EXHIBIT
D(3)
INVESTMENT
SUB-ADVISORY AGREEMENT
This INVESTMENT
SUB-ADVISORY AGREEMENT (the “Sub-Advisory Agreement”), is by and
between OppenheimerFunds, Inc., organized under the laws of Colorado (the
“Sub-Adviser”), and Massachusetts Mutual Life Insurance Company, a
Massachusetts corporation (“MassMutual”), effective this 1st day
of May, 2000.
WHEREAS, the
MassMutual International Equity Fund (the “Fund”) is a series of
MassMutual Institutional Funds (the “Trust”), a Massachusetts
business trust which is an open-end, 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”), and 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, 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 and the Sub-Adviser, the parties hereto, intending to be legally
bound, hereby agree as follows:
1. General Provision.
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 enable the
Fund to conform to:
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(a) the
provisions of the Act and any rules or regulations thereunder;
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(b) any
other applicable provisions of state or federal law;
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(c) 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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(d)
policies and determinations of the Board of Trustees of the Trust
and MassMutual;
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(e) the
fundamental and non-fundamental policies and investment restrictions of
the Fund as reflected in the Trust’s registration statement under the
Investment Company Act or as such policies may, from time to time, be
amended by the Fund’s shareholders; and
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(f) the
Prospectus and Statement of Additional Information of the Fund in effect
from time to time.
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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 and sale of securities; (ii) supervise and monitor
continuously the investment program of the Fund and the composition of its
portfolio and determine what securities shall be purchased or sold by the
Fund; (iii) arrange, subject to the provisions of Section 5 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; and (iv)
provide reports on the foregoing to the Board of Trustees at each Board
meeting.
(b)
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.
(c)
Provided that nothing herein shall be deemed to protect the
Sub-Adviser from 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 reason of good faith errors or omissions in
connection with any matters to which this Sub-Advisory Agreement
relates.
(d)
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 or corporation and shall not in any
way limit or restrict MassMutual or the Sub-Adviser or any of their
respective directors, officers, members, stockholders 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 will not adversely affect or otherwise impair the performance by
any party of its duties and obligations under this Sub-Advisory
Agreement.
(e) The
Sub-Adviser shall cooperate with MassMutual by providing MassMutual with any
information in the Sub-Adviser’s possession necessary for supervising
the activities of all administrative and clerical personnel as shall be
required to provide corporate administration for the Fund, including the
compilation and maintenance of such records with respect to its operations
as may reasonably be required. The Sub-Adviser shall, at its own expense,
provide such officers for the Trust as its Board may request.
3. Duties of MassMutual
MassMutual shall
provide the Sub-Adviser with the following information about the
Fund:
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(a) cash
flow estimates on request;
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(b)
notice of the Fund’s “investable funds” by 9:00 a.m.
each business day;
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(c) as
they are modified, from time to time, current versions of the documents
and policies referred to in Subsections (c), (d), (e) and (f) of Section 1
hereof, above.
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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 at the
annual rate of .50% of the average daily net asset value of the Fund,
determined at the close of the New York Stock Exchange on each day that the
Exchange is open for trading and paid not later than the tenth (10th)
business day after the end of each quarter.
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”), including “affiliated” broker-dealers, as that term
is defined in the Act, as may, in its best judgment, implement the policy of
the Fund to obtain, at reasonable expense, the best execution (prompt and
reliable execution at the most favorable security price obtainable) 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 in such
to effect said 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 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 of 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; as well as any other matters relevant to the selection of
a broker-dealer for particular and related transactions of the
Fund.
(d) The
Sub-Adviser shall have discretion, in the interest of the Fund, to allocate
brokerage on the portfolio transactions of the Fund to broker-dealers, other
than affiliated broker-dealers, qualified to obtain best execution of such
transactions who provide brokerage and/or research services (as such
services are defined in Section 28(e)(3) of the Securities Exchange Act of
1934, as amended (the “Exchange Act”) for the Fund and for all
other accounts for which the Sub-Adviser or any of its affiliates exercises
“investment discretion” (as that term is defined in Section
29(a)(35) of the Exchange Act) and to cause the Fund to pay such
broker-dealers a commission for effecting a portfolio transaction for the
Fund that is in excess of the amount of commission another broker-dealer
adequately qualified to effect such transaction would have charged for
effecting that transaction, if the Sub-Adviser determines, in good faith,
that such commission is reasonable in relation to the value of the brokerage
and/or research services provided by such broker-dealer viewed in terms of
either that particular transaction or the overall responsibilities of the
Sub-Adviser or its affiliates with respect to accounts as to which they
exercise investment discretion. In reaching such determination, the
Sub-Adviser will not be required to place or attempt to place a specific
dollar value on the brokerage and/or research services provided or being
provided by such broker-dealer. In demonstrating that such determinations
were made in good faith, the Sub-Adviser shall be prepared to show that all
commissions were allocated for purposes contemplated by this Agreement and
that the total commissions paid by the Fund over a representative period
selected by the Fund’s Trustees were reasonable in relation to the
benefits to the Fund.
(e)
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. Duration.
Unless terminated
earlier pursuant to Section 7 hereof, this Sub-Advisory Agreement shall
remain in effect until May 1, 2002. Thereafter it shall continue in effect
from year to year, 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.
7. Termination.
This Sub-Advisory
Agreement shall terminate automatically upon its assignment or in the event
upon the termination of the Advisory Agreement; it may also be terminated:
(i) for cause or with the consent of the parties
and the Trust by MassMutual or the Sub-Adviser at any time without penalty
upon sixty days’ written notice to the other party and the Trust; or
(ii) by the Trust at any time without penalty upon sixty days’ written
notice to MassMutual and the Sub-Adviser provided that such termination by
the Trust shall be directed or approved by a vote of a majority of all of
the Trustees of the Trust then in office or by the vote of the holders of a
“majority” of the outstanding voting securities of the Fund (as
defined in the Act).
8. 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.
9. 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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Attention: Vernon J. Meyer
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If to the
Sub-Adviser: OppenheimerFunds, Inc.
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Attention: Andrew J. Donohue
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Executive Vice
President and General Counsel
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If to either party,
copies to: MassMutual Institutional Funds
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Attention: Thomas M. Kinzler
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Vice President and
Secretary
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Investors Bank
& Trust Company
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Attention: Steven Peacock
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IN WITNESS WHEREOF,
MassMutual and the Sub-Adviser have caused this Sub-Advisory Agreement to be
executed on the day and year first above written.
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MASSACHUSETTS
MUTUAL
LIFE
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OPPENHEIMER
FUNDS
, INC
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By: |
/S
/ ANDREW
J. DONOHUE
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ACCEPTED AND
ACKNOWLEDGED
:
MASS
MUTUAL
INSTITUTIONAL
FUNDS
on behalf of MASSMUTUAL INTERNATIONAL EQUITY FUND
| By: |
/S
/ THOMAS
M. KINZLER
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Vice President and
Secretary
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