SUB-ADVISORY AGREEMENT
TOUCHSTONE MAZAMA INSTITUTIONAL GROWTH FUND
TOUCHSTONE INSTITUTIONAL FUNDS TRUST
This SUB-ADVISORY AGREEMENT is made as of January 30, 2008, by and between
TOUCHSTONE ADVISORS, INC., an Ohio corporation (the "Advisor"), and Mazama
Capital Management, Inc., an Oregon corporation (the "Sub-Advisor").
WHEREAS, the Advisor is an investment advisor registered under the
Investment Advisers Act of 1940, as amended, and has been retained by Touchstone
Institutional Funds Trust (the "Trust"), a Delaware statutory trust organized
pursuant to an Agreement and Declaration of Trust dated October 25, 1993 (as
amended) and registered as an open-end diversified management investment company
under the Investment Company Act of 1940 (the "1940 Act"), to provide investment
advisory services with respect to certain assets of the Touchstone Mazama
Institutional Growth Fund (the "Fund"); and
WHEREAS, the Sub-Advisor also is an investment advisor registered under
the Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Advisor desires to retain the Sub-Advisor to furnish it
with portfolio management services in connection with the Advisor's investment
advisory activities on behalf of the Fund, and the Sub-Advisor is willing to
furnish such services to the Advisor and the Fund;
NOW THEREFORE, in consideration of the terms and conditions hereinafter
set forth, it is agreed as follows:
1. EMPLOYMENT OF THE SUB-ADVISOR. In accordance with and subject to the
Investment Advisory Agreement between the Trust and the Advisor, attached hereto
as Exhibit A (the "Advisory Agreement"), the Advisor hereby appoints the
Sub-Advisor to manage the investment and reinvestment of that portion of the
assets of the Fund allocated to it by the Advisor (the "Fund Assets"), in
conformity with the Fund's currently effective Registration Statement,
prospectus and Statement of Additional Information and subject to the control
and direction of the Advisor and the Trust's Board of Trustees, for the period
and on the terms hereinafter set forth. The parties agree that if Fund Assets
reach or exceed $333.3 million on or before the first year anniversary of the
Fund's operations, then an additional investment capacity of $333.3 million in
Fund Assets (up to a total of at least $666.7 million) shall be provided by the
Sub-Advisor; and if Fund Assets reach or exceed $666.7 million on or before the
second year anniversary of the Fund's operations, then an additional investment
capacity of $333.3 million in Fund Assets (up to a total of at least $1 billion)
shall be provided by the Sub-Advisor. Additional capacity may be provided at the
Sub-Advisor's discretion if asset targets are not reached by the anniversary
dates. If Fund Assets drop below a previously achieved threshold and remain
below that threshold for a year, the capacity provided as a result of meeting
that threshold may be rescinded by Sub-Advisor upon written notice. The parties
further agree that these thresholds may be modified by the written consent of
both parties. The Sub-Advisor hereby accepts such employment and agrees during
such period to render the services and to perform the duties called for by this
Agreement for the compensation herein provided. The Sub-Advisor shall at all
times maintain its registration as an investment advisor under the Investment
Advisers Act of 1940 (the "Advisers Act") and shall otherwise comply in all
material respects with all applicable laws and regulations, both state and
federal. The Sub-Advisor shall for all purposes herein be deemed an independent
contractor and shall, except as expressly provided or authorized (whether herein
or otherwise), have no authority to act for or represent the Trust in any way or
otherwise be deemed an agent of the Trust or the Fund.
2. DUTIES OF THE SUB-ADVISOR. The Sub-Advisor will provide the
following services and undertake the following duties:
a. The Sub-Advisor will manage the investment and reinvestment
of the Fund Assets, subject to and in accordance with the investment
objectives, policies and restrictions of the Fund and in conformity
with the Fund's currently effective Registration Statement, prospectus
and Statement of Additional Information and any directions which the
Advisor or the Trust's Board of Trustees may give from time to time
with respect to the Fund. In furtherance of the foregoing, the
Sub-Advisor will make all determinations with respect to the investment
of the Fund Assets and the purchase and sale of portfolio securities
and shall take such steps as may be necessary or advisable to implement
the same. The Sub-Advisor also will determine the manner in which
voting rights, rights to consent to corporate action and any other
rights pertaining to the portfolio securities will be exercised. The
Sub-Advisor will render regular reports to the Trust's Board of
Trustees and to the Advisor (or such other advisor or advisors as the
Advisor shall engage to assist it in the evaluation of the performance
and activities of the Sub-Advisor). Such reports shall be made in such
form and manner and with respect to such matters regarding the Fund and
the Sub-Advisor as the Trust or the Advisor shall from time to time
request; provided, however, that in the absence of extraordinary
circumstances, the individual primarily responsible for management of
Fund Assets for the Sub-Advisor will not be required to attend in
person more than one meeting per year with the trustees of the Trust.
b. The Sub-Advisor shall immediately notify the Advisor if the
Sub-Advisor reasonably believes that the value of any security held by
the Fund may not reflect fair value. The Sub-Advisor agrees to provide
any pricing information of which the Sub-Advisor is aware to the
Advisor and/or any Fund pricing agent to assist in the determination of
the fair value of any Fund holdings for which market quotations are not
readily available or as otherwise required in accordance with the 1940
Act or the Fund's valuation procedures for the purpose of calculating
the Fund's net asset value in accordance with procedures and methods
established by the Board and provided to the Sub-Advisor.
c. Regulatory Compliance.
(i) The Sub-Advisor agrees to comply with the
requirements of the 1940 Act, the Advisers Act, the Securities Act of
1933, as amended (the "1933 Act"),, the Securities Exchange Act of
1934, as amended (the "1934 Act"), the Commodity Exchange Act and the
respective rules and regulations thereunder, as applicable, as well as
with all other applicable federal and state laws, rules, regulations
and case law that relate to the services and relationships described
hereunder and to the conduct of its business as a registered investment
adviser. In selecting the Fund's portfolio securities and performing
the Sub-Adviser's obligations hereunder, the Sub-Advisor shall cause
the Fund Assets (as if a separate investment company) to comply with
the diversification and source of income requirements of Subchapter M
of the Internal Revenue Code of 1986, as amended (the "Code"), for
qualification as a regulated investment company. The Sub-Advisor shall
maintain compliance procedures that it reasonably believes are adequate
to ensure the compliance with the foregoing. No supervisory activity
undertaken by the Advisor shall limit the Sub-Advisor's full
responsibility for any of the foregoing.
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(ii) The Sub-Advisor has adopted a written code of
ethics that it reasonably believes complies with the requirements of
Rule 17j-1 under the 1940 Act, which it will provide to the Advisor and
the Fund. The Sub-Advisor shall ensure that its Access Persons (as
defined in the Sub-Advisor's Code of Ethics) comply in all material
respects with the Sub-Advisor's Code of Ethics, as in effect from time
to time. Upon request, the Sub-Advisor shall provide the Fund with (i)
a copy of the Sub-Advisor's current Code of Ethics, as in effect from
time to time, and (ii) a certification that it has adopted procedures
reasonably necessary to prevent Access Persons from engaging in any
conduct prohibited by the Sub-Advisor's Code of Ethics. No less
frequently than annually, the Sub-Advisor shall furnish a written
report, which complies with the requirements of Rule 17j-1, concerning
the Sub-Advisor's Code of Ethics to the Fund and the Advisor. The
Sub-Advisor shall respond to requests for information from the Advisor
as to violations of the Code by Access Persons and the sanctions
imposed by the Sub-Advisor. The Sub-Advisor shall immediately notify
the Advisor of any material violation of the Code, whether or not such
violation relates to a security held by the Fund.
(iii) The Sub-Advisor shall notify the Trust's Chief
Compliance Officer and Advisor immediately upon detection of (i) any
material failure to manage the Fund Assets in accordance with the
Fund's investment objectives and policies or any applicable law; or
(ii) any material breach of any of the Fund's or the Adviser's
policies, guidelines or procedures provided to the Sub-Advisor. In
addition, the Sub-Advisor shall provide a quarterly report regarding
its compliance with the Fund's investment objectives and policies and
applicable law, including, but not limited to the 1940 Act, the Code,
and the Fund's and the Advisor's policies, guidelines or procedures as
applicable to the Sub-Advisor's obligations under this Agreement. The
Sub-Advisor acknowledges and agrees that the Advisor may, in its
discretion, provide such quarterly compliance certifications to the
Board. The Sub-Advisor agrees to correct any such failure promptly and
to take any action that the Board and/or the Advisor may reasonably
request in connection with any such breach. The Sub-Advisor shall also
provide the officers of the Trust with supporting certifications in
connection with such certifications of Fund financial statements and
disclosure controls pursuant to the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. The Sub-Advisor
will promptly notify the Trust in the event (i) the Sub-Advisor is
served or otherwise receives notice of any action, suit, proceeding,
inquiry or investigation, at law or in equity, before or by any court,
public board, or body, involving the affairs of the Trust (excluding
class action suits in which a Fund is a member of the plaintiff class
by reason of the Fund's ownership of shares in the defendant) or the
compliance by the Sub-Advisor with the federal or state securities laws
or (ii) the controlling stockholder of the Sub-Advisor changes or an
actual change in control resulting in an "assignment" (as defined in
the 1940 Act) has occurred or is otherwise proposed to occur.
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(iv) The Sub-Advisor shall maintain separate books
and detailed records of all matters pertaining to the Fund's assets
advised by the Sub-Advisor required by Rule 31a-1 under the 1940 Act
(other than those records being maintained by the Advisor, custodian or
transfer agent appointed by the Fund) relating to its responsibilities
provided hereunder with respect to the Fund, and shall preserve such
records for the periods and in a manner prescribed therefore by Rule
31a-2 under the 1940 Act (the "Fund Books and Records"). The Fund Books
and Records shall be available to the Advisor and the Board at any time
upon request shall be delivered to the Trust upon the termination of
this Agreement and shall be available for telecopying without delay
during any day the Fund is open for business.
d. The Sub-Advisor shall provide support to the Advisor with
respect to the marketing of the Fund, including but not limited to: (i)
permission to use the Sub-Advisor's name as provided in Section 5, (ii)
permission to use the past performance and investment history of the
Sub-Advisor with respect to a composite of other funds managed by the
Sub-Advisor that are comparable, in investment objective and
composition, to the Fund, (iii) access to the individual(s) responsible
for day-to-day management of the Fund for marketing conferences,
teleconferences and other activities involving the promotion of the
Fund, subject to the reasonable request of the Advisor, (iv) permission
to use biographical and historical data of the Sub-Advisor and
individual manager(s), and (v) permission to use the names of those
clients pre-approved by the Sub-Advisor to which the Sub-Advisor
provides investment management services, subject to receipt of the
consent of such clients to the use of their names.
e. The Sub-Advisor will, in the name of the Fund, place orders
for the execution of all portfolio transactions in accordance with the
policies with respect thereto set forth in the Trust's registration
statements under the 1940 Act and the 1933 Act, as such registration
statements may be in effect from time to time. When placing orders with
brokers and dealers, the Sub-Advisor's primary objective shall be to
obtain the most favorable price and execution available for the Fund,
and in placing such orders the Sub-Advisor may consider a number of
factors, including, without limitation, the overall direct net economic
result to the Fund (including commissions, which may not be the lowest
available but ordinarily should not be higher than the generally
prevailing competitive range), the financial strength and stability of
the broker, the efficiency with which the transaction will be effected,
the ability to effect the transaction at all where a large block is
involved and the availability of the broker or dealer to stand ready to
execute possibly difficult transactions in the future. Consistent with
the Conduct Rules of the National Association of Securities Dealers,
Inc., and subject to seeking most favorable price and execution and
compliance with Rule 12b-1(h) under the 1940 Act, the Sub-Advisor may
select brokers and dealers to execute portfolio transactions of the
Fund that promote or sell shares of the Fund. The Sub-Advisor is
specifically authorized, to the extent authorized by law (including,
without limitation, Section 28(e) of the 1934 Act), to pay a broker or
dealer who provides research services to the Sub-Advisor an amount of
commission for effecting a portfolio transaction in excess of the
amount of commission another broker or dealer would have charged for
effecting such transaction, in recognition of such additional research
services rendered by the broker or dealer, but only if the Sub-Advisor
determines in good faith that the excess commission is reasonable in
relation to the value of the brokerage and research services provided
by such broker or dealer viewed in terms of the particular transaction
or the Sub-Advisor's overall responsibilities with respect to
discretionary accounts that it manages, and that the Fund derives or
will derive a reasonable benefit from such research services. The
Sub-Advisor will present a written report to the Board of Trustees of
the Trust, at least quarterly, indicating total brokerage expenses,
actual or imputed, as well as the services obtained in consideration
for such expenses, broken down by broker-dealer and containing such
information as the Board of Trustees reasonably shall request.
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f. The Sub-Advisor shall maintain errors and omissions
insurance coverage in an appropriate amount and shall provide prior
written notice to the Trust (i) of any material changes in its
insurance policies or insurance coverage; or (ii) if any material
claims will be made on its insurance policies. Furthermore, the
Sub-Advisor shall, upon reasonable request, provide the Trust with any
information it may reasonably require concerning the amount of or scope
of such insurance.
g. In the event of any reorganization or other change in the
Sub-Advisor, its investment principals, supervisors or members of its
investment (or comparable) committee, the Sub-Advisor shall give the
Advisor and the Trust's Board of Trustees written notice of such
reorganization or change within a reasonable time (but not later than
30 days) after such reorganization or change.
h. The Sub-Advisor will bear its expenses of providing
services to the Fund pursuant to this Agreement except such expenses as
are expressly undertaken by the Advisor or the Trust.
3. COMPENSATION OF THE SUB-ADVISOR.
a. As compensation for the services to be rendered and duties
undertaken hereunder by the Sub-Advisor, the Advisor will pay to the
Sub-Advisor a monthly fee equal on an annual basis to 0.50% the average
daily net assets of the Fund without regard to any total expense
limitation of the Trust or the Advisor. Such fee shall be computed and
accrued daily. If the Sub-Advisor serves in such capacity for less than
the whole of any period specified in this Section 3a, the compensation
to the Sub-Advisor shall be prorated. For purposes of calculating the
Sub-Advisor's fee, the daily value of the Fund Assets shall be computed
by the same method as the Trust uses to compute the net asset value of
the Fund for purposes of purchases and redemptions of shares thereof.
b. The Sub-Advisor reserves the right to waive all or a part
of its fees hereunder.
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4. ACTIVITIES OF THE SUB-ADVISOR. It is understood that the Sub-Advisor
may perform investment advisory services for various other clients, including
other investment companies. The Trust and the Advisor further acknowledge that
the Sub-Advisor may form or serve as an investment advisor or sub-advisor to
future funds, which have the same, similar, or overlapping investment
objectives. Provided, however that the Sub-Advisor represents and warrants that
it has no arrangement or understanding with any party, other than the Trust,
that would influence the decision of the Sub-Advisor with respect to its
selection of securities for the Fund, and that all selections shall be done in
accordance with what is in the best interest of the Fund in a manner consistent
with Sub-Advisor's fiduciary duty.
The Sub-Advisor will report to the Board of Trustees of the Trust (at
regular quarterly meetings and at such other times as such Board of Trustees
reasonably shall request, subject to the limitation on personal attendance at
such meetings set forth in Section 2a) (i) the financial condition and prospects
of the Sub-Advisor, (ii) the nature and amount of transactions affecting the
Fund that involve the Sub-Advisor and affiliates of the Sub-Advisor, (iii)
information regarding any potential conflicts of interest arising by reason of
its continuing provision of advisory services to the Fund and to its other
accounts, and (iv) such other information as the Board of Trustees shall
reasonably request regarding the Fund, the Fund's performance, the services
provided by the Sub-Advisor and affiliates of the Sub-Advisor to the Fund as
compared to its other accounts and the plans of, and the capability of, the
Sub-Advisor with respect to providing future services to the Fund and its other
accounts. The Sub-Advisor agrees to submit to the Trust a statement defining its
policies with respect to the allocation of business among the Fund and its other
clients.
The Sub-Advisor has supplied to the Advisor and the Trust copies of its
Form ADV with all exhibits and attachments thereto (including the Sub-Advisor's
statement of financial condition) and will hereafter supply to the Advisor,
promptly upon the preparation thereof, copies of all amendments or restatements
of such document.
5. USE OF NAMES. Neither the Advisor nor the Trust shall use the name
of the Sub-Advisor in any prospectus, sales literature or other material
relating to the Advisor or the Trust in any manner not approved in advance by
the Sub-Advisor; provided, however, that the Sub-Advisor will approve all uses
of its name which merely refer in accurate terms to its appointment hereunder or
which are required by the SEC or a state securities commission; and provided
further, that in no event shall such approval be unreasonably withheld. The
Sub-Advisor shall not use the name of the Advisor or the Trust in any material
relating to the Sub-Advisor in any manner not approved in advance by the Advisor
or the Trust, as the case may be; provided, however, that the Advisor and the
Trust shall each approve all uses of their respective names which merely refer
in accurate terms to the appointment of the Sub-Advisor hereunder or which are
required by the SEC or a state securities commission; and, provided further,
that in no event shall such approval be unreasonably withheld.
6. LIABILITY OF THE SUB-ADVISOR. The Sub-Advisor shall indemnify and
hold harmless the Trust and all affiliated persons thereof (within the meaning
of Section 2(a)(3) of the ▇▇▇▇ ▇▇▇) and all controlling persons (as described in
Section 15 of the 1933 Act) (collectively, the "Sub-Advisor Indemnitees")
against any and all losses, claims, damages, liabilities or litigation
(including reasonable legal and other expenses) by reason of or arising out of:
(a) the Sub-Advisor being in material violation of any applicable federal or
state law, rule or regulation or any investment policy or restriction set forth
in the Funds' Registration Statement or any written guidelines or instruction
provided in writing by the Board, or (b) the Sub-Advisor's willful misfeasance,
bad faith or gross negligence generally in the performance of its duties
hereunder or its reckless disregard of its obligations and duties under this
Agreement. As used in this Section 6, the term "Sub-Advisor" shall include the
Sub-Advisor and/or any of its affiliates and the directors, officers and
employees of the Sub-Advisor and/or any of its affiliates.
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7. LIMITATION OF TRUST'S LIABILITY. The Sub-Advisor acknowledges that
it has received notice of and accepts the limitations upon the Trust's liability
set forth in its Declaration of Trust. The Sub-Advisor agrees that (i) the
Trust's obligations to the Sub-Advisor under this Agreement (or indirectly under
the Advisory Agreement) shall be limited in any event to the Fund Assets and
(ii) the Sub-Advisor shall not seek satisfaction of any such obligation from the
holders of shares of the Fund, other than the Advisor, nor from any Trustee,
officer, employee or agent of the Trust.
8. FORCE MAJEURE. The Sub-Advisor shall not be liable for delays or
errors occurring by reason of circumstances beyond its control, including but
not limited to acts of civil or military authority, national emergencies, work
stoppages, fire, flood, catastrophe, acts of God, insurrection, war, riot, or
failure of communication or power supply. In the event of equipment breakdowns
beyond its control, the Sub-Advisor shall take all reasonable steps to minimize
service interruptions but shall have no liability with respect thereto.
9. RENEWAL, TERMINATION AND AMENDMENT.
a. This Agreement shall continue in effect, unless sooner
terminated as hereinafter provided, for two years from its initial
effective date set forth above; and it shall continue thereafter
provided that such continuance is specifically approved by the parties
and, in addition, at least annually by (i) the vote of the holders of a
majority of the outstanding voting securities (as herein defined) of
the Fund or by vote of a majority of the Trust's Board of Trustees and
(ii) by the vote of a majority of the Trustees who are not parties to
this Agreement or interested persons of either the Advisor or the
Sub-Advisor, cast in person at a meeting called for the purpose of
voting on such approval.
b. This Agreement may be terminated at any time, without
payment of any penalty, (i) by the Advisor upon not more than sixty
(60) days' nor less than thirty (30) days' written notice delivered or
mailed by registered mail, postage prepaid, to the Sub-Advisor; (ii) by
the Sub-Advisor upon not less than sixty (60) days' written notice
delivered or mailed by registered mail, postage prepaid, to the
Advisor; or (iii) by the Trust upon either (y) the majority vote of its
Board or (z) the affirmative vote of a majority of the outstanding
voting securities of the Fund. This Agreement shall terminate
automatically in the event of its assignment.
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c. This Agreement may be amended at any time by the parties
hereto, subject to approval by the Trust's Board of Trustees and, if
required by applicable SEC rules and regulations, a vote of the
majority of the outstanding voting securities of the Fund affected by
such change.
d. The terms "assignment," "interested persons" and "majority
of the outstanding voting securities" shall have the meaning set forth
for such terms in the 1940 Act.
10. SEVERABILITY. If any provision of this Agreement shall become or
shall be found to be invalid by a court decision, statute, rule or otherwise,
the remainder of this Agreement shall not be affected thereby.
11. NOTICE. Any notices under this Agreement shall be in writing
addressed and delivered personally (or by telecopy) or mailed postage-paid, to
the other party at such address as such other party may designate in accordance
with this paragraph for the receipt of such notice. Until further notice to the
other party, it is agreed that the address of the Trust and that of the Advisor
for this purpose shall be ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇ and
that the address of the Sub-Advisor shall be ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Executive Vice
President/Chief Operating Officer...
12. MISCELLANEOUS. Each party agrees to perform such further actions
and execute such further documents as are necessary to effectuate the purposes
hereof. This Agreement shall be construed and enforced in accordance with and
governed by the laws of the State of Ohio and the Sub-Advisor consents to the
jurisdiction of courts, both state or federal, in Ohio, with respect to any
dispute under this Agreement.. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions hereof or
otherwise affect their construction or effect. This Agreement may be executed
simultaneously in two or more counterparts, each of which shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
THE REMAINDER OF THIS PAGE HAS BEEN LEFT INTENTIONALLY BLANK
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
and delivered in their names and on their behalf by the undersigned, thereunto
duly authorized, all as of the day and year first above written.
TOUCHSTONE ADVISORS, INC.
Attest:
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇
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▇▇▇▇▇ ▇. ▇▇▇▇▇
Name: President
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Title:
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MAZAMA CAPITAL MANAGEMENT, INC.
Attest:
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------- ----------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇ Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Title: Chief Compliance Officer Title: EVP/COO
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