INVESTMENT SUBADVISORY AGREEMENT
AGREEMENT made this 5th day of August, 2014, between
Sterling Capital Management LLC (the "Adviser" or "Sterling")
and Emancipation Capital, LLC (the "Sub-Adviser").
WHEREAS, Sterling Capital Funds, a Massachusetts business
trust (the "Trust"), is registered as an open-end management
investment company under the Investment Company Act of 1940, as
amended (the "1940 Act"); and
WHEREAS, the Adviser has entered into an Investment
Advisory Agreement dated October 1, 2010, as amended, (the
"Advisory Agreement") with the Trust, pursuant to which the
Adviser acts as investment adviser to Sterling Capital
Long/Short Equity Fund (the "Fund"), which is a series of the
Trust, and provides certain related services with respect to
the Fund; and
WHEREAS, the Adviser, with the approval of the Trust's
Board of Trustees, including a majority of the Trustees who are
not "interested persons," as defined in the 1940 Act, desires
to retain the Sub-Adviser to provide investment advisory
services in connection with the management of the Fund, and the
Sub-Adviser is willing to render such investment advisory
services.
NOW, THEREFORE, the parties hereto agree as follows:
1. Duties of the Sub-Adviser. Subject to supervision and
oversight by the Adviser and the Trust's Board of Trustees, the
Sub-Adviser shall manage that portion of the securities and
other assets of the Fund entrusted to it hereunder (the
"Assets"), including the purchase, retention and disposition of
the Assets, in accordance with the Fund's investment
objectives, policies and restrictions as stated in the Fund's
prospectus and statement of additional information, as
currently in effect and as amended or supplemented from time to
time (referred to collectively as the "Prospectus"), and
subject to the following:
a. In the performance of its duties and obligations
under this Agreement, the Sub-Adviser shall act in
conformity with the Trust's constituent documents and the
Prospectus as it relates to the Fund and with the
instructions and directions of the Adviser and of the
Board of Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act, the Internal
Revenue Code of 1986, as amended (the "Code"), and all
other applicable federal and state laws and regulations,
as each is amended from time to time. Notwithstanding
anything to the contrary set forth herein, the Adviser
acknowledges that the Sub-Adviser is not the compliance
agent for the Trust, the Fund or the Adviser, the Sub-
Adviser does not have access to the Trust's books and
records relating to the Fund (including the assets managed
by any other sub-advisers to the Adviser and the Fund),
and that the Sub-Adviser is not responsible for meeting or
monitoring the Fund's compliance with the income and asset
diversification requirements of Section 851 of the Code or
the other provisions of Subchapter M of the Code
applicable to the Fund. For the avoidance of doubt, the
Sub-Adviser acknowledges that with respect to the portion
of the Fund's assets entrusted to it from time to time
under this Agreement, the Sub-Adviser is responsible for
monitoring compliance with the Trust's constituent
documents and the Prospectus as it relates to the Fund and
with the instructions and directions of the Adviser and of
the Board of Trustees of the Trust and will conform to and
comply with the requirements of the 1940 Act, the Code,
and all other applicable federal and state laws and
regulations, as each may be amended from time to time.
In addition, the Sub-Adviser agrees that with respect to
the Assets, the Sub-Adviser shall at all times ensure that
its trading of "commodity interests," as defined in the
Commodity Exchange Act, as amended, satisfies the trading
tests set forth in the Commodity Futures Trading
Commission Rule 4.5(c)(2)(iii)(A) or (B). The Sub-Adviser
shall promptly notify the Adviser if the Sub-Adviser fails
to comply with this requirement.
b. The Sub-Adviser shall determine the Assets to be
purchased, retained or sold by the Fund and what portion
of the Assets will be invested or held uninvested in cash.
The Sub-Adviser will place orders with or through such
persons, brokers or dealers to carry out the policy with
respect to brokerage set forth in the Trust's registration
statement and the Fund's Prospectus or as the Board of
Trustees or the Adviser may direct in writing from time to
time, in conformity with federal securities laws. In
executing portfolio transactions and selecting brokers or
dealers, the Sub-Adviser will use its best efforts to seek
on behalf of the Fund best execution. In evaluating best
execution for any transaction, the Sub-Adviser shall
consider all factors that it deems relevant, including the
breadth of the market in the security, the price of the
security, the financial condition and execution capability
of the broker or dealer, and the reasonableness of the
commission, if any, both for the specific transaction and
on a continuing basis. In evaluating best execution, and
in selecting the broker-dealer to execute a particular
transaction, subject to any written instructions and
directions of the Adviser or the Board of Trustees, the
Sub-Adviser may also consider the brokerage and research
services provided (as those terms are defined in Section
28(e) of the Securities Exchange Act of 1934). Provided
the Sub-Adviser is acting in accordance with any such
instructions and directions of the Adviser or the Board of
Trustees, the Sub-Adviser is authorized to pay to a broker
or dealer who provides such brokerage and research
services a commission for executing a portfolio
transaction for the Fund which is in excess of the amount
of commission another broker or dealer would have charged
for effecting that transaction if, but only if, the Sub-
Adviser determines in good faith that such commission was
reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer -
viewed in terms of that particular transaction or in terms
of the overall responsibilities of the Sub-Adviser to the
Fund. In no instance, however, will the Fund's Assets
knowingly be purchased from or sold to the Adviser, the
Sub-Adviser, any other sub-adviser of the Trust or other
registered investment companies (or series or portions
thereof) that may be deemed to be under common control
with the Trust, the Trust's principal underwriter, or any
affiliated person of either the Trust, the Adviser, the
Sub-Adviser or any other sub-adviser of the Trust or other
registered investment companies (or series or portions
thereof) that may be deemed to be under common control
with the Trust, or the Trust's principal underwriter,
acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission
("SEC") and the 1940 Act and approved by the Adviser and
the Board of Trustees. The Adviser or its affiliates may,
from time to time, engage other sub-advisers to advise
series of the Trust (or portions thereof) or other
registered investment companies (or series or portions
thereof) that may be deemed to be under common control
with the Trust (each a "Sub-Advised Fund"). The Sub-
Adviser agrees that it will not consult with any other
sub- adviser engaged by the Adviser or its affiliates with
respect to transactions in securities or other assets
concerning the Fund or another Sub-Advised Fund, except to
the extent permitted by rules under the 1940 Act that
permit certain transactions with a sub-adviser or its
affiliates.
On occasions when the Sub-Adviser deems the purchase or
sale of a security to be in the best interests of the Fund
as well as other clients of the Sub-Adviser, the Sub-
Adviser, to the extent permitted by applicable laws and
regulations, may, but shall be under no obligation to,
aggregate the securities to be sold or purchased in order
to obtain the most favorable price or lower brokerage=
commissions and efficient execution. In such event,
allocation of securities so sold or purchased, as well as
the expenses incurred in the transaction, will be made by
the Sub-Adviser in the manner the Sub-Adviser considers to
be the most equitable and consistent with its fiduciary
obligations to the Fund and to such other clients.
The Sub-Adviser may buy securities for the Fund at the
same time it is selling such securities for another
client account and may sell securities for the Fund at
the time it is buying such securities for another client
account. In such cases, subject to applicable legal and
regulatory requirements, and in compliance with such
procedures of the Trust as may be in effect from time to
time of which the Sub-Adviser is advised in writing, the
Sub-Adviser may effectuate cross transactions between the
Fund and such other account if it deems this to be
advantageous to both of the accounts involved.
Notwithstanding the foregoing, the Sub-Adviser agrees
that the Adviser shall have the right by written notice
to identify securities that may not be purchased on
behalf of the Fund and/or broker-dealers through or with
which portfolio transactions on behalf of the Fund may
not be effected. The Sub-Adviser shall refrain from
purchasing such securities for the Fund or directing any
portfolio transaction to any such broker-dealer on behalf
of the Fund, unless and until the written approval of the
Adviser or the Board of Trustees, as the case may be, is
so obtained.
c. The Sub-Adviser shall maintain and keep all books and
records required to be maintained by registered investment
advisers, and shall provide the Fund with all records and
other information relating to the Assets as may be needed
for the Fund to comply with subparagraphs (b)(5)
[brokerage orders] , (6) [non-brokerage portfolio
purchases] , (7) [option transactions] , (9) [brokerage
allocations/commissions], (10) [persons authorized to
approve purchase or sale of securities] and (11) [advisory
materials] and paragraph (f) [books and records required
to maintained by registered investment advisers] of Rule 3
la-1 under the 1940 Act. The Sub-Adviser shall keep the
Adviser informed of developments materially affecting the
Fund or the Trust. The Sub-Adviser shall provide to the
Adviser or the Board of Trustees such periodic and special
reports, financial information, and such other information
with regard to its affairs as the Adviser or Board of
Trustees may reasonably request.
The Sub-Adviser shall maintain and keep the books and
records relating to the Assets required to be maintained
and kept by the Sub-Adviser under this Agreement and shall
timely furnish to the Adviser all information relating to
the Sub-Adviser's services under this Agreement needed by
the Adviser to keep the other books and records of the
Fund required by Rule 31a-1 under the 1940 Act. The Sub-
Adviser shall also furnish to the Adviser any other
information relating to the Assets that is required to be
filed by the Adviser or the Trust with the SEC or sent to
shareholders under the 1940 Act (including the rules
adopted thereunder) or any exemptive or other relief that
the Adviser or the Corporation obtains from the SEC. The
Sub-Adviser agrees that all records that it maintains on
behalf of the Fund are the property of the Fund and the
Sub-Adviser will surrender promptly to the Fund any of
such records upon the Fund's request; provided, however,
that the Sub-Adviser may retain a copy of such records.
The Sub-Adviser agrees to permit the Adviser, the Trust's
officers and the Fund's independent registered public
accounting firm to inspect and audit such records
pertaining to the Fund at reasonable times during regular
business hours upon due notice. In addition, for the
duration of this Agreement, the Sub-Adviser shall preserve
for the periods prescribed by Rule 31a-2 under the 1940
Act, and Rule 204-2 under the Investment Advisers Act of
1940, as amended (the "Advisers Act"), any such records as
are required to be maintained by it pursuant to this
Agreement, and (while it may retain copies therof) shall
transfer said records to the Adviser. The Sub-Adviser
shall maintain and enforce industry standard security
procedures with respect to all materials, records,
documents and data relating to any of its responsibilities
under this Agreement including all means for the effecting
of securities transactions.
d. The Sub-Adviser will be available to meet (which
meetings may be held telephonically at the option of the
Adviser) with the officers of the Adviser and the Trust's
officers and Trustees on reasonable due notice to review
the investments and investment program of the Fund in the
light of current and prospective economic and market
conditions. In addition, the Sub-Adviser shall, as
reasonably requested by the Adviser, for itself and on
behalf of the Trust, furnish to the Adviser from time to
time such information that the Adviser reasonably believes
appropriate for this purpose in accordance with general
industry standards. From time to time as the Board of
Trustees of the Trust or the Adviser may reasonably
request, the Sub-Adviser will furnish to the Adviser and
Trust's officers and to each of its Trustees, at the Sub-
Adviser's expense, reports on portfolio transactions and
reports on issuers of securities held by the Fund, all in
such detail as the Trust or the Adviser may reasonably
request in accordance with general industry standards. In
addition, the Sub-Adviser shall provide advice and
assistance to the Adviser as to the determination of the
value of securities held or to be acquired by the Fund
pursuant to this Agreement for valuation purposes in
accordance with the process described in the Fund's
Prospectus and valuation procedures of which the Sub-
Adviser is advised in writing. Upon reasonable notice, the
Sub-Adviser will make its officers and employees available
to meet (which meetings may be held telephonically at the
option of the Adviser) with the officers of the Adviser
and the Trust's officers and Trustees and provide such
information as the Board of Trustees and the Adviser
reasonably believe appropriate for purposes of the Board's
consideration of this Agreement and any continuations
thereof, including information about the profitability to
the Sub-Adviser of providing advisory services hereunder
(which may be provided in confidence directly to the Board
of Trustees).
i. The Sub-Adviser shall provide the Fund's
custodian on each business day with information relating
to all transactions concerning the Fund's Assets,
including the name of the issuer, the description and
amount or number of shares of the security purchased or
sold, the market price, commission and gross or net
price, trade date, settlement date and identity of the
effecting broker or dealer, and such other information
as may be reasonably required. The Sub-Adviser shall
also provide the Adviser with such information upon the
request of the Adviser. The Sub-Adviser shall
additionally provide the Fund's Accountant with a trade
log with the above information of all matched and
unmatched transactions. The Sub-Adviser shall also
provide the Adviser with such information upon request
of the Adviser. The Sub-Adviser shall provide such sub-
certifications as officers of the Adviser or the Trust
may reasonably request in connection with the filings of
Form N-CSR or Form N-Q (or any similar form) by the
Fund.
The parties to this Agreement agree that the Fund has
made arrangements for the safekeeping of any of the
Fund's assets (and the Fund's documents of title) with
such custodian as chosen by the Trust from time to time
with notice to the Sub-Adviser of the same. The Sub-
Adviser shall not hold, or have custody of, any asset of
the Fund (or the Fund's documents of title, if any) on
behalf of the Fund or the Adviser.
ii. In the performance of its duties hereunder, the
Sub-Adviser is and shall be an independent contractor
and, except as expressly provided for herein or
otherwise expressly provided or authorized in writing by
the Adviser, shall have no authority to act for or
represent the Fund or the Trust 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 the Fund, the Sub-Adviser will act solely as
investment counsel for such clients and not in any way
on behalf of the Fund. The Sub-Adviser is entitled to
assume that each of the Adviser and the Fund has the
necessary level of experience and knowledge in order to
understand the risks involved in the services provided
and the transactions carried out by the Sub-Adviser on
behalf of the Adviser and the Fund. The Sub-Adviser
shall promptly notify the Adviser of any financial
condition that is likely to impair the Sub-Adviser's
ability to fulfill its commitment under this Agreement.
iii. The Sub-Adviser shall be responsible for
corporate action elections; provided, however, that the
Sub-Adviser shall not be responsible for voting proxies
received with respect to securities held by the Fund,
unless the Adviser, subject to concurrence and
delegation by the Trust's Board of Trustees, notifies
the Sub-Adviser in writing that the Sub-Adviser shall
have such responsibility.
2. Duties of the Adviser. The Adviser shall continue to have
responsibility for all services to be provided to the Fund
pursuant to the Advisory Agreement and shall supervise and
oversee the Sub-Adviser's performance of its duties under this
Agreement. Notwithstanding the foregoing, in connection with
its management of the Assets, nothing herein shall be construed
to relieve the Sub-Adviser of responsibility for compliance
with the Trust's constituent documents, the Prospectus, the
instructions and directions of the Board of Trustees of the
Fund, the requirements of the 1940 Act, the Code, and all other
applicable federal and state laws and regulations, as each is
amended from time to time.
3. Delivery of Documents.
a. The Adviser has furnished the Sub-Adviser with copies
of each of the following documents:
i. The Trust's Declaration of Trust, as in effect
on the date of this Agreement and as amended from time to
time (herein called the "Declaration of Trust");
ii. By-Laws of the Trust; and
iii. Prospectus of the Fund.
The Adviser agrees to promptly provide the Sub-
Adviser with copies of any changes, amendments, modifications
or supplements to the above documents or any other document
relating to the Sub-Adviser's services hereunder.
b. The Sub-Adviser has furnished the Adviser with copies
of each of the following documents, as applicable (and Adviser
acknowledges receipt of the same):
i. A list of public companies and registered
broker-dealers affiliated with the Sub-Adviser;
ii. A list of entities that are affiliated persons,
or affiliated persons of affiliated persons of the Sub-
Advisers;
iii. The Sub-Adviser's Form ADV (including Part 2,
thereof) (at least 48 hours prior to the Agreement
becoming effective);
iv. The Sub-Adviser's Code of Ethics adopted
pursuant to Rule 17j-1 under the 1940 Act; and
v. The Sub-Adviser's most recent audited financial
statements.
The Sub-Adviser agrees to provide the Adviser with copies
of any changes, amendments, modifications or supplements to the
above documents.
4. Certain Representations and Warranties of the Sub-Adviser.
a. The Sub-Adviser represents and warrants that it
is a duly registered investment adviser under the Advisers
Act, and has obtained all necessary licenses and approvals
in order to perform the services provided in this
Agreement. The Sub-Adviser covenants to maintain all
necessary registrations, licenses and approvals in effect
during the term of this Agreement.
b. The Sub-Adviser represents that it has read and
understands the Prospectus and warrants that in investing
the Fund's assets it will adhere to the Fund's investment
objectives, policies and restrictions contained therein.
c. The Sub-Adviser represents that it will provide
the Fund with any amendments to its Code of Ethics and any
certifications required by Rule 17j-1 under the 1940 Act.
The Sub-Adviser represents that it has policies and
procedures regarding the detection and prevention and the
misuse of material, nonpublic information by the Sub-
Adviser and its employees as required by the Xxxxxxx
Xxxxxxx and Securities Fraud Enforcement Act of 1988.
d. The Sub-Adviser represents that, as of the date
of this Agreement (which representation shall be confirmed
periodically thereafter), (1) neither it nor any of its
"affiliated persons" (as defined in the 0000 Xxx) are
affiliated persons of: (i) the Adviser; (ii) to the best
knowledge of the Sub-Adviser, any other sub-adviser to the
Fund or the Trust or any affiliated person of that sub-
adviser; (iii) any promoter, underwriter, officer, board
member, member of an advisory board, or employee of the
Fund or the Trust; or (iv) the Fund (other than by reason
of serving as an investment adviser to the Fund); and (2)
to the best knowledge of the Sub-Adviser, neither the
Adviser nor any of its directors or officers directly or
indirectly owns any material interest in the Sub-Adviser
other than an interest through ownership of shares of a
pooled investment vehicle that is not controlled by such
person (or entity). The Sub-Adviser agrees to promptly
notify the Adviser if it or any of its affiliated persons
becomes an affiliated person of any of the persons set
forth in (i) to (iii).
e. The Sub-Adviser represents and warrants that it
will maintain written policies and procedures that are
reasonably designed to prevent violation of Federal
Securities Laws as defined in Rule 38a-1 under the 1940
Act and that are otherwise in compliance with Rule 206(4)-
7 under the Advisers Act. The Sub-Adviser agrees to
provide the Fund and the Adviser, from time to time, with
copies of such policies and procedures, summaries thereof
and certifications with respect thereto. The Sub-Adviser
agrees to cooperate with the Fund's Chief Compliance
Officer in providing information to fulfill the
requirements of Rule 38a-1 under the 1940 Act as
interpreted by the SEC or the Board of Trustees.
5. Compliance.
a. The Sub-Adviser agrees that it shall promptly
notify the Adviser and the Trust: (i) in the event that
the SEC or any other regulatory authority has censured its
activities, functions or operations; suspended or revoked
its registration as an investment adviser; or has
commenced proceedings or an investigation that may result
in any of these actions, (ii) of the occurrence of any
event that could disqualify the Sub-Adviser from serving
as an investment adviser pursuant to
Section 9 of the 1940 Act; (iii) in the event that there
is a change in the Sub-Adviser, financial or otherwise,
that adversely affects its ability to perform services
under this Agreement or (iv) upon having a reasonable
basis for believing that, as a result of the Sub-Adviser's
investing the Fund's assets, the Fund's investment
portfolio has ceased to adhere to the Fund's investment
objectives, policies or restrictions as stated in the
Prospectus or is otherwise in violation of applicable law.
i. The Adviser agrees that it (to the extent not
prohibited by applicable law or regulation) shall
promptly notify the Sub-Adviser in the event that the
SEC has censured the Adviser or the Trust; placed
limitations upon any of their activities, functions or
operations; suspended or revoked the Adviser's
registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any
of these actions.
ii. The Sub-Adviser shall immediately forward, upon
receipt, to the Adviser any correspondence from the SEC
or other regulatory authority that relates to the Fund
or the Adviser generally, including SEC inspection
reports.
iii. The Trust and the Adviser shall be given access
to any and all records or other documents of the Sub-
Adviser relating to the Assets at reasonable times
solely for the purpose of monitoring compliance with the
terms of this Agreement and the rules and regulations
applicable to the Sub-Adviser relating to its providing
investment advisory services to the Fund, including
without limitation records relating to trading by
employees of the Sub-Adviser for their own accounts and
on behalf of other clients. The Sub-Adviser agrees to
promptly cooperate with the Trust and the Adviser and
their representatives in connection with requests for
such records or other documents. In connection with such
cooperation as it relates to records relating to trading
by employees, the Sub-Adviser shall disclose (i) any and
all violations of the Sub-Adviser's code of ethics by
associated persons of the Sub-Adviser, (ii) the function
of such person(s), and (iii) such person(s) involvement
(if any) in the provision of services by the Sub-Adviser
to the Fund pursuant to this Agreement. The parties
acknowledge that the Sub-Adviser has obligations of
confidentiality with respect to its clients and
employees and nothing in this Agreement shall require
the Sub-Adviser to act in violation or contravention
thereof.
6. Compensation to the Sub-Adviser.
a. For the services to be provided by the Sub-
Adviser pursuant to this Agreement, the Adviser will pay
the Sub-Adviser, and the Sub-Adviser agrees to accept, a
sub-advisory fee at the rate specified in Appendix A which
is attached hereto and made part of this Agreement. The
fee will be computed daily based on the average daily net
assets of the Fund overseen by the Sub-Adviser pursuant to
this Agreement and will be paid to the Sub-Adviser
monthly. Except as may otherwise be prohibited by law or
regulation (including any then current SEC staff
interpretation), the Sub-Adviser may, in its discretion
and from time to time, waive a portion of its fee.
b. For purposes of this Section 6 and Appendix A,
the value of net assets of the Fund shall be computed as
required by the 1940 Act and in accordance with any
procedures approved by the Board of Trustees for the
computation of the value of the net assets of the Fund in
connection with the determination of net asset value of
its shares.
i. Expenses. The Sub-Adviser shall bear all of its
expenses (excluding, but not limited to, brokerage costs
and commissions, stamp duties, custodian fees, auditors'
fees or other expenses of the Fund to be borne by the
Fund or the Trust) in connection with the performance of
its services under this Agreement. The Fund will bear
certain other expenses to be incurred in its operation,
including, but not limited to, investment advisory fees,
sub-advisory fees (other than sub-advisory fees paid
pursuant to this Agreement) and administration fees;
fees for necessary professional and brokerage services
to the Fund; costs relating to local administration of
securities, including stamp duties; currency conversion
costs; leverage costs; fees for any pricing service; the
costs of the Fund's regulatory compliance (other than
costs primarily relating to the Adviser's or Sub-
Adviser's regulatory compliance); and the Fund's pro
rata costs associated with maintaining the Corporation's
legal existence and shareholder relations. All other
Fund operating expenses not specifically assumed by the
Sub-Adviser hereunder or by the Adviser are borne by the
Fund or the Trust.
7. Standard of Care and Liability of Sub-Adviser. The Sub-
Adviser will not be liable for any loss sustained by reason of
a mistake of law or error of judgment by the Sub-Adviser, but
nothing herein contained will be construed to protect the Sub-
Adviser against any liability to the Adviser, the Fund or its
shareholders by reason of: (a) the Sub-Adviser's causing the
Fund to be in violation of any applicable federal or state law,
rule or regulation or any investment policy or restriction set
forth in the Fund's Prospectus or any written guidelines,
policies or instruction provided in writing by the Trust's
Board of Trustees or the Adviser or (b) the Sub-Adviser's
willful misfeasance, bad faith or gross negligence in the
performance of its duties hereunder or its reckless disregard
of its obligations and duties under this Agreement (such
conduct set out in clauses (a) and (b) under Section 8,
"Disqualifying Conduct"). The Adviser acknowledges that the
Sub-Adviser makes no warranty, express or implied, as to the
performance or profitability of the Assets or the success of
any investment strategy recommended by the Sub-Adviser.
8. Disclosure Regarding the Sub-Adviser.
a. The Sub-Adviser has reviewed the disclosure
about the Sub-Adviser contained in the Trust's
registration statement, prospectus and supplements thereto
and represents and warrants that, with respect to such
disclosure about the Sub-Adviser or information related,
directly or indirectly, to the Sub-Adviser, such documents
contain, as of the date hereof, no untrue statement of any
material fact and do not omit any statement of a material
fact which is required to be stated therein or necessary
to make the statements contained therein not misleading.
b. The Sub-Adviser agrees to notify the Adviser and
the Trust promptly of: (i) any statement about the Sub-
Adviser contained in the Trust's registration statement,
prospectus or supplements thereto that becomes untrue in
any material respect, (ii) any omission of a material fact
about the Sub-Adviser in such documents which is required
to be stated therein or necessary to make the statements
contained therein not misleading, (iii) any reorganization
or change in control of the Sub-Adviser, as defined under
the 1940 Act, and (iv) any changes in the principal
portfolio managers of the Assets or senior management of
the Sub-Adviser.
9. Insurance. The Sub-Adviser shall maintain for the duration
hereof, with an insurer acceptable to the Adviser, a fidelity
bond and professional liability or errors and omissions
insurance in an amount or amounts sufficient to meet its
obligations to its clients, including the Fund.
10. Duration and Termination.
a. This Agreement shall remain in full force until
December 31, 2015 or terminated as hereinafter provided.
Notwithstanding the foregoing, this Agreement shall
continue in force from year to year thereafter only as
long as such continuance is specifically approved at least
annually and in the manner required by the 0000 Xxx.
b. This Agreement shall automatically terminate in
the event of its assignment or in the event of the
termination of the Advisory Agreement. In addition, the
Adviser has the right to terminate this Agreement
immediately upon notice if the Sub-Adviser becomes
statutorily disqualified from performing its duties under
this Agreement or otherwise is legally prohibited from
operating as an investment adviser.
c. If a party breaches this Agreement in any
material respect which is not cured within sixty (60) days
of the other party giving it written notice of such
breach, the other party may effect termination of this
Agreement on written notice to the defaulting party.
d. This Agreement may be terminated at any time,
without the payment by the Fund of any penalty, by the
Board of Trustees of the Fund, or by vote of a majority of
the outstanding voting securities of the Fund, or by the
Adviser as follows: the Fund may effect termination of
this Agreement by action of the Board of Trustees of the
Fund or by vote of a majority of the outstanding voting
securities of the Fund on sixty (60) days written notice
to the Adviser and the Sub-Adviser, and the Adviser may
effect termination of this Agreement on sixty (60) days
written notice to the Sub-Adviser.
e. The Sub-Adviser may terminate this Agreement
upon ninety (90) days written notice to the Adviser.
f. Termination of this Agreement shall not affect
the right of the Sub-Adviser to receive payments on any
unpaid balance of the compensation described in Section 6
earned prior to such termination.
11. Confidentiality.
a. Each party agrees that it shall hold in strict
confidence all data and information obtained from the
other party hereto or the Fund (unless such information is
or becomes readily ascertainable from public or published
information or trade sources other than through a breach
of this confidentiality clause) other than in relation to
its affiliates and any other party performing functions
for the Fund and such party shall ensure that its
officers, employees and authorized representatives do not
disclose such information to others without the prior
written consent of the party from whom it was obtained,
unless such disclosure is required by a court with
competent jurisdiction, the SEC, other regulatory or
official body with applicable jurisdiction, or the Fund's
independent registered public accounting firm, or in the
opinion of such party's counsel, applicable law, and then
only with as much prior written notice to the other party
as is practicable under the circumstances.
b. The Adviser, on behalf of the Fund, has
legitimate business reasons to disclose to the Sub-Adviser
certain non-public portfolio holdings information of the
Fund ("Holdings Information") from time to time. The Sub-
Adviser agrees that it:
i. Will use the Holdings Information exclusively
for the purposes of providing services pursuant to this
Agreement that may benefit the Fund;
ii. Will not engage in any fraudulent, competitive
or improper behavior based on the Holdings Information
that may disadvantage the Fund, including disclosing,
trading or making investment recommendations based on
the Holdings Information to or for any party other than
the Fund as provided in this Agreement;
iii. Will treat the Holdings Information as
confidential and will not disclose such information to
any party other than as required to perform the services
under this Agreement. This clause shall not apply to the
extent that: (1) the Holdings Information is publicly
known, (2) the Holdings Information is or becomes
legally known to the Sub-Adviser other than through
disclosure by the Fund, the Adviser, an affiliated
person of the Fund or the Adviser or by another party
bound by an obligation of confidentiality to the Fund,
or (3) the disclosure is required by law or requested by
any regulatory authority or required by statute, rule,
regulation, subpoena, regulatory examination request or
court order, provided, however, that the Sub-Adviser
will not make any such disclosure without first
notifying the Adviser and the Fund and allowing the
Adviser or the Fund a reasonable opportunity to seek
injunctive relief (or a protective order) with respect
to the obligation to make such disclosure; and
iv. Will notify the Adviser if the Sub-Adviser has
any knowledge of the Holdings Information having been
misused, including in violation of this Agreement.
12. Non-Exclusivity. The services of the Sub-Adviser to the
Fund are not to be deemed to be exclusive, and the Sub-Adviser
and its affiliates shall be free to render investment advisory
or other services to others (including other investment
companies) and to engage in other activities, so long as its
services under this Agreement are not impaired thereby. Adviser
acknowledges that Sub-Adviser or its affiliates may give advice
and take actions in the performance of its duties to clients
which differ from the advice, or the timing and nature of
actions taken, with respect to other clients' accounts
(including the Assets). In addition, advice provided by the
Sub-Adviser may differ from advice given by its affiliates.
13. Use of Names.
a. The Sub-Adviser acknowledges and agrees that the name
Sterling Capital (whether used by itself or in combination with
other words), and abbreviations or logos associated with that
name, are the valuable property of the Adviser and its
affiliates; that the Trust, the Adviser and their affiliates
have the right to use such name, abbreviations and logos; and
that the Sub-Adviser shall use the name Sterling Capital, and
associated abbreviations and logos, only in connection with the
Sub-Adviser's performance of its duties hereunder. Further, in
any communication with the public and in any marketing
communications of any sort, the Sub-Adviser agrees to obtain
prior written approval from the Adviser before using or
referring to Sterling Capital, the Fund or the Trust name, or
any abbreviations or logos associated with those names;
provided that nothing herein shall be deemed to prohibit the
Sub-Adviser from referring to the performance of the Fund in
the Sub-Adviser's marketing material as long as such marketing
material does not constitute "sales literature" or
"advertising" for the Fund, as those terms are used in the
rules, regulations and guidelines of the SEC and the Financial
Industry Regulatory Authority. The Adviser, for itself and on
behalf of the Trust, acknowledges and agrees that the names
Emancipation Capital, and all related names, marks, and trade
dress (collectively, the "Sub-Adviser Marks"), and
abbreviations or logos associated with such names, are the
valuable property of the Sub-Adviser and its affiliates; that
the Sub-Adviser and its affiliates have the right to use such
name, abbreviations and logos; and that the Adviser and Trust
shall use the Sub-Adviser Marks, and associated abbreviations
and logos, only in connection with the conduct of the business
of the Fund for so long as this Agreement is in effect and not
thereafter. The Adviser and the Trust shall not modify the Sub-
Adviser Marks.
14. Indemnification.
a. The Sub-Adviser agrees to indemnify and hold
harmless the Adviser and the Trust against any losses,
expenses, claims, damages or liabilities (or actions or
proceedings in respect thereof) to which the Adviser or
the Trust may become subject arising out of or based on
the breach by the Sub-Adviser of any provisions of this
Agreement or any breach by the Sub-Adviser of the standard
of care, as set out in Section 8 of the Agreement;
provided, however, that the Sub-Adviser shall not be
liable under this Section 15(a) in respect of any loss,
expense, claim, damage or liability to the extent that a
court having jurisdiction shall have determined by a final
judgment, or independent counsel agreed upon by the Sub-
Adviser and the Adviser or the Trust, as the case may be,
shall have concluded in a written opinion, that such loss,
expense, claim, damage or liability resulted primarily
from the Adviser's or the Trust's willful misfeasance, bad
faith or gross negligence or by reason of the reckless
disregard by the Adviser or the Trust of its duties. The
foregoing indemnification shall be in addition to any
rights that the Adviser or the Trust may have at common
law or otherwise. The Sub-Adviser's agreements in this
Section 15(a) shall, upon the same terms and conditions,
extend to and inure to the benefit of each person who may
be deemed to control the Adviser or the Trust, be
controlled by the Adviser or the Trust, or be under common
control with the Adviser or the Trust and their
affiliates, directors, officers, employees and agents. The
Sub-Adviser's agreement in this Section 15(a) shall also
extend to any of the Trust's, Fund's, and Adviser's
successors or the successors of the aforementioned
affiliates, trustees/directors, officers, employees or
agents.
b. The Adviser agrees to indemnify and hold
harmless the Sub-Adviser against any losses, expenses,
claims, damages or liabilities (or actions or proceedings
in respect thereof) to which the Sub-Adviser may become
subject arising out of or based on the breach by the
Adviser of any provisions of this Agreement or the
Advisory Agreement, or any wrongful action by the Adviser
or its affiliates in the distribution of the Trust's
shares, or any wrongful action by the Trust other than
wrongful action that was caused by the breach by the Sub-
Adviser of the provisions of this Agreement; provided,
however, that the Adviser shall not be liable under this
Section 15(b) in respect of any loss, expense, claim,
damage or liability to the extent that a court having
jurisdiction shall have determined by a final judgment, or
independent counsel agreed upon by the Adviser and the
Sub-Adviser shall have concluded in a written opinion,
that such loss, expense, claim, damage or liability
resulted primarily from the Sub-Adviser's Disqualifying
Conduct. The foregoing indemnification shall be in
addition to any rights that the Sub-Adviser may have at
common law or otherwise. The Adviser's agreements in this
Section 15(b) shall, upon the same terms and conditions,
extend to and inure to the benefit of each person who may
be deemed to control the Sub-Adviser, be controlled by the
Sub-Adviser or be under common control with the Sub-
Adviser and to each of the Sub-Adviser's and each such
person's respective affiliates, trustees/directors,
officers, employees and agents. The Adviser's agreements
in this Section 15(b) shall also extend to any of the Sub-
Adviser's successors or the successors of the
aforementioned affiliates, trustees/directors, officers,
employees or agents.
c. Promptly after receipt by a party indemnified
under Section 15(a) or 15(b) of notice of the commencement
of any action, proceeding, or investigation for which
indemnification will be sought (a "Proceeding"), such
indemnified party shall promptly notify the indemnifying
party in writing; but the omission so to notify the
indemnifying party shall not relieve it from any liability
which it may otherwise have to any indemnified party
unless such omission results in actual material prejudice
to the indemnifying party. In case any Proceeding shall be
brought against any indemnified party, and it shall notify
the indemnifying party of the commencement thereof, the
indemnifying party shall be entitled to participate in
and, individually or jointly with any other indemnifying
party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified
party of its election to assume the defense of any
Proceeding, the indemnifying party shall not be liable to
the indemnified party for any legal or other expenses
subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable
costs of investigation. Notwithstanding the indemnifying
party's election to appoint counsel to represent the
indemnified party in any Proceeding, the indemnified party
shall have the right to employ separate counsel (including
local counsel) and the indemnifying party shall bear the
reasonable fees, costs and expenses of such separate
counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party
would present such counsel with a conflict of interest,
(ii) the actual or potential defendants in, or target of,
any such Proceeding include both the indemnified party and
the indemnifying party and the indemnifying party and the
indemnified party shall have reasonably concluded that
there may be legal defenses available to it and/or other
indemnified parties which are different from or additional
to those available to the indemnifying party, (iii) the
indemnifying party shall not have employed counsel
reasonably satisfactory to the indemnified party within a
reasonable time after notice of the institution of such
Proceeding or (iv) the indemnifying party shall authorize
the indemnified party to employ separate counsel at the
expense of the indemnifying party. If the indemnifying
party does not elect to assume the defense of any action
or proceeding, the indemnifying party on a monthly basis
shall reimburse the indemnified party for the reasonable
legal fees and other costs of defense thereof. Regardless
of whether or not the indemnifying party shall have
assumed the defense of any Proceeding, the indemnified
party shall not settle or compromise the Proceeding
without the prior written consent of the indemnifying
party, which shall not be unreasonably withheld, and the
indemnifying party shall not settle or compromise any
Proceeding without the prior written consent of the
indemnified party, which shall not be unreasonably
withheld.
15. Governing Law. This Agreement shall be governed by the
internal laws of the Commonwealth of Massachusetts, without
regard to conflict of law principles; provided, however, that
nothing herein shall be construed as being inconsistent with
the 1940 Act.
16. Severability. Should any part of this Agreement be held,
invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby. This
Agreement shall be binding upon and shall inure to the benefit
of the parties hereto and their respective successors.
17. Notice. Any notice, advice or report to be given pursuant
to this Agreement shall be deemed sufficient if delivered or
mailed by registered, certified or overnight mail, postage
prepaid addressed by the party giving notice to the other party
at the last address furnished by the other party:
To the Adviser:
000 Xxxxxxxxxxxx Xxxxxx, 0xx Xxxxx,
Xxxxxxx, XX 00000
To the Sub-Adviser at:
000 Xxxxx Xxxxxx, 00xx Xxxxx,
Xxx Xxxx, XX 00000
18. Questions of Interpretation. Any question of
interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or
provision of the 1940 Act shall be resolved by reference to
such term or provision of the 1940 Act and to interpretations
thereof, if any, by the United States Courts or in the absence
of any controlling decision of any such court, by rules,
regulations, orders or interpretations of the SEC issued
pursuant to the 1940 Act or by an written guidance or no-action
relief issued or granted by the staff of the SEC. Specifically,
the terms "vote of a majority of the outstanding voting
securities," "interested person," "control," "assignment" and
"affiliated person," as used in this Agreement, shall have the
meanings assigned to them by Section 2(a) of the 1940 Act. In
addition, where the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is modified or
interpreted by any applicable order or orders of the SEC or any
rules or regulations adopted by, or interpretative releases of,
the SEC thereunder, such provision shall be deemed to
incorporate the effect of such order, rule, regulation or
interpretative release.
19. Entire Agreement; Amendment. This Agreement states the
entire agreement of the parties hereto, and is intended to be
the complete and exclusive statement of the terms hereof. It
may not be added to or changed orally, and may not be modified
or rescinded, or supplemented, except by a writing signed by
the parties hereto and in accordance with the 1940 Act or
pursuant to applicable orders or interpretations of the SEC or
the staff of the SEC.
20. Miscellaneous. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an
original, but such counterparts shall, together, constitute
only one instrument.
21. Force Majeure. Notwithstanding anything in this Agreement
to the contrary contained herein, the Sub-Adviser will not be
responsible or liable for its failure to perform under this
Agreement or for any losses to the Adviser or the Trust
resulting from any event beyond the reasonable control of the
Sub-Adviser or its agents, including but not limited to,
nationalization, expropriation, devaluation, seizure, or
similar unusual actions by any governmental authority, de facto
or de jure.; or the breakdown, failure or malfunction of any
utilities or telecommunications systems; or acts of war,
terrorism, insurrection or revolution; or acts of God
(collectively, "Force Majeure Events"). The Sub-Adviser will
endeavor to recommence performance or observance as soon as
reasonably practicable following the occurrence of a Force
Majeure Event, in a manner consistent with its obligations
under the Advisers Act and the 1940 Act.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their officers designated below
as of the day and year first written above.
STERLING CAPITAL MANAGEMENT LLC
By: /s/ Xxxxxxx X. Xxxxxx
EMANCIPATION CAPITAL, LLC
By: /s/ Xxxxxxx Xxxxxxxx
Appendix A
Fee Schedule
Pursuant to Section 6, the Adviser shall pay the Sub-Adviser
compensation at an annual rate as follows:
Fund Fee Rate (as a Percentage of
Average Net Assets Overseen by
the Sub-Adviser)
Sterling Capital Long/Short 1.00%
Equity Fund
