INVESTMENT SUB-ADVISORY AGREEMENT
CONSTELLATION INSTITUTIONAL PORTFOLIOS
AGREEMENT made this ______day of______________, 2004, by and between
Constellation Investment Management Company, LP (the "Adviser") and Clover
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 each 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
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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
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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.
(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 d 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");
(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.
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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.
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.
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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: Clover Capital Management, Inc.
000 Xxxxxx Xxxx Xxx
Xxxxxxxxx, XX 00000
Attn: Xxxx-Xxxx XxXxxx
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.
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 CLOVER 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
Clover Capital Institutional Small Cap Value Portfolio
Clover Capital Institutional Fixed Income Portfolio
Clover Capital Institutional Income Plus Portfolio
A-1
SCHEDULE B
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
NAME OF FUND ANNUAL RATE
--------------------------------------------------------------------------------
Clover Capital Institutional Small Cap 0.60% on the first $50 million
Value Portfolio 0.55% on assets over $50 million
Clover Capital Institutional Fixed 0.25% on the first $100 million
Income Portfolio 0.20% on assets over $100 million
Clover Capital Institutional Income 0.60% on the first $25 million
Plus Portfolio 0.55% on assets over $25 million
B-1