EXHIBIT (d)(17)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 2nd day of July, 2001, by and between Commonfund
Institutional Funds, a Delaware business trust (the "Company"), Commonfund Asset
Management Company, Inc., a Delaware Corporation (the "Investment Manager"), and
BlackRock Advisors, Inc. (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 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 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 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 Declaration of Trust of
the Company, and (iv) applicable laws and
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regulations including the 1940 Act, the Investment Advisers Act of 1940, 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-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 Internal Revenue Code.
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-Adviser's performance under this Agreement.
The Investment Manager shall furnish to the Sub-Adviser 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.
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-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 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.
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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, 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 sold to the Investment Manager, Sub-Adviser, the Company's
principal underwriter, or any affiliated person of either the Company, the
Investment Manager, 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.
(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 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 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
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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 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
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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 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 Securities and Exchange
Commission.
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 or
the Company shall have obtained exemptive relief from the Securities and
Exchange Commission permitting it to engage a Sub-Adviser without first
obtaining approval of the Agreement from a majority of the outstanding voting
securities of the
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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-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 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:
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;
if to the Investment Manager, at the foregoing address; and
if to the Sub-Adviser:
BlackRock Advisors, Inc.
000 Xxxx Xxxxxx, 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
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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.
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.
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. 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 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.
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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: /s/ Xxxxxx X. Xxxxxxxxx
---------------------------------------
Attest: /s/ Xxxxxxx Xxxxxxx
---------------------------------------
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
By:/s/Xxxx X. Xxxxxx
--------------------------------------
Attest: /s/L.O.
---------------------------------------
BLACKROCK ADVISORS, INC.
By:/s/ Xxxxx Xxxxxxxxxxx
---------------------------------------
Attest: /s/ R.A.
---------------------------------------
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
AND
BLACKROCK ADVISORS, INC.
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
Commonfund Asset Management Company, Inc.
AND
BLACKROCK ADVISORS, INC.
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 Managed Assets($) Fee (% per annum)
---- ----------------- ------------------
CIF Core Plus Bond Fund First $300 million 0.172%
Next $200 million 0.15%
Next $500 million 0.10%
Thereafter 0.08%
Quarterly Payment
Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET MANAGEMENT COMPANY, INC. BLACKROCK ADVISORS, INC.
By: /s/Xxxx X. Xxxxxx By: /s/ Xxxxx Xxxxxxxxxxx
------------------ ----------------------
Name: Xxxx X. Xxxxxx Name: Xxxxx Xxxxxxxxxxx
Title: President Title: President
Date of this Schedule B: ______
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