1
Exhibit 23 (d)(vii)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement is made as of the _____ day of June, 1999,
by and between New Covenant Trust Company, N.A., a limited purpose national
trust bank (the "Adviser"), and Seneca Capital Management (the "Sub-Adviser").
WHEREAS, pursuant to an agreement between them dated as of June __,
1999 (the "Advisory Agreement"), the Adviser serves as investment adviser to New
Covenant Funds, a Delaware business trust and an open-end management investment
company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933; and
WHEREAS, the Trust is comprised of four separate investment portfolios,
one of which is New Covenant Growth Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of securities to assist the Adviser
in performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and desires to
provide such services to the Trust and the Adviser.
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
Section 1. APPOINTMENT OF THE SUB-ADVISER. The Adviser hereby appoints
the Sub-Adviser to provide a continuous investment program for that portion of
the Fund designated by the Adviser as assigned to the Sub-Adviser (the "Segment"
of the Fund), subject to such written instructions and supervision as the
Adviser may from time to time furnish. The Sub-Adviser hereby accepts such
appointment and agrees to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser will
provide the services under this Agreement with respect to the Segment in
accordance with the Fund's investment objective, policies and applicable
restrictions as stated in the Fund's most recent Prospectus and Statement of
Additional Information and as the same may, from time to time, be supplemented
or amended and in resolutions of the Trust's Board of Trustees. The Adviser
agrees to furnish to the Sub-Adviser from time to time copies of all
Prospectuses and Statements of Additional Information and of all amendments of,
or supplements to, such Prospectuses and Statements of Additional Information
and of all resolutions of the Trust's Board of Trustees applicable to the
Sub-Adviser's services hereunder. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser, the Fund or the Trust in any way.
Section 2. SUB-ADVISORY SERVICES. Subject to such written instructions
and supervision as the Adviser may from time to time furnish, the Sub-Adviser
will provide an investment program for the Segment, including investment
research and management with respect to securities and investments, including
cash and cash equivalents in the Segment, and will determine from time to time
what
2
securities and other investments will be purchased, retained or sold by and
within the Segment. The Sub-Adviser will implement such determinations through
the placement, on behalf of the Fund, of orders for the execution of portfolio
transactions through such brokers or dealers as it may select. The Adviser will
instruct the Trust's Custodian to forward promptly to the Sub-Adviser proxy and
other materials relating to the exercise of such shareholder rights and, unless
otherwise instructed by the Adviser, the Sub-Adviser will determine from time to
time the manner in which voting rights, rights to consent to corporate action
and other rights pertaining to the Fund's investments should be exercised.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as it
uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) conform with all applicable rules and regulations of the
United States Securities and Exchange Commission ("SEC") and
in addition will conduct its activities under this Agreement
in accordance with any applicable regulations of any
government authority pertaining to the investment advisory
activities of the Sub-Adviser and shall furnish such written
reports or other documents substantiating such compliance as
the Adviser reasonably may request from time to time;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the
Fund either directly with the issuer or with an underwriter,
market maker or broker or dealer. In placing orders, the
Sub-Adviser will use its reasonable best efforts to obtain
best execution of such orders. Consistent with this
obligation, the Sub-Adviser may, to the extent permitted by
law, effect portfolio securities transactions through brokers
and dealers who provide brokerage and research services
(within the meaning of Section 28(c) of the Securities
Exchange Act of 1934) to or for the benefit of the Fund and/or
other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of
Trustees from time to time with respect to the extent and
continuation of the policy, the Sub-Adviser is authorized to
cause the Fund to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a
securities transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have
charged for effecting that transaction 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
either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to the
accounts as to which it exercises investment discretion. The
Trust or the Adviser may, from time to time in writing, direct
the Sub-Adviser to place orders through one or more brokers or
dealers and, thereafter, the Sub-Adviser will have no
responsibility for ensuring best execution with respect to
such orders. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser or any affiliated
person of the Sub-Adviser as principal except as may be
permitted by the 1940 Act or an exemption therefrom. If the
Sub-Adviser determines in good faith that the transaction is
in the best interest of each client, securities may be
purchased on behalf of the Fund from,
-2-
3
or sold on behalf of the Fund to, another client of the
Sub-Adviser in compliance with Rule 17a-7 under the 1940 Act;
(e) maintain all necessary or appropriate records with respect to
the Fund's securities transactions for the Segment in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31 (a) of the 1940 Act,
and will furnish the Trust's Board of Trustees and the Adviser
such periodic and special reports as the Board and Adviser
reasonably may request;
(f) treat confidentially and as proprietary information of the
Adviser and the Trust all records and other information
relative to the Adviser and the Trust and prior, present, or
potential shareholders, and will not use such records and
information for any purpose other than the performance of its
responsibilities and duties hereunder, except that subject to
prompt notification to the Trust and the Adviser, the
Sub-Adviser may divulge such information to its independent
auditors and regulatory authorities, or when so requested by
the Adviser and the Trust; provided, however, that nothing
contained herein shall prohibit the Sub-Adviser from (1)
advertising or soliciting the public generally with respect to
other products or services, regardless of whether such
advertisement or solicitation may include prior, present or
potential shareholders of the Fund or (2) including the
Adviser and Trust on its general list of disclosable clients.
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment decisions for
the Fund, the Sub-Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed
for purchase or sale for the Fund's account are customers of
the Adviser, other sub-advisers, the Sub-Adviser or of their
respective parents, subsidiaries or affiliates. In dealing
with such customers, the Sub-Adviser and its subsidiaries and
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities
of the Sub-Adviser with respect to the Sub-Adviser's Segment
of the Fund.
Section 3. EXPENSE. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it in performing its services under this
Agreement. The Sub-Adviser shall not be liable for any expenses of the Adviser
or the Trust, including without limitation (a) their interest and taxes, (b)
brokerage commissions and other costs in connection with the purchase or sale of
securities or other investment instruments with respect to the Fund and (c)
custodian fees and expenses.
Section 4. RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Adviser or the Trust any such records upon the
Adviser's or the Trust's request and that such records shall be available for
inspection by the SEC. The Sub-Adviser further agrees to preserve for the
periods and at the places prescribed by Rule 3la-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
-3-
4
Section 5. COMPENSATION OF THE SUB-ADVISER.
(a) In consideration of services rendered pursuant to this Agreement,
the Adviser will pay the Sub-Adviser a fee, in arrears, equal to an annual rate
in accordance with Schedule A hereto, paid quarterly.
(b) Such fee for each calendar quarter shall be calculated based on the
average of the market value of the assets under management as of the end of each
of the three months in the quarter just ended, as provided by the Adviser.
(c) If the Sub-Adviser should serve for less than the whole of any
calendar quarter, its compensation shall be determined as provided above on the
basis of the ending market value of the assets managed in the month in which the
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Sub-Adviser hereunder.
Section 6. SERVICES NOT EXCLUSIVE. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
Section 7. USE OF NAMES. The Adviser shall not use the name, logo,
trade or service xxxx or derivative of the foregoing of the Sub-Adviser or any
of the Sub-Adviser's affiliates in any prospectus, sales literature or other
materials whether or not relating to the Trust in any manner not approved prior
thereto by the Sub-Adviser; provided, however, that the Sub-Adviser shall
approve all uses of its or its affiliate's 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-Adviser shall not use the name of the
Trust, the Fund or the Adviser in any materials relating to the Sub-Adviser in
any manner not approved prior thereto by the Adviser; provided, however, that
the Adviser shall approve all uses of its and the Fund's or the Trust's name
which merely refer in accurate terms to the appointment of the Sub-Adviser
hereunder, including placing the Trust's or the Adviser's name on the
Sub-Adviser's list of representative clients, 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.
Section 8. LIABILITY OF THE SUB-ADVISER. Absent willful misfeasance,
bad faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty, the Sub-Adviser shall not be liable for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
Notwithstanding the foregoing, neither the Adviser nor the Trust shall be deemed
to have waived any rights it may have against the Sub-Adviser under federal or
state securities laws.
The Sub-Adviser shall indemnify and hold harmless the Trust and the
Adviser (and its affiliated companies and their respective officers, directors
and employees) from any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) arising
-4-
5
out of or in connection with the willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties including breach of
fiduciary duty, hereunder of the Sub-Adviser.
The Adviser shall hold harmless and indemnify the Sub-Adviser for any
loss, liability, cost, damage or expense (including reasonable attorney's fees
and costs) arising from any claim or demand by any person that is based upon (i)
the obligations of any other sub-adviser to the Fund, (ii) any obligation of the
Adviser under the Advisory Agreement that has not been delegated to the
Sub-Adviser under this Agreement or (iii) any matter for which the Sub-Adviser
does not have liability in accordance with the first sentence of this Section 8.
Section 9. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser
acknowledges that it has received notice of and accepts the limitations upon the
Trust's and the Fund's liability set forth in its Trust Instrument and under
Delaware law. The Sub-Adviser agrees that any of the Trust's obligations shall
be limited to the assets of the Fund and that the Sub-Adviser shall not seek
satisfaction of any such obligation from the shareholders of the Trust nor from
any Trustee, officer, employee or agent of the Trust.
The names "New Covenant Funds" and "Trustees of New Covenant Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Trust Instrument
dated as of September 30, 1998, to which reference is hereby made and a copy of
which is on file at the office of the Secretary of State of the State of
Delaware and elsewhere as required by law, and to any and all amendments thereto
so filed or hereafter filed. The obligations of "New Covenant Funds" entered
into in the name or on behalf thereof, or in the name or on behalf of any series
or class of shares of the Trust, by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series or class of shares of the Trust must look solely to the assets of the
Trust belonging to such series or class for the enforcement of any claims
against the Trust.
Section 10. DURATION RENEWAL TERMINATION AND AMENDMENT. This Agreement
will become effective as of the date first written above, provided that it shall
have been approved by vote of a majority of the outstanding voting securities of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect for an initial
period of one (1) year.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive one year periods provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of the disinterested Trustees cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of all votes attributable
to the outstanding Shares of the Fund. This Agreement may be terminated as to
the Fund at any time, without payment of any penalty, by the Trust's Board of
Trustees, by the Adviser, or by a vote of a majority of the outstanding voting
securities of the Fund, upon 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon.
This Agreement shall terminate automatically and immediately upon
termination of the Advisory Agreement. This Agreement shall terminate
automatically and immediately in the event
-5-
6
of its assignment. No assignment of this Agreement shall be made by the
Sub-Adviser without the consent of the Adviser and the Board of Trustees of the
Trust.
This Agreement may be amended at any time by the Adviser and the
Sub-Adviser, subject to approval by the Trust's Board of Trustees and, if
required by the 1940 Act and applicable SEC rules and regulations, a vote of a
majority of the Fund's outstanding voting securities. Notwithstanding the
foregoing, the Trust shall be under no obligation to obtain shareholder approval
to materially amend this Agreement unless required to obtain such approval
pursuant to any orders or rules and regulations which may have been issued by
the Securities and Exchange Commission.
Section 11. YEAR 2000 WARRANTY. The Sub-Adviser represents and warrants
that it is actively pursuing a comprehensive and coordinated compliance strategy
(including remediation and testing) to ensure the readiness of its business
systems and applications for the Year 2000 and believes that all such systems
critical to the performance of Sub-Adviser's responsibilities hereunder will be
Year 2000 compliant prior to January 1, 2000. The Sub-Adviser will make
appropriate inquiries as to the readiness of its vendors, service providers,
clients and other third parties for the Year 2000; provided, however, that
neither the Sub-Adviser nor any of its officers, directors or employees (or
affiliated companies) make any representations or warranties regarding the Year
2000 readiness of such vendors, service providers, clients and other third
parties.
Section 12. CONFIDENTIAL RELATIONSHIP. Any information and advice
furnished by either party to this Agreement to the other shall be treated as
confidential and shall not be disclosed to third parties except as required by
law or as required or permitted by this Agreement.
Section 13. 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.
Section 14. MISCELLANEOUS. This Agreement constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof and each party agrees to perform such further actions and execute such
further documents as are necessary to effectuate the purposes hereof. To the
extent not preempted by federal law, this Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Indiana.
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 in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all parties.
Section 15. NOTICES. All notices and other communications hereunder
shall be in writing (including telex or similar writing) and shall be deemed
given if delivered in person or by messenger, cable, telegram or telex or
facsimile transmission or by a reputable overnight delivery service which
provides evidence of receipt to the parties at the following addresses or telex
or facsimile transmission numbers (or at such other address or number for a
party as shall be specified by like notice):
-6-
7
(a) if to the Sub-Adviser, to:
------------------------------------------
------------------------------------------
------------------------------------------
(b) if to the Adviser, to:
New Covenant Trust Company, N.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxxxxx, XX 00000
Facsimile transmission number: ( )
---------------------
Attention:
---------------------
Each such notice or other communication shall be effective (i) if given
by telex or facsimile transmission, when such telex or facsimile is transmitted
to the number specified in this section and the appropriate answer back or
confirmation is received, and (ii) if given by any other means, when delivered
at the address specified in this section.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
NEW COVENANT TRUST COMPANY, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SENECA CAPITAL MANAGEMENT
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
Dated: June___, 1999
-7-
8
SCHEDULE A
----------
To the Sub-Advisory Agreement
between New Covenant Trust Company, N.A. and
Seneca Capital Management
Name of Fund Compensation Date
------------ ------------ ----
New Covenant Growth Fund 1.000% of first $5 Million in Assets; June __, 1999
0.800% of next $10 Million in Assets;
0.500% of next $35 Million in Assets;
(less 10% eleemosynary discount)
and 0.350% of Assets over $50 Million;
(flat fee over $50 million)
NEW COVENANT TRUST COMPANY, N.A.
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
SENECA CAPITAL MANAGEMENT
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
-8-
9
Exhibit 23(d) (viii)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement is made as of the _____ day of June, 1999,
by and between New Covenant Trust Company, N.A., a limited purpose national
trust bank (the "Adviser"), and Xxxxxxxx, Xxxx & Xxxx, Inc. (the "Sub-Adviser").
WHEREAS, pursuant to an agreement between them dated as of June __,
1999 (the "Advisory Agreement"), the Adviser serves as investment adviser to New
Covenant Funds, a Delaware business trust and an open-end management investment
company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933; and
WHEREAS, the Trust is comprised of four separate investment portfolios,
one of which is New Covenant Income Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of securities to assist the Adviser
in performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and desires to
provide such services to the Trust and the Adviser.
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
Section 1. APPOINTMENT OF THE SUB-ADVISER. The Adviser hereby appoints
the Sub-Adviser to provide a continuous investment program for that portion of
the Fund designated by the Adviser as assigned to the Sub-Adviser (the "Segment"
of the Fund), subject to such written instructions and supervision as the
Adviser may from time to time furnish. The Sub-Adviser hereby accepts such
appointment and agrees to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser will
provide the services under this Agreement with respect to the Segment in
accordance with the Fund's investment objective, policies and applicable
restrictions as stated in the Fund's most recent Prospectus and Statement of
Additional Information and as the same may, from time to time, be supplemented
or amended and in resolutions of the Trust's Board of Trustees. The Adviser
agrees to furnish to the Sub-Adviser from time to time copies of all
Prospectuses and Statements of Additional Information and of all amendments of,
or supplements to, such Prospectuses and Statements of Additional Information
and of all resolutions of the Trust's Board of Trustees applicable to the
Sub-Adviser's services hereunder. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser, the Fund or the Trust in any way.
Section 2. SUB-ADVISORY SERVICES. Subject to such written instructions
and supervision as the Adviser may from time to time furnish, the Sub-Adviser
will provide an investment program for the Segment, including investment
research and management with respect to securities and investments, including
cash and cash equivalents in the Segment, and will determine from time to time
what
10
securities and other investments will be purchased, retained or sold by and
within the Segment. The Sub-Adviser will implement such determinations through
the placement, on behalf of the Fund, of orders for the execution of portfolio
transactions through such brokers or dealers as it may select. The Adviser will
instruct the Trust's Custodian to forward promptly to the Sub-Adviser proxy and
other materials relating to the exercise of such shareholder rights and, unless
otherwise instructed by the Adviser, the Sub-Adviser will determine from time to
time the manner in which voting rights, rights to consent to corporate action
and other rights pertaining to the Fund's investments should be exercised.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as it
uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) conform with all applicable rules and regulations of the
United States Securities and Exchange Commission ("SEC") and
in addition will conduct its activities under this Agreement
in accordance with any applicable regulations of any
government authority pertaining to the investment advisory
activities of the Sub-Adviser and shall furnish such written
reports or other documents substantiating such compliance as
the Adviser reasonably may request from time to time;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the
Fund either directly with the issuer or with an underwriter,
market maker or broker or dealer. In placing orders, the
Sub-Adviser will use its reasonable best efforts to obtain
best execution of such orders. Consistent with this
obligation, the Sub-Adviser may, to the extent permitted by
law, effect portfolio securities transactions through brokers
and dealers who provide brokerage and research services
(within the meaning of Section 28(c) of the Securities
Exchange Act of 1934) to or for the benefit of the Fund and/or
other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of
Trustees from time to time with respect to the extent and
continuation of the policy, the Sub-Adviser is authorized to
cause the Fund to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a
securities transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have
charged for effecting that transaction 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
either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to the
accounts as to which it exercises investment discretion. The
Trust or the Adviser may, from time to time in writing, direct
the Sub-Adviser to place orders through one or more brokers or
dealers and, thereafter, the Sub-Adviser will have no
responsibility for ensuring best execution with respect to
such orders. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser or any affiliated
person of the Sub-Adviser as principal except as may be
permitted by the 1940 Act or an exemption therefrom. If the
Sub-Adviser determines in good faith that the transaction is
in the best interest of each client, securities may be
purchased on behalf of the Fund from,
-2-
11
or sold on behalf of the Fund to, another client of the
Sub-Adviser in compliance with Rule 17a-7 under the 1940 Act;
(e) maintain all necessary or appropriate records with respect to
the Fund's securities transactions for the Segment in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31 (a) of the 1940 Act,
and will furnish the Trust's Board of Trustees and the Adviser
such periodic and special reports as the Board and Adviser
reasonably may request;
(f) treat confidentially and as proprietary information of the
Adviser and the Trust all records and other information
relative to the Adviser and the Trust and prior, present, or
potential shareholders, and will not use such records and
information for any purpose other than the performance of its
responsibilities and duties hereunder, except that subject to
prompt notification to the Trust and the Adviser, the
Sub-Adviser may divulge such information to its independent
auditors and regulatory authorities, or when so requested by
the Adviser and the Trust; provided, however, that nothing
contained herein shall prohibit the Sub-Adviser from (1)
advertising or soliciting the public generally with respect to
other products or services, regardless of whether such
advertisement or solicitation may include prior, present or
potential shareholders of the Fund or (2) including the
Adviser and Trust on its general list of disclosable clients.
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment decisions for
the Fund, the Sub-Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed
for purchase or sale for the Fund's account are customers of
the Adviser, other sub-advisers, the Sub-Adviser or of their
respective parents, subsidiaries or affiliates. In dealing
with such customers, the Sub-Adviser and its subsidiaries and
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities
of the Sub-Adviser with respect to the Sub-Adviser's Segment
of the Fund.
Section 3. EXPENSE. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it in performing its services under this
Agreement. The Sub-Adviser shall not be liable for any expenses of the Adviser
or the Trust, including without limitation (a) their interest and taxes, (b)
brokerage commissions and other costs in connection with the purchase or sale of
securities or other investment instruments with respect to the Fund and (c)
custodian fees and expenses.
Section 4. RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Adviser or the Trust any such records upon the
Adviser's or the Trust's request and that such records shall be available for
inspection by the SEC. The Sub-Adviser further agrees to preserve for the
periods and at the places prescribed by Rule 3la-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
-3-
12
Section 5. COMPENSATION OF THE SUB-ADVISER.
(a) In consideration of services rendered pursuant to this Agreement,
the Adviser will pay the Sub-Adviser a fee, in arrears, equal to an annual rate
in accordance with SCHEDULE A hereto, paid quarterly.
(b) Such fee for each calendar quarter shall be calculated based on the
average of the market value of the assets under management as of the end of each
of the three months in the quarter just ended, as provided by the Adviser.
(c) If the Sub-Adviser should serve for less than the whole of any
calendar quarter, its compensation shall be determined as provided above on the
basis of the ending market value of the assets managed in the month in which the
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Sub-Adviser hereunder.
Section 6. SERVICES NOT EXCLUSIVE. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
Section 7. USE OF NAMES. The Adviser shall not use the name, logo,
trade or service xxxx or derivative of the foregoing of the Sub-Adviser or any
of the Sub-Adviser's affiliates in any prospectus, sales literature or other
materials whether or not relating to the Trust in any manner not approved prior
thereto by the Sub-Adviser; provided, however, that the Sub-Adviser shall
approve all uses of its or its affiliate's 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-Adviser shall not use the name of the
Trust, the Fund or the Adviser in any materials relating to the Sub-Adviser in
any manner not approved prior thereto by the Adviser; provided, however, that
the Adviser shall approve all uses of its and the Fund's or the Trust's name
which merely refer in accurate terms to the appointment of the Sub-Adviser
hereunder, including placing the Trust's or the Adviser's name on the
Sub-Adviser's list of representative clients, 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.
Section 8. LIABILITY OF THE SUB-ADVISER. Absent willful misfeasance,
bad faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty, the Sub-Adviser shall not be liable for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
Notwithstanding the foregoing, neither the Adviser nor the Trust shall be deemed
to have waived any rights it may have against the Sub-Adviser under federal or
state securities laws.
The Sub-Adviser shall indemnify and hold harmless the Trust and the
Adviser (and its affiliated companies and their respective officers, directors
and employees) from any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) arising
-4-
13
out of or in connection with the willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties including breach of
fiduciary duty, hereunder of the Sub-Adviser.
The Adviser shall hold harmless and indemnify the Sub-Adviser for any
loss, liability, cost, damage or expense (including reasonable attorney's fees
and costs) arising from any claim or demand by any person that is based upon (i)
the obligations of any other sub-adviser to the Fund, (ii) any obligation of the
Adviser under the Advisory Agreement that has not been delegated to the
Sub-Adviser under this Agreement or (iii) any matter for which the Sub-Adviser
does not have liability in accordance with the first sentence of this Section 8.
Section 9. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser
acknowledges that it has received notice of and accepts the limitations upon the
Trust's and the Fund's liability set forth in its Trust Instrument and under
Delaware law. The Sub-Adviser agrees that any of the Trust's obligations shall
be limited to the assets of the Fund and that the Sub-Adviser shall not seek
satisfaction of any such obligation from the shareholders of the Trust nor from
any Trustee, officer, employee or agent of the Trust.
The names "New Covenant Funds" and "Trustees of New Covenant Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Trust Instrument
dated as of September 30, 1998, to which reference is hereby made and a copy of
which is on file at the office of the Secretary of State of the State of
Delaware and elsewhere as required by law, and to any and all amendments thereto
so filed or hereafter filed. The obligations of "New Covenant Funds" entered
into in the name or on behalf thereof, or in the name or on behalf of any series
or class of shares of the Trust, by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series or class of shares of the Trust must look solely to the assets of the
Trust belonging to such series or class for the enforcement of any claims
against the Trust.
Section 10. DURATION RENEWAL TERMINATION AND AMENDMENT. This Agreement
will become effective as of the date first written above, provided that it shall
have been approved by vote of a majority of the outstanding voting securities of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect for an initial
period of one (1) year.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive one year periods provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of the disinterested Trustees cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of all votes attributable
to the outstanding Shares of the Fund. This Agreement may be terminated as to
the Fund at any time, without payment of any penalty, by the Trust's Board of
Trustees, by the Adviser, or by a vote of a majority of the outstanding voting
securities of the Fund, upon 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon.
This Agreement shall terminate automatically and immediately upon
termination of the Advisory Agreement. This Agreement shall terminate
automatically and immediately in the event
-5-
14
of its assignment. No assignment of this Agreement shall be made by the
Sub-Adviser without the consent of the Adviser and the Board of Trustees of the
Trust.
This Agreement may be amended at any time by the Adviser and the
Sub-Adviser, subject to approval by the Trust's Board of Trustees and, if
required by the 1940 Act and applicable SEC rules and regulations, a vote of a
majority of the Fund's outstanding voting securities. Notwithstanding the
foregoing, the Trust shall be under no obligation to obtain shareholder approval
to materially amend this Agreement unless required to obtain such approval
pursuant to any orders or rules and regulations which may have been issued by
the Securities and Exchange Commission.
Section 11. YEAR 2000 WARRANTY. The Sub-Adviser represents and warrants
that it is actively pursuing a comprehensive and coordinated compliance strategy
(including remediation and testing) to ensure the readiness of its business
systems and applications for the Year 2000 and believes that all such systems
critical to the performance of Sub-Adviser's responsibilities hereunder will be
Year 2000 compliant prior to January 1, 2000. The Sub-Adviser will make
appropriate inquiries as to the readiness of its vendors, service providers,
clients and other third parties for the Year 2000; provided, however, that
neither the Sub-Adviser nor any of its officers, directors or employees (or
affiliated companies) make any representations or warranties regarding the Year
2000 readiness of such vendors, service providers, clients and other third
parties.
Section 12. CONFIDENTIAL RELATIONSHIP. Any information and advice
furnished by either party to this Agreement to the other shall be treated as
confidential and shall not be disclosed to third parties except as required by
law or as required or permitted by this Agreement.
Section 13. 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.
Section 14. MISCELLANEOUS. This Agreement constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof and each party agrees to perform such further actions and execute such
further documents as are necessary to effectuate the purposes hereof. To the
extent not preempted by federal law, this Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Indiana.
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 in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all parties.
Section 15. NOTICES. All notices and other communications hereunder
shall be in writing (including telex or similar writing) and shall be deemed
given if delivered in person or by messenger, cable, telegram or telex or
facsimile transmission or by a reputable overnight delivery service which
provides evidence of receipt to the parties at the following addresses or telex
or facsimile transmission numbers (or at such other address or number for a
party as shall be specified by like notice):
-6-
15
(a) if to the Sub-Adviser, to:
---------------------------------
---------------------------------
---------------------------------
(b) if to the Adviser, to:
New Covenant Trust Company, N.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxxxxx, XX 00000
Facsimile transmission number: (_____________________)
Attention:___________________
Each such notice or other communication shall be effective (i) if given
by telex or facsimile transmission, when such telex or facsimile is transmitted
to the number specified in this section and the appropriate answer back or
confirmation is received, and (ii) if given by any other means, when delivered
at the address specified in this section.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
NEW COVENANT TRUST COMPANY, N.A.
By:_____________________________
Name:___________________________
Title:__________________________
XXXXXXXX, XXXX & XXXX, INC.
By:_____________________________
Name:___________________________
Title:__________________________
Dated: June___, 1999
-7-
16
SCHEDULE A
----------
To the Sub-Advisory Agreement
between New Covenant Trust Company, N.A. and
Xxxxxxxx, Ayer & Wood, Inc.
Name of Fund Compensation Date
------------ ------------ ----
New Covenant Income Fund Domestic Segment: June__, 1999
-----------------
0.400% of first $10 Million in Assets;
0.250% of next $90 Million in Assets;
0.200% of next $100 Million in Assets;
0.180% of next $100 Million in Assets;
0.150% of next $200 Million in Assets;
0.120% of Assets over $500 Million.
Global High-yield Segment:
--------------------------
0.500% of Assets managed.
NEW COVENANT TRUST COMPANY, N.A.
By:__________________________________
Name:________________________________
Title:_______________________________
XXXXXXXX, XXXX & XXXX, INC.
By:__________________________________
Name:________________________________
Title:_______________________________
-8-
17
Exhibit 23(d)(ix)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement is made as of the ______ day of June, 1999,
by and between New Covenant Trust Company, N.A., a limited purpose national
trust bank (the "Adviser"), and Tattersall Advisory Group (the "Sub-Adviser").
WHEREAS, pursuant to an agreement between them dated as of June ______,
1999 (the "Advisory Agreement"), the Adviser serves as investment adviser to New
Covenant Funds, a Delaware business trust and an open-end management investment
company (the "Trust"), which has filed a registration statement (the
"Registration Statement") under the Investment Company Act of 1940, as amended
(the "1940 Act") and the Securities Act of 1933; and
WHEREAS, the Trust is comprised of four separate investment portfolios,
one of which is New Covenant Income Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of securities to assist the Adviser
in performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and desires to
provide such services to the Trust and the Adviser.
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
Section 1. APPOINTMENT OF THE SUB-ADVISER. The Adviser hereby appoints
the Sub-Adviser to provide a continuous investment program for that portion of
the Fund designated by the Adviser as assigned to the Sub-Adviser (the "Segment"
of the Fund), subject to such written instructions and supervision as the
Adviser may from time to time furnish. The Sub-Adviser hereby accepts such
appointment and agrees to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser will
provide the services under this Agreement with respect to the Segment in
accordance with the Fund's investment objective, policies and applicable
restrictions as stated in the Fund's most recent Prospectus and Statement of
Additional Information and as the same may, from time to time, be supplemented
or amended and in resolutions of the Trust's Board of Trustees. The Adviser
agrees to furnish to the Sub-Adviser from time to time copies of all
Prospectuses and Statements of Additional Information and of all amendments of,
or supplements to, such Prospectuses and Statements of Additional Information
and of all resolutions of the Trust's Board of Trustees applicable to the
Sub-Adviser's services hereunder. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser, the Fund or the Trust in any way.
Section 2. SUB-ADVISORY SERVICES. Subject to such written instructions
and supervision as the Adviser may from time to time furnish, the Sub-Adviser
will provide an investment program for the Segment, including investment
research and management with respect to securities and investments, including
cash and cash equivalents in the Segment, and will determine from time to time
what
18
securities and other investments will be purchased, retained or sold by and
within the Segment. The Sub-Adviser will implement such determinations through
the placement, on behalf of the Fund, of orders for the execution of portfolio
transactions through such brokers or dealers as it may select. The Adviser will
instruct the Trust's Custodian to forward promptly to the Sub-Adviser proxy and
other materials relating to the exercise of such shareholder rights and, unless
otherwise instructed by the Adviser, the Sub-Adviser will determine from time to
time the manner in which voting rights, rights to consent to corporate action
and other rights pertaining to the Fund's investments should be exercised.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as it
uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) conform with all applicable rules and regulations of the
United States Securities and Exchange Commission ("SEC") and
in addition will conduct its activities under this Agreement
in accordance with any applicable regulations of any
government authority pertaining to the investment advisory
activities of the Sub-Adviser and shall furnish such written
reports or other documents substantiating such compliance as
the Adviser reasonably may request from time to time;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the
Fund either directly with the issuer or with an underwriter,
market maker or broker or dealer. In placing orders, the
Sub-Adviser will use its reasonable best efforts to obtain
best execution of such orders. Consistent with this
obligation, the Sub-Adviser may, to the extent permitted by
law, effect portfolio securities transactions through brokers
and dealers who provide brokerage and research services
(within the meaning of Section 28(c) of the Securities
Exchange Act of 1934) to or for the benefit of the Fund and/or
other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of
Trustees from time to time with respect to the extent and
continuation of the policy, the Sub-Adviser is authorized to
cause the Fund to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a
securities transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have
charged for effecting that transaction 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
either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to the
accounts as to which it exercises investment discretion. The
Trust or the Adviser may, from time to time in writing, direct
the Sub-Adviser to place orders through one or more brokers or
dealers and, thereafter, the Sub-Adviser will have no
responsibility for ensuring best execution with respect to
such orders. In no instance will portfolio securities be
purchased from or sold to the Sub-Adviser or any affiliated
person of the Sub-Adviser as principal except as may be
permitted by the 1940 Act or an exemption therefrom. If the
Sub-Adviser determines in good faith that the transaction is
in the best interest of each client, securities may be
purchased on behalf of the Fund from,
-2-
19
or sold on behalf of the Fund to, another client of the
Sub-Adviser in compliance with Rule 17a-7 under the 1940 Act;
(e) maintain all necessary or appropriate records with respect to
the Fund's securities transactions for the Segment in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31 (a) of the 1940 Act,
and will furnish the Trust's Board of Trustees and the Adviser
such periodic and special reports as the Board and Adviser
reasonably may request;
(f) treat confidentially and as proprietary information of the
Adviser and the Trust all records and other information
relative to the Adviser and the Trust and prior, present, or
potential shareholders, and will not use such records and
information for any purpose other than the performance of its
responsibilities and duties hereunder, except that subject to
prompt notification to the Trust and the Adviser, the
Sub-Adviser may divulge such information to its independent
auditors and regulatory authorities, or when so requested by
the Adviser and the Trust; provided, however, that nothing
contained herein shall prohibit the Sub-Adviser from (1)
advertising or soliciting the public generally with respect to
other products or services, regardless of whether such
advertisement or solicitation may include prior, present or
potential shareholders of the Fund or (2) including the
Adviser and Trust on its general list of disclosable clients.
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment decisions for
the Fund, the Sub-Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed
for purchase or sale for the Fund's account are customers of
the Adviser, other sub-advisers, the Sub-Adviser or of their
respective parents, subsidiaries or affiliates. In dealing
with such customers, the Sub-Adviser and its subsidiaries and
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities
of the Sub-Adviser with respect to the Sub-Adviser's Segment
of the Fund.
Section 3. EXPENSE. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it in performing its services under this
Agreement. The Sub-Adviser shall not be liable for any expenses of the Adviser
or the Trust, including without limitation (a) their interest and taxes, (b)
brokerage commissions and other costs in connection with the purchase or sale of
securities or other investment instruments with respect to the Fund and (c)
custodian fees and expenses.
Section 4. RECORDS. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Adviser or the Trust any such records upon the
Adviser's or the Trust's request and that such records shall be available for
inspection by the SEC. The Sub-Adviser further agrees to preserve for the
periods and at the places prescribed by Rule 3la-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
-3-
20
Section 5. COMPENSATION OF THE SUB-ADVISER.
(a) In consideration of services rendered pursuant to this Agreement,
the Adviser will pay the Sub-Adviser a fee, in arrears, equal to an annual rate
in accordance with SCHEDULE A hereto, paid quarterly.
(b) Such fee for each calendar quarter shall be calculated based on the
average of the market value of the assets under management as of the end of each
of the three months in the quarter just ended, as provided by the Adviser.
(c) If the Sub-Adviser should serve for less than the whole of any
calendar quarter, its compensation shall be determined as provided above on the
basis of the ending market value of the assets managed in the month in which the
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Sub-Adviser hereunder.
Section 6. SERVICES NOT EXCLUSIVE. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
Section 7. USE OF NAMES. The Adviser shall not use the name, logo,
trade or service xxxx or derivative of the foregoing of the Sub-Adviser or any
of the Sub-Adviser's affiliates in any prospectus, sales literature or other
materials whether or not relating to the Trust in any manner not approved prior
thereto by the Sub-Adviser; provided, however, that the Sub-Adviser shall
approve all uses of its or its affiliate's 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-Adviser shall not use the name of the
Trust, the Fund or the Adviser in any materials relating to the Sub-Adviser in
any manner not approved prior thereto by the Adviser; provided, however, that
the Adviser shall approve all uses of its and the Fund's or the Trust's name
which merely refer in accurate terms to the appointment of the Sub-Adviser
hereunder, including placing the Trust's or the Adviser's name on the
Sub-Adviser's list of representative clients, 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.
Section 8. LIABILITY OF THE SUB-ADVISER. Absent willful misfeasance,
bad faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty, the Sub-Adviser shall not be liable for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
Notwithstanding the foregoing, neither the Adviser nor the Trust shall be deemed
to have waived any rights it may have against the Sub-Adviser under federal or
state securities laws.
The Sub-Adviser shall indemnify and hold harmless the Trust and the
Adviser (and its affiliated companies and their respective officers, directors
and employees) from any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) arising
-4-
21
out of or in connection with the willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties including breach of
fiduciary duty, hereunder of the Sub-Adviser.
The Adviser shall hold harmless and indemnify the Sub-Adviser for any
loss, liability, cost, damage or expense (including reasonable attorney's fees
and costs) arising from any claim or demand by any person that is based upon (i)
the obligations of any other sub-adviser to the Fund, (ii) any obligation of the
Adviser under the Advisory Agreement that has not been delegated to the
Sub-Adviser under this Agreement or (iii) any matter for which the Sub-Adviser
does not have liability in accordance with the first sentence of this Section 8.
Section 9. LIMITATION OF TRUST'S LIABILITY. The Sub-Adviser
acknowledges that it has received notice of and accepts the limitations upon the
Trust's and the Fund's liability set forth in its Trust Instrument and under
Delaware law. The Sub-Adviser agrees that any of the Trust's obligations shall
be limited to the assets of the Fund and that the Sub-Adviser shall not seek
satisfaction of any such obligation from the shareholders of the Trust nor from
any Trustee, officer, employee or agent of the Trust.
The names "New Covenant Funds" and "Trustees of New Covenant Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Trust Instrument
dated as of September 30, 1998, to which reference is hereby made and a copy of
which is on file at the office of the Secretary of State of the State of
Delaware and elsewhere as required by law, and to any and all amendments thereto
so filed or hereafter filed. The obligations of "New Covenant Funds" entered
into in the name or on behalf thereof, or in the name or on behalf of any series
or class of shares of the Trust, by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series or class of shares of the Trust must look solely to the assets of the
Trust belonging to such series or class for the enforcement of any claims
against the Trust.
Section 10. DURATION RENEWAL TERMINATION AND AMENDMENT. This Agreement
will become effective as of the date first written above, provided that it shall
have been approved by vote of a majority of the outstanding voting securities of
the Fund, in accordance with the requirements under the 1940 Act, and, unless
sooner terminated as provided herein, shall continue in effect for an initial
period of one (1) year.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive one year periods provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of the disinterested Trustees cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of all votes attributable
to the outstanding Shares of the Fund. This Agreement may be terminated as to
the Fund at any time, without payment of any penalty, by the Trust's Board of
Trustees, by the Adviser, or by a vote of a majority of the outstanding voting
securities of the Fund, upon 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon.
This Agreement shall terminate automatically and immediately upon
termination of the Advisory Agreement. This Agreement shall terminate
automatically and immediately in the event
-5-
22
of its assignment. No assignment of this Agreement shall be made by the
Sub-Adviser without the consent of the Adviser and the Board of Trustees of the
Trust.
This Agreement may be amended at any time by the Adviser and the
Sub-Adviser, subject to approval by the Trust's Board of Trustees and, if
required by the 1940 Act and applicable SEC rules and regulations, a vote of a
majority of the Fund's outstanding voting securities. Notwithstanding the
foregoing, the Trust shall be under no obligation to obtain shareholder approval
to materially amend this Agreement unless required to obtain such approval
pursuant to any orders or rules and regulations which may have been issued by
the Securities and Exchange Commission.
Section 11. YEAR 2000 WARRANTY. The Sub-Adviser represents and warrants
that it is actively pursuing a comprehensive and coordinated compliance strategy
(including remediation and testing) to ensure the readiness of its business
systems and applications for the Year 2000 and believes that all such systems
critical to the performance of Sub-Adviser's responsibilities hereunder will be
Year 2000 compliant prior to January 1, 2000. The Sub-Adviser will make
appropriate inquiries as to the readiness of its vendors, service providers,
clients and other third parties for the Year 2000; provided, however, that
neither the Sub-Adviser nor any of its officers, directors or employees (or
affiliated companies) make any representations or warranties regarding the Year
2000 readiness of such vendors, service providers, clients and other third
parties.
Section 12. CONFIDENTIAL RELATIONSHIP. Any information and advice
furnished by either party to this Agreement to the other shall be treated as
confidential and shall not be disclosed to third parties except as required by
law or as required or permitted by this Agreement.
Section 13. 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.
Section 14. MISCELLANEOUS. This Agreement constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof and each party agrees to perform such further actions and execute such
further documents as are necessary to effectuate the purposes hereof. To the
extent not preempted by federal law, this Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Indiana.
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 in several counterparts,
all of which together shall for all purposes constitute one Agreement, binding
on all parties.
Section 15. NOTICES. All notices and other communications hereunder
shall be in writing (including telex or similar writing) and shall be deemed
given if delivered in person or by messenger, cable, telegram or telex or
facsimile transmission or by a reputable overnight delivery service which
provides evidence of receipt to the parties at the following addresses or telex
or facsimile transmission numbers (or at such other address or number for a
party as shall be specified by like notice):
-6-
23
(a) if to the Sub-Adviser, to:
_____________________________________
_____________________________________
_____________________________________
(b) if to the Adviser, to:
New Covenant Trust Company, N.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxxxxx, XX 00000
Facsimile transmission number: (_____________________)
Attention:___________________
Each such notice or other communication shall be effective (i) if given
by telex or facsimile transmission, when such telex or facsimile is transmitted
to the number specified in this section and the appropriate answer back or
confirmation is received, and (ii) if given by any other means, when delivered
at the address specified in this section.
IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
NEW COVENANT TRUST COMPANY, N.A.
By:________________________________
Name:______________________________
Title:_____________________________
TATTERSALL ADVISORY GROUP
By:________________________________
Name:______________________________
Title:_____________________________
Dated: June___, 1999
-7-
24
SCHEDULE A
----------
To the Sub-Advisory Agreement
between New Covenant Trust Company N.A. and
Tattersall Advisory Group
Name of Fund Compensation Date
------------ ------------ ----
New Covenant Income Fund 0.250% of first $50 Million in June __, 1999
Assets;
0.125% of next $50 Million in Assets;
0.100% of Assets over $100 Million.
NEW COVENANT TRUST COMPANY, N.A.
By:_____________________________
Name:___________________________
Title:__________________________
TATTERSALL ADVISORY GROUP
By:_____________________________
Name:___________________________
Title:__________________________
-8-
25
Exhibit 23 (e)(i)
DISTRIBUTION AGREEMENT
THIS AGREEMENT is made as of this ____ day of _______, 1999 (the
"Agreement") by and between New Covenant Funds, a Delaware business trust (the
"Fund") and First Data Distributors, Inc. (the "Distributor"), a Massachusetts
corporation.
WHEREAS, the Fund is registered as a diversified, open-end management
investment company under the Investment Company Act of 1940, as amended (the
"1940 Act"); and is currently offering units of beneficial interest (such units
of all series are hereinafter called the "Shares"), representing interests in
investment portfolios of the Fund identified on Schedule A hereto (the
"Portfolios") which are registered with the Securities and Exchange Commission
(the "SEC") pursuant to the Fund's Registration Statement on Form N-1A (the
"Registration Statement"); and
WHEREAS, the Fund desires to retain the Distributor as distributor for
the Portfolios to provide for the sale and distribution of the Shares of the
Portfolios identified on Schedule A and for such additional classes or series as
the Fund may issue, and the Distributor is prepared to provide such services
commencing on the date first written above.
NOW THEREFORE, in consideration of the premises and mutual covenants
set forth herein and intending to be legally bound hereby the parties hereto
agree as follows:
1. SERVICE AS DISTRIBUTOR
----------------------
1.1 The Distributor will act on behalf of the Fund for the distribution of
the Shares covered by the Registration Statement under the Securities
Act of 1933, as amended (the "1933 Act") and provide the distribution
services outlined in Schedule B to this Agreement. The Distributor will
have no liability for payment for the purchase of Shares sold pursuant
to this Agreement or with respect to redemptions or repurchases of
Shares.
1.2 The net asset value of the Shares shall be determined in the manner
provided in the then current Prospectus and Statement of Additional
Information relating to the Shares, and when determined shall be
applicable to all transactions as provided in the Prospectus. The net
asset value of the Shares shall be calculated by the Fund or by another
entity on behalf of the Fund. The Distributor shall have no duty to
inquire into, or liability for, the accuracy of the net asset value per
Share as calculated.
1.3 The Distributor agrees to use efforts deemed appropriate by the
Distributor to solicit orders for the sale of the Shares and will
undertake such advertising and promotion as it believes reasonable in
connection with such solicitation. To the extent that the Distributor
receives fees under any plan adopted by the Fund pursuant to Rule 12b-1
under the 1940 Act, the Distributor agrees to furnish and/or enter into
arrangements with others for the furnishing of marketing or sales
services with respect to the Shares as may be required pursuant to such
plan. To the extent that the Distributor receives shareholder services
fees under any shareholder services plan adopted by the Fund, the
Distributor
26
agrees to furnish and/or enter into arrangements with others for the
furnishing of, personal and/or account maintenance services with
respect to the relevant shareholders of the Fund as may be required
pursuant to such plan. It is contemplated that the Distributor will
enter into sales or servicing agreements with securities dealers,
financial institutions and other industry professionals, such as
investment advisers, accountants and estate planning firms. The
Distributor will require each dealer with whom the Distributor has a
selling agreement to conform to the applicable provisions of the
Prospectus, with respect to the public offering price of the Shares,
and the Distributor shall not cause the Fund to withhold the placing of
purchase orders so as to make a profit thereby.
1.4 The Fund understands that the Distributor is now, and may in the future
be, the distributor of the shares of several investment companies or
series (collectively, the "Investment Entities"), including Investment
Entities having investment objectives similar to those of the Fund. The
Fund further understands that investors and potential investors in the
Fund may invest in shares of such other Investment Entities. The Fund
agrees that the Distributor's duties to such Investment Entities shall
not be deemed in conflict with its duties to the Fund under this
Section 1.4.
1.5 The Distributor shall not utilize any materials in connection with the
sale or offering of Shares except the Fund's Prospectus and Statement
of Additional Information and such other materials as the Fund shall
provide or approve. The Fund agrees to furnish the Distributor with
sufficient copies of any and all: agreements, plans, communications
with the public or other materials which the Fund intends to use in
connection any sales of Shares, in adequate time for the Distributor to
file and clear such materials with the proper authorities before they
are put in use. The Distributor and the Fund may agree that any such
material does not need to be filed subsequent to distribution. In
addition, the Fund agrees not to use any such materials until so filed
and cleared for use, if required, by appropriate authorities as well as
by the Distributor.
1.6 All activities by the Distributor and its employees, as distributor of
the Shares, shall comply with all applicable laws, rules and
regulations, including, without limitation, all rules and regulations
made or adopted by the SEC or the National Association of Securities
Dealers.
1.7 The Distributor will transmit any orders received by it for purchase or
redemption of the Shares to the transfer agent for the Fund.
1.8 Whenever in its judgment such action is warranted by unusual market,
economic or political conditions or abnormal circumstances of any kind,
the Fund may decline to accept any orders for, or make any sales of,
the Shares until such time as the Fund deems it advisable to accept
such orders and to make such sales, and the Fund advises the
Distributor promptly of such determination.
1.9 The Fund agrees to execute any and all documents and to furnish any and
all information and otherwise to take all actions that may be
reasonably necessary in connection with the
2
27
qualification of the Shares for sale in such states as the Distributor
may designate. The Fund shall notify the Distributor in writing of the
states in which the Shares may be sold and shall notify the Distributor
in writing of any changes to the information contained in the previous
notification.
1.10 The Fund shall furnish from time to time, for use in connection with
the sale of the Shares, such information with respect to the Fund and
the Shares as the Distributor may reasonably request; and the Fund
warrants that the statements contained in any such information shall
fairly show or represent what they purport to show or represent. The
Fund shall also furnish the Distributor upon request with: (a) audited
annual statements and unaudited semi-annual statements of a Portfolio's
books and accounts prepared by the Fund, (b) quarterly earnings
statements prepared by the Fund, (c) a monthly itemized list of the
securities in the Portfolios, (d) monthly balance sheets as soon as
practicable after the end of each month, and (e) from time to time such
additional information regarding the financial condition of the Fund as
the Distributor may reasonably request.
1.11 The Fund represents to the Distributor that all Registration Statements
and Prospectuses filed by the Fund with the SEC under the 1933 Act with
respect to the Shares have been prepared in conformity with the
requirements of the 1933 Act and the rules and regulations of the SEC
thereunder. As used in this Agreement, the term "Registration
Statement" shall mean any Registration Statement and any Prospectus and
any Statement of Additional Information relating to the Fund filed with
the SEC and any amendments or supplements thereto at any time filed
with the SEC. Except as to information included in the Registration
Statement in reliance upon information provided to the Fund by the
Distributor or any affiliate of the Distributor expressly for use in
the Registration Statement, the Fund represents and warrants to the
Distributor that any Registration Statement, when such Registration
Statement becomes effective, will contain statements required to be
stated therein in conformity with the 1933 Act and the rules and
regulations of the SEC; that all statements of fact contained in any
such Registration Statement will be true and correct when such
Registration Statement becomes effective; and that no Registration
Statement when such Registration Statement becomes effective will
include an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading to a purchaser of the Shares. The
Fund may but shall not be obligated to propose from time to time such
amendment or amendments to any Registration Statement and such
supplement or supplements to any Prospectus as, in the light of future
developments, may, in the opinion of the Fund's counsel, be necessary
or advisable. The Fund shall promptly notify the Distributor of any
advice given to it by its counsel regarding the necessity or
advisability of amending or supplementing such Registration Statement.
If the Fund shall not propose such amendment or amendments and/or
supplement or supplements within fifteen days after receipt by the Fund
of a written request from the Distributor to do so, the Distributor
may, at its option, terminate this Agreement. The Fund shall not file
any amendment to any Registration Statement or supplement to any
Prospectus without giving the Distributor reasonable notice thereof in
advance; provided, however, that nothing contained in this Agreement
shall in any way limit the Fund's right to file at any
3
28
time such amendments to any Registration Statements and/or supplements
to any Prospectus, of whatever character, as the Fund may deem
advisable, such right being in all respects absolute and unconditional.
The Fund authorizes the Distributor to use any Prospectus or Statement
of Additional Information in the form furnished from time to time in
connection with the sale of the Shares.
1.12 No Shares shall be offered by either the Distributor or the Fund under
any of the provisions of this Agreement and no orders for the purchase
or sale of Shares hereunder shall be accepted by the Fund if and so
long as effectiveness of the Registration Statement then in effect or
any necessary amendments thereto shall be suspended under any of the
provisions of the 1933 Act, or if and so long as a current Prospectus
as required by Section 5(b)(2) of the 1933 Act is not on file with the
SEC; provided, however, that nothing contained in this Section 1.12
shall in any way restrict or have any application to or bearing upon
the Fund's obligation to redeem Shares tendered for redemption by any
shareholder in accordance with the provisions of the Fund's
Registration Statement, Articles of Incorporation, or bylaws.
1.13 The Fund agrees to advise the Distributor as soon as reasonably
practical by a notice in writing delivered to the Distributor:
(a) of any request by the SEC for amendments to the Registration
Statement, Prospectus or Statement of Additional Information
then in effect or for additional information;
(b) in the event of the issuance by the SEC of any stop order
suspending the effectiveness of the Registration Statement,
Prospectus or Statement of Additional Information then in
effect or the initiation by service of process on the Fund of
any proceeding for that purpose;
(c) of the happening of any event that makes untrue any statement
of a material fact made in the Registration Statement,
Prospectus or Statement of Additional Information then in
effect or that requires the making of a change in such
Registration Statement, Prospectus or Statement of Additional
Information in order to make the statements therein not
misleading; and
(d) of all actions of the SEC with respect to any amendments to
any Registration Statement, Prospectus or Statement of
Additional Information which may from time to time be filed
with the SEC.
For purposes of this section, informal requests by or acts of the Staff
of the SEC shall not be deemed actions of or requests by the SEC.
1.14 The Fund represents and warrants to the Distributor that the Fund is a
series of investment company registered under the 1940 Act and the
Shares sold by each Portfolio are, and will be, registered under the
1933 Act.
4
29
2. FUND EXPENSES
-------------
2.1 The Fund will bear the following expenses:
(a) preparation, printing and distribution of sufficient copies of
the Prospectus and SAI for to shareholders;
(b) preparation, printing and distribution of reports and other
communications to shareholders;
(c) registration of the Shares under the federal and state
securities laws;
(d) maintaining facilities for the issue and transfer of Shares;
(e) supplying information, prices and other data to be furnished
by the Fund under this Agreement; and
(f) any original issue taxes or other transfer taxes applicable to
the sale or delivery of the Shares or certificates therefor.
The Fund will pay all other expenses incident to the sale and
distribution of the Shares sold hereunder.
3. INDEMNIFICATION
---------------
3.1 The Fund agrees to indemnify and hold harmless the Distributor, its
officers, directors, and employees, and any person who controls the
Distributor within the meaning of Section 15 of the 1933 Act, free and
harmless (a) from and against any and all claims, costs, expenses
(including reasonable attorneys' fees) losses, damages, charges,
payments and liabilities of any sort or kind which the Distributor, its
officers, directors, employees or any such controlling person may incur
under the 1933 Act, under any other statute, at common law or
otherwise, arising out of or based upon: (i) any untrue statement, or
alleged untrue statement, of a material fact contained in the Fund's
Registration Statement, Prospectus, Statement of Additional
Information, or sales literature (including amendments and supplements
thereto), or (ii) any omission, or alleged omission, to state a
material fact required to be stated in the Fund's Registration
Statement, Prospectus, Statement of Additional Information or sales
literature (including amendments or supplements thereto), necessary to
make the statements therein not misleading, provided, however, that
insofar as losses, claims, damages, liabilities or expenses arise out
of or are based upon any such untrue statement or omission or alleged
untrue statement or omission made in reliance on and in conformity with
information furnished to the Fund by the Distributor or its affiliated
persons for use in the Fund's Registration Statement, Prospectus, or
Statement of Additional Information or sales literature (including
amendments or supplements thereto), such indemnification is not
applicable; and (b)
5
30
from and against any and all such claims, demands, liabilities and
expenses (including such costs and counsel fees) which you, your
officers and directors, or such controlling person, may incur in
connection with this Agreement or the Distributor's performance
hereunder (but excluding such claims, demands, liabilities and expenses
(including such costs and counsel fees) arising out of or based upon
any untrue statement, or alleged untrue statement, of a material fact
contained in any registration statement or any Prospectus or arising
out of or based upon any omission, or alleged omission, to state a
material fact required to be stated in either any registration
statement or any Prospectus or necessary to make the statements in
either thereof not misleading), unless such claims, demands,
liabilities and expenses (including such costs and counsel fees) arise
by reason of the Distributor's willful misfeasance, bad faith or
negligence in the performance of the Distributor's duties hereunder.
The Fund acknowledges and agrees that in the event that the
Distributor, at the request of the Fund, are required to give
indemnification comparable to that set forth in this Section 3.1 to any
broker-dealer selling Shares of the Fund or servicing agent servicing
the shareholders of the Fund and such broker-dealer or servicing agent
shall make a claim for indemnification against the Distributor, the
Distributor shall make a similar claim for indemnification against the
Fund.
The Fund will indemnify the Distributor against and hold it harmless
from any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of
any sort or kind which may be asserted against the Distributor for
which the Distributor may be held to be liable in connection with this
Agreement or the Distributor's performance hereunder (a "Claim"),
unless such Claim resulted from a negligent act or omission to act or
bad faith by the Distributor in the performance of its duties
hereunder.
3.2 The Distributor agrees to indemnify and hold harmless the Fund, its
several officers and Board Members and each person, if any, who
controls a Portfolio within the meaning of Section 15 of the 1933 Act
against any and all claims, costs, expenses (including reasonable
attorneys' fees), losses, damages, charges, payments and liabilities of
any sort or kind which the Fund, its officers, Board Members or any
such controlling person may incur under the 1933 Act, under any other
statute, at common law or otherwise, but only to the extent that such
liability or expense incurred by the Fund, its officers or Board
Members, or any controlling person resulting from such claims or
demands arose out of the acquisition of any Shares by any person which
may be based upon any untrue statement, or alleged untrue statement, of
a material fact contained in the Fund's Registration Statement,
Prospectus or Statement of Additional Information (including amendments
and supplements thereto), or any omission, or alleged omission, to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading, if such statement or
omission was made in reliance upon information furnished or confirmed
in writing to the Fund by the Distributor or its affiliated persons (as
defined in the 1940 Act). The Distributor also agrees to indemnify and
hold harmless the Fund and each such person in connection with any
claim or in connection with any action, suit or proceeding which arises
out of or is alleged to arise out of the Distributor's failure to
exercise reasonable care and diligence with respect to its services
rendered in
6
31
connection with the purchase and sale of Shares. The foregoing rights
of indemnification shall be in addition to any other rights to which
the Fund or any such person shall be entitled to as a matter of law.
3.3 In any case in which one party hereto (the "Indemnifying Party") may be
asked to indemnify or hold the other party hereto (the "Indemnified
Party") harmless, the Indemnified Party will notify the Indemnifying
Party promptly after identifying any situation which it believes
presents or appears likely to present a claim for indemnification (an
"Indemnification Claim") against the Indemnifying Party, although the
failure to do so shall not prevent recovery by the Indemnified Party,
and shall keep the Indemnifying Party advised with respect to all
developments concerning such situation. The Indemnifying Party shall
have the option to defend the Indemnified Party against any
Indemnification Claim which may be the subject of this indemnification,
and, in the event that the Indemnifying Party so elects, such defense
shall be conducted by counsel chosen by the Indemnifying Party and
satisfactory to the Indemnified Party, and thereupon the Indemnifying
Party shall take over complete defense of the Indemnification Claim and
the Indemnified Party shall sustain no further legal or other expenses
in respect of such Indemnification Claim. In the event that the
Indemnifying Party does not elect to assume the defense of any such
suit, or in case the Indemnified Party reasonably does not approve of
counsel chosen by the Indemnifying Party, or in case there is a
conflict of interest between the Indemnifying Party or the Indemnified
Party, the Indemnifying Party will reimburse the Indemnified Party for
the fees and expenses of any counsel retained by the Indemnified
Party.. The Fund agrees promptly to notify the Distributor of the
commencement of any litigation or proceedings against the Fund or any
of its officers or directors in connection with the issue and sale of
any Shares. The Indemnified Party will not confess any Indemnification
Claim or make any compromise in any case in which the Indemnifying
Party will be asked to provide indemnification, except with the
Indemnifying Party's prior written consent.
3.4 The obligations of the parties hereto under this Section 3 shall
survive the termination of this Agreement. The Fund's indemnification
agreement contained in this Section 3 and the Fund's representations
and warranties in this Agreement shall remain operative and in full
force and effect regardless of any investigation made by or on behalf
of the Distributor, its officers, directors and employees, or any
controlling person, and shall survive the delivery of any Shares. This
agreement of indemnity will inure exclusively to the Distributor's
benefit, to the benefit of its several officers, directors and
employees, and their respective estates and to the benefit of the
controlling persons and their successors.
4. STANDARD OF CARE; LIMITATION OF LIABILITY
-----------------------------------------
4.1 The Distributor shall not be liable to the Fund for any error of
judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of its obligations and duties under
this Agreement, except a loss resulting from the Distributor's willful
misfeasance, bad faith or negligence in the performance of such
obligations and duties, or by reason of its reckless disregard thereof.
7
32
4.2 Notwithstanding any provision in this Agreement to the contrary, the
Distributor's cumulative liability (to the Fund) for all losses,
claims, suits, controversies, breaches, or damages ("Liability Claims")
for any cause whatsoever and regardless of the form of action or legal
theory, shall not exceed $500,000. The Fund understands the limitation
on the Distributor's damages to be a reasonable allocation of risk and
the Fund expressly consents with respect to such allocation of risk.
4.3 Neither party may assert any cause of action against the other party
under this Agreement that accrued more than two (2) years prior to the
filing of the suit (or commencement of arbitration proceedings)
alleging such cause of action.
4.4 Each party shall have the duty to mitigate damages for which the other
party may become responsible.
4.5 NOTWITHSTANDING ANYTHING IN THIS AGREEMENT TO THE CONTRARY, IN NO EVENT
SHALL THE DISTRIBUTOR, ITS AFFILIATES OR ANY OF ITS OR THEIR DIRECTORS,
OFFICERS, EMPLOYEES, AGENTS OR SUBCONTRACTORS BE LIABLE UNDER ANY
THEORY OF TORT, CONTRACT, STRICT LIABILITY OF OTHER LEGAL OR EQUITABLE
THEORY FOR LOST PROFITS, EXEMPLARY, PUNITIVE, SPECIAL, INCIDENTAL,
INDIRECT OR CONSEQUENTIAL DAMAGES, EACH OF WHICH IS HEREBY EXCLUDED BY
AGREEMENT OF THE PARTIES REGARDLESS OF WHETHER SUCH DAMAGES WERE
FORESEEABLE OR WHETHER EITHER PARTY OR ANY ENTITY HAS BEEN ADVISED OF
THE POSSIBILITY OF SUCH DAMAGES.
5. EXCLUSION OF WARRANTIES
-----------------------
THIS IS A SERVICE AGREEMENT. EXCEPT AS EXPRESSLY PROVIDED IN THIS
AGREEMENT, THE DISTRIBUTOR DISCLAIMS ALL OTHER REPRESENTATIONS OR
WARRANTIES, EXPRESS OR IMPLIED, MADE TO THE FUND, A PORTFOLIO OR ANY
OTHER PERSON, INCLUDING, WITHOUT LIMITATION, ANY WARRANTIES REGARDING
QUALITY, SUITABILITY, MERCHANTABILITY, FITNESS FOR A PARTICULAR PURPOSE
OR OTHERWISE (IRRESPECTIVE OF ANY COURSE OF DEALING, CUSTOM OR USAGE OF
TRADE) OF ANY SERVICES OR ANY GOODS PROVIDED INCIDENTAL TO SERVICES
PROVIDED UNDER THIS AGREEMENT. THE DISTRIBUTOR DISCLAIMS ANY WARRANTY
OF TITLE OR NON-INFRINGEMENT EXCEPT AS OTHERWISE SET FORTH IN THIS
AGREEMENT.
6. TERM
----
6.1 This Agreement shall become effective on the date first written above
and, unless sooner terminated as provided herein, shall continue for an
initial two-year term and thereafter shall be renewed for successive
one-year terms, provided such continuance is specifically
8
33
approved at least annually by (i) the Fund's Board of Directors or (ii)
by a vote of a majority (as defined in the 1940 Act and Rule 18f-2
thereunder) of the outstanding voting securities of the Fund, provided
that in either event the continuance is also approved by a majority of
the Board Members who are not parties to this Agreement and who are not
interested persons (as defined in the 0000 Xxx) of any party to this
Agreement, by vote cast in person at a meeting called for the purpose
of voting on such approval. This Agreement is terminable without
penalty, on at least sixty days' written notice, by the Fund's Board of
Directors, by vote of a majority (as defined in the 1940 Act and Rule
18f-2 thereunder) of the outstanding voting securities of the Fund, or
by the Distributor. This Agreement will also terminate automatically in
the event of its assignment (as defined in the 1940 Act and the rules
thereunder).
6.2 In the event a termination notice is given by the Fund, all expenses
associated with movement of records and materials and conversion
thereof will be borne by the Fund.
7. MODIFICATIONS AND WAIVERS
-------------------------
No change, termination, modification, or waiver of any term or
condition of the Agreement shall be valid unless in writing signed by
each party. No such writing shall be effective as against the
Distributor unless said writing is executed by a Senior Vice President,
Executive Vice President or President of the Distributor. A party's
waiver of a breach of any term or condition in the Agreement shall not
be deemed a waiver of any subsequent breach of the same or another term
or condition.
8. NO PRESUMPTION AGAINST DRAFTER
------------------------------
The Distributor and the Fund have jointly participated in the
negotiation and drafting of this Agreement. The Agreement shall be
construed as if drafted jointly by the Fund and the Distributor, and no
presumptions arise favoring any party by virtue of the authorship of
any provision of this Agreement.
9. PUBLICITY
---------
Neither the Distributor nor the Fund shall release or publish news
releases, public announcements, advertising or other publicity relating
to this Agreement or to the transactions contemplated by it without
prior review and written approval of the other party; provided,
however, that either party may make such disclosures as are required by
legal, accounting or regulatory requirements after making reasonable
efforts in the circumstances to consult in advance with the other
party.
10. SEVERABILITY
------------
The parties intend every provision of this Agreement to be severable.
If a court of competent jurisdiction determines that any term or
provision is illegal or invalid for any reason, the illegality or
invalidity shall not affect the validity of the remainder of this
9
34
Agreement. In such case, the parties shall in good faith modify or
substitute such provision consistent with the original intent of the
parties. Without limiting the generality of this paragraph, if a court
determines that any remedy stated in this Agreement has failed of its
essential purpose, then all other provisions of this Agreement,
including the limitations on liability and exclusion of damages, shall
remain fully effective.
11. FORCE MAJEURE
-------------
No party shall be liable for any default or delay in the performance of
its obligations under this Agreement if and to the extent such default
or delay is caused, directly or indirectly, by (i) fire, flood,
elements of nature or other acts of God; (ii) any outbreak or
escalation of hostilities, war, riots or civil disorders in any
country, (iii) any act or omission of the other party or any
governmental authority; (iv) any labor disputes (whether or not the
employees' demands are reasonable or within the party's power to
satisfy); or (v) nonperformance by a third party or any similar cause
beyond the reasonable control of such party, including without
limitation, failures or fluctuations in telecommunications or other
equipment. In any such event, the non-performing party shall be excused
from any further performance and observance of the obligations so
affected only for so long as such circumstances prevail and such party
continues to use commercially reasonable efforts to recommence
performance or observance as soon as practicable.
12. MISCELLANEOUS
-------------
12.1 Any notice or other instrument authorized or required by this Agreement
to be given in writing to the Fund or the Distributor shall be
sufficiently given if addressed to the party and received by it at its
office set forth below or at such other place as it may from time to
time designate in writing.
To the Fund:
New Covenant Funds
C/o Presbyterian Church (U.S.A.) Foundation
000 Xxxx Xxxxxxx Xxxxxx
Xxxxxxxxxxxxxx, Xxxxxxx 00000
Attention: Xxxxx Xxxxxx, Esquire
To the Distributor:
First Data Distributors, Inc.
0000 Xxxxxxxx Xxxxx
Xxxxxxxx, Xxxxxxxxxxxxx 00000
Attention: President
10
35
with a copy to the Distributor's Chief Legal Officer
12.2 The laws of the Commonwealth of Massachusetts, excluding the laws on
conflicts of laws, and the applicable provisions of the 1940 Act shall
govern the interpretation, validity, and enforcement of this Agreement.
To the extent the provisions of Massachusetts law or the provisions
hereof conflict with the 1940 Act, the 1940 Act shall control. All
actions arising from or related to this Agreement shall be brought in
the state and federal courts sitting in the City of Boston, and the
Distributor and the Fund hereby submit themselves to the exclusive
jurisdiction of those courts
12.3 This Agreement may be executed in any number of counterparts, each of
which shall be deemed to be an original and which collectively shall be
deemed to constitute only one instrument.
12.4 The captions of this Agreement are included for convenience of
reference only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect.
12.5 This Agreement shall be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and is not intended
to confer upon any other person any rights or remedies hereunder.
13. CONFIDENTIALITY
---------------
13.1 The parties agree that the Proprietary Information (defined below) and
the contents of this Agreement (collectively "Confidential
Information") are confidential information of the parties and their
respective licensers. The Fund and the Distributor shall exercise
reasonable care to safeguard the confidentiality of the Confidential
Information of the other. The Fund and the Distributor may each use the
Confidential Information only to exercise its rights or perform its
duties under this Agreement. The Fund and the Distributor shall not
duplicate, sell or disclose to others the Confidential Information of
the other, in whole or in part, without the prior written permission of
the other party. The Fund and the Distributor may, however, disclose
Confidential Information to its employees who have a need to know the
Confidential Information to perform work for the other, provided that
each shall use reasonable efforts to ensure that the Confidential
Information is not duplicated or disclosed by its employees in breach
of this Agreement. The Fund and the Distributor may also disclose the
Confidential Information to independent contractors, auditors and
professional advisors, provided they first agree in writing to be bound
by the confidentiality obligations substantially similar to this
Section 13. Notwithstanding the previous sentence, in no event shall
either the Fund or the Distributor disclose the Confidential
Information to any competitor of the other without specific, prior
written consent.
13.2 Proprietary Information means:
11
36
(a) any data or information that is completely sensitive material, and
not generally known to the public, including, but not limited to,
information about product plans, marketing strategies, finance,
operations, customer relationships, customer profiles, sales estimates,
business plans, and internal performance results relating to the past,
present or future business activities of the Fund or the Distributor,
their respective subsidiaries and affiliated companies and the
customers, clients and suppliers of any of them;
(b) any scientific or technical information, design, process,
procedure, formula, or improvement that is commercially valuable and
secret in the sense that its confidentiality affords the Fund or the
Distributor a competitive advantage over its competitors: and
(c) all confidential or proprietary concepts, documentation, reports,
data, specifications, computer software, source code, object code, flow
charts, databases, inventions, know-how, show-how and trade secrets,
whether or not patentable or copyrightable.
13.3 Confidential Information includes, without limitation, all documents,
inventions, substances, engineering and laboratory notebooks, drawings,
diagrams, specifications, bills of material, equipment, prototypes and
models, and any other tangible manifestation of the foregoing of either
party which now exist or come into the control or possession of the
other.
13.4 The Fund acknowledges that breach of the restrictions on use,
dissemination or disclosure of any Confidential Information would
result in immediate and irreparable harm, and money damages would be
inadequate to compensate the Distributor for that harm. The Distributor
shall be entitled to equitable relief, in addition to all other
available remedies, to redress any such breach.
13.5 The obligations of confidentiality and restriction on use herein shall
not apply to any Confidential Information that a party proves:
(a) Was in the public domain prior to the date of this Agreement or
subsequently came into the public domain through no fault of such
party; or
(b) Was lawfully received by the party from a third party free of any
obligation of confidence to such third party; or
(c) Was already in the possession of the party prior to receipt
thereof, directly or indirectly, from the other party; or
(d) Is required to be disclosed in a judicial or administrative
proceeding after all reasonable legal remedies for maintaining such
information in confidence have been exhausted including, but not
limited to, giving the other party as much advance notice of the
possibility of such disclosure as practical so the other party may
attempt to stop such disclosure or obtain a protective order concerning
such disclosure; or
12
37
(e) Is subsequently and independently developed by employees,
consultants or agents of the party without reference to the
Confidential Information disclosed under this Agreement.
14. ENTIRE AGREEMENT
----------------
This Agreement, including all Schedules hereto, constitutes the entire
agreement between the parties with respect to the subject matter hereof
and supersedes all prior and contemporaneous proposals, agreements,
contracts, representations, and understandings, whether written or
oral, between the parties with respect to the subject matter hereof.
15. BOARD MEMBER LIABILITY
----------------------
The Fund and the Distributor agree that the obligations of the Fund
under the Agreement shall not be binding upon any of the Board Members,
shareholders, nominees, officers, employees or agents, whether past,
present or future, of the Fund individually, but are binding only upon
the assets and property of the Fund, as provided in the Articles of
Incorporation. The execution and delivery of this Agreement have been
authorized by the Board Members of the Fund, and signed by an
authorized officer of the Fund, acting as such, and neither such
authorization by such Board Members nor such execution and delivery by
such officer shall be deemed to have been made by any of them or any
shareholder of the Fund individually or to impose any liability on any
of them or any shareholder of the Fund personally, but shall bind only
the assets and property of the Fund as provided in the Articles of
Incorporation.
13
38
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed all as of the day and year first above written.
NEW COVENANT FUNDS
By:_________________________
Name:_______________________
Title:________________________
FIRST DATA DISTRIBUTORS, INC.
By:_________________________
Name:_______________________
Title:________________________
14
39
SCHEDULE A
----------
NAME OF PORTFOLIOS
New Covenant Growth Fund
New Covenant Income Fund
New Covenant Balanced Growth Fund
New Covenant Balanced Income Fund
S-1
40
SCHEDULE B
----------
DISTRIBUTION SERVICES
Services shall include:
1. Preparation and execution of sales or servicing agreements
monitoring accruals
monitoring expenses
making disbursements for expenses and fees
2. Quarterly 12b-1 Reports to the Board
3. Literature review, recommendations and submission to the NASD
S-1
41
Exhibit 23(g)
FORM OF AGREEMENT
CUSTODIAN AGREEMENT
-------------------
This Agreement between NEW COVENANT FUNDS a business trust organized
and existing under the laws of Delaware (the "FUND"), and STATE STREET BANK and
TRUST COMPANY, a Massachusetts trust company (the "CUSTODIAN"),
WITNESSETH:
WHEREAS, the Fund is authorized to issue shares in separate series,
with each such series representing interests in a separate portfolio of
securities and other assets; and
WHEREAS, the Fund intends that this Agreement be applicable to four
series, New Covenant Growth Fund, New Covenant Income Fund, New Covenant
Balanced Growth Fund and New Covenant Balanced Income Fund (such series together
with all other series subsequently established by the Fund and made subject to
this Agreement in accordance with Section 18, be referred to herein as the
"PORTFOLIO(S)");
NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:
SECTION 1. EMPLOYMENT OF CUSTODIAN AND PROPERTY TO BE HELD BY IT
The Fund hereby employs the Custodian as the custodian of the assets of
the Portfolios of the Fund, including securities which the Fund, on behalf of
the applicable Portfolio desires to be held in places within the United States
("DOMESTIC SECURITIES") and securities it desires to be held outside the United
States ("FOREIGN SECURITIES"). The Fund on behalf of the Portfolio(s) agrees to
deliver to the Custodian all securities and cash of the Portfolios, and all
payments of income, payments of principal or capital distributions received by
it with respect to all securities owned by the Portfolio(s) from time to time,
and the cash consideration received by it for such new or treasury shares of
beneficial interest of the Fund representing interests in the Portfolios
("SHARES") as may be issued or sold from time to time. The Custodian shall not
be responsible for any property of a Portfolio held or received by the Portfolio
and not delivered to the Custodian. With respect to uncertificated shares (the
"UNDERLYING SHARES") of registered investment companies in the same "group of
investment companies" (as defined in Section 12(d)(1)(G)(ii) of the Investment
Company Act of 1940, as amended (the "1940 ACT")) (hereinafter sometimes
referred to as the "UNDERLYING PORTFOLIOS") the holding of confirmation
statements that identify the shares as being recorded in the Custodian's name on
behalf of the Portfolios will be deemed custody for purposes hereof.
Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in
Section 6 hereof), the Custodian shall on behalf of the applicable Portfolio(s)
from time to time employ one or more sub-custodians located in the United
States, but only in accordance with an applicable vote by the Board of Trustees
of the Fund (the "BOARD") on behalf of
42
FORM OF AGREEMENT
the applicable Portfolio(s), and provided that the Custodian shall have no more
or less responsibility or liability to the Fund on account of any actions or
omissions of any sub-custodian so employed than any such sub-custodian has to
the Custodian. The Custodian may employ as sub-custodian for the Fund's foreign
securities on behalf of the applicable Portfolio(s) the foreign banking
institutions and foreign securities depositories designated in Schedules A and B
hereto but only in accordance with the applicable provisions of Sections 3 and
4.
SECTION 2. DUTIES OF THE CUSTODIAN WITH RESPECT TO PROPERTY OF THE FUND
HELD BY THE CUSTODIAN IN THE UNITED STATES
SECTION 2.1 HOLDING SECURITIES. The Custodian shall hold and physically
segregate for the account of each Portfolio all non-cash property, to be held by
it in the United States including all domestic securities owned by such
Portfolio, other than (a) securities which are maintained pursuant to Section
2.8 in a clearing agency which acts as a securities depository or in a
book-entry system authorized by the U.S. Department of the Treasury (each, a
"U.S. SECURITIES SYSTEM") and (b) commercial paper of an issuer for which State
Street Bank and Trust Company acts as issuing and paying agent ("DIRECT PAPER")
which is deposited and/or maintained in the Direct Paper System of the Custodian
(the "DIRECT PAPER SYSTEM") pursuant to Section 2.9; and (c) the Underlying
Shares owned by the Fund which are maintained pursuant to Section 2.10A in an
account with State Street Bank and Trust Company or such other entity which may
from time to time act as a transfer agent for the Underlying Portfolios and with
respect to which the Custodian is provided with Proper Instructions (the
"UNDERLYING TRANSFER AGENT").
SECTION 2.2 DELIVERY OF SECURITIES. The Custodian shall release and
deliver domestic securities owned by a Portfolio held by the Custodian or in a
U.S. Securities System account of the Custodian or in the Custodian's Direct
Paper book entry system account ("DIRECT PAPER SYSTEM ACCOUNT") or in an account
at the Underlying Transfer Agent, only upon receipt of Proper Instructions on
behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, and only in the following cases:
1) Upon sale of such securities for the account of the Portfolio
and receipt of payment therefor;
2) Upon the receipt of payment in connection with any repurchase
agreement related to such securities entered into by the
Portfolio;
3) In the case of a sale effected through a U.S. Securities
System, in accordance with the provisions of Section 2.8
hereof;
2.
43
FORM OF AGREEMENT
4) To the depository agent in connection with tender or other
similar offers for securities of the Portfolio;
5) To the issuer thereof or its agent when such securities are
called, redeemed, retired or otherwise become payable;
provided that, in any such case, the cash or other
consideration is to be delivered to the Custodian;
6) To the issuer thereof, or its agent, for transfer into the
name of the Portfolio or into the name of any nominee or
nominees of the Custodian or into the name or nominee name of
any agent appointed pursuant to Section 2.7 or into the name
or nominee name of any sub-custodian appointed pursuant to
Section 1; or for exchange for a different number of bonds,
certificates or other evidence representing the same aggregate
face amount or number of units; PROVIDED that, in any such
case, the new securities are to be delivered to the Custodian;
7) Upon the sale of such securities for the account of the
Portfolio, to the broker or its clearing agent, against a
receipt, for examination in accordance with "street delivery"
custom; provided that in any such case, the Custodian shall
have no responsibility or liability for any loss arising from
the delivery of such securities prior to receiving payment for
such securities except as may arise from the Custodian's own
negligence or willful misconduct;
8) For exchange or conversion pursuant to any plan of merger,
consolidation, recapitalization, reorganization or
readjustment of the securities of the issuer of such
securities, or pursuant to provisions for conversion contained
in such securities, or pursuant to any deposit agreement;
provided that, in any such case, the new securities and cash,
if any, are to be delivered to the Custodian;
9) In the case of warrants, rights or similar securities, the
surrender thereof in the exercise of such warrants, rights or
similar securities or the surrender of interim receipts or
temporary securities for definitive securities; provided that,
in any such case, the new securities and cash, if any, are to
be delivered to the Custodian;
10) For delivery in connection with any loans of securities made
by the Portfolio, BUT ONLY against receipt of adequate
collateral as agreed upon from time to time by the Custodian
and the Fund on behalf of the Portfolio, which may be in the
form of cash or obligations issued by the United States
government, its agencies or instrumentalities, except that in
connection with any loans for which collateral is to be
credited to the Custodian's account in the book-entry system
authorized by the U.S.
3.
44
Department of the Treasury, the Custodian will not be held
liable or responsible for the delivery of securities owned by
the Portfolio prior to the receipt of such collateral;
11) For delivery as security in connection with any borrowing by
the Fund on behalf of the Portfolio requiring a pledge of
assets by the Fund on behalf of the Portfolio, BUT ONLY
against receipt of amounts borrowed;
12) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian and a broker-dealer registered under the Securities
Exchange Act of 1934 (the "EXCHANGE ACT") and a member of The
National Association of Securities Dealers, Inc. ("NASD"),
relating to compliance with the rules of The Options Clearing
Corporation and of any registered national securities
exchange, or of any similar organization or organizations,
regarding escrow or other arrangements in connection with
transactions by the Portfolio of the Fund;
13) For delivery in accordance with the provisions of any
agreement among the Fund on behalf of the Portfolio, the
Custodian, and a futures commission merchant registered under
the Commodity Exchange Act, relating to compliance with the
rules of the Commodity Futures Trading Commission ("CFTC")
and/or any contract market, or any similar organization or
organizations, regarding account deposits in connection with
transactions by the Portfolio of the Fund;
14) Upon receipt of instructions from the transfer agent for the
Fund (the "TRANSFER AGENT") for delivery to such Transfer
Agent or to the holders of Shares in connection with
distributions in kind, as may be described from time to time
in the currently effective prospectus and statement of
additional information of the Fund related to the Portfolio
(the "PROSPECTUS"), in satisfaction of requests by holders of
Shares for repurchase or redemption;
15) In the case of a sale processed through the Underlying
Transfer Agent of Underlying Shares, in accordance with
Section 2.10A hereof; and
16) For any other proper purpose, BUT ONLY upon receipt of Proper
Instructions from the Fund on behalf of the applicable
Portfolio specifying the securities of the Portfolio to be
delivered, setting forth the purpose for which such delivery
is to be made, declaring such purpose to be a proper trust
purpose, and naming the person or persons to whom delivery of
such securities shall be made.
4.
45
FORM OF AGREEMENT
SECTION 2.3 REGISTRATION OF SECURITIES. Domestic securities held by the
Custodian (other than bearer securities) shall be registered in the name of the
Portfolio or in the name of any nominee of the Fund on behalf of the Portfolio
or of any nominee of the Custodian which nominee shall be assigned exclusively
to the Portfolio, UNLESS the Fund has authorized in writing the appointment of a
nominee to be used in common with other registered investment companies having
the same investment adviser as the Portfolio, or in the name or nominee name of
any agent appointed pursuant to Section 2.7 or in the name or nominee name of
any sub-custodian appointed pursuant to Section 1. All securities accepted by
the Custodian on behalf of the Portfolio under the terms of this Agreement shall
be in "street name" or other good delivery form. If, however, the Fund directs
the Custodian to maintain securities in "street name", the Custodian shall
utilize its best efforts only to timely collect income due the Fund on such
securities and to notify the Fund on a best efforts basis only of relevant
corporate actions including, without limitation, pendency of calls, maturities,
tender or exchange offers.
SECTION 2.4 BANK ACCOUNTS. The Custodian shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio of the Fund, subject only to draft or order by the Custodian acting
pursuant to the terms of this Agreement, and shall hold in such account or
accounts, subject to the provisions hereof, all cash received by it from or for
the account of the Portfolio, other than cash maintained by the Portfolio in a
bank account established and used in accordance with Rule 17f-3 under the 1940
Act. Funds held by the Custodian for a Portfolio may be deposited by it to its
credit as Custodian in the Banking Department of the Custodian or in such other
banks or trust companies as it may in its discretion deem necessary or
desirable; PROVIDED, however, that every such bank or trust company shall be
qualified to act as a custodian under the 1940 Act and that each such bank or
trust company and the funds to be deposited with each such bank or trust company
shall on behalf of each applicable Portfolio be approved by vote of a majority
of the Board. Such funds shall be deposited by the Custodian in its capacity as
Custodian and shall be withdrawable by the Custodian only in that capacity.
SECTION 2.5 COLLECTION OF INCOME. Subject to the provisions of Section
2.3, the Custodian shall collect on a timely basis all income and other payments
with respect to registered domestic securities held hereunder to which each
Portfolio shall be entitled either by law or pursuant to custom in the
securities business, and shall collect on a timely basis all income and other
payments with respect to bearer domestic securities if, on the date of payment
by the issuer, such securities are held by the Custodian or its agent thereof
and shall credit such income, as collected, to such Portfolio's custodian
account. Without limiting the generality of the foregoing, the Custodian shall
detach and present for payment all coupons and other income items requiring
presentation as and when they become due and shall collect interest when due on
securities held hereunder. Income due each Portfolio on securities loaned
pursuant to the provisions of Section 2.2 (10) shall be the responsibility of
the Fund. The Custodian will have no duty or responsibility in connection
therewith, other than to provide the Fund with such information or data as
5.
46
may be necessary to assist the Fund in arranging for the timely delivery to the
Custodian of the income to which the Portfolio is properly entitled.
SECTION 2.6 PAYMENT OF FUND MONIES. Upon receipt of Proper Instructions
on behalf of the applicable Portfolio, which may be continuing instructions when
deemed appropriate by the parties, the Custodian shall pay out monies of a
Portfolio in the following cases only:
1) Upon the purchase of domestic securities, options, futures
contracts or options on futures contracts for the account of
the Portfolio but only (a) against the delivery of such
securities or evidence of title to such options, futures
contracts or options on futures contracts to the Custodian (or
any bank, banking firm or trust company doing business in the
United States or abroad which is qualified under the 1940 Act
to act as a custodian and has been designated by the Custodian
as its agent for this purpose) registered in the name of the
Portfolio or in the name of a nominee of the Custodian
referred to in Section 2.3 hereof or in proper form for
transfer; (b) in the case of a purchase effected through a
U.S. Securities System, in accordance with the conditions set
forth in Section 2.8 hereof; (c) in the case of a purchase of
Underlying Shares, in accordance with the conditions set forth
in Section 2.10A hereof; (d) in the case of a purchase
involving the Direct Paper System, in accordance with the
conditions set forth in Section 2.9; (e) in the case of
repurchase agreements entered into between the Fund on behalf
of the Portfolio and the Custodian, or another bank, or a
broker-dealer which is a member of NASD, (i) against delivery
of the securities either in certificate form or through an
entry crediting the Custodian's account at the Federal Reserve
Bank with such securities or (ii) against delivery of the
receipt evidencing purchase by the Portfolio of securities
owned by the Custodian along with written evidence of the
agreement by the Custodian to repurchase such securities from
the Portfolio or (f) for transfer to a time deposit account of
the Fund in any bank, whether domestic or foreign; such
transfer may be effected prior to receipt of a confirmation
from a broker and/or the applicable bank pursuant to Proper
Instructions from the Fund as defined herein;
2) In connection with conversion, exchange or surrender of
securities owned by the Portfolio as set forth in Section 2.2
hereof;
3) For the redemption or repurchase of Shares issued as set
forth in Section 5 hereof;
4) For the payment of any expense or liability incurred by the
Portfolio, including but not limited to the following payments
for the account of the Portfolio: interest, taxes, management,
accounting, transfer agent and
6.
47
FORM OF AGREEMENT
legal fees, and operating expenses of the Fund whether or not
such expenses are to be in whole or part capitalized or
treated as deferred expenses;
5) For the payment of any dividends on Shares declared pursuant
to the governing documents of the Fund;
6) For payment of the amount of dividends received in respect of
securities sold short;
7) For any other proper purpose, BUT ONLY upon receipt of Proper
Instructions from the Fund on behalf of the Portfolio
specifying the amount of such payment, setting forth the
purpose for which such payment is to be made, declaring such
purpose to be a proper trust purpose, and naming the person or
persons to whom such payment is to be made.
SECTION 2.7 APPOINTMENT OF AGENTS. The Custodian may at any time or
times in its discretion appoint (and may at any time remove) any other bank or
trust company which is itself qualified under the 1940 Act to act as a
custodian, as its agent to carry out such of the provisions of this Section 2 as
the Custodian may from time to time direct; PROVIDED, HOWEVER, that the
appointment of any agent shall not relieve the Custodian of its responsibilities
or liabilities hereunder. The Underlying Transfer Agent shall not be deemed an
agent or subcustodian of the Custodian for purposes of this Section 2.7 or any
other provision of this Agreement.
SECTION 2.8 DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. The
Custodian may deposit and/or maintain securities owned by a Portfolio in a U.S.
Securities System subject to the following provisions:
1) The Custodian may keep securities of the Portfolio in a U.S.
Securities System provided that such securities are
represented in an account of the Custodian in the U.S.
Securities System (the "U.S. SECURITIES SYSTEM ACCOUNT") which
account shall not include any assets of the Custodian other
than assets held as a fiduciary, custodian or otherwise for
customers;
2) The records of the Custodian with respect to securities of the
Portfolio which are maintained in a U.S. Securities System
shall identify by book-entry those securities belonging to the
Portfolio;
3) The Custodian shall pay for securities purchased for the
account of the Portfolio upon (i) receipt of advice from the
U.S. Securities System that such securities have been
transferred to the U.S. Securities System Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such payment and transfer for the account of the
Portfolio. The
7.
48
FORM OF AGREEMENT
Custodian shall transfer securities sold for the account of
the Portfolio upon (i) receipt of advice from the U.S.
Securities System that payment for such securities has been
transferred to the U.S. Securities System Account, and (ii)
the making of an entry on the records of the Custodian to
reflect such transfer and payment for the account of the
Portfolio. Copies of all advices from the U.S. Securities
System of transfers of securities for the account of the
Portfolio shall identify the Portfolio, be maintained for the
Portfolio by the Custodian and be provided to the Fund at its
request. Upon request, the Custodian shall furnish the Fund on
behalf of the Portfolio confirmation of each transfer to or
from the account of the Portfolio in the form of a written
advice or notice and shall furnish to the Fund on behalf of
the Portfolio copies of daily transaction sheets reflecting
each day's transactions in the U.S. Securities System for the
account of the Portfolio;
4) The Custodian shall provide the Fund with any report
obtained by the Custodian on the U.S. Securities System's
accounting system, internal accounting control and procedures
for safeguarding securities deposited in the U.S. Securities
System;
5) [Reserved.];
6) Anything to the contrary in this Agreement notwithstanding,
the Custodian shall be liable to the Fund for the benefit of
the Portfolio for any loss or damage to the Portfolio
resulting from use of the U.S. Securities System by reason of
any negligence, misfeasance or misconduct of the Custodian or
any of its agents or of any of its or their employees or from
failure of the Custodian or any such agent to enforce
effectively such rights as it may have against the U.S.
Securities System; at the election of the Fund, it shall be
entitled to be subrogated to the rights of the Custodian with
respect to any claim against the U.S. Securities System or any
other person which the Custodian may have as a consequence of
any such loss or damage if and to the extent that the
Portfolio has not been made whole for any such loss or damage.
SECTION 2.9 FUND ASSETS HELD IN THE CUSTODIAN'S DIRECT PAPER SYSTEM.
The Custodian may deposit and/or maintain securities owned by a Portfolio in the
Direct Paper System of the Custodian subject to the following provisions:
1) No transaction relating to securities in the Direct Paper
System will be effected in the absence of Proper Instructions
from the Fund on behalf of the Portfolio;
8.
