EXHIBIT (d)(26)
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT made this 2nd day of July, 2001, by and among Commonfund Institutional
Funds, a Delaware business trust (the "Company"), Commonfund Asset Management
Company, Inc., a Delaware Corporation (the "Investment Manager"), Western Asset
Management Company ("WAMCO") and Western Asset Management Company Limited
("WAMCO Limited" together with WAMCO, the "Sub-Advisers").
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 adviser to the Company; and
WHEREAS, each of WAMCO and WAMCO Limited is controlled by Xxxx Xxxxx, Inc.
WHEREAS, the Investment Manager, acting with the approval of the Company, wishes
to retain the Sub-Advisers 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 one or both Sub-Advisers 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-Advisers are willing to render such services.
NOW, THEREFORE, in consideration of mutual covenants herein contained, the
parties hereto agree as follows:
1. DUTIES OF SUB-ADVISERS. The Sub-Advisers shall collectively manage the
investment and reinvestment of the Managed Assets and determine in their
discretion, the securities and other property to be purchased or sold and the
portion of the Managed Assets to retain in cash. WAMCO and WAMCO Limited shall
be jointly and severally responsible for the investment decisions relating to
the Managed Assets, provided that (i) the Investment Manager may designate
certain Managed Assets to be managed by WAMCO or WAMCO Limited and (ii) in the
event that WAMCO and WAMCO Limited disagree as to the management of any Managed
Assets, WAMCO's decision shall control. The Sub-Advisers 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-Advisers shall provide the Investment Manager and the
Company with records concerning the Sub-Advisers' activities that the Company is
required to maintain, and to render regular reports to the Investment Manager
and to the Company concerning the Sub-Advisers' discharge of the foregoing
responsibilities.
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The Sub-Advisers 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 in writing to the Sub-Advisers, (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 and delivered to the Sub-Advisers (the
"Prospectus and Statement of Additional Information"), (iii) the Declaration of
Trust of the Company, and (iv) applicable laws and regulations including the
1940 Act, the Investment Advisers Act of 1940 (the "Advisers Act") 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-Advisers agree to perform such duties at their 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-Advisers 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-Advisers 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-Advisers' performance under this Agreement.
The Investment Manager shall furnish to the Sub-Advisers 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. The provisions of Section 1, paragraph 2 shall not
apply to those documents as amended unless the Sub-Advisers have received any
such amendments.
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-Advisers 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-Advisers, they 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-Advisers are 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 in writing from time to time and in conformity
with federal securities laws.
In executing Fund transactions and selecting brokers or dealers, the
Sub-Advisers will use their 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-Advisers shall consider all factors that they deem
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-Advisers 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-Advisers in writing, the
Sub-Advisers are 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-Advisers determine 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-Advisers to the
Fund. In addition, the Sub-Advisers are authorized to allocate purchase and
sale orders for securities to brokers or dealers (including brokers and dealers
that are affiliated with the Investment Manager, the Sub-Advisers or the
Company's principal underwriter) to take into account the sale of shares of the
Company if the Sub-Advisers believe 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, the Sub-Advisers, the Company's principal underwriter, or
any affiliated person of either the Company, the Investment Manager, the
Sub-Advisers 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-Advisers
may aggregate orders for purchase or sale of Managed Assets with similar orders
being made concurrently for other accounts managed by the Sub-Advisers, if, in
the Sub-Advisers' 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 the Sub-Advisers may
represent the Sub-Advisers' evaluation that a Fund is benefited over time 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
the Sub-Advisers, 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-ADVISERS. For the services to be rendered by the
Sub-Advisers under this Agreement, the Investment Manager shall pay to WAMCO
compensation at
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the 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-Advisers may, in their discretion and from
time to time, waive a portion of its fee. The parties understand that WAMCO
will, from time to time, pay to WAMCO Limited a portion of any fee paid to it
hereunder.
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-Advisers 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-Advisers advertising and sales literature or other material prepared for
distribution to Fund shareholders or the public, which refer to the
Sub-Advisers or their clients in any way, prior to the use thereof, and the
Investment Manager shall not use any such materials if the Sub-Advisers
reasonably object in writing within ten (10) business days (or such other time
as may be mutually agreed) after receipt thereof.
(b) The Sub-Advisers 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-Advisers 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-Advisers 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-Advisers shall promptly notify the Company and the Investment
Manager of any financial condition likely to impair the ability of the
Sub-Advisers to fulfill their commitments under this Agreement.
8. STATUS OF SUB-ADVISERS. The Sub-Advisers are and will continue to be
registered as such under the Advisers Act. The services of the Sub-Advisers to
the Company for each Fund are not to be deemed exclusive, and the Sub-Advisers
shall be free to render similar services to others so long as their services to
the Fund are not impaired thereby. The Sub-Advisers shall be deemed to be
independent contractors 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-Advisers shall maintain all books and records with
respect to transactions involving the Managed Assets required by subparagraphs
(b)(5), (6), (7), (9), (10)
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and (11) and paragraph (f) of Rule 31a-1 under the 1940 Act. The Sub-Advisers
shall provide to 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 their affairs as the Investment Manager or the Board
of Directors may reasonably request.
The Sub-Advisers shall keep the books and records relating to the Managed
Assets required to be maintained by the Sub-Advisers under this Agreement and
shall timely furnish to the Investment Manager all information relating to the
Sub-Advisers' 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-Advisers shall also furnish to the Investment Manager any
other information within their control 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-Advisers agree that all records that they
maintain on behalf of the Company are property of the Company and the
Sub-Advisers will surrender promptly to the Company any of such records upon
the Company's request; provided, however, that the Sub-Advisers may retain a
copy of such records. In addition, for the duration of this Agreement, the
Sub-Advisers 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-ADVISERS. The duties of the Sub-Advisers
shall be confined to those expressly set forth herein, and no implied duties
are assumed by or may be asserted against the Sub-Advisers hereunder, except as
may be imposed by law. The Sub-Advisers 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 their duties hereunder, except a loss
resulting from willful misfeasance, bad faith or gross negligence in the
performance of their duties, or by reason of reckless disregard of their
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 Section 10, the term "Sub-Advisers"
shall include directors, officers, employees and other corporate agents of the
Sub-Advisers as well as the entities themselves).
11. PERMISSIBLE INTERESTS. Agents and shareholders of the Company may be
interested in the Sub-Advisers (or any successor thereof) as directors,
partners, officers, or shareholders, or otherwise; directors, partners,
officers, agents, and shareholders of the Sub-Advisers are or may be interested
in the Company as shareholders or otherwise; and the Sub-Advisers (or any
successor) are 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-Advisers if approved by the Board of Directors of
the Company subject to the rules and regulations of the SEC.
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 the
Company shall have obtained exemptive relief from the SEC permitting them to
engage a sub-adviser without first obtaining approval of the Agreement
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from a majority of the outstanding voting securities of the 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-Advisers may continue to
serve hereunder in the manner and to the extent permitted by the 1940 Act 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 1940 Act 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-Advisers, by the
Investment Manager at any time without the payment of a penalty upon 90 days
written notice to the Sub-Advisers, or by the Sub-Advisers 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,
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
(iii) if to WAMCO or WAMCO Limited:
Western Asset Management Company
000 Xxxx Xxxxxxxx Xxxxxxxxx
Xxxxxxxx, XX 00000
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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.
15. 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.
16. CONFIDENTIAL INFORMATION. The Sub-Advisers 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, as requested by a
regulatory body, or deemed appropriate to further the purposes of this
Agreement 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 the 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. The parties hereto agree that, except as provided in
Section 1 of this Agreement, joint action shall not be required for
satisfaction of any duty or obligation of the Sub-Advisers, to the extent such
duty or obligation may be satisfied by any one Sub-Adviser acting singly.
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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.
-------------------------------------
WESTERN ASSET MANAGEMENT COMPANY
By:/s/ Xxxxx X. Xxxxxx
-------------------------------------
Attest: /s/ S.S.
-------------------------------------
WESTERN ASSET MANAGEMENT COMPANY LIMITED
By:/s/ Xxxxx Xxxxxxxxxx
-------------------------------------
Attest: /s/ S.S.
-------------------------------------
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SCHEDULE A
TO THE
INVESTMENT SUB-ADVISORY AGREEMENT
AMONG
COMMONFUND INSTITUTIONAL FUNDS
COMMONFUND ASSET MANAGEMENT COMPANY, INC.
WESTERN ASSET MANAGEMENT COMPANY
AND
WESTERN ASSET MANAGEMENT COMPANY LIMITED
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.
WESTERN ASSET MANAGEMENT COMPANY
AND
WESTERN ASSET MANAGEMENT COMPANY LIMITED
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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 (% Per Annum)
---- --------------
CIF Core Plus Bond Fund 0.135%
Quarterly Payment
Fees shall be paid within 30 days following the end of each calendar quarter.
COMMONFUND ASSET
MANAGEMENT COMPANY
By:/s/ Xxxx X. Xxxxxx
--------------------------------------
Name: Xxxx X. Xxxxxx
Title: President
WESTERN ASSET MANAGEMENT
COMPANY
By:/s/ Xxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxx
Title: Director of Compliance
WESTERN ASSET MANAGEMENT
COMPANY LIMITED
By:/s/ Xxxxx Xxxxxxxxxx
--------------------------------------
Name: Xxxxx X. Xxxxxxxxxx
Title: Managing Director
Date of this Schedule B: ______
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