EXHIBIT (d)(26)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this day of _________, 2001, by and among Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company, Inc., a Delaware Corporation (the "Investment Manager"),
Western Asset Management Company ("WAMCO") and Western Asset Management Company
Limited ("WAMCO Limited" together with WAMCO, the "Sub-Advisers").
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 series, each having its own investment
policies; and
WHEREAS, the Company has entered into an investment advisory agreement with
the Investment Manager pursuant to which the Investment Manager will act as
investment adviser to the Company; and
WHEREAS, each of WAMCO and WAMCO Limited is controlled by Xxxx Xxxxx, Inc.
WHEREAS, the Investment Manager, acting with the approval of the Company,
wishes to retain the Sub-Advisers 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 one or both Sub-Advisers 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-Advisers are willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF SUB-ADVISERS. The Sub-Advisers shall collectively manage the
investment and reinvestment of the Managed Assets and determine in
their discretion, the securities and other property to be purchased or
sold and the portion of the Managed Assets to retain in cash. WAMCO and
WAMCO Limited shall be jointly and severally responsible for the
investment decisions relating to the Managed Assets, provided that (i)
the Investment Manager may designate certain Managed Assets to be
managed by WAMCO or WAMCO Limited and (ii) in the event that WAMCO and
WAMCO Limited disagree as to the management of any Managed Assets,
WAMCO's decision shall control. The Sub-Advisers 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-Advisers shall provide the
Investment Manager and the Company with records concerning the
Sub-Advisers' activities that the Company is required to maintain, and
to render regular reports to the
Investment Manager and to the Company concerning the Sub-Advisers'
discharge of the foregoing responsibilities.
The Sub-Advisers 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 in writing
to the Sub-Advisers, (ii) the objectives, policies, and limitations for
each Fund set forth in the Prospectus and Statement of Additional
Information as those documents may from time to time be amended or
supplemented and delivered to the Sub-Advisers (the "Prospectus and
Statement of Additional Information"), (iii) the Declaration of Trust
of the Company, and (iv) applicable laws and regulations including the
1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act") and
the Internal Revenue Code of 1986. If a conflict in policies or
guidelines referenced herein occurs, the Prospectus and Statement of
Additional Information shall control.
The Sub-Advisers agree to perform such duties at their 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-Advisers 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-Advisers bear any
expenses that would result in the Company's inability to qualify as a
regulated investment company under provisions of the Internal Revenue
Code.
2. DUTIES OF INVESTMENT MANAGER. The Investment Manager shall continue to
have responsibility for all services to be provided to a Fund pursuant
to the Advisory Agreement between it and the Company and shall oversee
and review the Sub-Advisers' performance under this Agreement.
The Investment Manager shall furnish to the Sub-Advisers current and
complete copies of the 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. The provisions of
Section 1, paragraph 2 shall not apply to those documents as amended
unless the Sub-Advisers have received any such amendments.
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-Advisers 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-Advisers, they will promptly deliver the same over
to the custodian for the benefit of and in the name of the Fund.
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Unless otherwise required by local custom, all securities transactions
for the Managed Assets will be consummated by payment to or delivery by
a Fund of cash or securities due to or from the Managed Assets.
Repurchase agreements including tri-party repurchase agreements and
other trading agreements may be entered into by a Fund acting through
designated officers or agents; custodians under tri-party repurchase
agreements will act as sub-custodians of the Fund.
4. PORTFOLIO TRANSACTIONS.
(a) Selection of Brokers. The Sub-Advisers are 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 in writing
from time to time and in conformity with federal securities laws.
In executing Fund transactions and selecting brokers or dealers, the
Sub-Advisers will use their 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-Advisers shall consider all
factors that they deem 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-Advisers 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-Advisers in writing,
the Sub-Advisers are 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-Advisers determine
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-Advisers to the Fund. In addition,
the Sub-Advisers are 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-Advisers or
the Company's principal underwriter) to take into account the sale of
shares of the Company if the Sub-Advisers believe 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 sold to the Investment Manager, the Sub-Advisers,
the Company's principal underwriter, or any affiliated person of either
the Company, the Investment Manager, the Sub-Advisers or the principal
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underwriter, acting as principal in the transaction, except to the
extent permitted by the Securities and Exchange Commission ("SEC") and
the 1940 Act.
(b) Aggregating Orders. The Sub-Advisers may aggregate orders for
purchase or sale of Managed Assets with similar orders being made
concurrently for other accounts managed by the Sub-Advisers, if, in the
Sub-Advisers' 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-Advisers may represent the Sub-Advisers' evaluation that a
Fund is benefited over time 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 the
Sub-Advisers, 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-ADVISERS. For the services to be rendered by
the Sub-Advisers under this Agreement, the Investment Manager shall pay
to WAMCO 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-Advisers may, in their
discretion and from time to time, waive a portion of its fee. The
parties understand that WAMCO will, from time to time, pay to WAMCO
Limited a portion of any fee paid to it hereunder.
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-Advisers 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-Advisers advertising and
sales literature or other material prepared for distribution to Fund
shareholders or the public, which refer to the Sub-Advisers or their
clients in any way, prior to the use thereof, and the Investment
Manager shall not use any such materials if the Sub-Advisers reasonably
object in writing within ten (10) business days (or such other time as
may be mutually agreed) after receipt thereof.
(b) The Sub-Advisers shall provide to each Fund's custodian, on each
business day, information relating to all transactions in the Managed
Assets and
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shall provide such information to the Investment Manager upon request.
The Sub-Advisers 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-Advisers 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-Advisers shall promptly notify the Company and the
Investment Manager of any financial condition likely to impair the
ability of the Sub-Advisers to fulfill their commitments under this
Agreement.
8. STATUS OF SUB-ADVISERS. The Sub-Advisers are and will continue to be
registered as such under the Advisers Act. The services of the
Sub-Advisers to the Company for each Fund are not to be deemed
exclusive, and the Sub-Advisers shall be free to render similar
services to others so long as their services to the Fund are not
impaired thereby. The Sub-Advisers shall be deemed to be independent
contractors 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-Advisers 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-Advisers 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 their affairs as the Investment Manager or
the Board of Directors may reasonably request.
The Sub-Advisers shall keep the books and records relating to the
Managed Assets required to be maintained by the Sub-Advisers under this
Agreement and shall timely furnish to the Investment Manager all
information relating to the Sub-Advisers' services under this Agreement
needed by the Investment Manager to keep the other books and records of
the Company required by Rule 31a-1 under the 1940 Act. The Sub-Advisers
shall also furnish to the Investment Manager any other information
within their control 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-Advisers agree
that all records that they maintain on behalf of the Company are
property of the Company and the Sub-Advisers will surrender promptly to
the Company any of such records upon the Company's request; provided,
however, that the Sub-Advisers may retain a copy of such records. In
addition, for the duration of this Agreement, the Sub-Advisers 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
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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-ADVISERS. The duties of the Sub-Advisers
shall be confined to those expressly set forth herein, and no implied
duties are assumed by or may be asserted against the Sub-Advisers
hereunder, except as may be imposed by law. The Sub-Advisers 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 their duties hereunder, except a loss resulting from willful
misfeasance, bad faith or gross negligence in the performance of their
duties, or by reason of reckless disregard of their 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 Section 10, the term
"Sub-Advisers" shall include directors, officers, employees and other
corporate agents of the Sub-Advisers as well as the entities
themselves).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company may be
interested in the Sub-Advisers (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Sub-Advisers are or may be
interested in the Company as shareholders or otherwise; and the
Sub-Advisers (or any successor) are 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-Advisers 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
Directors of the Company and by a vote of the majority of the
outstanding voting securities of each Fund; provided, however, that at
any time the Investment Manager and the Company shall have obtained
exemptive relief from the SEC permitting them 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, the
Agreement shall become effective upon its approval by the Company's
Board of Directors. 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-Advisers 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
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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 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-Advisers, by the Investment Manager at any time without the payment
of a penalty upon 90 days written notice to the Sub-Advisers, or by the
Sub-Advisers 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, postage prepaid, addressed by the party giving notice to 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: Xx. Xxxx X. Xxxxxx, President
(ii) if to the Investment Manager, at the foregoing
address; and
(iii) if to WAMCO or WAMCO Limited:
Western Asset Management Company
000 Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, 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.
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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. The Sub-Advisers 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, as requested by a regulatory body, or deemed appropriate to
further the purposes of this Agreement or as may be expressly permitted
by the Company.
17. MISCELLANEOUS. 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 the
parties, their successors and assigns. This Agreement 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. 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. 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. The parties hereto agree that,
except as provided in Section 1 of this Agreement, joint action shall
not be required for satisfaction of any duty or obligation of the
Sub-Advisers, to the extent such duty or obligation may be satisfied by
any one Sub-Adviser acting singly.
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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:
----------------------------------
Attest:
------------------------------
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
By:
----------------------------------
Attest:
------------------------------
WESTERN ASSET MANAGEMENT COMPANY
By:
----------------------------------
Attest:
------------------------------
WESTERN ASSET MANAGEMENT COMPANY LIMITED
By:
----------------------------------
Attest:
------------------------------
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
WESTERN ASSET MANAGEMENT COMPANY
AND
WESTERN ASSET MANAGEMENT COMPANY LIMITED
FUND
----
CIF Core Plus Bond Fund
Date of this Schedule: ______
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SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
DATED , 2001
AMONG
COMMONFUND INSTITUTIONAL FUNDS
I. COMMONFUND ASSET MANAGEMENT COMPANY, INC.
WESTERN ASSET MANAGEMENT COMPANY
AND
WESTERN ASSET MANAGEMENT COMPANY LIMITED
II. FEES
Daily Accrual
-------------
Fees shall be accrued each day by applying to the Net Asset Value of the Managed
Assets at the end of that day, the daily rate, using a 365 day year, equivalent
to the following:
Fund (% Per Annum)
---- -------------
CIF Core Plus Bond Fund 0.135%
Quarterly Payment
-----------------
Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET
MANAGEMENT COMPANY
By:
---------------------------------
Name:
Title:
WESTERN ASSET MANAGEMENT
COMPANY
By:
---------------------------------
Name:
Title:
WESTERN ASSET MANAGEMENT
COMPANY LIMITED
By:
---------------------------------
Name:
Title:
Date of this Schedule B: ______
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