77Q(1) Exhibits
(e) Form of new Sub-Advisory Agreement with Xxxxx Selected Advisers, L.P.
FORM OF
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this __ day of ___________, 2005, between Menno Insurance
Service, Inc., d/b/a MMA Capital Management (the "Adviser"), and Xxxxx Selected
Advisers, L.P. (the "Sub-Adviser").
WHEREAS, MMA Praxis Mutual Funds (the "Trust") is registered as an
open-end, management investment company under the Investment Company Act of
1940, as amended (the "1940 Act"); and
WHEREAS, MMA Core Stock Fund (the "Fund") is a separate investment series
of the Trust; and
WHEREAS, the Adviser has been appointed investment adviser to the Fund;
and
WHEREAS, the Adviser desires to retain the Sub-Adviser to assist it in the
provision of a continuous investment program for the Fund and the Sub-Adviser is
willing to do so; and
WHEREAS, the Adviser and the Sub-Adviser are each duly registered with the
Securities and Exchange Commission (the "Commission") as investment advisers and
their respective registrations are current and in good order; and
WHEREAS, the Board of Trustees of the Trust (the "Board") and the Fund's
shareholders have approved this Agreement, and the Sub-Adviser is willing to
furnish such services upon terms and conditions herein set forth;
NOW, THEREFORE, in consideration of the premises and mutual covenants
herein contained, it is agreed between the parties hereto as follows;
1. Appointment. The Adviser hereby appoints the Sub-Adviser to act as
sub-adviser to the Fund. Intending to be legally bound, the Sub-Adviser accepts
such appointment and agrees to render the services herein set forth for the
compensation herein provided.
2. Sub-Advisory Services. Subject to the supervision of the Board and the
Adviser, the Sub-Adviser shall assist the Adviser in providing a continuous
investment program with respect to the Fund's portfolio, including investment
research and management with respect to all securities and investments and cash
equivalents in the Fund. The Sub-Adviser may, subject to the Adviser's review,
determine the securities and investments to be purchased, sold or retained by
the Fund, and the Sub-Adviser may place orders directly with the issuer or any
broker or dealer for such securities and investments. The Sub-Adviser will
provide services under this Agreement in accordance with the Fund's investment
objective, policies and restrictions as stated in the Fund's currently effective
prospectus and statement of additional information, the Trust's Declaration of
Trust and By-laws, each as amended from time to time, and resolutions of the
Board applicable to the Fund, each as provided to the Sub-Adviser by the
Adviser. The Sub-Adviser shall have authority to enter into and execute
agreements on behalf of the Fund relating to the acquisition or disposition of
investment assets and the execution of portfolio transactions pursuant to the
Sub-Adviser's management of the Fund under this Agreement. Such agreements may
include foreign exchange contracts and other transactional agreements. Nothing
contained herein, however, shall be deemed to authorize the Sub-Adviser to take
or receive physical possession of any cash or securities held in the Fund, it
being intended that sole responsibility for safekeeping thereof (in such
investments as the Sub-Adviser shall direct) and the consummation of all such
purchases, sales, deliveries, and investments made pursuant to the Sub-Adviser's
direction shall rest upon the custodian for the Fund. The parties hereto also
agree that the Sub-Adviser shall not receive or vote proxies or other similar
solicitations on behalf of the Fund and that such proxies and other similar
solicitations shall be voted by the Adviser in accordance with its procedures.
The Sub-Adviser warrants that all actions taken in the exercise of the power
herein granted to the Sub-Adviser will be taken solely and exclusively for the
benefit of the Fund.
Without limiting the generality of the foregoing, the Sub-Adviser further
agrees that it:
(a) will use the same skill and care in providing such services as it
uses in providing services to fiduciary accounts for which it has
investment responsibilities;
(b) will conform with all applicable Rules and Regulations of the
Commission under the 1940 Act and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any governmental authority pertaining to the
investment advisory activities of the Sub-Adviser;
(c) will place or cause to be placed orders for the Fund either directly
with the issuer or with any broker or dealer. In placing orders with
brokers and dealers, the Sub-Adviser will attempt to obtain prompt
execution of orders in an effective manner at the most favorable
price. Consistent with this obligation and to the extent permitted
by the 1940 Act, when the execution and price offered by two or more
brokers or dealers are comparable, the Sub-Adviser may, in its
discretion, purchase and sell portfolio securities to and from
brokers and dealers who provide the Sub-Adviser with research advice
and other services. In no instance will portfolio securities be
purchased from or sold to Integrated Fund Services, Inc., the
Adviser, the Sub-Adviser or any affiliated person of the Trust,
Integrated Fund Services, Inc., the Sub-Adviser or the Adviser,
except to the extent permitted by the 1940 Act and the Commission.
Any action taken for the purpose of this Agreement by the Adviser
and/or the Fund, at the discretion of either or both, with regard to
the placement of securities transactions shall be the Adviser's and
the Fund's sole liability and responsibility, including the
performance of any broker.
The Sub-Adviser may use one or more of its affiliates, or other
parties related to the Sub-Adviser, as brokers for effecting
securities transactions for the Fund, and pay, on behalf of the
Fund, fair and reasonable brokerage commissions therefor, but only
in accordance with procedures adopted by the Fund pursuant to Rule
17e-1;
(d) will maintain or cause to be maintained all books and records with
respect to the securities transactions of the Fund and will furnish
the Board with such periodic and special reports as the Board may
request;
(e) will treat confidentially and as proprietary information of the
Trust all records and other information relative to the Trust and
the Fund and prior, present, or potential shareholder, and will not
use such records and information for any purpose other than
performance of its responsibilities and duties hereunder, or as
required by applicable law, except after prior notification to and
approval in writing by the Trust, which approval shall not be
unreasonably withheld and may not be withheld where the Sub-Adviser
may be exposed to civil and criminal contempt proceedings for
failure to comply, when requested to divulge such information by
duly constituted authorities, or when so requested by the Trust;
(f) will keep the Adviser informed of developments materially affecting
the Fund and will, on the Sub-Adviser's own initiative and as
reasonably requested by the Adviser, furnish to the Adviser from
time to time whatever information the Adviser reasonably believes
appropriate for this purpose;
(g) will maintain and enforce adequate security procedures with respect
to all materials, records, documents and data relating to any of its
responsibilities pursuant to this Agreement including all means for
the effecting of securities transactions;
(h) will immediately notify the Adviser and the Trust in the event that
the Sub-Adviser: (i) becomes subject to a statutory disqualification
that prevents the Sub-Adviser from serving as an investment adviser
pursuant to this Agreement; or (ii) is or expects to become the
subject of an administrative proceeding or enforcement action by the
Commission or other regulatory authority;
(i) will immediately forward to the Adviser, upon receipt, any
correspondence from the Commission or other regulatory authority
that relates to the Fund;
(j) will cause the Fund to comply with the requirements of (i) Section
851(b)(2) of the Internal Revenue Code of 1986, as amended (the
"Code") regarding derivation of income from specified investment
activities, and (ii) Section 851(b)(4) of the Code regarding
diversification of the Fund's assets;
(k) will be responsible for maintaining an appropriate compliance
program to ensure that the services provided by the Sub-Adviser
under this Agreement are performed in a manner consistent with the
applicable laws and the terms of this Agreement. The Sub-Adviser
agrees to provide such reports and certifications regarding its
compliance program as the Adviser or the Trust shall reasonably
request from time to time; and
(l) will maintain a written Code of Ethics that complies with the
requirements of Rule 17j-1 under the 1940 Act. The Sub-Adviser
certifies that it has adopted procedures reasonably necessary to
prevent its "access persons," as such term is defined in Rule 17j-1,
from violating the Code of Ethics. The Sub-Adviser shall notify the
Board upon the adoption of any material change to its Code of Ethics
so that the Board, including a majority of the Trustees who are not
interested persons of the Trust, may approve such change not later
than six months after its adoption by the Sub-Adviser, as required
by Rule 17j-1. The Sub-Adviser also shall provide the Trust with a
copy of any amendments to its Code of Ethics that do not represent a
material change to such Code. Within 45 days of the end of each
calendar year while this Agreement is in effect (or more frequently
if required by Rule 17j-1 or as the Trust may reasonably request),
the Sub-Adviser shall provide the Board with a written report that,
as required by Rule 17j-1: (i) describes any issue arising under the
Sub-Adviser's Code of Ethics or related procedures since the last
report to the Board, including, but not limited to, information
about material violations of the Code or related procedures and
sanctions imposed in response to material violations, and (ii)
certifies that the Sub-Adviser has adopted procedures reasonably
necessary to prevent its access persons from violating its Code of
Ethics. Upon the written request of the Trust, the Sub-Adviser shall
permit the Trust to examine the reports to be made by the
Sub-Adviser under Rule 17j-1(d) and the records the Sub-Adviser
maintains pursuant to Rule 17j-1(f).
3. Services Not Exclusive. Except as provided herein, the services
furnished by the Sub-Adviser hereunder are deemed not to be exclusive, and the
Sub-Adviser shall be free to furnish similar services to others so long as it
services under this Agreement are not impaired thereby. The Sub-Adviser and its
affiliates may give advice and take action in the performance of their duties
with respect to any of their clients which may differ from advice given, or the
timing or nature of action taken, with respect to the Fund. Nothing in this
Agreement shall be deemed to impose upon the Sub-Adviser any obligation to
purchase or sell or to recommend for purchase or sale for the Fund any security
or other property which the Sub-Adviser or its affiliates may purchase or sell
for their own account or for the account of any other client, if in the
Sub-Adviser's sole discretion, such action or such recommendation is undesirable
or impractical for the Fund. Nothing in this Agreement shall limit or restrict
the Sub-Adviser or its affiliates from trading for their own account. The
Sub-Adviser and its affiliates or other clients may have or trade in investments
which are at the same time being traded for the Fund. The Sub-Adviser shall have
no obligation to acquire for the Fund a position which the Sub-Adviser or its
affiliates may acquire for their own or the account of another client, so long
as it continues to be the policy and practice of the Sub-Adviser not to favor or
disfavor any client or class of clients in the allocation of investment
opportunities.
4. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Sub-Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
5. Expenses. During the term of this Agreement, the Sub-Adviser will pay
all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities' commodities and other investments
(including brokerage commissions and other transaction charges, if any)
purchased for the Fund.
6. Compensation. For the services provided and the expenses assumed with
respect to the Fund pursuant to this Agreement, the Sub-Adviser will be entitled
to a fee, computed daily and payable monthly, calculated at the annual rate of
0.45% of the Fund's average daily net assets up to and including $100 million,
0.40% of the Fund's average daily net assets from $100 million up to and
including $500 million, and 0.35% of the Fund's average daily net assets over
$500 million.
For purposes of calculating the fee payable to the Sub-Adviser, "average
daily net assets" will exclude those corporate notes issued by MMA Community
Development Investment, Inc. (the "MMA-CDI Notes") purchased by the Fund at the
direction of the Adviser from time to time, and any and all equity index futures
purchased by the Fund at the direction of the Adviser in consideration of the
MMA-CDI Notes (together, the "Excluded Assets"). The Sub-Adviser does not assume
responsibility or liability for managing the Excluded Assets.
7. Limitation of Liability. The Sub-Adviser shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Fund in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Sub-Adviser in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement. The federal and state securities laws impose liabilities under
certain circumstances on persons who act in good faith, and therefore nothing
herein shall in any way constitute waiver or limitation of any rights which the
undersigned may have under any federal and state securities laws.
8. Duration and Termination. The effective date of this Agreement shall be
January 2, 2006. Unless sooner terminated, this Agreement shall continue until
January 1, 2007, and thereafter shall continue automatically for successive
annual periods, provided such continuance is specifically approved at least
annually by the Board or vote of the lesser of (a) 67% of the shares of the Fund
represented at a meeting if holders of more than 50% of the outstanding shares
of the Fund are present in person or by proxy or (b) more than 50% of the
outstanding shares of the Fund, provided that in either event its continuance
also is approved by a majority of the Trust's Trustees who are not "interested
persons" (as defined in the 0000 Xxx) of any party to this Agreement (the
"Independent Trustees"), by vote cast in person at a meeting called for the
purpose of voting on such approval. This Agreement is terminable at any time
without penalty, on 60 days' notice, by the Adviser, the Sub-Adviser or by the
Board or by vote of the lesser of (a) 67% of the share of the Fund represented
at a meeting if holders of more than 50% of the outstanding shares of the Fund
are present in person or by proxy or (b) more than 50% of the outstanding shares
of the Fund. This Agreement will terminate automatically in the event of its
assignment (as defined in the 0000 Xxx) or in the event of the termination of
the management agreement between the Adviser and the Trust (the "Management
Agreement").
9. Sub-Adviser's Representations. The Sub-Adviser hereby represents and
warrants that it is willing and possesses all requisite legal authority to
provide the services contemplated by this Agreement without violation of
applicable law and regulations.
The Sub-Adviser further represents and warrants that the Sub-Adviser has
reviewed the portion of (i) the registration statement filed with the
Commission, as amended from time to time for the Fund (the "Registration
Statement"), in the form received from the Adviser with respect to the
disclosure about the Sub-Adviser and the Fund of which the Sub-Adviser has
knowledge, and except as advised in writing to the Adviser such Registration
Statement, including the prospectus and any supplement contain, as of its date,
no untrue statement of any material fact of which the Sub-Adviser has knowledge
and do not omit any statement of a material fact of which the Sub-Adviser has
knowledge which was required to be stated therein or necessary to make the
statements contained therein not misleading. The Sub-Adviser further agrees to
notify the Adviser of any changes that would cause the Registration Statement,
including the prospectus for the Fund to contain any untrue statement of a
material fact or to omit to state a material fact which is required to be stated
therein or is necessary to make the statements contained therein not misleading,
in each case relating to Sub-Adviser and Fund information of which the
Sub-Adviser has knowledge.
The Sub-Adviser also represents and warrants that for the entire time this
Agreement is in effect and for a period of two years thereafter, the Sub-Adviser
will maintain a claims made bond issued by a reputable fidelity insurance
company against larceny and embezzlement, covering each officer and employee of
the Sub-Adviser, at a minimum level of $10 million which provides coverage for
acts or alleged acts which occur during the period of this Agreement.
10. Use of Names.
(a) The Sub-Adviser acknowledges and agrees that the names MMA Praxis,
MMA Capital Management and MMA Praxis Core Stock Fund (whether used
by themselves or in combination with other words), and abbreviations
or logos associated with those names, are the valuable property of
the Adviser and its affiliates; that the Trust, the Adviser and
their affiliates have the right to use such names, abbreviations and
logos; and that the Sub-Adviser shall use the names MMA Praxis, MMA
Capital Management and MMA Praxis Core Stock Fund, and associated
abbreviations and logos, only in connection with the Sub-Adviser's
performance of its duties hereunder. Further, in any written
communication with the public and in any marketing communications of
any sort, the Sub-Adviser agrees to obtain prior written approval
from the Adviser before using or referring to MMA Praxis, MMA
Capital Management or MMA Praxis Core Stock Fund or any
abbreviations or logos associated with those names; provided that
nothing herein shall be deemed to prohibit the Sub-Adviser from
referring to the performance of the Fund in the Sub-Adviser's
marketing material as long as such marketing material does not
constitute "sales literature" or "advertising" for the Fund, as
those terms are used in the rules, regulations and guidelines of the
Commission and the National Association of Securities Dealers, Inc.
(b) The Adviser acknowledges and agrees that in any written
communication with the public and in any marketing communications of
any sort, the Adviser will obtain prior written approval from the
Sub-Adviser before referring to the Sub-Adviser or any abbreviations
or logos associated with the Sub-Adviser.
11. Indemnifications.
(a) The Sub-Adviser agrees to indemnify and hold harmless the Adviser
and the Trust against any losses, expenses, claims, damages or
liabilities (or actions or proceedings in respect thereof), to which
the Adviser or the Trust may become subject arising out of or based
on the breach by the Sub-Adviser of any provisions of this Agreement
or any wrongful action by the Sub-Adviser; provided, however, that
the Sub-Adviser shall not be liable under this paragraph in respect
of any loss, expense, claim, damage or liability to the extent that
a court having jurisdiction shall have determined by a final
judgment, or independent counsel agreed upon by the Sub-Adviser and
the Adviser or the Trust, as the case may be, shall have concluded
in a written opinion, that such loss, expense, claim, damage or
liability resulted primarily from the Adviser's or the Trust's
willful misfeasance, bad faith or gross negligence or by reason of
the reckless disregard by the Adviser or the Trust of its duties.
The foregoing indemnification shall be in addition to any rights
that the Adviser or the Trust may have at common law or otherwise.
The Sub-Adviser's agreements in this paragraph shall, upon the same
terms and conditions, extend to and inure to the benefit of each
person who may be deemed to control the Adviser or the Trust, be
controlled by the Adviser or the Trust, or be under common control
with the Adviser or the Trust and their affiliates, trustees,
officers, employees and agents. The Sub-Adviser's agreements in this
paragraph shall also extend to any of the Trust's, Fund's and
Adviser's successors or the successors of the aforementioned
affiliates, trustees, officers, employees or agents.
(b) The Adviser agrees to indemnify and hold harmless the Sub-Adviser
against any losses, expenses, claims, damages or liabilities (or
actions or proceedings in respect thereof), to which the Sub-Adviser
may become subject arising out of or based on the breach by the
Adviser of any provisions of this Agreement or the Management
Agreement, or any wrongful action by the Adviser or its affiliates
in the distribution of the Fund's shares, or any wrongful action by
the Trust other than wrongful action that was caused by the breach
by the Sub-Adviser of the provisions of this Agreement; provided,
however, that the Adviser shall not be liable under this paragraph
in respect of any loss, expense, claim, damage or liability to the
extent that a court having jurisdiction shall have determined by a
final judgment, or independent counsel agreed upon by the Adviser
and the Sub-Adviser shall have concluded in a written opinion, that
such loss, expense, claim, damage or liability resulted primarily
from the Sub-Adviser's willful misfeasance, bad faith or gross
negligence or by reason of the reckless disregard by the Sub-Adviser
of its duties. The foregoing indemnification shall be in addition to
any rights that the Sub-Adviser may have at common law or otherwise.
The Adviser's agreements in this paragraph shall, upon the same
terms and conditions, extend to and inure to the benefit of each
person who may be deemed to control the Sub-Adviser, be controlled
by the Sub-Adviser or be under common control with the Sub-Adviser
and to each of the Sub-Adviser's and to each such person's
respective affiliates, trustees, officers, employees and agents. The
Adviser's agreements in this paragraph shall also extend to any of
the Sub-Adviser's successors or the successors of the aforementioned
affiliates, trustees, officers, employees or agents.
12. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
13. Governing Law. This Agreement shall be governed by and its provisions
shall be construed in accordance with the laws of the State of Delaware.
14. Notices. All notices, instructions, or advice permitted or required
under this Agreement shall be deemed to have been properly given if sent by
registered U.S. mail, first class postage prepaid, return receipt requested, or
by overnight courier, all addressed as follows:
If to the Fund:
Attention: Xxxx Xxxxxxx
MMA Capital Management
0000 X. Xxxx Xxxxxx
Xxxxxx, XX 00000
Fax Number 000-000-0000
If to the Sub-Adviser:
Attention: Xxxxxx Xxxx
Xxxxx Selected Advisers, L.P.
0000 Xxxx Xxxxxx Xxxx, Xxxxx 000
Xxxxxx, Xxxxxxx 00000
Fax Number 520/000-0000
15. Any term or provision of this Agreement that is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction, be effective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement in any
other jurisdiction.
IN WITNESS WHEREOF, the parties thereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
MENNO INSURANCE SERVICE, INC. d/b/a
MMA CAPITAL MANAGEMENT
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
XXXXX SELECTED ADVISERS, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
