INVESTMENT SUB-ADVISORY AGREEMENT
CONSTELLATION INSTITUTIONAL PORTFOLIOS
AGREEMENT made this ______day of______________, 2004, by and between
Constellation Investment Management Company, LP (the "Adviser") and Sands
Capital Management, Inc. (the "Sub-Adviser").
WHEREAS, Constellation Institutional Portfolios, a Delaware 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 (the
"Advisory Agreement") with the Trust, pursuant to which the Adviser will act
as investment adviser to each series of the Trust set forth on Schedule A of
this Agreement (each a "Fund" and collectively the "Funds"); and
WHEREAS, the Adviser, with the approval of the Trust, desires to retain the
Sub-Adviser to provide investment advisory services to the Adviser in
connection with the management of a 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 by the Adviser and the
Trust's Board of Trustees, the Sub-Adviser shall manage those assets of a Fund
that the Adviser determines to allocate to the Sub-Adviser (the "Allocated
Assets"), including the purchase, retention and disposition of the Allocated
Assets, in accordance with each 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) The Sub-Adviser shall, subject to the direction of the Adviser, determine
from time to time what Allocated Assets will be purchased, retained or sold by
the Fund, and what portion of the Allocated Assets will be invested or held
uninvested in cash.
(b) In the performance of its duties and obligations under this Agreement, the
Sub-Adviser shall act in conformity with the Trust's Declaration of Trust (as
defined herein) and the Prospectus 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, and all other applicable federal and state laws and regulations, as each
is amended from time to time.
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(c) The Sub-Adviser shall determine the Allocated Assets to be purchased or
sold by the Fund as provided in subsection (a) and will place orders with or
through such persons, brokers or dealers to carry out the policy with respect
to brokerage set forth in each Fund's Registration Statement (as defined
herein) and Prospectus or as the Board of Trustees or the Adviser may direct
from time to time, 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 each 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 Trustees of
the Trust, the Sub-Adviser is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
fund transaction for a 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 and other accounts as to which it exercises investment discretion. In
addition, to the extent permitted by applicable law, 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 Adviser,
Sub-Adviser or the Trust's principal underwriter) to take into account the
sale of shares of the Trust 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 a Fund's Allocated Assets
be purchased from or sold to the Adviser, Sub-Adviser, the Trust's principal
underwriter, or any affiliated person of either the Trust, Adviser, the Sub-
Adviser or the principal underwriter, acting as principal in the transaction,
except to the extent permitted by the U.S. Securities and Exchange Commission
("SEC") and the 1940 Act.
(d) The Sub-Adviser shall maintain all books and records with respect to
transactions involving the Allocated 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 Adviser or the Board of Trustees
such periodic and special reports and such other information relating to the
Fund as the Adviser or Board of Trustees may reasonably request. The Sub-
Adviser shall keep the books and records relating to the Allocated Assets
required to be maintained 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 a 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 Allocated 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
Trust obtains from the SEC. The Sub-Adviser agrees that all records that it
maintains on behalf of a Fund are 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. 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 Adviser).
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(e) The Sub-Adviser shall provide each Fund's custodian on each business day
with information relating to all transactions concerning the Fund's Allocated
Assets and shall provide the Adviser with such information upon request of the
Adviser.
(f) The investment management services provided by the Sub-Adviser under this
Agreement are not to be deemed exclusive and the Sub-Adviser shall be free to
render similar services to others, as long as such services do not impair the
services rendered to the Adviser or the Trust.
(g) 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.
(h) The Sub-Adviser shall be responsible for voting all proxies that it
receives in relation to the Allocated Assets. The Adviser shall instruct the
custodian and other parties providing services to the Fund to promptly forward
misdirected proxies to the Sub-Adviser.
(i) Except as specifically permitted in writing by the Adviser, or as
otherwise permitted or required to comply with the requirements of the 1940
Act (including the rules adopted thereunder), the Sub-Adviser shall not
consult with any other sub-adviser to the Trust or a Fund concerning the
purchase, retention or disposition of Fund Allocated Assets.
Services to be furnished by the Sub-Adviser under this Agreement may be
furnished through the medium of any of the Sub-Adviser's partners, officers or
employees.
2. DUTIES OF THE ADVISER. The Adviser shall continue to have responsibility
for all services to be provided to each Fund pursuant to the Advisory
Agreement and shall oversee and review the Sub-Adviser's performance of its
duties under this Agreement; provided, however, that in connection with its
management of the Allocated Assets, nothing herein shall be construed to
relieve the Sub-Adviser of responsibility for compliance with the Trust's
Declaration of Trust (as defined herein), the Prospectus, the instructions and
directions of the Board of Trustees of the Trust, the requirements of the 1940
Act, the Internal Revenue Code of 1986, and all other applicable federal and
state laws and regulations, as each is amended from time to time.
3. DELIVERY OF DOCUMENTS. The Adviser has furnished the Sub-Adviser with
copies properly certified or authenticated of each of the following documents:
(a) The Trust's Agreement and Declaration of Trust, as filed with the
Secretary of State of the State of Delaware (such Agreement and 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");
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(b) By-Laws of the Trust (such By-Laws, as in effect on the date of this
Agreement and as amended from time to time, are herein called the "By-Laws");
(c) Prospectus(es) of each Fund.
4. COMPENSATION TO THE SUB-ADVISER. 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 as full compensation therefor, a sub-
advisory fee at the rate specified on Schedule B of this Agreement. The fee
will be calculated based on the monthly average net value of the Allocated
Assets under the Sub-Adviser's management 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.
5. INDEMNIFICATION. The Sub-Adviser shall indemnify and hold harmless the
Adviser from and against any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) howsoever
arising from or in connection with the performance of the Sub-Adviser's
obligations under this Agreement; provided, however, that the Sub-Adviser' s
obligation under this Section 5 shall be reduced to the extent that the claim
against, or the loss, liability or damage experienced by the Adviser, is
caused by or is otherwise directly related to the Adviser's own, or any other
sub-adviser's, willful misfeasance, bad faith or negligence, or to the
reckless disregard of its duties under this Agreement.
6. DURATION AND TERMINATION. This Agreement shall become effective upon its
approval by the Trust's Board of Trustees and by the vote of a majority of the
outstanding voting securities of each Fund. This Agreement shall continue in
effect for a period of more than two years from the date hereof only so long
as continuance is specifically approved at least annually in conformance with
the 1940 Act; provided, however, that this Agreement may be terminated with
respect to a Fund (a) by the Fund at any time, without the payment of any
penalty, by the vote of a majority of Trustees of the Trust or by the vote of
a majority of the outstanding voting securities of the Fund, (b) by the
Adviser at any time, without the payment of any penalty, on not more than 60
days' nor less than 30 days' written notice to the Sub-Adviser, or (c) by the
Sub-Adviser at any time, without the payment of any penalty, on 90 days'
written notice to the Adviser. This Agreement shall terminate automatically
and immediately in the event of its assignment, or in the event of a
termination of the Adviser's Advisory agreement with the Trust. As used in
this Section 6, the terms "assignment" and "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 the 1940 Act.
7. GOVERNING LAW. This Agreement shall be governed by the internal laws of the
Commonwealth of Pennsylvania, without regard to conflict of law principles;
provided, however, that nothing herein shall be construed as being
inconsistent with the 1940 Act.
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8. 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.
9. 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 at: Constellation Investment Management Company, LP
0000 Xxxxxxxxx Xxxxx, Xxxxx 000
Xxxxxx, Xxxxxxxxxxxx 00000
Attn: Xxxx X. Xxxxx
To the Sub-Adviser at: Sands Capital Management, Inc.
0000 Xxxxxx Xxxxxxxxx, Xxxx 0000
Xxxxxxxxx, Xxxxxxxx 00000
Attn: Xxxxx Xxxxx, Xx.
10. ENTIRE AGREEMENT. This Agreement embodies the entire agreement and
understanding between the parties hereto, and supersedes all prior agreements
and understandings relating to this Agreement's subject matter. 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.
11. USE OF NAMES.
(a) The Sub-Adviser hereby agrees to grant a non-exclusive, non-assignable
license to the Trust for use of the names "Sands", "Sands Capital" or "Sands
Capital Management" in the name of each series of the Trust for which the Sub-
Adviser provides investment management services pursuant to this Agreement for
so long as the Sub-Adviser continues to provide such services to such series,
and such license shall terminate upon termination of this Agreement.
(b) The Adviser shall not permit the use of the Sub-Adviser's name, investment
performance information or other pertinent information regarding the Sub-
Adviser in marketing or advertising materials relating to the Fund, the Trust
or the Adviser, without the prior written consent of the Sub-Adviser, which
consent shall not be unreasonably withheld.
A copy of the Declaration of Trust is on file with the Secretary of State of
the State of Delaware, and notice is hereby given that the obligations of this
instrument are not binding upon any of the Trustees, officers or shareholders
of the Fund or the Trust.
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Where the effect of a requirement of the 1940 Act reflected in any provision
of this Agreement is altered by a 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 by their officers designated below as of the day and year first
written above.
CONSTELLATION INVESTMENT SANDS CAPITAL MANAGEMENT, INC.
MANAGEMENT COMPANY, LP
By:_________________________________ By:__________________________________
Name:_______________________________ Name:________________________________
Title:______________________________ Title:_______________________________
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
LISTING OF FUND(s)
NAME OF FUND
Sands Capital Institutional Growth Portfolio
A-1
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
NAME OF FUND/APPLICABLE ANNUAL BASIC FEE RATE
CLASS
--------------------------------------------------------------------------------
Sands Capital Institutional Growth
Portfolio 0.45%
B-1
