INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 25th day of August 2003, by and between Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company, Inc., a Delaware Corporation (the "Investment Manager"), and
Martingale Asset Management, L.P. (the "Sub-Adviser").
WHEREAS, the Company is an open-end, management investment company
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), which consists of several portfolios, each having its own investment
policies; and
WHEREAS, the Company has entered into an investment advisory agreement
(the "Investment Management Agreement") with the Investment Manager pursuant to
which the Investment Manager will act as investment manager to the Company; and
WHEREAS, the Investment Manager, acting with the approval of the Company,
wishes to retain the Sub-Adviser to render discretionary investment advisory
services with respect to that portion of each portfolio identified on the
attached Schedule A to this Investment Sub-Advisory Agreement, as it may be
amended from time to time, (each a "Fund") that may be allocated by the
Investment Manager for management by the Sub-Adviser from time to time together
with all income earned on those assets and all realized and unrealized capital
appreciation related to those assets (with respect to a Fund, the "Managed
Assets"), and the Sub-Adviser is willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained,
the parties hereto agree as follows:
1. DUTIES OF SUB-ADVISER. The Sub-Adviser shall manage the investment
and reinvestment of the Managed Assets and determine in its
discretion, the securities and other property to be purchased or sold
and the portion of the Managed Assets to retain in cash. The
Sub-Adviser shall review all proxy solicitation materials and shall
exercise any voting rights associated with securities comprising the
Managed Assets in the best interests of the Fund and its
shareholders. The Sub-Adviser shall provide the Investment Manager
and the Company with records concerning the Sub-Adviser's activities
that the Company is required to maintain, and to render regular
reports to the Investment Manager and to the Company concerning the
Sub-Adviser's discharge of the foregoing responsibilities.
The Sub-Adviser shall discharge the foregoing responsibilities
subject to the written instructions and directions of the Company and
its Board of Directors and their agents, including the officers of
the Company and the Investment Manager, and in compliance with (i)
such policies as the Company may from time to time establish and
communicate to the Sub-Adviser, (ii) the objectives, policies, and
limitations for each Fund set forth in the Prospectus and Statement
of Additional Information as those
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documents may from time to time be amended or supplemented from and
delivered to the Sub-Adviser (the "Prospectus and Statement of
Additional Information"), (iii) the Agreement and Declaration of
Trust and the By-Laws of the Company, and (iv) applicable laws and
regulations, including the 1940 Act, the Investment Advisers Act of
1940, and the Internal Revenue Code of 1986 (the "Code"), as each may
be amended from time to time. If a conflict in policies or guidelines
referenced herein occurs, the Prospectus and Statement of Additional
Information shall control.
In performance of its duties and obligations under this Agreement,
the Sub-Adviser shall not consult with any other sub-adviser to a
Fund or a sub-adviser to a portfolio that is under common control
with a Fund concerning the Managed Assets, except as permitted by the
policies and procedures of the Company. The Sub-Adviser shall not
provide investment advice with respect to any assets of a Fund other
than the Managed Assets.
The Sub-Adviser agrees to perform such duties at its own expense and
to provide the office space, furnishings and equipment and the
personnel required by it to perform the services on the terms and for
the compensation provided herein. The Sub-Adviser will not, however,
pay for the cost of securities, commodities, and other investments
(including brokerage commissions and other transaction charges, if
any) purchased or sold for a Fund, nor will the Sub-Adviser bear any
expenses that would result in the Company's inability to qualify as a
regulated investment company under provisions of the Code.
2. DUTIES OF INVESTMENT MANAGER The Investment Manager shall continue to
have responsibility for all services to be provided pursuant to the
Investment Management Agreement between it and the Company and shall
oversee and review the Sub-Adviser's performance under this
Agreement.
The Investment Manager shall furnish to the Sub-Adviser current and
complete copies of the Agreement, Declaration of Trust and By-laws of
the Company, and the current Prospectus and Statement of Additional
Information as those documents may be amended from time to time.
3. CUSTODY, DELIVERY AND RECEIPT OF SECURITIES. The Company shall
designate one or more custodians to hold the Managed Assets. The
custodians, as so designated, will be responsible for the custody,
receipt and delivery of securities and other assets of a Fund
including the Managed Assets, and the Sub-Adviser shall have no
authority, responsibility or obligation with respect to the custody,
receipt or delivery of securities or other assets of a Fund,
including the Managed Assets. In the event that any cash or
securities of a Fund are delivered to the Sub-
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Adviser, it will promptly deliver the same over to the custodian for
the benefit of and in the name of the Fund.
Unless otherwise required by local custom, all securities
transactions for the Managed Assets will be consummated by payment to
or delivery of cash or securities due to or from the Managed Assets.
4. PORTFOLIO TRANSACTIONS.
(a) Selection of Brokers. The Sub-Adviser is authorized to select the
brokers or dealers that will execute the purchases and sales of
portfolio securities and other property for a Fund in a manner that
implements the policy with respect to brokerage set forth in the
Prospectus and Statement of Additional Information for the Fund or as
the Board of Directors or the Investment Manager may direct from time
to time and in conformity with federal securities laws.
In executing Fund transactions and selecting brokers or dealers, the
Sub-Adviser will use its best efforts to seek on behalf of the Fund
the best overall terms available. In assessing the best overall terms
available 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 the best overall
terms available, and in selecting the broker-dealer to execute a
particular transaction, 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). Consistent
with any guidelines established by the Board of Directors and
communicated to the Sub-Adviser, 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 a
Fund that 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 terms of the overall responsibilities of
the Sub-Adviser to the Fund. In addition, the Sub-Adviser is
authorized to allocate purchase and sale orders for securities to
brokers or dealers (including brokers and dealers that are affiliated
with the Investment Manager, the Sub-Adviser or the Company's
principal underwriter) to take into account the sale of shares of the
Company if the Sub-Adviser believes that the quality of the
transaction and the commission are comparable to what they would be
with other qualified firms. In no instance, however, will Fund assets
be purchased from or
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sold to the Investment Manager, the Sub-Adviser, the Company's
principal underwriter, or any affiliated person of either the
Company, the Investment Manager, the Sub-Adviser or the principal
underwriter, acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission ("SEC")
and the 1940 Act or any rule, regulation or an order thereunder.
(b) Aggregating Orders. The Sub-Adviser may aggregate orders for
purchase or sale of Managed Assets with similar orders being made
concurrently for other accounts managed by Sub-Adviser, if, in the
Sub-Adviser's reasonable judgment, such aggregation shall result in
an overall economic benefit to the Fund, taking into consideration
the transaction price, brokerage commission and other expenses. The
Company acknowledges that the determination of such economic benefit
to a Fund by the Sub-Adviser may represent Sub-Adviser's evaluation
that a Fund is benefited by relatively better purchase or sales
prices, lower commission expenses and beneficial timing of
transactions or a combination of these and other factors. In any
single transaction in which purchases and or sales of securities of
any issuer for the account of a Fund are aggregated with other
accounts managed by Sub-Adviser, the actual prices applicable to the
transaction will be averaged among the accounts for which the
transaction is effected, including the account of a Fund.
5. COMPENSATION OF THE SUB-ADVISER. For the services to be rendered by
the Sub-Adviser under this Agreement, the Investment Manager shall
pay to the Sub-Adviser compensation at the rate specified in Schedule
B, as it may be amended from time to time. Such compensation shall be
paid at the times and on the terms set forth in Schedule B. All
rights of compensation under this Agreement for services performed as
of the termination date shall survive the termination of this
Agreement. Except as may otherwise be prohibited by law or regulation
(including any then current SEC staff interpretations), the
Sub-Adviser may, in its discretion and from time to time, waive a
portion of its fee.
6. OTHER EXPENSES. The Company shall pay all expenses relating to
mailing prospectuses, statements of additional information, proxy
solicitation material and shareholder reports to shareholders.
7. REPORTS.
(a) The Company and the Sub-Adviser agree to furnish to each other,
current prospectuses, proxy statements, reports to shareholders,
certified copies of financial statements, and such other information
with regard to their affairs as each may reasonably request. The
Investment Manager will furnish to the Sub-Adviser advertising and
sales literature or other material prepared for distribution to Fund
shareholders or the public, which
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refer to the Sub-Adviser or its clients in any way, prior to the use
thereof, and the Investment Manager shall not use any such materials
if the Sub-Adviser reasonably objects in writing within ten (10)
business days (or such other time as may be mutually agreed) after
receipt thereof.
(b) The Sub-Adviser shall provide to each Fund's custodian, on each
business day, information relating to all transactions in the Managed
Assets and shall provide such information to the Investment Manager
upon request. The Sub-Adviser will make all reasonable efforts to
notify the custodian of all orders to brokers for the Managed Assets
by 9:00 am EST on the day following the trade date and will affirm
the trade to the custodian before the close of business one business
day after the trade date.
(c) The Sub-Adviser will promptly communicate to the Investment
Manager and to the Company such information relating to portfolio
transactions on behalf of a Fund as they may reasonably request.
(d) The Sub-Adviser shall promptly notify the Company and the
Investment Manager of any financial condition likely to impair the
ability of the Sub-Adviser to fulfill its commitments under this
Agreement.
8. STATUS OF SUB-ADVISER. The Sub-Adviser is and will continue to be
registered as such under the federal Investment Advisers Act of 1940.
The services of the Sub-Adviser to the Company for each Fund are not
to be deemed exclusive, and the Sub-Adviser shall be free to render
similar services to others so long as its services to the Fund are
not impaired thereby. The Sub-Adviser shall be deemed to be an
independent contractor and shall, unless otherwise expressly provided
or authorized, have no authority to act for or represent the Company
in any way or otherwise be deemed an agent of the Company.
9. CERTAIN RECORDS. The Sub-Adviser shall maintain all books and records
with respect to transactions involving the Managed Assets required by
subparagraphs (b)(5), (6), (7), (9), (10) and (11) and paragraph (f)
of Rule 31a-1 under the 1940 Act. The Sub-Adviser shall provide to
the Investment Manager or the Board of Directors such periodic and
special reports, balance sheets or financial information, and such
other information with regard to its affairs as the Investment
Manager or the Board of Directors may reasonably request.
The Sub-Adviser shall keep the books and records relating to the
Managed Assets required to be maintained by the Sub-Adviser under
this Agreement and shall timely furnish to the Investment Manager all
information relating to the Sub-Adviser's services under this
Agreement needed by the Investment Manager to keep the other books
and records
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of the Company required by Rule 31a-1 under the 1940 Act. The
Sub-Adviser shall also furnish to the Investment Manager any other
information relating to the Managed Assets that is required to be
filed by the Investment Manager or the Company with the SEC or sent
to shareholders under the 1940 Act (including the rules adopted
thereunder) or any exemptive or other relief that the Investment
Manager or the Company obtains from the SEC. The Sub-Adviser agrees
that all records that it maintains on behalf of the Company are
property of the Company and the Sub-Adviser will surrender promptly
to the Company any of such records upon the Company's request;
provided, however, that the Sub-Adviser may retain a copy of such
records. 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 any such records as are required to be maintained
by it pursuant to this Agreement, and shall transfer said records to
any successor sub-adviser upon the termination of this Agreement (or,
if there is no successor sub-adviser, to the Investment Manager).
10. LIMITATION OF LIABILITY OF SUB-ADVISER. The duties of the Sub-Adviser
shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Sub-Adviser
hereunder, except as may be imposed by law. The Sub-Adviser shall not
be liable for any error of judgment or mistake of law or for any loss
arising out of any investment or for any act or omission in carrying
out its duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of its
duties, or by reason of reckless disregard of its obligations and
duties hereunder, except as may otherwise be provided under
provisions of applicable state law or Federal securities law which
cannot be waived or modified hereby. (As used in this Paragraph 10,
the term "Sub-Adviser" shall include directors, officers, employees
and other corporate agents of the Sub-Adviser as well as that entity
itself).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company may be
interested in the Sub-Adviser (or any successor thereof) as
directors, partners, officers, or shareholders, or otherwise;
directors, partners, officers, agents, and shareholders of the
Sub-Adviser are or may be interested in the Company as shareholders
or otherwise; and the Sub-Adviser (or any successor) is or may be
interested in the Company as a shareholder or otherwise. In addition,
brokerage transactions for the Company may be effected through
affiliates of the Sub-Adviser if approved by the Board of Directors
of the Company subject to the rules and regulations of the SEC.
12. DURATION AND TERMINATION. This Agreement shall become effective for
each Fund set forth in Schedule A upon its approval by the Board of
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Directors of the Company in accordance with an SEC exemptive order
(Investment Company Act Release No. 25160), which permits the
Investment Manager and/or the Company to engage a Sub-Adviser without
first obtaining approval of the Agreement from a majority of the
outstanding voting securities of the Fund(s) involved. This Agreement
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 by the vote of
a (a) majority of those Directors of the Company 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 Directors of the Company, or by the vote of
a majority of the outstanding voting securities of the Fund;
provided, however, that if the shareholders of a Fund fail to approve
the Agreement as provided herein, the Sub-Adviser may continue to
serve hereunder in the manner and to the extent permitted by the
Investment Company Act of 1940 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 Investment Company Act of 1940 and the
rules and regulations thereunder.
This Agreement may be terminated at any time, without the payment of
any penalty, by vote of a majority of the Directors of the Company or
by vote of a majority of the outstanding voting securities of a Fund
on not less than 30 days nor more than 60 days written notice to the
Sub-Adviser, by the Investment Manager at any time without the
payment of a penalty upon 90 days written notice to the Sub-Adviser,
or by the Sub-Adviser at any time without the payment of any penalty
on 90 days written notice to the Investment Manager. This Agreement
will automatically and immediately terminate in the event of its
assignment or in the event of the termination of the Investment
Manager's advisory agreement with the Company. Any termination of
this Agreement in accordance with the terms hereof will not affect
the obligations or liabilities accrued prior to termination. 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.
As used in this Section 12, the terms "assignment", "interested
persons," and a "vote of a majority of the outstanding voting
securities" shall have the respective meanings set forth in the 1940
Act and the rules and regulations thereunder; subject to such
exceptions as may be granted by the SEC under said Act.
13. NOTICE. Any notice required or permitted to be given by either party
to the other shall be deemed sufficient if sent by registered or
certified mail, or by express courier, postage prepaid, addressed by
the party giving notice to
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the other party at the last address furnished by the other party to
the party giving notice. At the outset, such notices shall be
delivered to the following addresses:
(i) if to the Company, then care of:
Commonfund Asset Management Company, Inc.
00 Xxx Xxxxxxx Xx, X.X. Xxx 000
Xxxxxx, XX 00000
Attn: Mr. Xxxxxxx Xxxxxxx, Chief Operating Officer;
(ii) if to the Investment Manager, at the foregoing address;
and
(iii) if to the Sub-Adviser:
Martingale Asset Management, L.P.
000 Xxxxxxx Xxxxxx
Xxxxxx, XX 00000
14. SEVERABILITY. If any provision of this Agreement shall be held or
made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
15. GOVERNING LAW. This Agreement shall be construed in accordance with
the laws of the State of New York and the applicable provisions of
the 1940 Act. To the extent that the applicable laws of the State of
New York, or any of the provisions herein, conflict with the
applicable provisions of the 1940 Act, the latter shall control. With
respect to any suit, action, or proceeding relating to this Agreement
or transactions contemplated hereby, each party irrevocably submits
to the non-exclusive jurisdiction of the United States District Court
for the Southern District of New York.
16. CONFIDENTIAL INFORMATION. Sub-Adviser shall not identify the Company
or the Fund as a client, or disclose any information about the
Company or the Fund to any third party except as may be required by
law, regulatory proceeding or as may be expressly permitted by the
Company.
17. MISCELLANEOUS.
(A) This instrument constitutes the sole and only agreement of the
parties to it relating to its object; any prior agreements, promises
or representations not expressly set forth in this Agreement are of
no force and effect. No waiver or modification of this Agreement
shall be effective unless reduced to writing and signed by the party
to be charged. No failure to exercise and no delay in exercising on
the part of any party hereto of any right, remedy, power or privilege
hereunder shall operate as a waiver thereof. Except as set forth in
Section 12, this Agreement binds and inures to the benefit of
parties, their successors and assigns. This Agreement
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may be executed in more than one counterpart each of which shall be
deemed an original and both of which, taken together, shall be deemed
to constitute one and the same instrument.
In the event the terms of this Agreement are applicable to more than
one Fund, the Investment Manager is entering into this Agreement with
the Sub-Adviser on behalf of the respective Funds severally and not
jointly, with the express intention that the provisions contained in
each numbered paragraph hereof shall be understood as applying
separately with respect to each Fund as if contained in separate
agreements between the Investment Manager and the Sub-Adviser for
each such Fund. In the event that this Agreement is made applicable
to any additional Fund by way of a Schedule executed subsequent to
the date first indicated above, provisions of such Schedule shall be
deemed to be incorporated into this Agreement as it relates to such
Fund so that, for example, the effective date for purposes of
Paragraph 12 of this Agreement with respect to such Fund shall be the
execution date of the relevant Schedule.
(b) A copy of the Certificate of Trust of the Company is on file with
the Secretary of State of the State of Delaware and notice is hereby
given that the obligations under this instrument are not binding on
any of the Directors, officers or shareholders of the Company.
(c) Where the effect of a requirement of the 1940 Act reflected in
any provision of this Agreement is altered by rule, regulation or
order of the SEC, whether of special or general application, such
provision shall be deemed to incorporate the effect of such rule,
regulation or order.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
as of the day and year first written above.
COMMONFUND INSTITUTIONAL FUNDS
By:/s/ Xxxxx Xxxxxxxx
------------------------------
Attest: /s/ Xxxxxxxxx Xxxxxxxx
-------------------------
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COMMONFUND ASSET MANAGEMENT COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxx
-----------------------------------------
Attest: /s/ Xxxxxxx X. Xxxxxx
-------------------------------------
MARTINGALE ASSET MANAGEMENT, L.P.
by Martingale Asset Management Corporation
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
-----------------------------------------
Attest: /s/ Xxxxxx X. Xxxx
-------------------------------------
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
AND
MARTINGALE ASSET MANAGEMENT, L.P.
FUND
----
CIF Small Cap Fund
Date of this Schedule: August 25, 2003
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SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED AUGUST 25, 2003
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
AND
MARTINGALE ASSET MANAGEMENT, L.P.
FEES
----
CIF Small Cap Fund
COMMONFUND ASSET MANAGEMENT COMPANY, INC. Martingale Asset Management, L.P.
by Martingale Asset Management Corporation its
General Partner
By: /s/ Xxxxxxx X. Xxxxxxx By: /s/ Xxxxxx X. Xxxx
----------------------- -------------------
Name: Xxxxxxx X. Xxxxxxx Name: Xxxxxx X. Xxxx
Title: Chief Operating Officer & Chief Economist Title: President
Date of this Schedule B: August 25, 2003
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