INVESTMENT SUB-ADVISORY AGREEMENT
EXHIBIT
D(12)
FORM OF INVESTMENT
SUB-ADVISORY AGREEMENT
This Investment
Sub-Advisory Agreement (this “Sub-Advisory Agreement”), is by and
between RS Investment Management, L.P. (the “Sub-Adviser”) and
Massachusetts Mutual Life Insurance Company, a mutual life insurance company
organized under the laws of the Commonwealth of Massachusetts
(“MassMutual”), for the MassMutual Emerging Growth Fund (the
“Fund”), a series of MassMutual Institutional Funds (the
“Trust”), a Massachusetts business trust which is an open-end
diversified management investment company registered as such with the
Securities and Exchange Commission (the “Commission”) pursuant to
the Investment Company Act of 1940, as amended (the “Act”),
effective as of the 1st day of May, 2000.
WHEREAS, the Trust
has appointed MassMutual as the investment adviser for the Fund pursuant to
the terms of an Investment Advisory Agreement (the “Advisory
Agreement”);
WHEREAS, the Advisory
Agreement provides that MassMutual may, at its option, subject to approval
by the Trustees of the Trust and, to the extent necessary, the shareholders
of the Fund, appoint a sub-adviser to assume certain responsibilities and
obligations of MassMutual under the Advisory Agreement;
WHEREAS, MassMutual
and the Sub-Adviser are investment advisers registered with the Commission
as such under the Investment Advisers Act of 1940, as amended (the
“Advisers Act”); and
WHEREAS, MassMutual
desires to appoint the Sub-Adviser as its sub-adviser for the Fund and the
Sub-Adviser is willing to act in such capacity upon the terms herein set
forth;
NOW THEREFORE, in
consideration of the premises and of the mutual covenants herein contained,
MassMutual, the Fund and the Sub-Adviser, the parties hereto, intending to
be legally bound, hereby agree as follows:
1. General Provision.
(a)
MassMutual hereby employs the Sub-Adviser and the Sub-Adviser hereby
undertakes to act as the investment sub-adviser of the Fund to provide
investment advice and to perform for the Fund such other duties and
functions as are hereinafter set forth. The Sub-Adviser shall, in all
matters, give to the Fund and the Trust’s Board of Trustees, directly
or through MassMutual, the benefit of the Sub-Adviser’s best judgment,
effort, advice and recommendations and shall, at all times conform to, and
use its best efforts to ensure the Fund conforms to:
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| (i) the
provisions of the Act and any rules or regulations thereunder;
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| (ii) any
other applicable provisions of state or federal law;
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| (iii)
the provisions of the Agreement and Declaration of Trust and Bylaws
of the Trust, as amended from time to time (collectively referred to as
the “Trust Documents”);
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| (iv)
policies and determinations of the Board of Trustees of the Trust
and MassMutual;
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| (v) the
fundamental and non-fundamental policies and investment restrictions of
the Fund as reflected in the Trust’s registration statement under the
Act or as such policies may, from time to time, be amended by the
Fund’s shareholders; and
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| (vi) the
Prospectus and Statement of Additional Information of the Fund in effect
from time to time (collectively referred to as the “Disclosure
Documents”).
(b) The
appropriate officers and employees of the Sub-Adviser shall be available
upon reasonable notice for consultation with any of the Trustees and
officers of the Trust and MassMutual with respect to any matter dealing with
the business and affairs of the Fund, such as the valuation of portfolio
securities of the Fund, including but not limited to securities that are
either not registered for public sale or securities not traded on any
securities market.
2. Duties of the Sub-Adviser.
(a) The
Sub-Adviser shall, subject to the direction and control by the Trust’s
Board of Trustees or MassMutual, to the extent MassMutual’s direction
is not inconsistent with that of the Board of Trustees, (i) regularly
provide investment advice and recommendations to the Fund, directly or
through MassMutual, with respect to the Fund’s investments, investment
policies and the purchase, sale or other disposition of securities and other
investments; (ii) supervise and monitor continuously the investment program
of the Fund and the composition of its portfolio and determine what
securities or other investments shall be purchased or sold by the Fund;
(iii) arrange, subject to the provisions of Section 6 hereof, for the
purchase of securities and other investments for the Fund and the sale of
securities and other investments held in the portfolio of the Fund; (iv)
provide reports on the foregoing to the Board of Trustees at each Board
meeting; and (v) undertake to do anything incidental to the foregoing to
facilitate the performance of the Sub-Adviser’s obligations hereunder,
including voting or exercising any consent rights with respect to such
securities or investments.
(b) The
Sub-Adviser shall provide to MassMutual such reports for the Fund, and in
such time frames, as MassMutual shall reasonably request or as required by
applicable law or regulation.
(c)
Provided that none of MassMutual, the Fund or the Trust shall be
required to pay any compensation other than as provided by the terms of this
Sub-Advisory Agreement and subject to the provisions of Section 5 hereof,
the Sub-Adviser may obtain investment information, research or assistance
from any other person, firm or corporation to supplement, update or
otherwise improve its investment management services.
(d)
Provided that nothing herein shall be deemed to protect the
Sub-Adviser from liability for willful misfeasance, bad faith or gross
negligence in the performance of its duties, or reckless disregard to its
obligations and duties under this Sub-Advisory Agreement, the Sub-Adviser
shall not be liable for any loss sustained by the Fund, MassMutual or any
other person under or in respect of the services performed by the
Sub-Adviser pursuant to this Sub-Advisory Agreement.
(e) The
Sub-Adviser shall, upon request of MassMutual or the Fund, make all material
disclosures to MassMutual and the Fund regarding itself and its partners,
officers, directors, shareholders, employees, affiliates or any person who
controls any of the foregoing, including, but not limited to, information
regarding any change in control in the Sub-Adviser or any change in its key
personnel, information regarding any material adverse change in the
condition (financial or otherwise) of the Sub-Adviser or any person who
controls the Sub-Adviser, information regarding the investment performance
and general investment methods of the Sub-Adviser, its principals and
affiliates, information that MassMutual reasonably deems material to the
Fund or necessary to enable MassMutual to monitor the performance of the
Sub-Adviser and information that is required, in the reasonable judgment of
MassMutual, to be disclosed in any filings required by any governmental
agency or by any applicable law, regulation, rule or order.
(f) The
Sub-Adviser shall provide MassMutual with any information in the
Sub-Adviser’s possession necessary for the compilation and maintenance
of such records with respect to the Fund’s operations as may reasonably
be required.
(g) The
Sub-Adviser shall provide MassMutual, upon reasonable prior written request
by MassMutual to the Sub-Adviser, with access to inspect at the
Sub-Adviser’s office the books and records of the Sub-Adviser relating
to the Fund and the Sub-Adviser’s performance hereunder and such other
books and records of the Sub-Adviser as are reasonably necessary to confirm
that the Sub-Adviser has complied with its obligations and duties under this
Sub-Advisory Agreement.
3. Other Activities.
(a)
Nothing in this Sub-Advisory Agreement shall prevent MassMutual or the
Sub-Adviser or any officer thereof from acting as investment adviser or
sub-adviser for any other person, firm, corporation or other entity and
shall not in any way limit or restrict MassMutual or the Sub-Adviser or any
of their respective directors,
officers, members, stockholders, partners or employees from buying, selling,
or trading any securities for its own account or for the account of others
for whom it or they may be acting, provided that such activities are in
compliance with U.S. federal and state securities laws, regulations and
rules and will not adversely affect or otherwise impair the performance by
any party of its duties and obligations under this Sub-Advisory
Agreement.
(b) To the
extent that a particular investment is suitable for both the Fund and the
Sub-Adviser’s other clients, such investment will be allocated among
the Fund and such other clients in a manner that is, in the reasonable
judgment of the Sub-Adviser, fair and equitable in the circumstances.
Subject to the foregoing, the Sub-Adviser agrees that it will not knowingly
or deliberately favor any other account managed or controlled by it or any
of its principals or affiliates over the Fund. The Sub-Adviser, upon
reasonable request and receipt of adequate assurances of confidentiality,
shall provide MassMutual with an explanation of the differences, if any, in
performance between the Fund and any other account with investment
objectives and policies similar to the Fund for which the Sub-Adviser, or
any one of its principals or affiliates, acts as investment
adviser.
4. Compensation of the Sub-Adviser.
MassMutual agrees to
pay the Sub-Adviser and the Sub-Adviser agrees to accept as full
compensation for the performance of all functions and duties on its part to
be performed pursuant to the provisions hereof, a fee paid quarterly, in
arrears, at the following rate: an annual rate of .65% on the first $200
million of Aggregate Assets; .60% on the next $200 million of Aggregate
Assets; and, subject to MassMutual adding another Concert Investment Program
investment option that is either sub-advised by the Sub-Adviser or that is a
proprietary or retail mutual fund of the Sub-Adviser that MassMutual
purchases through a separate investment account, .55% on Aggregate Assets in
excess of $400 million. For the purposes of this Sub-Advisory Agreement,
“Aggregate Assets” shall mean the aggregate of (i) the average
daily net assets of the Fund determined at the close of the New York Stock
Exchange on each day that the Exchange is open for trading, and (ii) the
average daily net assets of all other funds or accounts of MassMutual or its
affiliates, including other funds registered under the Act, for which the
Sub-Adviser provides investment advisory services, and which have
substantially the same investment objective and strategy, determined at the
close of the Exchange on each day that the Exchange is open for trading.
MassMutual shall pay the Sub-Adviser such fee not later than the tenth
(10th) business day immediately following the end of each calendar quarter.
Aggregate Assets for which the Sub-Adviser provides investment advisory
services shall mean only equity securities and securities convertible into
equity securities, but shall not include cash or cash equivalents (and do
not include the Sub-Adviser’s proprietary mutual funds or insurance
trusts which are purchased by the Fund or by MassMutual registered or
unregistered separate investment accounts).
5. Portfolio Transactions and
Brokerage.
(a) The
Sub-Adviser is authorized, in arranging the purchase and sale of the
Fund’s publicly-traded portfolio securities, to employ or deal with
such members of securities exchanges, brokers or dealers (hereinafter
“broker-dealers”), as may, in its best judgment, implement the
policy of the Fund to obtain, at reasonable expense, the best execution of
the Fund’s portfolio transactions.
(b) The
Sub-Adviser may effect the purchase and sale of securities (which are
otherwise publicly traded) in private transactions on such terms and
conditions as are customary in such transactions, may use a broker to effect
such transactions, and may enter into a contract in which the broker acts
either as principal or as agent.
(c) The
Sub-Adviser shall select broker-dealers to effect the Fund’s portfolio
transactions on the basis of its estimate of their ability to obtain best
execution of particular and related portfolio transactions. The abilities of
a broker-dealer to obtain best execution of particular portfolio
transaction(s) will be judged by the Sub-Adviser on the basis of all
relevant factors and considerations including, insofar as feasible, the
execution capabilities required by the transaction or transactions; the
ability and willingness of the broker-dealer to facilitate the Fund’s
portfolio transactions by participating therein for its own account; the
importance to the Fund of speed, efficiency or confidentiality; the
broker-dealer’s apparent familiarity with sources from or to whom
particular securities might be purchased or sold; other matters involved in
the receipt of brokerage and research services in
accordance with Section 28(e) of the Securities Exchange Act of 1934, as
amended; as well as any other matters relevant to the selection of a
broker-dealer for particular and related transactions of the Fund; and such
other considerations as the Board of Trustees of the Trust or MassMutual
determine and provide to the Sub-Adviser from time to time. Subject to the
foregoing, the Sub-Adviser may also consider sales of shares of the Fund, or
may consider or follow the recommendations of MassMutual that take such
sales into account, as factors in the selection of broker-dealers to effect
the Fund’s portfolio transactions. Notwithstanding the above, nothing
herein shall require the Sub-Adviser to use a broker-dealer which provides
research services or to use a particular broker-dealer which MassMutual has
recommended.
6. Representations And Warranties of The
Sub-Adviser.
The Sub-Adviser
hereby represents and warrants to the Fund and MassMutual that:
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| (a) The
Sub-Adviser has obtained all required governmental and regulatory
licenses, registrations and approvals required by law as may be necessary
to perform its obligations under this Sub-Advisory Agreement and to act as
contemplated by the Trust Documents and the Disclosure Documents,
including without limitation registration as an investment adviser under
the Advisers Act, and will maintain and renew any required licenses,
registrations, approvals and memberships during the term of this
Sub-Advisory Agreement.
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| (b)
There is no pending, or to the best of its knowledge, threatened or
contemplated action, suit or proceeding before or by any court,
governmental, administrative or self-regulatory body or arbitration panel
to which the Sub-Adviser or any of its principals or affiliates is a
party, or to which any of the assets of the Sub-Adviser is subject, which
reasonably might be expected to (i) result in any material adverse change
in the Sub-Adviser’s condition (financial or otherwise), business or
prospects, (ii) affect adversely in any material respect any of the
Sub-Adviser’s assets, or (iii) materially impair the
Sub-Adviser’s ability to discharge its obligations under this
Sub-Advisory Agreement; and the Sub-Adviser has not received any notice of
an investigation by the Securities and Exchange Commission or any state
regarding U.S. federal or state securities laws, regulations or rules
other than routine examinations of the books and records of the
Sub-Adviser.
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| (c) All
references in the Disclosure Documents concerning the Sub-Adviser and its
affiliates and the controlling persons, affiliates, stockholders,
directors, officers and employees of any of the foregoing are accurate in
all material respects and do not contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make
such information not misleading.
The foregoing
representations and warranties shall be continuing during the term of this
Sub-Advisory Agreement.
7. Covenants of the Sub-Adviser.
(a) If at
any time during the term of this Sub-Advisory Agreement, the Sub-Adviser
discovers any fact or omission, or any event or change of circumstances
occurs, which would make the Sub-Adviser’s representations and
warranties in Section 6 inaccurate or incomplete in any material respect, or
which might render the Disclosure Documents untrue or misleading in any
material respect, the Sub-Adviser will provide prompt written notification
to the Fund and MassMutual of any such fact, omission, event or change of
circumstances, and the facts related thereto.
(b) The
Sub-Adviser agrees that, during the term of this Sub-Advisory Agreement, and
for so long as investment in the Fund is being offered for sale, it will
provide the Fund and the Sub-Adviser with updated information relating to
the Sub-Adviser’s performance results as reasonably required from time
to time by the Fund and MassMutual. The Sub-Adviser shall use its best
efforts to provide such information within a reasonable period of time after
the end of the month to which such updated information relates and the
information is available to it.
(c) The
Sub-Adviser or its delegated auditor will make available for review by
MassMutual (and, if requested by MassMutual, its designated auditors or
attorneys) all audited reports relating the Sub-Adviser’s
composite performance results with respect to the Fund and other funds or
accounts of the Sub-Adviser with substantially similar investment objectives
and strategies and which are in the Sub-Adviser’s possession or to
which it has access. Sub-Adviser will make its or its delegated
auditor’s representatives available to discuss any items contained in
such audited reports.
8. Confidentiality.
All information and
advice furnished by one party to the other party (including their respective
agents, employees and representatives) hereunder shall be treated as
confidential and shall not be disclosed to third parties, except as may be
necessary to comply with applicable laws, rules and regulations, subpoenas
or court orders.
9. Duration.
Unless terminated
earlier pursuant to Section 10 hereof, this Sub-Advisory Agreement shall
remain in effect for a period of two years from the date hereof. Thereafter
it shall continue in effect from year to year, unless terminated pursuant to
Section 10 hereof, so long as such continuance shall be approved at least
annually by the Trust’s Board of Trustees, including the vote of the
majority of the Trustees of the Trust who are not parties to this
Sub-Advisory Agreement or “interested persons” (as defined in the
Act) of any such party cast in person at a meeting called for the purpose of
voting on such approval, or by the holders of a “majority” (as
defined in the Act) of the outstanding voting securities of the
Fund.
10. Termination.
(a) This
Sub-Advisory Agreement shall terminate automatically upon its unauthorized
assignment (within the meaning of the Act), the termination of the Advisory
Agreement or the dissolution of the Fund.
(b) The
Sub-Advisory Agreement may be terminated by MassMutual or the Board of
Trustees of the Trust: (i) by written notice to the Sub-Adviser with
immediate effect, if the Sub-Adviser’s registration under the
Adviser’s Act is suspended, terminated, lapsed or not renewed; (ii) by
written notice to the Sub-Adviser with immediate effect, if the Sub-Adviser
is bankrupt or insolvent, seeks an arrangement with creditors, is dissolved
or terminated or ceases to exist; (iii) by written notice to the Sub-Adviser
with immediate effect, if MassMutual determines in good faith, for any
reason, that such termination is appropriate for the protection of the Fund,
including without limitation a good faith determination by MassMutual or the
Board of Trustees of the Trust that the Sub-Adviser has breached an
obligation or duty under this Sub-Advisory Agreement; or (iv) in their sole
discretion, without penalty, upon ninety days prior written notice to
Sub-Adviser. This Sub-Advisory Agreement also may be terminated at any time,
without penalty, by the vote of the holders of a “majority” of the
outstanding voting securities of the Fund (as defined in the
Act).
(c) The
Sub-Advisory Agreement may be terminated by the Sub-Adviser, without penalty
at any time, upon ninety days’ prior written notice, to MassMutual and
the Trust.
11. Indemnification.
(a) In any
action in which MassMutual or the Fund or any of its or their controlling
persons, or any shareholders, partners, directors, officers and/or employees
of any of the foregoing, are parties, the Sub-Adviser agrees to indemnify
and hold harmless the foregoing persons against any loss, claim, damage,
charge, liability or expense (including, without limitation, reasonable
attorneys’ and accountants’ fees) to which such persons may become
subject, insofar as such loss, claim, damage, charge, liability or expense
arises out of or is based upon an act or omission of the Sub-Adviser or its
officers, directors, employees, affiliates or controlling persons or the
performance of the Sub-Adviser of its obligations hereunder constituting
willful misfeasance, bad faith, gross negligence, fraud or willful
misconduct.
(b) In any
action in which the Sub-Adviser or any of its controlling persons, or any
shareholders, partners, directors, officers and/or employees of any of the
foregoing, are parties, MassMutual agrees to indemnify and hold harmless the
foregoing persons against any loss, claim, settlement, damage, charge,
liability or expense
(including, without limitation, reasonable attorneys’ and
accountants’ fees) to which such persons may become subject, insofar as
such loss, claim, settlement, damage, charge, liability or expense arises
out of or is based upon any demands, claims, liabilities, expenses,
lawsuits, actions or proceedings relating to this Sub-Advisory Agreement,
the advisory services for the account of the Fund provided by the
Sub-Adviser, the operation of the Fund or the contents of the Disclosure
Documents, provided that the loss, claim, damage, liability, cost or expense
did not relate to, or was not based upon, or did not arise out of an act or
omission of the Sub-Adviser, its shareholders, or any of its partners,
officers, directors, employees, agents or controlling persons constituting
willful misfeasance, bad faith, gross negligence, fraud, willful misconduct,
or a breach of this Sub-Advisory Agreement.
(c)
Promptly after receipt by an indemnified party under this Section 11
of notice of any claim or dispute or commencement of any action or
litigation, such indemnified party will, if a claim in respect thereof is to
be made against an indemnifying party under this Section 11, notify the
indemnifying party of the commencement thereof; but the omission to notify
the indemnifying party will not relieve it from any liability which it may
have to any indemnified party otherwise than under this Section 11 except to
the extent, if any, that such failure or delay prejudiced the other party in
defending against the claim. In case any such claim, dispute, action or
litigation is brought or asserted against any indemnified party, and it
notifies the indemnifying party of the commencement thereof, the
indemnifying party will be entitled to participate therein and, to the
extent that it may wish, to assume the defense thereof, with counsel
specially approved in writing by such indemnified party, such approval not
to be unreasonably withheld, following notice from the indemnifying party to
such indemnified party of its election so to assume the defense thereof; in
which event, the indemnifying party will not be liable to such indemnified
party under this Section 11 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof,
but shall continue to be liable to the indemnified party in all other
respects as heretofore set forth in this Section 11. Notwithstanding any
other provisions of this Section 11, if, in any claim, dispute, action or
litigation as to which indemnity is or may be available, any indemnified
party reasonably determines that its interests are or may be, in whole or in
part, adverse to the interests of the indemnifying party, the indemnified
party may retain its own counsel, with the choice of counsel subject to the
consent of the indemnifying party (which consent shall not be withheld
unreasonably), in connection with such claim, dispute, action or litigation
and shall continue to be indemnified by the indemnifying party for any legal
or any other expenses reasonably incurred in connection with investigating
or defending such claim, dispute, action or litigation.
12. Disclaimer of Shareholder
Liability.
MassMutual and the
Sub-Adviser understand that the obligations of the Trust under this
Sub-Advisory Agreement are not binding upon any Trustee or shareholder of
the Trust personally, but bind only the Trust and the Trust’s property.
MassMutual and the Sub-Adviser represent that each has notice of the
provisions of the Trust Documents disclaiming shareholder and Trustee
liability for acts or obligations of the Trust.
13. Notice.
Any notice under this
Sub-Advisory Agreement shall be in writing, addressed and delivered or
mailed, postage prepaid, to the other party, with a copy to the Trust, at
the addresses below or such other address as such other party may designate
for the receipt of such notice.
If to MassMutual:
Massachusetts Mutual Life Insurance Company
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| 0000 Xxxxx
Xxxxxx
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| Xxxxxxxxxxx, XX
00000
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| Attention: Xxxxxx X. Xxxxx,
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| Vice
President
If to the
Sub-Adviser: RS Investment Management L.P.
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| 000 Xxxxxx Xxxxxx,
Xxxxx 000
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