EXHIBIT Q
SUB-ADVISORY AGREEMENT
SUB-ADVISORY AGREEMENT (the "Agreement") made as of this 1st day of
May, 2014 by and between Cornerstone Advisors Inc., a Washington corporation
with its principal place of business at 225 -- ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇, ▇▇▇▇▇ ▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇ (the "Adviser"), and Strategic Income
Management, LLC a Washington limited liability company with its principal place
of business at ▇▇▇ ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇ (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 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 a
portion of the assets 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 a portion of the assets of
the Fund, as allocated and directed by Adviser (the "Allocated Fund Assets"). 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
Allocated Fund 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 in connection with the Allocated Fund Assets and what such
securities shall be held or sold by the Fund in connection with the Allocated
Fund Assets, 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
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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 Allocated Fund Asset'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 Allocated Fund Assets or to otherwise exercise its right to control the
overall management of the Allocated Fund 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. 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 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
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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) 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 Allocated Fund Assets as are required of an
investment adviser of a registered investment company pursuant to the
Investment Company Act and Advisers Act and the rules thereunder (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 Allocated Fund Asset'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 in the
Allocated Fund Assets 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 Allocated Fund Asset 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 Allocated Fund Assets as
such entities may reasonably request from time to time in the performance of
their obligations, provide prompt responses to reasonable
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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 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 / 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 Allocated Fund Assets 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 Allocated Fund Asset'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 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
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disclosure controls pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ 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.
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
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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 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.
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
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expenses incurred in placing orders for the purchase and sale of securities and
other investment instruments.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS OF SUB ADVISER.
(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
material amendment to its Form ADV with the Commission or materially 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) (collectively the
"Disclosure Documents") and represents and warrants that, with respect to
matters specifically applicable to the Allocated Fund Assets, to its best
knowledge and belief, 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 does not currently maintain errors
and omissions insurance coverage, and if in the future Sub-Adviser shall obtain
such insurance it will be in an appropriate amount and Sub-Adviser 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 claims will
be made on its insurance policies.
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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. REPRESENTATIONS, WARRANTIES AND COVENANTS OF ADVISER.
(a) PROPERLY REGISTERED. The Adviser is registered as an investment
adviser under the Advisers Act, and will remain so registered for the duration
of this Agreement.
The Adviser is not prohibited by the Advisers Act or the 1940 Act from entering
into this Agreement, and to the best knowledge of the Adviser, there is no
proceeding or investigation that is reasonably likely to result in the Adviser
being prohibited from performing the services contemplated by this Agreement.
The Adviser agrees to promptly notify Sub-Adviser of the occurrence of any
event that would disqualify the Adviser from serving as an investment adviser
to an investment company. The 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. Adviser acknowledges receipt of Part II of
Sub-Adviser's Form ADV at least 48 hours prior to entering into this Agreement,
as required by Rule 204-3 under the Advisers Act.
(c) FUND DISCLOSURE DOCUMENTS. Adviser will deliver to the
Sub-Adviser a true and complete copy of the Fund's then current Prospectus and
Statement of Additional Information as effective from time to time and such
other documents or instruments governing the investment of the Allocated Fund
Assets and such other information as is necessary for the Sub-Adviser to carry
out its obligations under this Agreement. To the best of its knowledge and
belief Adviser represents and warrants that the 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.
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(d) Adviser has been duly authorized by the Trustees to delegate to
Sub-Adviser the provision of investment services to the Allocated Fund Assets
as contemplated hereby.
(e) REPRESENTATIONS. The representations and warranties in this
Section 8 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 Adviser 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 Adviser. The Fund shall have no responsibility for any fee
payable to the Sub-Adviser.
The Sub-Adviser will be compensated based on the portion of Fund
assets allocated to the Sub-Adviser by the Adviser. The method for determining
net assets of 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 NON-EXCLUSIVITY. 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.
The services of Sub-Adviser to Adviser, the Funds and the Trust are not
exclusive, and Sub-Adviser shall be free to render investment advisory or other
services to others and to engage in
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other activities, including, without limitation, providing investment advisory
services to other registered investment companies following similar or
identical investment strategies as followed by the Fund. Except as otherwise
prohibited by applicable law, this Agreement shall not prohibit Sub-Adviser, or
its directors, officers, and employees from engaging in any other business
activity or from rendering services to any other person, or from serving as
partners, officers, directors, trustees, or employees of any other firm or
corporation.
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 ▇▇▇▇ ▇▇▇) 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 12 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
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(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) Subject to subsection (c), below, 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 in so far as they
specifically relate to Allocated Fund Assets.
(b) Subject to subsection (c), below, the Sub-Adviser shall be liable
to the Fund for any loss (including transaction costs, but excluding lost
profits) incurred by the Fund 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 (the investments described in this
subsection (b) collectively are referred to as "Improper Investments").
(c) The Sub-Adviser shall not be liable for any action taken, omitted
or suffered to be taken by it in its reasonable judgment, in good faith and
reasonably believed by it to be authorized or within the discretion, rights or
powers conferred upon it by this Agreement, or in accordance with (or in the
absence of) specific directions or instructions from the Trust or the Adviser,
provided, however, that such acts or omissions shall not have resulted from the
Sub-Adviser's willful misfeasance, bad faith, gross negligence or a reckless
disregard of duty. Nothing in this Section 14(c) shall be construed in a
manner
11
inconsistent with Section 17(i) of the 1940 Act.
15. INDEMNITIES.
(a) 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 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) in so far as they
specifically relate to Allocated Fund Assets, 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.
(b) The Adviser shall indemnify and hold harmless the Sub-Adviser,
and its officers, directors and employees (any such person, an "Indemnified
Party") against any and all losses, claims, damages, expenses or liabilities
(including the reasonable cost of investigating and defending any alleged loss,
claim, damage, expense or liability and reasonable counsel fees incurred in
connection therewith) to which any such person may become subject under the
1933 Act, the 1934 Act, the 1940 Act or other federal or state statutory law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages, expenses or liabilities (or actions in respect thereof) arise out of
or are based upon: (i) a breach by the Adviser of this Agreement or of the
representations and warranties made by the Adviser herein; (ii) any untrue
statement or alleged untrue statement of a material fact contained in any
Disclosure Document or the omission or alleged omission from a Disclosure
Document of a material fact required to be stated therein or necessary to make
the statements therein not misleading for which Sub-Adviser is not otherwise
responsible pursuant to Section 14(a), above; or (iii) Adviser's performance or
non-performance of its duties hereunder; provided, however, that nothing herein
shall be deemed to protect any Indemnified Party against any liability 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.
12
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.
17. CHANGE IN THE ADVISER'S OWNERSHIP. The Sub-Adviser and Adviser
each agrees that it shall notify the other, and in the case of the Sub-Adviser
the Trust as well, of any anticipated or otherwise reasonably foreseeable
change in the ownership of the Sub-Adviser or 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 State of Washington and the
Sub-Adviser consents to the jurisdiction of courts, both state or federal, in
Washington, 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/ ▇▇▇▇▇ ▇▇▇▇
Name: ▇▇▇▇▇ ▇▇▇▇
Title: Secretary
Strategic Income Management, LLC
By: /s/ ▇▇▇ ▇▇▇▇▇
Name: ▇▇▇ ▇▇▇▇▇
Title:Chief Operating Officer
14
SCHEDULE A
TO THE
SUB-ADVISORY AGREEMENT
DATED MAY 1, 2014 BETWEEN
CORNERSTONE ADVISORS INC.
AND
STRATEGIC INCOME MANAGEMENT, LLC
The Adviser 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
Income Opportunities Fund [REDACTED]
15