h) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed and
at the time of delivery of the quarterly compliance report required by Section
3(a), whether or not specifically referenced in such report.
8. THE NAME "Cornerstone Advisors." The Adviser has granted to the
Trust a license to use the name "Cornerstone Advisors" (collectively, the
"Name") as part of the name of the Fund. The foregoing authorization by the
Adviser to the Trust to use the Name as part of the name of the Fund is not
exclusive of the right of the Adviser itself to use, or to authorize others to
use, the Name; the Sub-Adviser acknowledges and agrees that as between the
Sub-Adviser and the Adviser, the Adviser has the right to use, or authorize
others to use, the Name and the Sub-Adviser agrees to take such action as may
reasonably be requested by the Adviser to give full effect to the provisions of
this section. Without limiting the generality of the foregoing, the Sub-Adviser
agrees that, upon the effective date any termination of this Agreement, the
Sub-Adviser will not thereafter transact any new business using the name
"Cornerstone Advisors."
9. SUB-ADVISER'S COMPENSATION. The Fund shall pay to the Sub-Adviser,
as compensation for the Sub-Adviser's services hereunder, a fee, determined as
described in Schedule A that is attached hereto and made a part hereof. Such fee
shall be computed daily and paid not less than monthly in arrears by the Fund
within thirty (30) calendar days of each month-end.
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The Sub-Adviser will be compensated based on the portion of Fund
assets allocated to the Sub-Adviser by the Adviser. The method for determining
net assets of the Fund for purposes hereof shall be the same as the method for
determining net assets for purposes of establishing the offering and redemption
prices of Fund shares as described in the Fund's prospectus. In the event of
termination of this Agreement, the fee provided in this Section shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month.
10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder,
the Sub-Adviser is and shall be an independent contractor and, unless otherwise
expressly provided herein or otherwise authorized in writing, shall have no
authority to act for or represent the Fund, the Trust or the Adviser in any way
or otherwise be deemed to be an agent of the Fund, the Trust or the Adviser. If
any occasion should arise in which the Sub-Adviser gives any advice to its
clients concerning the shares of a Fund, the Sub-Adviser will act solely as
investment counsel for such clients and not in any way on behalf of the Fund.
11. ASSIGNMENT AND AMENDMENTS. This Agreement shall automatically
terminate, without the payment of any penalty, (i) in the event of its
assignment (as defined in section 2(a)(4) of the 0000 Xxx) or (ii) in the event
of the termination of the Management Agreement; provided that such termination
shall not relieve the Adviser or the Sub-Adviser of any liability incurred
hereunder.
This Agreement may not be added to or changed orally and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with the 1940 Act, when applicable.
12. DURATION AND TERMINATION.
This Agreement shall become effective as of the date executed and shall remain
in full force and effect continually thereafter, subject to renewal as provided
in Section 12(c) and unless terminated automatically as set forth in Section 11
hereof or until terminated as follows:
(a) The Trust may cause this Agreement to terminate either (i) by
vote of its Board or (ii) with respect to the Fund, upon the affirmative vote
of a majority of the outstanding voting securities of the Fund; or
(b) The Adviser may at any time terminate this Agreement by not more
than sixty (60) days' nor less than thirty (30) days' written notice delivered
or mailed by registered mail, postage prepaid, to the Sub-Adviser; or
(c) The Sub-Adviser may at any time terminate this Agreement by not
more than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the Adviser; or
10
(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 Portfolio's Books and
Records to the Adviser by such means and in accordance with such schedule as
the Adviser shall reasonably 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. The
Sub-Adviser shall not be liable for any effect on the Portfolio or Fund due to
the termination of this Agreement and transition of portfolio asset management
to any successor of the Sub-Adviser.
13. CERTAIN DEFINITIONS. FOR THE PURPOSES OF THIS AGREEMENT:
(a) "Affirmative vote of a majority of the outstanding voting
securities of the Fund" shall have the meaning as set forth in the 1940 Act,
subject, however, to such exemptions as may be granted by the Commission under
the 1940 Act or any interpretations of the Commission staff.
(b) "Interested persons" and "Assignment" shall have their respective
meanings as set forth in the 1940 Act, subject, however, to such exemptions as
may be granted by the Commission under the 1940 Act or any interpretations of
the Commission staff.
14. LIABILITY OF THE SUB-ADVISER.
(a) The Sub-Adviser shall have responsibility for the accuracy and
completeness (and liability for the lack thereof) of statements in the Fund's
Disclosure Documents regarding the Sub-Adviser, provided such statement or
omission was made in reliance upon information furnished by Sub-Adviser,
Sub-Adviser was given a reasonable amount of time to review the Disclosure
Document prior to its filing, dissemination or use, and any material comments
to such Disclosure Document provided by Sub-Adviser to Adviser, the Trust or
the Fund were included in such Disclosure Document verbatim.
11
(b) Except as may otherwise be provided by the 1940 Act or any other
federal securities law, the Sub-Adviser shall not be liable for any losses,
claims, damages, liabilities or litigation (including legal and other expenses)
incurred or suffered by the Adviser, the Fund or the Trust as a result of any
error of judgment or mistake of law by the Sub-Adviser with respect to the
Portfolio.
(c) The Sub-Adviser shall be liable to the Fund for any loss
(including transaction costs) incurred by the Fund as a result of any
investment made by the Sub-Adviser on behalf of the Portfolio in material
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 ("Investment Guidelines); or (ii) applicable law,
including but not limited to the 1940 Act and the Code (including but not
limited to the Portfolio's failure to satisfy the diversification or source of
income requirements of Subchapter M of the Code); provided such loss did not
result directly or indirectly from the gross negligence, fraud, willful
misconduct or reckless disregard of its duties of, or the delivery of incorrect
or incomplete information by, the Adviser, the Fund, the Trust or any officer,
director, employee, agent, representative or service provider of any of them
(the investments described in this subsection (b) collectively are referred to
as "Improper Investments"). For the avoidance of doubt and notwithstanding any
provision to the contrary contained in this Agreement, any loss incurred by the
Fund as a result of (i) events beyond the reasonable control of the Sub-Adviser
or (ii) deviations from the Investment Guidelines resulting from market events,
including but not limited to, daily market fluctuations and corporate actions,
as well as, contributions to, or withdrawals from, the Portfolio, shall not be
deemed to be Improper Investments and Sub-Adviser shall have no liability or
duty of indemnification with respect thereto.
(d) The Sub-Adviser shall indemnify and hold harmless the Trust, each
affiliated person of the Trust within the meaning of Section 2(a)(3) of the
1940 Act, and each person who controls the Trust within the meaning of Section
15 of the 1933 Act (any such person, an "Indemnified Party") against any and
all losses, claims, damages, expenses or liabilities (including the reasonable
cost of investigating and defending any alleged loss, claim, damage, expense or
liability and reasonable counsel fees incurred in connection therewith) to
which any such person may become subject under the 1933 Act, the 1934 Act, the
1940 Act or other federal or state statutory law or regulation, at common law
or otherwise, insofar as such losses, claims, damages, expenses or liabilities
(or actions in respect thereof) arise out of or are based upon: (i) a material
breach by the Sub-Adviser of this Agreement or of the representations and
warranties made by the Sub-Adviser herein; (ii) any Improper Investment; or
(iii) any untrue statement or alleged untrue statement of a material fact
regarding Sub-Adviser contained in any Disclosure Document or the omission or
alleged omission from a Disclosure Document of a material fact regarding
Sub-Adviser required to be stated therein or necessary to make the statements
therein not misleading, provided such statement or omission was made in
reliance upon information furnished by Sub-Adviser, Sub-Adviser was given a
reasonable amount of time to review the Disclosure Document prior to its
filing,
12
dissemination or use, and any material comments to such Disclosure Document
provided by Sub-Adviser to Adviser, the Trust or the Fund were included in such
Disclosure Document verbatim; provided, however, that nothing herein shall be
deemed to protect any Indemnified Party against any loss, claim, damage,
expense or liability to which such Indemnified Party would otherwise be subject
resulting directly or indirectly from the gross negligence, fraud, willful
misconduct or reckless disregard of its duties of, or the delivery of incorrect
or incomplete information by, any Indemnified Party or any officer, director,
employee, agent, representative or service provider of any of them.
(e) The Adviser shall indemnify and hold harmless the Sub-Adviser,
each affiliated person of the Sub-Adviser within the meaning of Section 2(a)(3)
of the 1940 Act, and each person who controls the Sub-Adviser within the
meaning of Section 15 of the 1933 Act (any such person, a "Sub-Adviser
Indemnified Party") against any and all losses, claims, damages, expenses or
liabilities (including the reasonable cost of investigating and defending any
alleged loss, claim, damage, expense or liability and reasonable counsel fees
incurred in connection therewith) to which any such person may become subject
under the 1933 Act, the 1934 Act, the 1940 Act or other federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of or are based upon: (i) a material breach by the Adviser
of this Agreement or the representations and warranties made by the Adviser
herein; (ii) any willful misconduct, fraud, bad faith, reckless disregard or
gross negligence of the Adviser or any of its officers, directors, employees,
agents or service providers; (iii) any failure by Adviser to properly notify
Sub-Adviser of any changes to any Fund Documentation and Policies, Disclosure
Document, or any policies, guidelines, instructions or procedures of the Fund,
Trust or Adviser applicable to the services provided by Sub-Adviser hereunder;
(iv) any untrue statement of a material fact contained in a Disclosure Document
or the omission to state therein a material fact known to the Adviser which was
required to be stated therein or necessary to make the statements therein not
misleading, unless such statement or omission was made in direct reliance upon
information furnished to the Adviser by the Sub-Adviser for use in such
Disclosure Document; or (v) any action or omissions taken by Sub-Adviser in
accordance with an instruction or direction provided by Adviser, the Trust or
the Board of Trustees of the Trust; provided, however, that nothing herein
shall be deemed to protect any Sub-Adviser Indemnified Party against any loss,
claim, damage, expense or liability to which such Sub-Adviser Indemnified Party
would otherwise be subject resulting directly or indirectly from the gross
negligence, fraud, willful misconduct or reckless disregard of its duties of,
or the delivery of incorrect or incomplete information by, any Sub-Adviser
Indemnified Party or any officer, director, employee, agent, representative or
service provider of any of them.
15. ENFORCEABILITY. Any term or provision of this Agreement which is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
13
16. LIMITATION OF LIABILITY. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing
liabilities. The Trust's Certificate of Trust, as amended from time to time, is
on file in the Office of the Secretary of State of the Commonwealth of
Massachusetts. Such Certificate of Trust and the Trust's Agreement and
Declaration of Trust describe in detail the respective responsibilities and
limitations on liability of the Trustees, officers, and holders of shares of
beneficial interest.
The parties hereby agree that the duties, responsibilities
and obligations of the Sub-Adviser hereunder only relate to the Portfolio and
the Sub-Adviser shall not be responsible or liable with respect to any other
assets of the Fund or Trust.
17. 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 but in no event sooner than such information is
disclosed publicly by Sub-Adviser.
18. CONFIDENTIAL RELATIONSHIP. Any information and advice furnished
by any party to this Agreement to the other party or parties shall be treated
as confidential and shall not be disclosed to third parties without the consent
of the other party hereto except (i) as required by law, rule or regulation or
(ii) with respect to disclosure to a party's officers, directors, employees,
professional advisers or service providers ("Representatives") that need to
know such information solely in connection with the performance of such party's
duties and obligations under this Agreement. The foregoing shall not apply to
any information that is public when provided or thereafter becomes public,
unless the party receiving the information knows or reasonably should have
known that the information became public as a result of a wrongful or illegal
act. All information disclosed as required by law, rule or regulation shall
nonetheless continue to be deemed confidential. The Sub-Adviser retains all
rights in and to any of its proprietary investment models, strategies and
approaches used by or on behalf of the Portfolio and any models, strategies or
approaches based upon or derived from them.
19. ALLOCATION OF ASSETS. Notwithstanding anything to the contrary
contained in this Agreement, the parties hereby agree that the terms of this
Agreement, including the obligations, responsibilities and liabilities
hereunder shall not apply to Sub-Adviser until such time that Sub-Adviser is
allocated Fund assets in accordance with Schedule B hereto. Schedule B may not
be amended to allocate Fund assets to the Sub-Adviser without the consent of
the Adviser and Sub-Adviser. Further, the parties agree that at such time that
Fund assets are allocated to Sub-Adviser in accordance with Schedule B,
Sub-Adviser shall be provided with the opportunity to review the current
Disclosure Documents of the Fund and such Disclosure Documents shall be amended
or supplemented by Adviser if the parties agree, while acting in good faith and
upon the advice of counsel, that such supplements are necessary.
14
20. JURISDICTION. This Agreement shall be governed by and construed
in accordance with the substantive laws of the Commonwealth of Massachusetts
and the Sub-Adviser consents to the jurisdiction of courts, both state or
federal, in Massachusetts, with respect to any dispute under this Agreement.
21. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
22. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
15
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be signed
on their behalf by their duly authorized officers as of the date first above
written.
CORNERSTONE ADVISORS INC.
By: /s/ Xxxxx Xxxx
Name: Xxxxx Xxxx
Title: Secretary
THE ADVISORS' INNER CIRCLE FUND
(solely for the purpose of paying the fee in Section 9 hereto)
By:______________________________________
Name:
Title:
AQR CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxx
Name: Xxxxx X. Xxxxxx
Title: Deputy General Counsel
16
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED AUGUST 14, 2012 BETWEEN
CORNERSTONE ADVISORS
AND
AQR CAPITAL MANAGEMENT, LLC
The Fund will pay to the Sub-Adviser as compensation for the Sub-Adviser's
services rendered, a fee, computed daily at an annual rate based on the average
daily net assets of the respective Fund as may be allocated by the Adviser to
the Sub-Adviser from time to time under the following fee schedule:
FUND ANNUAL RATE
---- -----------
Public Alternatives Fund 1.10%
17
SCHEDULE B
TO THE
SUB-ADVISORY AGREEMENT
DATED AUGUST 14, 2012 BETWEEN
CORNERSTONE ADVISORS
AND
AQR CAPITAL MANAGEMENT, LLC
Percent of Assets Xxxxxx xxx
Fund to Sub-Adviser
--------------------------- ---------------------------
Public Alternatives Fund 0%
This Schedule B may not be amended to allocate Fund assets to the Sub-Adviser
without the consent of both the Adviser and Sub-Adviser.
18
