INVESTMENT SUB-ADVISORY AGREEMENT
CONSTELLATION FUNDS
AGREEMENT made this ______ day of___________, 2004, by and between
Constellation Investment Management Company, LP (the "Adviser") and Xxxxxxx
International Advisors, LLC (the "Sub-Adviser").
WHEREAS, Constellation Funds, 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
dated , 2004 (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.
(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-
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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, 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 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, balance sheets or
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 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 that it is responsible for
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).
(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.
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(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 review all proxy solicitation materials
and be responsible for voting and handling all proxies 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");
(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 C 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.
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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 out-of-pocket 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 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.
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 ACKNOWLEDGEMENT. The Advisor acknowledges receipt of Form ADV, Part 2
at least 48 hours in advance of entering this agreement.
10. 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: Xxxxxxx International Advisors, LLC
Xxx Xxxxxxxxxxxxx Xxxxx
Xxxxxx, XX 00000
Attn: L. Xxxx Xxxxx, Managing Principal
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11. 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.
12 LICENSE OF NAMES. The Sub-Adviser hereby agrees to grant a
non-exclusive, non-assignable license to the Trust for use of the name
of the Sub-Adviser 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.
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.
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 XXXXXXX INTERNATIONAL ADVISORS, LLC
MANAGEMENT COMPANY, LP
By: By:
------------------------------------ ---------------------------------
Name: Xxxx X. Xxxxx Name: L. Xxxx Xxxxx
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Title: President and Chief Executive Title: Managing Principal
Officer
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
LISTING OF FUND(s)
Name of Fund
Constellation International Equity Fund
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SCHEDULE C*
TO THE
INVESTMENT ADVISORY AGREEMENT
FOR FUNDS WITH NO PERFORMANCE ADJUSTMENT
This Schedule C shall apply to each of the Funds identified on Schedule C-1
hereto.
(a) The Trust shall pay to the Adviser a fee for each Fund calculated
daily and payable monthly in arrears, computed as a percentage of the average
net assets of the Fund for such month at the rate set forth in Schedule C-1
hereto.
(b) The "average net assets" of the Fund for any month shall be equal
to the quotient produced by dividing (i) the sum of the net assets of such Fund,
determined in accordance with procedures established from time to time by or
under the direction of the Board of Trustees of the Trust, for each calendar day
of such month, by (ii) the number of such days.
* Note Schedule B is intentionally omitted
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SCHEDULE C-1*
TO THE
INVESTMENT ADVISORY AGREEMENT
LISTING OF FUNDS AND FEE RATES
Name of Fund
Constellation International Equity Fund 0.40%
* Note Schedule B is intentionally omitted.
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