SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 15th day of January,
2016 by and between Cornerstone Advisors Inc., a Washington corporation with
its principal place of business at 225 -- 000xx Xxxxxx XX, Xxxxx 000, Xxxxxxxx,
Xxxxxxxxxx 00000-0000 (the "Adviser"), and Xxxxxx X. Xxxxx & Co. Incorporated
(the "Sub-Adviser"), a Wisconsin corporation with its principal place of
business at 000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxxxxxx, XX 00000.
W I T N E S S E T H
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of THE ADVISORS' INNER CIRCLE FUND (the "Trust") on
behalf of the series set forth on Schedule A to this Agreement (the "Fund") and
pursuant to the provisions of the Investment Advisory Agreement dated as of May
1, 2014 between the Adviser and the Fund (the "Management Agreement"), the
Adviser has selected the Sub-Adviser to act as sub-investment adviser of the
Fund and to provide certain related services, as more fully set forth below,
and to perform such services under the terms and conditions hereinafter set
forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits
set forth herein, the Adviser and the Sub-Adviser do hereby agree as follows:
1. THE SUB-ADVISER'S SERVICES.
(a) DISCRETIONARY INVESTMENT MANAGEMENT SERVICES. The Sub-Adviser
shall act as sub-investment adviser with respect to the Fund. In such capacity,
the Sub-Adviser shall, subject to the supervision of the Adviser and the Board,
regularly provide the Fund with investment research, advice and supervision and
shall furnish continuously an investment program for such Fund assets as may be
allocated by the Adviser to the Sub-Adviser (the "Assets"), consistent with the
investment objectives and policies of the Fund. The Sub-Adviser shall
determine, from time to time, what investments shall be purchased for the Fund
and what such securities shall be held or sold by the Fund, subject always to
the provisions of the Trust's Agreement and Declaration of Trust, By-Laws and
its registration statement on Form N-1A (the "Registration Statement") under
the Investment Company Act of 1940, as amended (the "1940 Act"), and under the
Securities Act of 1933, as amended (the "1933 Act"), covering Fund shares, as
filed with the Securities and Exchange Commission (the "Commission"), and to
the investment objectives, policies and restrictions of the Fund, as each of
the same shall be from time to time in effect. 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
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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.
(b) COMPLIANCE. The Sub-Adviser agrees to comply with the requirements of the
1940 Act, the Investment Advisers Act of 1940, as amended (the "Advisers Act"),
the 1933 Act, the Securities Exchange Act of 1934, as amended (the "1934 Act"),
the Commodity Exchange Act and the respective rules and regulations thereunder,
as applicable, as well as with all other applicable federal and state laws,
rules, regulations and case law that relate to the services and relationships
described hereunder and to the conduct of its business as a registered
investment adviser. The Sub-Adviser also agrees to comply with the objectives,
policies and restrictions set forth in the Registration Statement, as amended
or supplemented, of the Fund, and with any policies, guidelines, instructions
and procedures approved by the Board or the Adviser and provided to the
Sub-Adviser. In selecting the Fund's portfolio securities and performing the
Sub- Adviser's obligations hereunder, the Sub-Adviser shall cause the Fund to
comply with the diversification and source of income requirements of Subchapter
M of the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. The Sub-Adviser shall maintain
compliance procedures that it reasonably believes are adequate to ensure the
compliance with the foregoing. No supervisory activity undertaken by the
Adviser shall limit the Sub-Adviser's full responsibility for any of the
foregoing.
(c) PROXY VOTING. Pursuant to Board authority, the Adviser has the
authority to determine how proxies with respect to securities that are held by
the Fund shall be voted, and the Adviser may delegate the authority and
responsibility to vote proxies for the Fund's securities to the Sub-Adviser. So
long as proxy voting authority for the Fund has been delegated to the
Sub-Adviser, the Adviser shall provide such assistance to the Sub-Adviser with
respect to the voting of proxies for the Fund as the Sub-Adviser may from time
to time reasonably request, and the Adviser shall promptly forward to the
Sub-Adviser any information or documents necessary for the Sub-Adviser to
exercise its proxy voting responsibilities. The Sub-Adviser shall carry out
such responsibility in accordance with any instructions that the Board or the
Adviser shall provide from time to time, and at all times in a manner
consistent with Rule 206(4)-6 under the Advisers Act and its fiduciary
responsibilities to the Trust. The Sub-Adviser shall provide periodic reports
and keep such records relating to proxy voting as the Board may reasonably
request or as may be necessary for the Fund to comply with the 1940 Act and
other applicable law. Any such delegation of proxy voting responsibility to the
Sub-Adviser may be revoked or modified by the Board or the Adviser at any
time.
The Sub-Adviser is authorized to instruct the Fund's custodian and/or broker(s)
to forward promptly to the Sub-Adviser or designated service provider copies of
all proxies and
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shareholder communications relating to securities held in the portfolio of a
Fund (other than materials relating to legal proceedings against the Fund). The
Sub-Adviser may also instruct the Fund's custodian and/or broker(s) to provide
reports of holdings in the portfolio of the Fund. The Sub-Adviser has the
authority to engage a service provider to assist with administrative functions
related to voting Fund proxies. The Trust shall direct the Fund's custodian
and/or broker(s) to provide any assistance requested by the Sub-Adviser in
facilitating the use of a service provider. In no event shall the Sub-Adviser
have any responsibility to vote proxies that are not received on a timely
basis. The Trust acknowledges that the Sub-Adviser, consistent with the
Sub-Adviser's written proxy voting policies and procedures, may refrain from
voting a proxy if, in the Sub-Adviser's discretion, refraining from voting
would be in the best interests of the Fund and its shareholders.
(D) RECORDKEEOING. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Sub-Adviser
to supply to the Adviser, the Trust or its Board the information required to be
supplied under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Fund's assets advised by the Sub-Adviser required
by Rule 31a-1 under the 1940 Act (other than those records being maintained by
the Adviser, or any administrator custodian or transfer agent appointed by the
Fund) relating to its responsibilities provided hereunder with respect to the
Fund, and shall preserve such records for the periods and in a manner
prescribed therefore by Rule 31a-2 under the 1940 Act (the "Fund Books and
Records"). The Fund Books and Records shall be available to the Adviser and the
Board at any time upon request shall be delivered to the Trust upon the
termination of this Agreement and shall be available without delay during any
day the Trust is open for business.
(E) HOLDINGS INFORMATION AND PRICING. The Sub-Adviser shall provide
regular reports regarding the Fund's holdings, and may, on its own initiative,
furnish the Adviser, the Trust and its Board from time to time with whatever
information the Sub-Adviser believes is appropriate for this purpose. The
Sub-Adviser agrees to notify the Adviser and the Board promptly if the
Sub-Adviser reasonably believes that the value of any security held by a Fund
may not reflect fair value. The Sub-Adviser agrees to provide upon request any
pricing information of which the Sub-Adviser is aware to the Adviser, Trust,
its Board and/or any Fund pricing agent to assist in the determination of the
fair value of any Fund holdings for which market quotations are not readily
available or as otherwise required in accordance with the 1940 Act or the Fund
valuation procedures for the purpose of calculating the Trust's net asset value
in accordance with procedures and methods established by the Board.
(F),COOPERATION WITH AGENTS OF THE ADVISER AND THE TRUST. The
Sub-Adviser agrees to cooperate with and provide reasonable assistance to the
Adviser, the Trust and any Trust custodian or foreign sub-custodians, any Trust
pricing agents and all other agents and
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REPRESENTATIVES OF THE ADVISER AND THE TRUST WITH RESPECT TO SUCH INFORMATION
REGARDING THE FUND AS SUCH ENTITIES MAY REASONABLY REQUEST FROM TIME TO TIME IN
THE PERFORMANCE OF THEIR OBLIGATIONS, PROVIDE PROMPT RESPONSES TO REASONABLE
REQUESTS MADE BY SUCH PERSONS AND ESTABLISH APPROPRIATE INTERFACES WITH EACH SO
AS TO PROMOTE THE EFFICIENT EXCHANGE OF INFORMATION AND COMPLIANCE WITH
APPLICABLE LAWS AND REGULATIONS.
(G)SONSULTATION WITH OTHER SUB-ADVISERS. IN PERFORMANCE OF ITS DUTIES AND
OBLIGATIONS UNDER THIS AGREEMENT, THE SUB-ADVISER SHALL NOT CONSULT WITH ANY
OTHER SUB- ADVISER TO THE FUND OR A SUB-ADVISER TO A PORTFOLIO THAT IS UNDER
COMMON CONTROL WITH THE FUND CONCERNING TRANSACTIONS FOR THE FUND, EXCEPT AS
PERMITTED BY THE POLICIES AND PROCEDURES OF THE FUND. THE SUB-ADVISER SHALL NOT
PROVIDE INVESTMENT ADVICE TO ANY ASSETS OF THE FUND OTHER THAN THE ASSETS
MANAGED BY THE SUB-ADVISER.
2. CODE OF ETHICS. THE SUB-ADVISER HAS ADOPTED A WRITTEN CODE OF
ETHICS THAT IT REASONABLY BELIEVES COMPLIES WITH THE REQUIREMENTS OF RULE 17J-1
UNDER THE 1940 ACT, WHICH IT HAS PROVIDED TO THE ADVISER AND THE TRUST. THE
SUB-ADVISER SHALL ENSURE THAT ITS ACCESS PERSONS (AS DEFINED IN THE
SUB-ADVISER'S CODE OF ETHICS) COMPLY IN ALL MATERIAL RESPECTS WITH THE
SUB-ADVISER'S CODE OF ETHICS, AS IN EFFECT FROM TIME TO TIME. UPON REQUEST, THE
SUB-ADVISER SHALL PROVIDE THE TRUST WITH (I) A COPY OF THE SUB-ADVISER'S
CURRENT CODE OF ETHICS, AS IN EFFECT FROM TIME TO TIME, AND (II) A
CERTIFICATION THAT IT HAS ADOPTED PROCEDURES REASONABLY NECESSARY TO PREVENT
ACCESS PERSONS FROM ENGAGING IN ANY CONDUCT PROHIBITED BY THE SUB-ADVISER'S
CODE OF ETHICS. ANNUALLY, THE SUB-ADVISER SHALL FURNISH A WRITTEN REPORT, WHICH
COMPLIES WITH THE REQUIREMENTS OF RULE 17J-1, CONCERNING THE SUB-ADVISER'S CODE
OF ETHICS TO THE ADVISER AND THE TRUST'S BOARD. THE SUB-ADVISER SHALL RESPOND
TO REQUESTS FOR INFORMATION FROM THE ADVISER AND THE TRUST AS TO VIOLATIONS OF
THE CODE BY ACCESS PERSONS AND THE SANCTIONS IMPOSED BY THE SUB-ADVISER. THE
SUB-ADVISER SHALL IMMEDIATELY NOTIFY THE ADVISER AND THE TRUST OF ANY MATERIAL
VIOLATION OF THE CODE, WHETHER OR NOT SUCH VIOLATION RELATES TO A SECURITY HELD
BY ANY FUND.
3. INFORMATION AND REPORTING. THE SUB-ADVISER SHALL PROVIDE THE
ADVISER, THE TRUST, AND THEIR RESPECTIVE OFFICERS WITH SUCH PERIODIC REPORTS
CONCERNING THE OBLIGATIONS THE SUB-ADVISER HAS ASSUMED UNDER THIS AGREEMENT AS
THE ADVISER AND THE TRUST MAY FROM TIME TO TIME REASONABLY REQUEST.
(A) NOTIFICATION OF BREACH I COMPLIANCE REPORTS. THE SUB-ADVISER
SHALL NOTIFY THE TRUST'S CHIEF COMPLIANCE OFFICER AND ADVISER IMMEDIATELY UPON
DETECTION OF (1) ANY MATERIAL FAILURE TO MANAGE ANY FUND IN ACCORDANCE WITH ITS
INVESTMENT OBJECTIVES AND POLICIES OR ANY APPLICABLE LAW; OR (II) ANY MATERIAL
BREACH OF ANY OF THE FUND'S OR THE ADVISER'S POLICIES, GUIDELINES OR
PROCEDURES. IN ADDITION, THE SUB-ADVISER SHALL PROVIDE a QUARTERLY REPORT
REGARDING THE FUND'S COMPLIANCE WITH ITS INVESTMENT OBJECTIVES AND POLICIES,
APPLICABLE LAW, INCLUDING, BUT NOT LIMITED TO THE 1940 ACT AND SUBCHAPTER M OF
THE CODE, AND THE FUND'S AND THE ADVISER'S POLICIES, GUIDELINES OR PROCEDURES
AS APPLICABLE TO THE SUB-ADVISER'S OBLIGATIONS UNDER THIS AGREEMENT. THE
SUB-ADVISER ACKNOWLEDGES AND AGREES THAT THE ADVISER MAY, IN ITS DISCRETION,
PROVIDE SUCH QUARTERLY COMPLIANCE CERTIFICATIONS TO THE BOARD. THE SUB-ADVISER
AGREES TO CORRECT ANY SUCH FAILURE PROMPTLY AND TO TAKE ANY ACTION THAT THE
BOARD AND/OR THE ADVISER MAY REASONABLY REQUEST IN
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CONNECTION WITH ANY SUCH BREACH. UPON REQUEST, THE SUB-ADVISER SHALL ALSO
PROVIDE THE OFFICERS OF THE TRUST WITH SUPPORTING CERTIFICATIONS IN CONNECTION
WITH SUCH CERTIFICATIONS OF FUND FINANCIAL STATEMENTS AND DISCLOSURE CONTROLS
PURSUANT TO THE XXXXXXXX-XXXXX ACT. THE SUB-ADVISER WILL PROMPTLY NOTIFY THE
TRUST IN THE EVENT (I) THE SUB-ADVISER IS SERVED OR OTHERWISE RECEIVES NOTICE
OF ANY ACTION, SUIT, PROCEEDING, INQUIRY OR INVESTIGATION, AT LAW OR IN EQUITY,
BEFORE OR BY ANY COURT, PUBLIC BOARD, OR BODY, INVOLVING THE AFFAIRS OF THE
TRUST (EXCLUDING CLASS ACTION SUITS IN WHICH A FUND IS A MEMBER OF THE
PLAINTIFF CLASS BY REASON OF THE FUND'S OWNERSHIP OF SHARES IN THE DEFENDANT)
OR THE COMPLIANCE BY THE SUB-ADVISER WITH THE FEDERAL OR STATE SECURITIES LAWS
OR (II) AN ACTUAL CHANGE IN CONTROL OF THE SUB-ADVISER RESULTING IN AN
"ASSIGNMENT" (AS DEFINED IN THE 1940 ACT) HAS OCCURRED OR IS OTHERWISE PROPOSED
TO OCCUR.
(B)INSPECTION. UPON REASONABLE REQUEST, THE SUB-ADVISER AGREES TO MAKE ITS
RECORDS AND PREMISES (INCLUDING THE AVAILABILITY OF THE SUB-ADVISER'S EMPLOYEES
FOR INTERVIEWS) TO THE EXTENT THAT THEY RELATE TO THE CONDUCT OF SERVICES
PROVIDED TO THE FUND OR THE SUB-ADVISER'S CONDUCT OF ITS BUSINESS AS AN
INVESTMENT ADVISER REASONABLY AVAILABLE FOR COMPLIANCE AUDITS BY THE ADVISER OR
THE TRUST'S OFFICERS, EMPLOYEES, ACCOUNTANTS OR COUNSEL; IN THIS REGARD, THE
TRUST AND THE ADVISER ACKNOWLEDGE THAT THE SUB-ADVISER SHALL HAVE NO OBLIGATION
TO MAKE AVAILABLE PROPRIETARY INFORMATION UNRELATED TO THE SERVICES PROVIDED TO
THE FUND OR ANY INFORMATION RELATED TO OTHER CLIENTS OF THE SUB- ADVISER,
EXCEPT TO THE EXTENT NECESSARY FOR THE ADVISER TO CONFIRM THE ABSENCE OF ANY
CONFLICT OF INTEREST AND COMPLIANCE WITH ANY LAWS, RULES OR REGULATIONS IN THE
MANAGEMENT OF THE FUND.
(C) BOARD AND FILINGS INFORMATION. THE SUB-ADVISER WILL ALSO PROVIDE THE
ADVISER AND TRUST WITH ANY INFORMATION REASONABLY REQUESTED REGARDING ITS
MANAGEMENT OF THE FUND REQUIRED FOR ANY MEETING OF THE BOARD, OR FOR ANY
SHAREHOLDER REPORT, FORM N- CSR, FORM N-Q, FORM N-PX, FORM N-SAR, AMENDED
REGISTRATION STATEMENT, PROXY STATEMENT, OR PROSPECTUS SUPPLEMENT TO BE FILED
BY THE TRUST WITH THE COMMISSION. THE SUB-ADVISER WILL MAKE ITS OFFICERS AND
EMPLOYEES AVAILABLE TO MEET WITH THE BOARD FROM TIME TO TIME ON DUE NOTICE TO
REVIEW ITS INVESTMENT MANAGEMENT SERVICES TO THE FUND IN LIGHT OF CURRENT AND
PROSPECTIVE ECONOMIC AND MARKET CONDITIONS AND SHALL FURNISH TO THE BOARD SUCH
INFORMATION AS MAY REASONABLY BE NECESSARY IN ORDER FOR THE BOARD TO EVALUATE
THIS AGREEMENT OR ANY PROPOSED AMENDMENTS THERETO.
(D)TRANSACTION INFORMATION. THE SUB-ADVISER SHALL FURNISH TO THE ADVISER AND
THE TRUST SUCH INFORMATION CONCERNING PORTFOLIO TRANSACTIONS 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.
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4. BROKERAGE.
(A) PRINCIPAL TRANSACTIONS. In connection with purchases or sales of
securities for the account of a Fund, neither the Sub-Adviser nor any of its
directors, officers or employees will act as a principal or agent or receive
any commission except as permitted by the 1940 Act.
(B) PLACEMENT OF ORDERS. The Sub-Adviser shall arrange for the
placing of all orders for the purchase and sale of securities for a Fund's
account with brokers or dealers selected by the Sub-Adviser. In the selection
of such brokers or dealers and the placing of such orders, the Sub-Adviser is
directed at all times to seek for a Fund the most favorable execution and net
price available under the circumstances. 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 Fund with such brokers,
subject to review by the Adviser and the Board from time to time with respect
to the extent and continuation of this practice. It is understood that the
services provided by such brokers may be useful to the Sub-Adviser in
connection with its or its affiliates' services to other clients.
(C) AGGREGATED TRANSACTIONS. On occasions when the Sub-Adviser deems
the purchase or sale of a security to be in the best interest of a Fund as well
as other clients of the Sub-Adviser, the Sub-Adviser may, to the extent
permitted by applicable law and regulations, aggregate the order for securities
to be sold or purchased. In such event, the Sub-Adviser will allocate
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, in the manner the Sub-Adviser reasonably considers
to be equitable and consistent with its fiduciary obligations to a Fund and to
such other clients under the circumstances.
(D) AFFILIATED BROKERS. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Sub-Adviser
seek to obtain best execution and price within the policy guidelines determined
by the Board and set forth in a Fund's current Registration Statement; (b) the
provisions of the 1940 Act; (c) the provisions of the Advisers Act; (d) the
provisions of the 1934 Act; and (e) other provisions of applicable law. These
brokerage services are not within the scope of the duties of the Sub-Adviser
under this Agreement. Subject to the requirements of applicable law and any
procedures adopted by the Board, the Sub-Adviser or its affiliates may receive
brokerage commissions, fees or other remuneration from a Fund for these
services in addition to the Sub-Adviser's fees for services under this
Agreement.
5. CUSTODY. Nothing IN THIS AGREEMENT SHALL PERMIT THE SUB-ADVISER
TO TAKE or receive physical possession of cash, securities or other investments
of a Fund.
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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 or the
Adviser's expenses, including brokerage and other expenses incurred in placing
orders for the purchase and sale of securities and other investment
instruments.
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 and will, promptly after filing any
amendment to its Form ADV with the Commission or updating its Part II, furnish
a copy of such amendments or updates to the Trust. The information contained in
the Adviser's Form ADV is accurate and complete in all material respects and
does not omit to state any material fact necessary in order to make the
statements made, in light of the circumstances under which they were made, not
misleading.
(C) FUND DISCLOSURE DOCUMENTS. The Sub-Adviser has reviewed and will
in the future review, the Registration Statement, summary prospectus,
prospectus, statement of additional information, periodic reports to
shareholders, reports and schedules filed with the Commission (including any
amendment, supplement or sticker to any of the foregoing) and advertising and
sales material relating to the Fund (collectively the "Disclosure Documents")
and represents and warrants that 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.
(D) USE OF THE NAME "CORNERSTONE ADVISORS." The Sub-Adviser has the
right to use the name "Cornerstone Advisors" in connection with its services to
the Trust. The Sub-Adviser is not aware of any threatened or existing actions,
claims, litigation or proceedings that would adversely affect or prejudice the
rights of the Sub-Adviser or the Trust to use the name "Cornerstone Advisors."
(E)INSURANCE. The Sub-Adviser maintains errors and omissions insurance coverage
in an appropriate amount and shall provide prior written notice to the Trust
(i) of any material changes in its insurance policies or insurance coverage; or
(ii) if any material
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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 Fund, and that all selections shall be done in
accordance with what is in the best interest of the Fund.
(G) CONFLICTS. The Sub-Adviser shall act honestly, in good faith and
in the best interests of the Trust including requiring any of its personnel
with knowledge of Fund activities to place the interest of the Fund first,
ahead of their own interests, in all personal trading scenarios that may
involve a conflict of interest with the Fund, consistent with its fiduciary
duties under applicable law.
(H) REPRESENTATIONS. The representations and warranties in this
Section 7 shall be deemed to be made on the date this Agreement is executed 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 any termination of this Agreement, the Sub-Adviser will not
thereafter transact any business using the name "Cornerstone Advisors."
9. SUB-ADVISER'S COMPENSATION. The Fund shall pay to the
Sub-Adviser, as compensation for the Sub-Adviser's services hereunder, a fee,
determined as described in Schedule A that is attached hereto and made a part
hereof. Such fee shall be computed daily and paid not less than monthly in
arrears by the Fund.
The Sub-Adviser will be compensated based on the portion of Fund
assets allocated to the Sub-Adviser by the Adviser. The method for determining
net assets of the Fund for purposes hereof shall be the same as the method for
determining net assets for purposes of establishing the offering and redemption
prices of Fund shares as described in the Fund's prospectus. In the event of
termination of this Agreement, the fee provided in this Section shall be
computed on the basis of the period ending on the last business day on which
this Agreement is in effect subject to a pro rata adjustment based on the
number of days elapsed in the current month as a percentage of the total number
of days in such month.
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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
(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
9
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. 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.
(b) The Sub-Adviser shall be liable to the Fund for any loss
(including transaction costs) incurred by the Fund as a result of any
investment made by the Sub-Adviser in contravention of: (1) 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").
(c) The Sub-Adviser shall indemnify and hold harmless the Trust, each
affiliated person of the Trust within the meaning of Section 2(a)(3) of the
1940 Act, and each person who controls the Trust within the meaning of Section
15 of the 1933 Act (any such person, an "Indemnified Party") against any and
all losses, claims, damages, expenses or liabilities (including the reasonable
cost of investigating and defending any alleged loss,
10
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 Sub-Adviser of this Agreement or of the
representations and warranties made by the Sub-Adviser herein; (ii) any
Improper Investment; (iii) 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; or (iv) the
Sub-Adviser's performance or non-performance of its duties hereunder; 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) THE ADVISER AGREES to indemnify AND HOLD HARMLESS the Sub-Adviser
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 1.933 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) which are caused by (i) the
Adviser's willful misfeasance, bad faith, or gross negligence in the
performance of the Adviser's obligations and duties under this Agreement or
obligations and duties to the Trust or a Series under the Investment Advisory
Agreement, or (ii) by reason of the Adviser's reckless disregard of such
obligations and duties,
15. ENFORCEABILITY. Any term or provision of this Agreement WHICH is
invalid or unenforceable in any jurisdiction shall, as to such jurisdiction be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Agreement or affecting the validity or enforceability of any of the terms or
provisions of this Agreement in any other jurisdiction.
16. LIMITATION OF LIABILITY. The parties to this Agreement
acknowledge and agree that all litigation arising hereunder, whether direct or
indirect, and of any and every nature whatsoever shall be satisfied solely out
of the assets of the affected Fund and that no Trustee, officer or holder of
shares of beneficial interest of the Fund shall be personally liable for any of
the foregoing liabilities. The Trust's Certificate of Trust, as amended from
time to time, is on file in the Office of the Secretary of State of the
Commonwealth of Massachusetts. Such Certificate of Trust and the Trust's
Agreement and Declaration of Trust describe in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
11
(a) Other than with respect to Sections 14(a) and 14(b), the Sub-Adviser shall
not be liable for any error of judgment or mistake of law or for any loss
suffered by the Portfolio, the Trust or its shareholders or by Cornerstone or
SEI in connection with the matters to which this Agreement relates, except a
loss resulting from willful misfeasance, bad faith or negligence on its part in
the performance of its duties or from reckless disregard by it of its
obligations and duties under this Agreement.
(b) In no event will the Sub-Adviser have any responsibility for any other
portfolio of the Trust, for any portion of the Portfolio not managed by the
Sub-Adviser or for the acts or omissions of any Other Sub-Adviser to the Trust
or Portfolio. In particular, in the event the Sub-Adviser shall manage only a
Segment of the Portfolio, the Sub-Adviser shall have no responsibility for the
Portfolio's being in violation of any applicable law or regulation or
investment policy or restriction applicable to the Portfolio as a whole or for
the Portfolio's failing to qualify as a regulated investment company under the
Code, if the securities and other holdings of the Segment of the Portfolio
managed by the Sub-Adviser are such that such Segment would not be in such
violation or fail to so qualify if such Segment were deemed a separate series
of the Trust or a separate regulated investment company under the Code, unless
such violation was due to the Sub-Advisers failure to comply with written
guidelines adopted by the Board Cornerstone, or SEI and provided to the
Sub-Adviser.
Nothing in this section shall be deemed a limitation or waiver of any
obligation or duty that may not by law be limited or waived.
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.
18. Jurisdiction. This Agreement shall be governed by and construed
in accordance with the substantive laws of the Commonwealth of Massachusetts
and the Sub-Adviser consents to the jurisdiction of courts, both state or
federal, in Massachusetts, with respect to any dispute under this Agreement.
19. PARAGRAPH HEADINGS. The headings of paragraphs contained in this
Agreement are provided for convenience only, form no part of this Agreement and
shall not affect its construction.
20. COUNTERPARTS. This Agreement may be executed simultaneously in
two or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
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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:COO
XXXXXX X. XXXXX & CO. INCORPORATED
By: /s/ Reik Read
Name: Reik Read
Title: Managing Director
13
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED JANUARY 15, 2016 BETWEEN
CORNERSTONE ADVISORS INC.
AND
XXXXXX X. XXXXX & CO. INCORPORATED
Each 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 RATE
--------------------------------------------------------------------------------
[redacted]
14
INVESTMENT GUIDELINES
MANDATE: GLOBAL EQUITY
INDEX: MSCI ACWI INDEX
PERMITTED SECURITIES
o Common stock.
o Preferred stock.
o Securities convertible into common stock.
o Depository receipts (ADRs, GDRs, EDRs, etc.).
PROHIBITED TRANSACTIONS:
o Sell securities short.
PORTFOLIO GUIDELINES
o The portfolio is to generally remain fully invested with a cash
position not to exceed 5%. Cash may temporarily go above 5% during
brief periods between significant sale and purchase transactions and
due to client cash flows.
o The portfolio will typically hold 30-50 securities.
o Holdings in a single company will typically not exceed 10% of the
portfolio's market value.
o investments will be allocated among a broad number of countries to
ensure adequate diversification of country and/or region-specific
risk.
o No sector can comprise more than 50% of THE portfolio's market value.
o Companies domiciled in emerging markets will not exceed 35% of the
portfolios' market value.
15
