SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 7th day
of August, 2012 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 Xxxxxxxxx
XxXxxxx, LLC, a Delaware limited liability company with its principal place of
business at 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 (the
"Sub-Adviser").
W I T N E S S E T H
WHEREAS, pursuant to authority granted to the Adviser by the Board of
Trustees (the "Board") of THE ADVISORS' INNER CIRCLE FUND (the "Trust") on
behalf of the series set forth on Schedule A to this Agreement (the "Fund") and
pursuant to the provisions of the Investment Advisory Agreement dated as of
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 management 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 ("Allocated Assets"), consistent
with the investment objectives and policies of the fund as applicable to the
Allocated Assets and articulated in the investment guidelines and restrictions
provided in writing to the Sub-Adviser by the Adviser and attached as Schedule B
to this Agreement ("Investment Guidelines and Restrictions"). The Sub-Adviser
shall determine, from time to time, what investments shall be purchased and what
such securities shall be held or sold from the portfolio of the Allocated Assets
("Portfolio"), subject always to the Investment Guidelines and Restrictions and
in accordance with the provisions of the Trust's Agreement and Declaration of
Trust, ByLaws 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
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
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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 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 Portfolio'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 applicable
requirements of the Investment Company Act of 1940, as amended ("1940 Act"),
the Investment Advisers Act of 1940, as amended (the "Advisers Act"), the
Securities Act of 1933 Act, as amended ("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 Investment Guidelines and Restrictions in accordance 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 pertaining to the Portfolio 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 writing from time to time. 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 and does herein 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 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.
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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 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 Portfolio and its shareholders.
(d) RECORDKEEPING. The Sub-Adviser shall not be responsible for the
provision of administrative, bookkeeping or accounting services to the Fund,
except as otherwise provided herein or as may be necessary for the Sub-Adviser
to supply to the Adviser, the Trust or its Board the information required to be
supplied under this Agreement.
The Sub-Adviser shall maintain separate books and detailed records of
all matters pertaining to the Portfolio's assets advised by the Sub-Adviser
required in accordance with its recordkeeping policy, such policy being
consistent with 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 in accordance with its
recordkeeping policy, where such policy is consistent with all applicable law
("Records"). The Records shall be available to the Adviser and the Board upon
reasonable request
(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 notify the Adviser and the Board promptly if the
Sub-Adviser reasonably believes that the value of any security held in the
Portfolio 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 such 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
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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
prompt responses to reasonable requests made by such persons and establish
appropriate interfaces with each so as to promote the efficient exchange of
information and compliance with applicable laws and regulations.
(g) CONSULTATION WITH OTHER SUB-ADVISERS. In performance of its
duties and obligations under this Agreement, the Sub-Adviser shall not consult
with any other sub-adviser to the Fund or a sub-adviser to a portfolio that is
under common control with the Fund concerning transactions for the Portfolio,
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 in the Portfolio.
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 reasonable 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 in the Portfolio.
3. INFORMATION AND REPORTING. The Sub-Adviser shall provide the
Adviser, the Trust, and their respective officers with such periodic reports
concerning the obligations the Sub-Adviser has assumed under this Agreement as
the Adviser and the Trust may from time to time reasonably request.
(a) NOTIFICATION OF BREACH / COMPLIANCE REPORTS. The Sub-Adviser
shall notify the Trust's Chief Compliance Officer and Adviser immediately upon
detection of (i) any material failure to manage any Fund in accordance with its
investment objectives and policies or any applicable law; or (ii) any material
breach of any of the Fund's or the Adviser's 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
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failure promptly and to take any action that the Board and/or the Adviser may
reasonably request in 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 Portfolio 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 reasonable 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 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 Portfolio, 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 the Portfolio
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 the Portfolio best execution. It is also understood
that it is desirable for the Portfolio 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 Portfolio 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 to be in the best interest of the 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
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 the
Portfolioand to such other clients under the circumstances.
(d) AFFILIATED BROKERS. The Sub-Adviser or any of its affiliates may
act as broker in connection with the purchase or sale of securities or other
investments for a Fund, subject to: (a) the requirement that the Sub-Adviser
seek to obtain best execution within the policy guidelines determined by the
Board and set forth in a Fund's current Registration Statement; (b) the
provisions of the 1940 Act; (c) the provisions of the 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 the Portfolio 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.
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
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shall not be responsible for the Portfolio's or the Adviser's expenses,
including brokerage and other expenses incurred in placing orders for the
purchase and sale of securities and other investment instruments.
7. REPRESENTATIONS AND WARRANTIES
(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 2A and 2B as most recently updated and will, promptly after filing any
amendment to its Form ADV with the Commission or updating its Part 2A or 2B,
furnish a copy of such amendments or updates to the Trust. The information
contained in the Sub-Adviser's Form ADV is believed to be 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 shall use its best
efforts to 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 Portfolio (collectively the "Disclosure Documents") in order to make sure
that the Disclosure Documents contain or will contain no untrue statement of
any material fact relating to the Portfolio and do not and will not omit any
statement of material fact relating to the Portfolio required to be stated
therein or necessary to make the statements therein not misleading. The Adviser
represents and agrees that the Investment Guidelines and Restrictions provided
to the Sub-Adviser are consistent with the Disclosure Statements and that the
Sub-Adviser shall rely on those Investment Guidelines and Restrictions in
providing its advisory services to the Portfolio.
(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 Portfolio. 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 to use
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the name "Cornerstone Advisors." Further, Adviser authorizes Sub-Adviser to
use Adviser's or the Trust's name in a representative sample of Sub-Adviser's
clients for marketing purposes. Adviser understands that Adviser's or the
Trust's name may appear in quarterly updates, presentation material and other
marketing materials sent to prospective clients, consultants of the Sub-Adviser
and other persons. Adviser or Trust may revoke such consent to Sub-Adviser upon
written notice at any time and for any reason.
(e) INSURANCE. The Sub-Adviser maintains errors and omissions
insurance coverage in an appropriate amount and shall provide written notice to
the Trust (i) of any material decreases in its insurance policies or insurance
coverage applicable to the services under this Agreement; or (ii) if any
material claims will be made on its insurance policies applicable to the
services provided under this Agreement. Furthermore, the Sub-Adviser shall,
upon reasonable request, provide the Trust with reasonable 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 the Portfolio, and that all selections shall be
done in accordance with what is in the best interest of the Portfolio.
(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 the Portfolio activities to place the interest of the
Portfolio first, ahead of their own interests, in all personal trading
scenarios that may involve a conflict of interest with the Portfolio, pursuant
to the Sub-Adviser's personal trading policy which is consistent with its
fiduciary duties under applicable law. Notwithstanding the forgoing, nothing
in this Agreement shall be deemed to require the Sub-Adviser, its principals,
affiliates, agents or employees to purchase or sell for the Portfolio any
security which it or they may purchase or sell for its or their own account or
for the account of any other client.
(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
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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 Portfolio assets. The
method for determining net assets of the Portfolio 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. CONFIDENTIALITY. Subject to the duty of the Adviser or Sub-Adviser to
comply with applicable law, including any demand of any regulatory or taxing
authority having jurisdiction, the parties hereto shall treat as confidential
all non-public information pertaining to the Portfolio. It is understood that
any information or recommendation supplied by the Sub-Adviser in connection
with the performance of its obligations hereunder is to be regarded as
confidential and for use only by the Adviser with respect to the Portfolio or
such persons as the Adviser may designate in connection with the Portfolio for
the specific limited purpose of fulfilling the duties and obligations under
this Agreement. It is also understood that any information supplied to the
Sub-Adviser in connection with the performance of its obligations hereunder is
to be regarded as confidential and for use only by the Sub-Adviser in
connection with its obligation to provide investment advice and other services
to the Portfolio. The parties acknowledge and agree that all nonpublic personal
information with regard to shareholders in a Fund shall be deemed proprietary
information of the Trust, and where the Sub-Adviser has this information that
the Sub-Adviser shall use that information solely in the performance of its
duties and obligations under this Agreement and shall take reasonable steps to
safeguard the confidentiality of that information. Further, the Sub-Adviser
shall maintain and enforce adequate security procedures with respect to all
materials, records, documents and data relating to any of its responsibilities
pursuant to this Agreement including all means for the effecting of investment
transactions.
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12. 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.
13. 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(d) 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
10
the Sub-Adviser under applicable law. In addition, the Sub-Adviser shall
deliver the Portfolio's 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.
14. 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.
15. 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 made to the
Trust and/or Adviser regarding the Sub-Adviser 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 Portfolio as a result of any
investment made by the Sub-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"). For avoidance of doubt, any investment decision made in
accordance with the Sub-Adviser's fiduciary duty and consistent with the
Investment Guidelines and Restrictions would not constitute an Improper
Investment and accordingly would not lead to liability or indemnification on
the part of the Sub-Adviser under this Agreement.
(c) The Sub-Adviser shall indemnify and hold harmless the Trust, each
affiliated person of the Trust within the meaning of Section 2(a)(3) of the
1940 Act, and each person who controls the Trust within the meaning of Section
15 of the 1933 Act (any such person, an "Indemnified Party") against any and
all losses, claims, damages, expenses or liabilities (including the reasonable
cost of investigating and defending any alleged loss, claim, damage, expense or
liability and reasonable counsel fees incurred in connection therewith) to
which any such person may become subject under applicable law, insofar as such
losses, claims, damages, expenses or liabilities (or actions in respect
thereof) arise out of: (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
11
Investment; (iii) any untrue statement of a material fact or the omission of a
material fact made or omitted by the Sub-Adviser to the Adviser for Adviser's
use in the Disclosure Document as required to be stated therein or necessary to
make the statements therein not misleading; or (iv) the Sub-Adviser's grossly
negligent 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, negligence or reckless disregard
of the duties involved in the conduct of such person's office with the Trust.
In no event shall the Sub-Adviser be liable for or indemnify any Indemnified
Party for the Indemnified Party's willful misfeasance, bad faith, negligence or
reckless disregard of their duties under this Agreement. The Sub-Adviser shall
not be liable for or indemnify for any act or omission by Adviser, the Trust,
broker, custodian or any other third-party.
(d) The Adviser shall indemnify and hold harmless the Sub-Adviser,
its officers, directors and employees (each such person, an "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 applicable law, insofar as such losses, claims, damages, expenses or
liabilities (or actions in respect thereof) arise out of: (i) a material breach
by the Adviser of this Agreement or of the representations and warranties made
by the Adviser herein; (iii) omitted, incomplete, and/or inaccurate statements
in the Investment Guidelines and Restrictions provided in writing to the
Sub-Adviser; or (iv) the Adviser's grossly negligent performance or
non-performance of its duties hereunder; provided, however, that Adviser shall
not be liable for or indemnify any Sub-Adviser Indemnified Party for such
Sub-Adviser Indemnified Party's willful misfeasance, bad faith, negligence or
reckless disregard of their duties under this Agreement.
16. 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.
17. 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. In no event shall the parties to this Agreement be liable
for indirect, consequential or special damages.
12
18. CHANGE IN THE ADVISER'S OWNERSHIP. The Sub-Adviser agrees that it
shall notify the Trust and the Adviser of any anticipated or otherwise
reasonably foreseeable material change in the ownership of the Sub-Adviser
within a reasonable time prior to such change being effected.
19. JURISDICTION. This Agreement shall be governed by and construed
in accordance with the substantive laws of the State of New York and the
Sub-Adviser consents to the jurisdiction of courts, both state or federal, in
New York, with respect to any dispute under this Agreement.
20. 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.
21. 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.
13
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
XXXXXX XXXXXXXXX XXXXXXX, LLC
By: /s/ Xxxxxx Xxxx
Name: Xxxxxx Xxxx
Title: EVP/CFO
14
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED AUGUST 7, 2012 BETWEEN
CORNERSTONE ADVISORS INC.
AND
XXXXXX XXXXXXXXX XXXXXXX, 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 RATE
---- ----
Global Public Equity Fund 0.70% on 0-$50 million
0.50% on over $50 million
15
