SUB-ADVISORY AGREEMENT
This
Sub-Advisory Agreement is made as of the 18th day of
November, 2008, by and between One Compass Advisors (the “Adviser”), a separate
division of New Covenant Trust Company, N.A., and Sterling Capital Management,
LLC (the “Sub-Adviser”).
WHEREAS, pursuant to an
agreement dated as of June 30th, 1999
(the “Advisory
Agreement”)
as amended and restated on May 14, 2001, the Adviser serves as investment
adviser to New Covenant Funds, a Delaware statutory 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:
§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.
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§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 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 Adviser
proxy and other materials relating to the exercise of such shareholder rights
and the 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:
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(a)
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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;
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(b)
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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;
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(c)
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not
make loans to any person to purchase or carry shares of beneficial
interest in the Trust or make loans to the
Trust;
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(d)
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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(e) 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, or sold on behalf
of the Fund to, another client of the Sub-Adviser in compliance with Rule
17a-7 under the 1940 Act;
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(e)
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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;
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(f)
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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 anid 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;
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(g)
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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
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(h)
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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.
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§3. Expenses. 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.
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§4. Records. In
compliance with the requirements of Rule 31a-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 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-1 under the 1940 Act.
§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.
§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.
§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.
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§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 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 thee 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.
§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 tune 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 o r 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.
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§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 Trustees, including a majority of the
disinterested Trustees cast in person at a meeting called for the purpose of
voting on such approval, and, unless sooner terminated as provided herein, shall
continue in effect until June 30, 2010.
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 on 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 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.
§11. 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.
§12. 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.
§13. 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.
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§14. 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):
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(a)
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if
to the Sub-Adviser, to:
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Sterling
Capital Management, LLC
0000
Xxxxxx Xx., Xxxxx 000
Xxxxxxxxx,
XX 00000
Facsimile
transmission number: (704-334-7142)
Attention:
Xxxxxx X. Xxxx
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(b)
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if
to the Adviser, to:
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One
Compass Advisors
000 Xxxx
Xxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxxxxx,
XX 00000
Facsimile
transmission number: (000) 000-0000
Attention:
Xxxx X. Xxxxxxxx
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.
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IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first written
above.
ONE
COMPASS ADVISORS
By: /s/
Xxxx X. Xxxxxxxx
Name: Xxxx
X. Xxxxxxxx, CFA
Title: Chief
Investment Officer, Senior Vice President
Sterling
Capital Management, LLC
By: /s/
Xxxxxx X. Xxxx
Name: Xxxxxx
X. Xxxx
Title: Director
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SCHEDULE
A
To the
Sub-Advisory Agreement between
One
Compass Advisors and
Sterling
Capital Management, LLC
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Name of Fund
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Compensation
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New
Covenant Income Fund
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0.15%
on all assets under management by
sub-adviser
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A-1
