ADVISORY AGREEMENT
ADVISORY AGREEMENT made as of this 13th day of July, 2005 by and
between The Advisors' Inner Circle Fund (the "Trust"), a Massachusetts business
trust registered as an investment company under the Investment Company Act of
1940, as amended (the "1940 Act"), and Sterling Capital Management, LLC, a North
Carolina limited liability company with its principal place of business at 0000
Xxxxxx Xxxx, Xxxxx 000, Xxxxxxxxx, XX 00000 (the "Adviser").
WITNESSETH
WHEREAS, the Board of Trustees (the "Board") of the Trust has selected
the Adviser to act as investment adviser to the Trust on behalf of the series
set forth on Schedule A to this Agreement (each a "Fund" and, collectively, the
"Funds"), as such Schedule may be amended from time to time upon mutual
agreement of the parties, 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 Trust and the Adviser do hereby agree as follows:
1. THE ADVISER'S SERVICES.
(a) Discretionary Investment Management Services. The Adviser shall act as
investment adviser with respect to the Funds. In such capacity, the Adviser
shall, subject to the supervision of the Board, regularly provide the Funds with
investment research, advice and supervision and shall furnish continuously an
investment program for the Funds, consistent with the respective investment
objectives and policies of each Fund. The Adviser shall determine, from time to
time, what securities shall be purchased for the Funds, what securities shall be
held or sold by the Funds and what portion of the Funds' assets shall be held
uninvested in cash, 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 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 Funds, as each of the same shall be
from time to time in effect. To carry out such obligations, the Adviser shall
exercise full discretion and act for the Funds in the same manner and with the
same force and effect as the Funds themselves 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. No reference in this Agreement to the
Adviser having full discretionary authority over each Fund's investments shall
in any way limit the right of the Board, in its sole discretion, to establish or
revise policies in connection with the management of a Fund's assets or to
otherwise exercise its right to control the overall management of a Fund.
(b) Compliance. The Adviser agrees to comply with the requirements of the
1940 Act, the Investment Advisers Act of 1940 (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 Adviser also agrees to comply with the objectives, policies and restrictions
set forth in the Registration Statement, as amended or supplemented, of the
Funds, and with any policies, guidelines, instructions and procedures approved
by the Board and provided to the Adviser. In selecting each Fund's portfolio
securities and performing the Adviser's obligations hereunder, the 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 Adviser
shall maintain compliance procedures that it reasonably believes are adequate to
ensure the its compliance with the foregoing. No supervisory activity undertaken
by the Board shall limit the Adviser's full responsibility for any of the
foregoing.
(c) Proxy Voting. The Board has the authority to determine how proxies with
respect to securities that are held by the Funds shall be voted, and the Board
has initially determined to delegate the authority and responsibility to vote
proxies for the Fund's securities to the Adviser. So long as proxy voting
authority for the Fund has been delegated to the Adviser, the Adviser shall
exercise its proxy voting responsibilities and shall carry out such
responsibility in accordance with any instructions that the Board 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
Adviser shall provide periodic reports and keep records relating to proxy voting
as the Board may reasonably request or as may be necessary for the Funds to
comply with the 1940 Act and other applicable law. Any such delegation of proxy
voting responsibility to the Adviser may be revoked or modified by the Board at
any time.
(d) Recordkeeping. The 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 Adviser to supply to
the Trust or its Board the information required to be supplied under
thisAgreement.
The Adviser shall maintain separate books and detailed records of all
matters pertaining to Fund assets advised by the Adviser required by Rule 31a-1
under the 1940 Act (other than those records being maintained by any
administrator, custodian or transfer agent appointed by the Funds) relating to
its responsibilities provided hereunder with respect to the Funds, 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 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 Adviser shall provide regular
reports regarding Fund holdings, and shall, on its own initiative, furnish the
Trust and its Board from time to time with whatever information the Adviser
believes is appropriate for this purpose. The Adviser agrees to immediately
notify the Trust if the Adviser reasonably believes that the value of any
security held by a Fund may not reflect fair value. The Adviser agrees to
provide any pricing information of which the Adviser is aware to the 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 Trust's
valuation procedures for the purpose of calculating the Fund net asset value in
accordance with procedures and methods established by the Board.
(f) Cooperation with Agents of the Trust. The Adviser agrees to cooperate
with and provide reasonable assistance to the Trust, any Trust custodian or
foreign sub-custodians, any Trust pricing agents and all other agents and
representatives of the Trust, such information with respect to the Funds as they
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.
2. CODE OF ETHICS. The 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 will provide to the Trust. The Adviser shall ensure that its
Access Persons (as defined in the Adviser's Code of Ethics) comply in all
material respects with the Adviser's Code of Ethics, as in effect from time to
time. Upon request, the Adviser shall provide the Trust with a: (i) a copy of
the Adviser's current Code of Ethics, as in effect from time to time; and (ii)
certification that it has adopted procedures reasonably necessary to prevent
Access Persons from engaging in any conduct prohibited by the Adviser's Code of
Ethics. Annually, the Adviser shall furnish a written report, which complies
with the requirements of Rule 17j-1, concerning the Adviser's Code of Ethics to
the Trust. The Adviser shall respond to requests for information from the Trust
as to violations of the Code by Access Persons and the sanctions imposed by the
Adviser. The Adviser shall immediately notify the Trust of any material
violation of the Code, whether or not such violation relates to an security held
by any Fund.
3. INFORMATION AND REPORTING. The Adviser shall provide the Trust and its
respective officers with such periodic reports concerning the obligations the
Adviser has assumed under this Agreement as the Trust may from time to time
reasonably request.
(a) Notification of Breach/Compliance Reports. The Adviser shall notify the
Trust 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 Funds' or the Adviser's policies,
guidelines or procedures. In addition, the Adviser shall provide a quarterly
report regarding each 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 policies, guidelines or procedures as
applicable to the Adviser's obligations under this Agreement. The Adviser agrees
to correct any such failure promptly and to take any action that the Board may
reasonably request in connection with any such breach. Upon request, the 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 Adviser will promptly notify
the Trust in the event: (i) the 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 Adviser with the federal or state securities laws; or (ii) an
actual change in control of the Adviser resulting in an "assignment" (as defined
in the 1940 Act) has occurred or is otherwise proposed to occur.
(b) Board and Filings Information. The Adviser will also provide the Trust
with any information reasonably requested regarding its management of the Funds
required for any meeting of the Board, or for any shareholder report, amended
registration statement, proxy statement, or prospectus supplement to be filed by
the Trust with the Commission. The 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 Funds 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.
(c) Transaction Information. The Adviser shall furnish to the Trust such
information concerning portfolio transactions as may be necessary to enable the
Trust or its designated agent to perform such compliance testing on the Funds
and the Adviser's services as the Trust may, in its sole discretion, determine
to be appropriate. The provision of such information by the Adviser to the Trust
or its designated agent in no way relieves the 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 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 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 Adviser. In the selection of such brokers or dealers
and the placing of such orders, the Adviser is directed at all times to seek for
the 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
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
Adviser is authorized to place orders for the purchase and sale of securities
for a Fund with such brokers, subject to review by 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 Adviser in
connection with its or its affiliates' services to other clients.
(c) Aggregated Transactions. On occasions when the 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 Adviser, the 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 Adviser will allocate securities or futures
contracts so purchased or sold, as well as the expenses incurred in the
transaction, in the manner the Adviser reasonably considers to be equitable and
consistent with its fiduciary obligations to the Fund and to such other clients
under the circumstances.
(d) Affiliated Brokers. The 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 Adviser seek to
obtain best execution and price within the policy guidelines determined by the
Board and set forth in the Fund's current prospectus and SAI; (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 Adviser under this
Agreement. Subject to the requirements of applicable law and any procedures
adopted by the Board, the Adviser or its affiliates may receive brokerage
commissions, fees or other remuneration from a Fund for these services in
addition to the Adviser's fees for services under this Agreement.
5. CUSTODY. Nothing in this Agreement shall permit the Adviser to take or
receive physical possession of cash, securities or other investments of a Fund.
6. ALLOCATION OF CHARGES AND EXPENSES. The Adviser will bear its own costs of
providing services hereunder. Other than as herein specifically indicated, the
Adviser shall not be responsible for a Fund's expenses, including brokerage and
other expenses incurred in placing orders for the purchase and sale of
securities and other investment instruments.
7. REPRESENTATIONS, WARRANTIES AND COVENANTS.
(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 performing the services contemplated by 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
the Trust 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. The Adviser has provided the Trust with a copy of its
Form ADV as most recently filed with the SEC and will, promptly after filing any
amendment to its Form ADV with the SEC, furnish a copy of such amendments 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 Adviser has reviewed and will in the
future review, the Registration Statement, and any amendments or supplements
thereto, the annual or semi-annual reports to shareholders, other reports filed
with the Commission and any marketing material of a Fund (collectively the
"Disclosure Documents") and represents and warrants that with respect to
disclosure about the Adviser, the manner in which the Adviser manages the Fund
or information relating directly or indirectly to the Adviser, such Disclosure
Documents contain or will contain, as of the date thereof, no untrue statement
of any material fact and does not omit any statement of material fact which was
required to be stated therein or necessary to make the statements contained
therein not misleading.
(d) Use Of The Name "Sterling Capital." The Adviser has the right to use
the name "Sterling Capital" in connection with its services to the Trust and
that, subject to the terms set forth in Section 8 of this Agreement, the Trust
shall have the right to use the name "Sterling Capital" in connection with the
management and operation of the Funds. The Adviser is not aware of any
threatened or existing actions, claims, litigation or proceedings that would
adversely effect or prejudice the rights of the Adviser or the Trust to use the
name "Sterling Capital".
(e) Insurance. The 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 claims will be made on its insurance policies.
Furthermore, the 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 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 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 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 Funds, 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 "STERLING CAPITAL." The Adviser grants to the Trust a license to use
the name "Sterling Capital" (the "Name") as part of the name of any Fund. The
foregoing authorization by the Adviser to the Trust to use the Name as part of
the name of any Fund is not exclusive of the right of the Adviser itself to use,
or to authorize others to use, the Name; the Trust acknowledges and agrees that,
as between the Trust and the Adviser, the Adviser has the right to use, or
authorize others to use, the Name. The Trust shall: (1) only use the Name in a
manner consistent with uses approved by the Adviser; (2) use its best efforts to
maintain the quality of the services offered using the Name; and (3) adhere to
such other specific quality control standards as the Adviser may from time to
time promulgate. At the request of the Adviser, the Trust will: (a) submit to
Adviser representative samples of any promotional materials using the Name; and
(b) change the name of any Fund within three months of its receipt of the
Adviser's request, or such other shorter time period as may be required under
the terms of a settlement agreement or court order, so as to eliminate all
reference to the Name and will not thereafter transact any business using the
Name in the name of any Fund; provided, however, that the Trust may continue to
use beyond such date any supplies of prospectuses, marketing materials and
similar documents that the Trust had on had at the date of such name change in
quantities not exceeding those historically produced and used in connection with
such Fund.
9. ADVISER'S COMPANSATION. The Funds shall pay to the Adviser, as compensation
for the Adviser's services hereunder, a fee, determined at the rate described in
Schedule A that is attached hereto and made a part hereof. Such fee shall be
paid to the Adviser at the end of each month and shall be calculated by applying
a daily rate, based on the annual percentage rates as specified in Schedule A,
to the assets. The fee shall be based on the average daily net assets for the
month involved.
The method for determining net assets of a Fund for purposes hereof
shall be the same as the method for determining net assets for purposes of
establishing the offering and redemption prices of Fund shares as described in
the Fund's prospectus. In the 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.
All rights of compensation under this Agreement for services performed
as of the termination date shall survive the termination of this Agreement.
10. INDEPENDENT CONTRACTOR. In the performance of its duties hereunder, the
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 Trust or any Fund in any way or otherwise
be deemed to be an agent of the Trust or any Fund. If any occasion should arise
in which the Adviser gives any advice to its clients concerning the shares of a
Fund, the 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, in the event of its assignment (as defined
in Section 2(a)(4) of the 1940 Act); provided that such termination shall not
relieve the 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, unless sooner terminated as
provided herein, shall remain in effect until two years from date of execution,
and thereafter, for periods of one year so long as such continuance thereafter
is specifically approved at least annually: (a) by the vote of a majority of
those Trustees of the Trust who are not parties to this Agreement or interested
persons of any such party, cast in person at a meeting called for the purpose of
voting on such approval; and (b) by the Trustees of the Trust or by vote of a
majority of the outstanding voting securities of a Fund; provided, however, that
if the shareholders of a Fund fail to approve the Agreement as provided herein,
the Adviser may continue to serve hereunder in the manner and to the extent
permitted by the 1940 Act and rules and regulations thereunder. The foregoing
requirement that continuance of this Agreement be "specifically approved at
least annually" shall be construed in a manner consistent with the 1940 Act and
the rules and regulations thereunder.
This Agreement may be terminated as to a Fund at any time, without the
payment of any penalty by vote of a majority of the Trustees of the Trust or by
vote of a majority of the outstanding voting securities of the Fund on not less
than 30 days nor more than 60 days written notice to the Adviser, or by the
Adviser at any time without the payment of any penalty, on 90 days written
notice to the Trust. Any notice under this Agreement shall be given in writing,
addressed and delivered, or mailed postpaid, to the other party at any office of
such party.
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 ADVISER. The Adviser shall indemnify and hold harmless the
Trust and all affiliated persons thereof (within the meaning of Section 2(a)(3)
of the 0000 Xxx) and all controlling persons (as described in Section 15 of the
1933 Act) (collectively, the "Adviser Indemnitees") against any and all losses,
claims, damages, liabilities or litigation (including reasonable legal and other
expenses) by reason of or arising out of: (a) the Adviser being in material
violation of any applicable federal or state law, rule or regulation or any
investment policy or restriction set forth in the Funds' Registration Statement
or any written guidelines or instruction provided in writing by the Board; (b) a
Fund's failure to satisfy the diversification or source of income requirements
of Subchapter M of the Code; or (c) the Adviser's willful misfeasance, bad faith
or gross negligence generally in the performance of its duties hereunder or its
reckless disregard of its obligations and duties under this Agreement.
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. JURISDICTION. This Agreement shall be governed by and construed in
accordance with the substantive laws of Commonwealth of Massachusetts and the
Adviser consents to the jurisdiction of courts, both state or federal, in
Massachusetts, with respect to any dispute under this Agreement.
18. 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.
19. 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.
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.
THE ADVISORS' INNER CIRCLE FUND, on behalf of each
Fund listed on Schedule A
/s/ XXXXX X. XXXX
--------------------------------------------
Name: Xxxxx X. Xxxx
Title: President
STERLING CAPITAL MANAGEMENT LLC
By: /s/ XXXXXXX X. XXXXXX
----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Director
SCHEDULE A TO THE
INVESTMENT ADVISORY AGREEMENT
BETWEEN
THE ADVISORS' INNER CIRCLE FUND
AND
STERLING CAPITAL MANAGEMENT LLC
Pursuant to Article 9, the Trust shall pay the Adviser compensation at an annual
rate as follows:
PORTFOLIO FEE:
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Sterling Capital Balanced Portfolio 0.75%
Sterling Capital Small Cap Value Portfolio 1.00%