The NCF Investment Department of New Covenant Trust Company, N.A.
June 18,
2008
The NCF
Investment Department of
New
Covenant Trust Company, N.A.
000 Xxxx
Xxxxxxx Xxxxxx, Xxxxx X
Jeffersonville,
IN 47130
Attention:
Xxxxx X. Xxxxxxx
Dear Xx.
Xxxxxxx:
This
letter relates to the Sub-Advisory Agreement ("Agreement"), dated June 18, 2008,
by and between The NCF Investment Department of New Covenant Trust Company, N.A.
(the "Adviser") and Xxxxxxx Implementation Services Inc. (the "Sub-Adviser").
Terms that are not otherwise defined in this letter have the meaning assigned to
them in the Agreement.
Pursuant
to Section 3 of the Agreement, the parties agreed that the Sub-Adviser will
provide investment advisory services to the Segment as set forth in the
investment guidelines agreed to by the parties from time to time. In accordance
with this section, attached as Schedule A to this
letter is a copy of the investment guidelines, which may be amended by the
parties from time to time.
Pursuant
to Section 3(d) of the Agreement, the parties agreed that the Sub-Adviser will
use its reasonable best efforts to obtain best execution of the trade orders
made on behalf of the Segment in accordance with the Sub-Adviser's Trading
Practices. In accordance with this subsection, attached as Schedule B to this
letter is a copy of the Sub-Adviser's Trading Practices policy, which may be
amended from time to time by written notice to the Adviser. The Adviser
acknowledges and understands that all futures, securities and currency
transactions made on behalf of the Segment will be conducted in the manner
described in the Sub-Adviser's Trading Practices.
For the
convenience of the parties, a list of persons authorized to act on the Adviser's
behalf concerning the Agreement is set forth in Schedule C to this
letter, which may be amended from time to time by written notice to the
Sub-Adviser.
Pursuant
to Section 6 of the Agreement, the Adviser will pay the Sub-Adviser a fee in
consideration of services rendered pursuant to this Agreement. The Adviser
understands and agrees that the fee, which is set forth on Schedule A of the
Agreement, is based on our agreement that the Sub-Adviser will conduct the
transition at the conclusion of the interim investment management
assignment.
This
letter only supplements the Agreement, and will not amend or abridge any duties
and obligations of the parties as contemplated by the Agreement. Please indicate
your acceptance of these terms and conditions by signing
below.
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Sincerely,
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XXXXXXX
IMPLEMENTATION SERVICES INC.
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By:
/s/ Xxxxx
Xxxxxxxxxx
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Name:
Xxxxx Xxxxxxxxxx
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Title:
Manager, Portfolio Management
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Accepted
and Agreed on behalf of
The
NCF Investment Department of New Covenant Trust Company, N.A.
Date: 7/16/08
By: /s/ Xxxxx X.
Xxxxxxx
Name:
Xxxxx X. Xxxxxxx
Title:
Vice President
SCHEDULE
A
INVESTMENT
GUIDELINES
INTERIM
MANAGEMENT SERVICES PROGRAM
This
Schedule describes the Interim Management Services program (the "Program") to be
provided under the Agreement. The Program includes a combination of
administrative coordination, cash and transaction management and "overlay"
investment advisory services using securities, futures and other instruments
designed to keep the Client's assets aligned with investment policy or an
otherwise specified target for a specified period.
INVESTMENT
OBJECTIVE
The
objective of this Program is to reduce risk (defined as tracking error relative
to the policy portfolio or target), and reduce administrative burden. The
current Mazama portfolio level tracking error is 7.4% (annualized) to its
benchmark, the Xxxxxxx 2500 Growth. Xxxxxxx will optimize the legacy portfolio
to generate an interim portfolio level tracking error of 2%
(annualized).
TIMEFRAME
The
expected timeframe of the interim assignment is 12 months. Xxxxxxx reserves the
right to resign from the interim assignment by providing 60 days advanced
written notice.
FEES
There
will be an origination fee of 2 (two) basis point(s).
There
will be a monthly (assessed quarterly) investment management fee of 2 (two)
basis point(s) which begins on the assignment's implementation date which will
be considered the day after the transition from the Mazama to the optimized
portfolio is completed and securities have settled.
The
monthly fee will increase by l(one) basis point per month beginning on the one
year anniversary of this assignment’s implementation date.
It is
understood that the above pricing is based on our agreement that Xxxxxxx will
conduct the transition at the conclusion of the interim portfolio management
assignment.
INTERIM
MANAGEMENT SERVICES
Xxxxxxx
will monitor the tracking error monthly.
Xxxxxxx
will rebalance, if necessary, monthly when the measured portfolio tracking error
exceeds 25 basis points from the target portfolio level tracking error outlined
above.
Xxxxxxx'x
interim portfolio management process utilizes various risk models and
optimization techniques with the primary goal of reducing portfolio level
tracking error as measured versus the specified published benchmark index. This
process further attempts to mitigate and reduce other but not all associated
risk factors. While providing interim portfolio management services, Xxxxxxx
does not conduct specific research, fundamental analysis, or have an opinion as
to the investment quality of any specific security or investment instrument.
While the optimization process seeks to reduce portfolio level tracking error,
it does not eliminate the risk associated with security specific
events.
CONSTRAINTS
Limit
purchases to securities contained within the benchmark universe (Xxxxxxx 2500
Growth)
Limit
purchases to not exceed the benchmark weight (Xxxxxxx default)
Limit
legacy residual holdings to securities contained within the benchmark
universe
Limit
legacy residual holdings to not exceed the benchmark weight
Exclude
prohibited securities as defined by New Covenant Trust Company.
Current list of prohibited securities attached and dated 2/23/2008. It is
understood that it is New Covenant Trust Company's responsibility to provide an
updated list to Xxxxxxx.
Cash and
cash equivalents should be limited to 10 % of the total portfolio
value.
The # of
holdings in the interim portfolio should not exceed 1000.
Will the
interim assignment include the use of financial futures? Yes
Are any
residual cash balances to be equitized? Yes
REPORTING
REQUIREMENTS
Monthly
portfolio appraisal detailing the holdings
Monthly
performance report
Monthly
risk analysis
Monthly
reconciliation of account(s) with custodian
ELIGIBLE
SECURITIES AND INVESTMENTS
The
Program can invest in CFTC approved financial futures contracts (including a
combination of short and long
positions), short-term Government securities, short-term cash vehicles and
individual equity, fixed income or other securities. Xxxxxxx may also engage in
foreign exchange transactions, including forward currency contracts, to maintain
the proper currency exposure.
While not
intended to be an exhaustive list. The following contracts (including e-mini or
Globex versions where applicable) may be used: S&P 500, S&P 400 Midcap,
NASDAQ 100, Xxxxxxx 1000, Xxxxxxx 2000, XXX-60 (Canada), CAC-60 (France), Hang
Seng (Hong Kong), DAX (Germany), IBEX-Plus (Spain), MIB-30 (Italy), OMX
(Sweden), MSCI Pan Euro (European Union), Euro Stoxx-50 (European Union),
FTSE-100 (UK), Topix (Japan), Nikkei-225 (Japan), SPI-200 (Australia), MSCI
Taiwan (Taiwan), MSCI Singapore (Singapore), 2-yr Treasury, 5-yr Treasury, 10-yr
Treasury, 10-yr Swap Future, Long Bond and foreign currencies including the
Australian Dollar, British Pound, Canadian Dollar, Euro, and Japanese
Yen.
RESTRICTIONS
The
Program may not:
• Use
futures for the purpose of speculation or leverage. If the notional value of the
futures exceed the underlying cash on any business day, the long (short) futures
position will be adjusted downward (upward) as soon as practical with
consideration given to market conditions existing at that time.
• Engage
in commodity transactions other than those listed above unless separately agreed
with the Client.
Agreement: The undersigned
Client appoints Xxxxxxx to manage the Interim Management Services described
above on the terms and conditions of the Sub-Advisory Agreement, dated June 18,
2008.
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Xxxxxxx
Implementation Services Inc.
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NCF
Investment Department of
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New
Covenant Trust Company N.A
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By:
/s/ Xxxxx
Xxxxxxxxxx
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By:
/s/ Xxxxx
Xxxxxxx
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Name:
Xxxxx
Xxxxxxxxxx
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Name:
Xxxxx
Xxxxxxx
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Title:
Manager,
Portfolio Management
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Title
Vice
President
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SCHEDULE
B
TRADING
PRACTICES
Xxxxxxx
Implementation Services inc. ("Xxxxxxx") is a registered investment adviser
under the investment Advisers act of 1940, as amended, and a registered broker
dealer under the Securities Exchange Act of 1934, as amended. The following
describes the terms, conditions and trading practices that apply when Xxxxxxx
has been engaged by a client (the "Client") to effect transactions in
securities, financial futures, currency and related instruments.
BEST EXECUTION. Xxxxxxx seeks
"best execution" in performing all of its trading services. Best execution is a
term of art that does not have a single industry accepted definition. Xxxxxxx
believes that best execution can be thought of as:
The
process that is most likely, in Xxxxxxx'x good faith judgment, to preserve the
value of investment decisions within the Client's stated investment objectives
and constraints.
Best
execution requires evaluation and management of probabilistic factors that
cannot be predicted or controlled effectively on a trade-by-trade basis. As
such, Xxxxxxx'x process is designed to minimize total expected costs and risks
across the distribution of events in an investment cycle.
ORDER AGGREGATION AND
ALLOCATION. Xxxxxxx may in some cases aggregate sales and purchase orders
of securities, commodities and other investments for clients with similar
simultaneous orders for other accounts managed by Xxxxxxx or its affiliates.
Xxxxxxx is not obligated to aggregate orders, and will only do so if Xxxxxxx
reasonably believes such aggregation will result in an overall economic benefit
to its clients, taking into consideration the objective of best execution as
defined above. Aggregated orders are allocated among Xxxxxxx clients according
to Xxxxxxx'x policies and procedures designed to ensure that all clients are
treated on a fair and equitable basis, and that the interests of some clients
are not placed over those of others.
SECURITIES AND CURRENCY
TRANSACTIONS. Xxxxxxx effects transactions in securities and currency as
follows:
Agency Basis. Xxxxxxx
acts as agent for its Clients for all transactions. In seeking the best trading
strategies, Xxxxxxx may consider trades with independent brokers or
counterparties who are themselves acting as principal or agent, but Xxxxxxx will
always act in an agency capacity. Xxxxxxx may arrange agency cross transactions
where permitted and where such transactions are consistent with the overall
implementation strategy. An arranged agency cross trade is a trade where Xxxxxxx
presents both sides of the trade, as agent, to an external crossing network,
exchange or market place where the price is determined
independently.
Xxxxxxx Accounts.
Xxxxxxx establishes and trades in brokerage accounts in the Client's
name.
Correspondent
Brokers. Xxxxxxx has arrangements with a wide network of non-affiliated
correspondent brokers and dealers (collectively "Brokers") and may use any one
or more of such Brokers to perform execution, clearing or other services in
relation to trades executed under this Agreement. Xxxxxxx selects and evaluates
Brokers for trading services based on processes designed to achieve best
execution as defined above. These due diligence processes include evaluation of
several factors, including quality of execution (measured in terms of net price
vs. stated benchmarks on an individual security or currency and aggregate
portfolio basis), client service, market access, technology and ability to
accommodate special transaction needs.
Fees and Other
Charges. Xxxxxxx charges gross brokerage fees at rates agreed with the
Client separately for each assignment. Such charges are generally collected by
the Brokers and include charges for execution, clearing or other services, if
any, imposed by the Brokers. Transaction fees for taxes, exchange fees,
settlement, custodial fees and other similar items are borne by the
Client.
FUTURES TRANSACTIONS. Xxxxxxx
manages futures transactions for clients in several contexts, including Overlay
Services, Transition Services and various interim portfolio management
assignments. The terms and strategies applied will vary depending on the type of
service and the contract, investment guidelines and special restrictions
established with the Client, but the following general practices
apply:
Management of Futures
Trading. Xxxxxxx effects transactions in financial
futures according to the investment objectives, policies and restrictions agreed
in writing with the Client.
Futures
are only used for hedging or adjusting market exposures. Xxxxxxx generally
overlays up to one hundred percent (100%) of underlying cash, defined as settled
cash including synthetic cash created by short futures positions plus pending
transactions or as otherwise defined. If the notional value of the futures
exceed the underlying cash on any business day, the long (short) futures
position will be adjusted downward (upward) as soon as practical with
consideration given to market conditions existing at that time.
Designated Commodities
Broker. Financial futures are regulated as "commodities" and Xxxxxxx does
not act as a commodities broker. Xxxxxxx effects all futures transactions in
accounts established with a commodities broker (the "Designated Broker")
selected by agreement of Xxxxxxx and the Client. To establish these account(s),
Xxxxxxx will provide the Client with materials developed by the Designated
Broker, including certain disclosure materials related to the risks of financial
futures. Accounts may be established either directly by the Client, or by
Xxxxxxx on behalf of the Client if the Client executes a Power of Attorney (in
the form prescribed by the Designated Broker) authorizing Xxxxxxx to execute
customer agreements and establish such accounts. The Designated Xxxxxx is
responsible for the timely payment of amounts owed to clients and for the
payment of any penalties and interest due to any default by the Designated
Broker. The Client is responsible for ensuring the timely payment of any amounts
owed by the Client to the Designated Broker upon instruction from Xxxxxxx and
for payment of any penalties and interest due to any such default on the part of
the Client.
Collateral. The
Designated Broker will require original, variation, maintenance and other
required margin in the form of moneys, securities or otherwise ("Collateral") in
connection with the Client account. As provided in the Client agreement, Xxxxxxx
will from time to time execute Collateral transactions and provide (or direct
the Client to provide) the Designated Broker with the necessary Collateral. The
collateral will be held in a segregated account at the Designated Broker in the
name of the Client. All interest and earnings on the Collateral belong to the
Client and will be delivered to the Client on the maturity date. All Collateral
transactions (investment or maturity) will be settled on a delivery versus
payment ("DVP") basis between the Client and the designated depositories and
agents.
Fees. Brokerage
incurred in the trading of financial futures is paid directly to the Designated
Broker. Xxxxxxx may receive investment management fees in connection with
managing financial futures (as provided in a written agreement with the Client),
but Xxxxxxx does not impose brokerage charges on Client futures
transactions.
SCHEDULE
C
AUTHORIZED
PERSONS
The
Adviser hereby certifies that the persons named below have authority to provide
instructions in respect to the Agreement.
The
Sub-Adviser may rely on this authorization until it receives written notice to
the contrary.
Name:
Xxxxxx Xxxxx
Title:
President
Signature:
/s/ Xxxxxx
Xxxxx
Name:
Xxxxx Xxxxxxx
Title:
Vice President
Signature:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxx
Title:
Investment Officer
Signature:
/s/ Xxxxx
Xxxxxx
Certified
this 16th day of July, 2008.
This
Sub-Advisory Agreement is made as of the 18th day of
June, 2008, by and between The NCF Investment Department of New Covenant Trust
Company, N.A. (the "Adviser") and Xxxxxxx Implementation Services Inc. (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 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:
1. Appointment of the
Sub-Adviser. The Adviser hereby appoints the Sub-Adviser to provide those
certain investment advisory services agreed to by the parties from time to time
for that portion of the Fund designated by the Adviser as assigned to the
Sub-Adviser (the "Segment" of the Fund). 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 investment advisory 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.
2. Authority; Xxxxxxx and
Title.
(a) Sub-Adviser
has full discretion and authority, to the extent required or permitted by
applicable law, and further subject to the additional terms, policies,
objectives and restrictions set forth in this Agreement and as agreed by the
parties from time to time, to do any or all of the following: (1) to establish
brokerage accounts, for futures and related instruments, in the Fund's name with
a commodities broker (the "Designated Broker") selected by agreement of Sub-
Adviser and the Adviser; to provide such financial information regarding the
Fund as a Designated Broker may reasonably request and to exercise full
discretionary authority over such accounts; (2) to establish brokerage accounts
in the Fund's name with Sub-Adviser to effect securities and currency
transactions in connection with the Services, and to exercise full discretionary
authority over such accounts; (3) (A) to engage in
transactions in futures and related instruments with the Designated Broker,
including but not limited to combinations of long and short positions; (B) to
obtain from the Fund or its custodian (or direct the Adviser to provide)
original, variation, maintenance and other required margin in the form of
moneys, securities or otherwise ("Collateral"); and (C) to execute Collateral
transactions; and (D) instruct the transfer of assets to and From Fund accounts
with trustees or custodians identified by the Adviser in connection with such
transactions; and (4) to purchase, sell or otherwise transfer securities held in
Segment investment accounts.
(b) Sub-Adviser
will not have custody of or title to any Fund assets. All Fund assets will be
held by the Trust's Custodian designated by the Adviser, with the exception of
Collateral held by a broker or counterparty to support derivative positions. The
Adviser will notify Sub- Adviser prior to any change to such
custodian.
3. Sub-Advisory
Services. The Sub-Adviser will provide investment advisory services for
the Segment as set forth in the investment guidelines agreed to by the parties
from time to time, and may determine from time to time what securities and other
investments will be purchased, retained or sold by and within the Segment,
subject to such written instructions and supervision as the Adviser may from
time to time furnish. 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 in accordance with Sub-Adviser's
Trading Practices, which may be amended from time to time. Consistent with
its best execution 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 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)
disclosing confidential information to its employees, affiliates, and
vendors (including brokers and counterparties) who need to know such
information in order to perform services contemplated by this Agreement
and who act in accordance with these confidentiality obligations, (2)
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 (3) 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. If 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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4. 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.
5. 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 3la-l under the 1940 Act.
6. 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 monthly.
(b) Such
fee for each calendar month shall be calculated quarterly 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 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.
7. 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.
8. Use of Names. The
Adviser shall not use the name, logo, trade or service mark 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.
9. 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 indemnify and hold harmless the Sub-Adviser (and its affiliated
companies and their respective officers, directors and employees) for any and
all claims, losses, liabilities, costs, damages or expenses (including
reasonable attorney's fees and other related expenses) arising out of or in
connection with 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
9.
10. 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.
11. Duration Renewal Termination
and Amendment. This Agreement will become effective as of the date the
portfolio assets are delivered to the Sub-Adviser, 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 for such period as the Trust desires up to 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 45
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 a breach of any of the material terms of this Agreement or of an
assignment of the Agreement. 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.
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. The Adviser will treat as confidential and will not disclose
information regarding models, tools, software programs, technical information or
specific investment advice provided by the Sub-Adviser to the Adviser except (1)
to its employees or consultants who need to know such information in receiving
or monitoring the services and who act in accordance with these confidentiality
obligations; (2) upon written authorization of the Sub-Adviser; or (3) as required by
applicable law or regulation.
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.
14. Miscellaneous. This
Agreement, including the Schedules to this Agreement, constitute 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 New York.
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.
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):
(a) if
to the Sub-Adviser, to:
Xxxxxxx
Implementation Services, Inc. 000 X Xxxxxx, Xxxxxx, XX 00000
Facsimile
transmission number: (000) 000-0000
Attention:
Xxxxx Xxxxxxxxxx, Manager, Portfolio Management With a copy to: U.S. General
Counsel
|
|
(b)
|
if
to the Adviser, to:
|
|
|
The
NCF Investment Department of New Covenant Trust Company, N.A. 000 Xxxx
Xxxxxxx Xxxxxx, Xxxxx X
|
|
|
Jeffersonville,
IN 47130
|
|
|
Facsimile
transmission number: (000) 000-0000 Attention: Chief Investment
Officer
|
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 15 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.
|
THE
NCF INVESTMENT DEPARTMENT
|
|
|
OF
NEW COVENANT TRUST COMPANY, N.A.
|
|
|
By:
/s/ Xxxxx
Xxxxxxx
|
|
|
Name:
Xxxxx Xxxxxxx
|
|
|
Vice
President
|
|
|
XXXXXXX
IMPLEMENTATION SERVICES INC.
|
|
|
By:
/s/ Xxxxx
Xxxxxxxxxx
|
|
|
Xxxxx
Xxxxxxxxxx
|
|
|
Manager,
Portfolio Management
|
SCHEDULE
A
To
the Sub-Advisory Agreement between
The
NCF Investment Department of New Covenant Trust Company, N.A. and Xxxxxxx
Implementation Services Inc.
|
Name
of Fund
|
Compensation
|
Date
|
|
See
"Fees" below
|
FEES
There
will be an origination fee of 2 basis points. There will be a monthly (assessed
quarterly) investment management fee of 2 basis points (24 basis points
annually) which begins on August 1, 2008. On the one year anniversary of the
interim management assignment, the investment management fee will increase by 1
basis point per quarter if these services are still required at that
time.
IMPLEMENTATION
SERVICES AGREEMENT
THIS
IMPLEMENTATION SERVICES AGREEMENT (the "Agreement") is entered into this 18th day of
June 2008, between and The NCF Investment Department of New Covenant Trust
Company, N.A. (the "Client" and Xxxxxxx Implementation Services Inc.
("Xxxxxxx").
BACKGROUND
Xxxxxxx
is a registered investment adviser under the Investment Advisers Act of 1940
(the "Advisers Act") and as a broker dealer under the Securities Exchange Act of
1934 (the "Exchange Act"). Under these registrations, Xxxxxxx provides
implementation Services, which involve various combinations of investment
advisory, brokerage and other services designed to help clients Improve the
implementation of their investment strategies. The scope and nature of the
Implementation Services to be provided to the Client are set forth in the
Agreement below and further described on the attached schedules.
AGREEMENT
1. APPOINTMENT. The Client
hereby appoints Xxxxxxx, and Xxxxxxx accepts its appointment, to provide
Transition Services subject to the investment objectives, policies and
restrictions set forth, on Schedule A.
Transition Services will commence upon Xxxxxxx'x receipt and acceptance of a
Fund Restructure Notice in the form attached to Schedule A.
2. FEES. For Transition
Services, Xxxxxxx'x compensation will be agreed separately by the parties in
advance and set forth in the applicable Fund Restructure Notice. Except as
provided in or authorized by this Agreement or other separate written agreement
with the Client, neither Xxxxxxx nor any of its officers, directors, partners or
affiliated companies will receive any compensation or fees with respect to the
business of the Client.
3. AUTHORITY. Xxxxxxx has full
discretion and authority, to the extent required or permitted by applicable law,
and further subject to the additional terms, policies, objectives and
restrictions set forth in this Agreement and the applicable Schedules, to do any
or all of the following:
(a) to
establish brokerage accounts in the Client's name with Xxxxxxx to effect
securities and currency transactions in connection with the Transition Services,
and to exercise full discretionary authority over such accounts;
(b) to
purchase, sell or otherwise transfer securities held in Client investment
accounts;
(c) (if
futures trading is authorized) to establish brokerage accounts, for futures and
related instruments, in the Client's name with a commodities broker (the
"Designated Broker") selected by agreement of Xxxxxxx and the Client; to provide
such financial information regarding the Client as a Designated Broker may
reasonably request and to exercise full discretionary authority over such
accounts; and
(d) (if
futures trading is authorized) (i) to engage in transactions in futures and
related instruments with the Designated Broker, including but not limited to
combinations of long and short positions; (ii) to obtain from the Client or its
custodian (or direct the Client to provide) original, variation, maintenance and
other required margin in the form of moneys, securities or otherwise
("Collateral"); (iii) to execute Collateral transactions; and (iv) instruct the
transfer of assets to and from Client accounts with trustees or custodians
identified by the Client in connection with such transactions.
4. TRADING. All futures,
securities and currency transactions will be conducted in the manner described
in Xxxxxxx'x Trading Practices set forth on Schedule
B.
5. CUSTODY AND TITLE. Xxxxxxx
will not have custody of or title to any Client assets. All Client assets will
be held by the trustee or custodian designated by the Client. The Client will
notify Xxxxxxx prior to any change to such trustee or
custodian.
6. VOTING AND CORPORATE
ACTIONS. In general, Xxxxxxx does not manage voting securities for
extended periods and thus does not vote proxies or handle corporate actions.
Where the Client assigns (in writing) such responsibility to Xxxxxxx, Xxxxxxx
will handle corporate actions and vote proxies with respect to securities held
in accounts managed by Xxxxxxx: (i) first, according to the written instructions
of the Client or its agent; or (ii) absent such instructions, according to
Xxxxxxx'x judgment as to the Client's best interest, with reference to the proxy
voting guidelines of Xxxxxxx in effect at such time.
7. RECORDS AND DOCUMENTS.
Xxxxxxx will (i) keep accurate books and records relating to its transactions
under this Agreement; (ii) permit the Client to inspect its books and records
relating to such transactions at reasonable times upon reasonable prior notice;
and (iii) furnish such information concerning such transactions to such persons
as the Client may reasonably request.
8. STANDARD OF CARE. Xxxxxxx
will discharge its duties with the care, skill, prudence and diligence under the
circumstances then prevailing that a prudent person acting in a like capacity
and familiar with such matters would use in the conduct of an enterprise of a
like character and with like aims.
9. INDEMNIFICATION AND LIABILITY. (a) Xxxxxxx
will be liable for, and will indemnify the Client, its affiliates, officers and
employees against, losses, damages, costs, and expenses (including reasonable
attorney fees) for material violation of its duties under applicable law or its negligence, bad
faith, willful misconduct or material breach of this Agreement. Xxxxxxx will not
be liable for (i) any act or omission taken in good faith reliance on data
or instructions
from the Client or its agents; (ii) any act or omission of a predecessor
investment manager or any other person authorized to invest assets of the Client
(iii) any act, omission or insolvency of any broker selected by Xxxxxxx in
accordance with the provisions of this Agreement, except to the extent Xxxxxxx
breaches its duty of care in selecting or supervising such broker; or (iv) bona
fide good faith errors in judgment after having previously considered with due
care the merits of any particular investment.
(b) The
Client will be liable for, and will indemnify Xxxxxxx, its affiliates, officers
and employees against, losses, damages, costs and expenses (including reasonable
attorney fees) for material violation of its or its agents' duties under
applicable law, or its negligence, bad faith or willful misconduct or material
breach of this Agreement.
(c)
Neither party will be liable to the other for losses caused directly or
indirectly by circumstances beyond the other party's reasonable control,
including but not limited to government restrictions, exchange or market
rulings, suspensions of trading, acts of civil or military authority, threatened
or actual terrorist activity, national emergencies, labor difficulties, fires,
earthquakes, floods or other catastrophes, acts of God, wars, riots, widespread
computer viruses or failures of communication or power supply.
10. XXXXXXX REPRESENTATIONS.
Xxxxxxx represents that:
(a)
Xxxxxxx has all necessary power and authority to execute, deliver and perform
this Agreement, and such execution, delivery and performance will not violate
any applicable law, regulation, organizational document, policy or agreement
binding on Xxxxxxx or its property; and
(b)
Xxxxxxx is a registered investment adviser under the Advisers Act and a
registered broker dealer under the Exchange Act, and it will remain so
registered at all times during the term of this Agreement, and
(c) With
respect to the assets under its management pursuant to this Agreement, but not
with respect to any other Client assets or any other services Xxxxxxx or its
affiliates may be providing, Xxxxxxx: (i) is an "investment manager" as defined
in Section 3(38) of ERISA; (ii) is a "fiduciary" as defined in Section 3(21) of
ERISA; and (iii) will maintain throughout the term of this Agreement a fidelity
bond, if required, which satisfies the requirements of Section 412 of
ERISA.
Xxxxxxx
will promptly notify Client if any representation ceases to be accurate or
complete in any material respect.
11. CLIENT REPRESENTATIONS. The
Client represents that:
(a)
Client has all necessary power and authority to execute, deliver and perform
this Agreement, and such execution, delivery and performance will not violate
any applicable law, regulation, organizational document, policy or agreement
binding on Client or its property;
(b)
Client's decision to appoint Xxxxxxx was made in a manner consistent with its
fiduciary duties under applicable law and the governing documents, contracts or
other material agreements or instruments governing Client's investment or
trading activities;
(c)
information provided by Client to Xxxxxxx pursuant to this Agreement, including
but not limited to investment policies, restrictions and identifying information
provided to establish accounts with Xxxxxxx or Designated Broker(s), is accurate
and complete in every material respect, and
(d)
Client acknowledges that various members of the Xxxxxxx investment Group provide
other services, including consulting advice and recommendations with respect to
investment strategies and service providers, and that as a matter of policy,
such consulting services do not include evaluations, advice or recommendations
to use Xxxxxxx Investment Group products or services. If the Client has or will
receive such services, the Client represents that (i) it did not rely upon, and
was not influenced by, this investment advice as the primary basis for selecting
Xxxxxxx to provide the Transition Services; and (ii) it will not rely on such
investment advice in considering whether or not to continue the Transition
Services.
Client
will promptly notify Xxxxxxx if any representation ceases to be accurate or
complete in any material respect.
12. ASSIGNMENT AND DELEGATION.
At its own expense, Xxxxxxx may delegate its duties to its affiliates and may
share such information as necessary to accomplish these purposes. Xxxxxxx will
be liable for any failure of such affiliates to meet the standard of care set
out in this Agreement. As provided in Advisers Act, Xxxxxxx may not assign this
Agreement without the consent of the Client.
13. CONFIDENTIAL INFORMATION.
Xxxxxxx will treat as confidential and will not disclose information regarding
operations and investments of the Client except: (i) to its employees, its
affiliates, agents and vendors who need to know such information in order to
perform services contemplated by this Agreement and who act in accordance with
these confidentiality obligations; (ii) upon written authorization of the
Client; or (iii) as required by applicable law, regulation or legal
process.
14. ENTIRE AGREEMENT;
AMENDMENTS. This Agreement, including the Schedules and any Fund
Restructure Notice, constitutes the entire agreement of the parties. This
Agreement may be amended at any time by written agreement between Xxxxxxx and
the Client, except that Xxxxxxx may amend Schedule B (Xxxxxxx
Xxxxxxx Practices) by written notice to the Client, and the Client may amend
Schedule C
(Authorized Persons) by written notice to Xxxxxxx.
15. TERMINATION; SURVIVAL.
This Agreement may be terminated without penalty by either party: (i) upon
fifteen (15) days prior written notice at any time, or (ii) immediately upon the
other party's material breach of any terms of this Agreement. Upon termination,
Client assets will be transferred to the Client under such terms and conditions
as the Client directs in writing. The provisions of Section 9 (indemnification
& Liability) and 13 (Confidential Information) will survive the
termination.
16. APPLICABLE LAW. This
Agreement is governed by the laws of the State of New York without regard to
conflicts of laws principles that. would impose the laws of any other
jurisdiction.
17. NOTICES. All notices under
Agreement must be in writing and will be considered delivered: (i) upon delivery
in person; (ii) two days after mailing by traceable first class mail; (iii) one
day after mailing by traceable overnight courier service; or (iv) upon
transmission by confirmed facsimile to the address listed below:
if to the
Client: The NCF
investment Department of
New
Covenant Trust Company, N.A 000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X Xxxxxxxxxxxxxx, XX
00000
Facsimile
No.: 000-000-0000
if to
Xxxxxxx: Xxxxx
Xxxxxxxxxx
Manager,
Portfolio Management Xxxxxxx Implementation Services Inc. 000 X Xxxxxx, Xxxxxx,
XX 00000 Facsimile No.: 253.439-5469
cc: U.S.
General Counsel
18. AUTHORIZED PERSONS. A list of
persons duly authorized to act on the Client's behalf concerning this Agreement
is attached as Schedule
C.
INTENDING
TO BE BOUND, the undersigned parties have executed this Agreement.
|
Xxxxxxx
Implementation
|
NCF
Investment Department of
|
|
Services
Inc.
|
New
Covenant Trust Company N.A
|
|
By:
/s/ Xxxxx
Xxxxxxxxxx
|
By:
/s/ Xxxxx
Xxxxxxx
|
|
Xxxxx
Xxxxxxxxxx
|
Name:
Xxxxx
Xxxxxxx
|
|
Manager,
Portfolio Management
|
Title
Vice
President
|
Schedule
A
TRANSITION
SERVICES
1.
CERTAIN DEFINITIONS.
(a)
'Transition Services" refer to a combination of analysis, strategy development,
implementation, trading and brokerage services designed to reduce the total cost
and risk associated with a Transition.
(b) A
"Transition" occurs when the Client reallocates assets ("Transition Assets")
from a Legacy Portfolio to a Target Portfolio. For example, a Transition may
occur when Transition Assets are reallocated among existing investment managers,
when existing managers are terminated and new managers are hired or when the
Client terminates existing managers and establishes an interim Target Portfolio
prior to identifying new managers or the final Target Portfolio.
(c)
"Legacy Portfolio" means the existing portfolio of securities, cash and/or other
assets identified by the Client to be restructured in a Transition.
(d)
'Target Portfolio" means the portfolio of securities, cash and other assets
identified by the Client and/or the Receiving Managers to be created through the
Transition.
(e)
"Receiving Managers" are the Client's existing or newly hired investment
managers who receive Transition Assets.
(f)
"Transferring Managers" are the Client's investment managers whose assets are
partially or completely transferred in a Transition.
2. SCOPE OF TRANSITION
SERVICES. The scope of Transition Services will vary by Transition, and
will be described on a "Fund Restructure Notice" to be executed by the Client
and Xxxxxxx in the form attached as Appendix 1 to this Schedule. Among other
things, the Fund Restructure Notice:
(a)
Establishes Xxxxxxx'x authority (under the terms of the Agreement) to purchase,
sell or otherwise transfer securities held in the identified Transition
Account(s) for the purpose of establishing the Target Portfolio (or interim
Target Portfolio, as the case may be), all in accordance with the Client's
instructions as provided in the Fund Restructure Notice;
(b)
Establishes the basic objectives for the Transition;
(c)
Establishes whether Xxxxxxx is authorized to use financial futures or other
securities and instruments (other than those selected by Receiving Managers) to
achieve the desired exposure while the Transition is in progress;
and
(d) May
provide any special or additional instructions for the conduct of the Transition
Services.
3. CONDUCT OF TRANSITION. Upon
acceptance of the Fund Restructure Notice by Xxxxxxx, the Client will provide
Xxxxxxx with a list of the appropriate contact persons and persons
with authority to deal in the Transition Assets at the Client's custodian(s) and
at each of the Transferring and Receiving Managers (collectively, the
"Transition Parties"). The Client will deliver instructions to the Transition
Parties to comply with Xxxxxxx'x instructions and to provide information and
updates related to the Legacy Portfolio, the Target Portfolio and other elements
of the Transition to the extent reasonably requested by Xxxxxxx. Xxxxxxx will
provide forms of instruction and request letters from time to time to assist in
this process.
4. RELIANCE ON INFORMATION.
Xxxxxxx is entitled to rely on information provided by the Transition Parties,
including but not limited to the contents of the Legacy and Target Portfolios
and investment guidelines or other instructions provided by the Client or the
Transition Parties. Changes to such information, investment guidelines or other
instructions will be effective only upon Xxxxxxx'x receipt of an amendment in
writing or in such other form as acceptable to it.
5. INVESTMENT DECISIONS.
Xxxxxxx does not:
(a)
review or assess the investment decisions made by the Client and/or Receiving
Managers in configuring the Target Portfolio; or
(b)
select securities or other instruments for investment of Transition Assets,
except to the extent that Xxxxxxx has been authorized in the Fund Restructure
Notice to invest in financial futures, securities or other Instruments to
achieve desired exposures during the course of a Transition or until a final
Target Portfolio can be identified.
6. TRANSACTION PROCEDURES. All
transactions will be consummated by payment or delivery to the Client's
custodian, or to such depositories or agents as may be designated by the Client
or its agent, of all cash and/or securities due to or from the Transition
Account. Other than for investment or reinvestment as provided herein, transfers
from such custodial accounts will be made solely at the direction of the Client.
Xxxxxxx will confirm in writing or by electronic communications to the custodian
when such transactions have been executed. Xxxxxxx does not accept
responsibility or liability with respect to custodial arrangements relating to
the Transition Account or the acts or omissions of the Client's custodian(s)
which may affect settlement.
7. REPORTS. Xxxxxxx will
provide to the Client a summary report concerning the status of the transition
activity upon completion of the Transition.
APPENDIX
1 TO SCHEDULE A
FUND
RESTRUCTURE NOTICE (FORM)
Client: Effective Date:
Transition
Manager: Xxxxxxx implementation Services Inc.
(Xxxxxxx)
Transition
objective:
The
objective of Xxxxxxx in its role as Transition Manager is to ensure assets are
repositioned as directed by the Client during the reallocation of assets. The
reallocation includes the sale and purchase of eligible securities, and if
applicable, currencies and financial futures.
Special Instructions/Restrictions:
Plan Tax ID #:
________________________
Use of futures
permitted? □ Yes □ No
Transferring
Manager/Accounts:
|
Manager
Name
|
Approximate
Value
|
Custodian
Account Number
|
Index
Benchmark
|
Receiving
Managers/Funding Accounts:
|
Manager
Name
|
Approximate
Value
|
Custodian
Account Number
|
Index
Benchmark
|
Transaction
Fee Table
|
US
Equities
|
$XXX
per share
|
|
Canadian
Equities
|
$XXX
per xxxxx
|
|
Xxxxxxxxxxxxx
Eq’s (developed)
|
XXX
basis points of principal traded
|
|
International
Eq’s (emerging)
|
XXX
basis points of principal traded
|
|
Foreign
Currency
|
XXX
basis points of principal traded
|
|
Fixed
Income
|
XXX
basis points of principal traded
|
Performance Measurement:
Performance and cost information for this Transition will be presented in
accordance with the T Standard.
Agreement: The undersigned
Client appoints Xxxxxxx to manage the Transition described above on the terms
and conditions of the Implementation Services Agreement, dated
___________.
|
Xxxxxxx
Implementation Services Inc.
|
|
| _____________________________ | |
|
(Insert
Client Legal Name)
|
|
|
By:
_____________________________
|
By:
__________________________
|
|
Name:
___________________________
|
Name:
________________________
|
|
Title:
____________________________
|
Title:
_________________________
|
SCHEDULE
B
TRADING PRACTICES
Xxxxxxx
implementation Services Inc. ("Xxxxxxx") is a registered investment adviser
under the investment Advisers act of 1940, as amended, and a registered broker
dealer under the Securities Exchange Act of 1934, as amended. The following
describes the terms, conditions and trading practices that apply when Xxxxxxx
has been engaged by a client (the "Client") to effect transactions in
securities, financial futures, currency and related instruments.
BEST EXECUTION. Xxxxxxx seeks
"best execution" in performing all of its trading services. Best execution is a
term of art that does not have a single industry accepted definition. Xxxxxxx
believes that best execution can be thought of as:
The
process that is most likely, in Xxxxxxx'x good faith judgment, to preserve the
value of investment decisions within the Client's stated investment objectives
and constraints.
Best
execution requires evaluation and management of probabilistic factors that
cannot be predicted or controlled effectively on a trade-by trade basis. As
such, Xxxxxxx'x process is designed to minimize total expected costs and risks
across the distribution of events in an investment cycle.
ORDER AGGREGATION AND
ALLOCATION. Xxxxxxx may in some cases aggregate sales and purchase orders
of securities, commodities and other investments for clients with similar
simultaneous orders for other accounts managed by Xxxxxxx or its affiliates.
Xxxxxxx is not obligated to aggregate orders, and will only do so if Xxxxxxx
reasonably believes such aggregation will result in an overall economic benefit
to its clients, taking into consideration the objective of best execution as
defined above. Aggregated orders are allocated among Xxxxxxx clients according
to Xxxxxxx’x policies and procedures designed to ensure that all clients are
treated on a fair and equitable basis, and that the interests of some clients
are not placed over those of others.
SECURlTlES AND CURRENCY
TRANSACTIONS. Xxxxxxx effects transactions in securities and currency as
follows:
Agency Basis. Xxxxxxx
acts as agent for its Clients for all transactions. In seeking the best trading
strategies, Xxxxxxx may consider trades with independent brokers or
counterparties who are themselves acting as principal or agent, but Xxxxxxx will
always act in an agency capacity. Xxxxxxx may arrange agency cross transactions
where permitted and where such transactions are consistent with the overall
implementation strategy. An arranged agency cross trade is a trade where Xxxxxxx
presents both sides of the trade, as agent, to an external crossing network,
exchange or market place where the price is determined
independently.
Xxxxxxx Accounts.
Xxxxxxx establishes and trades in brokerage accounts in the Client's
name.
Correspondent
Brokers. Xxxxxxx has arrangements with a wide network of non-affiliated
correspondent brokers and dealers (collectively "Brokers") and may use any one
or more of such Brokers to perform execution, clearing or other services in
relation to trades executed under this Agreement. Xxxxxxx selects and evaluates
Brokers for trading services based on processes designed to achieve best
execution as defined above. These due diligence processes include evaluation of
several factors, including quality of execution (measured in terms of net price
vs. stated benchmarks on an individual security or currency and aggregate
portfolio basis), client service, market access, technology and ability to
accommodate special transaction needs.
Fees and Other
Charges. Xxxxxxx charges gross brokerage fees at rates agreed with the
Client separately for each assignment. Such charges are generally collected by
the Brokers and include charges for execution, clearing or other services, if
any, imposed by the Brokers. Transaction fees for taxes, exchange fees,
settlement, custodial fees and other similar items are borne by the
Client.
FUTURES TRANSACTIONS. Xxxxxxx
manages futures transactions for clients in several contexts, including Overlay
Services, Transition Services and various interim portfolio management
assignments. The terms and strategies applied will vary depending on the type of
service and the contract, investment guidelines and special restrictions
established with the Client, but the following general practices
apply:
Management of Futures
Trading. Xxxxxxx effects transactions in financial futures according to
the investment objectives, policies and restrictions agreed in writing with the
Client. Futures are only used for hedging or adjusting market exposures. Xxxxxxx
generally overlays up to one hundred percent (100%) of underlying cash, defined
as settled cash including synthetic cash created by short futures positions plus
pending transactions or as otherwise defined. If the notional value of the
futures exceed the underlying cash on any business day, the long (short) futures
position will be adjusted downward (upward) as soon as practical with
consideration given to market conditions existing at that time.
Designated Commodities
Broker. Financial futures are regulated as "commodities" and Xxxxxxx does
not act as a commodities broker. Xxxxxxx effects all futures transactions in
accounts established with a commodities broker (the "Designated Broker")
selected by agreement of Xxxxxxx and the Client. To establish these account(s),
Xxxxxxx will provide the Client with materials developed by the Designated
Broker, including certain disclosure materials related to the risks of financial
futures. Accounts may be established either directly by Client, or by Xxxxxxx on
behalf of the Client if the Client executes a Power of Attorney (in the form
prescribed by the Designated Broker) authorizing Xxxxxxx to execute customer
agreements and establish such accounts.
The
Designated Xxxxxx is responsible for the timely payment of amounts owed to
clients and for the payment of any penalties and interest due to any default by
the Designated Broker. The Client is responsible for ensuring the timely payment
of any amounts owed by the Client to the Designated Broker upon instruction from
Xxxxxxx and for payment of any penalties and interest due to any such default on
the part of the Client.
Collateral. The
Designated Broker will require original, variation, maintenance and other
required margin in the form of moneys, securities or otherwise ("Collateral") in
connection with the Client account. As provided in the client agreement, Xxxxxxx
will from time to time execute Collateral transactions and provide (or direct
the Client to provide) the Designated Broker with the necessary Collateral. The
collateral will be held in a segregated account at the Designated Broker in the
name of the Client. All interest and earnings on the Collateral belong to the
Client and will be delivered to the Client on the maturity date. All Collateral
transactions (investment or maturity) will be settled on a delivery versus
payment ("DVP") basis between the Client and the designated depositories and
agents.
Fees. Brokerage
incurred in the trading of financial futures is paid directly to the Designated
Broker. Xxxxxxx may receive investment management fees in connection with
managing financial futures (as provided in a written agreement with the Client),
but Xxxxxxx does not impose brokerage charges on Client futures
transactions.
SCHEDULE
C
AUTHORIZED
PERSONS
The
Client hereby certifies that the persons named below have authority to provide
instructions in respect to this Agreement.
Xxxxxxx
may rely on this authorization until it receives written notice to the
contrary.
Name:
Xxxxxx Xxxxx
Title:
President
Signature:
/s/ Xxxxxx
Xxxxx
Name:
Xxxxx Xxxxxxx
Title:
Vice President
Signature:
/s/ Xxxxx
Xxxxxxx
Name:
Xxxxx Xxxxxx
Title:
Investment Officer
Signature:
/s/ Xxxxx
Xxxxxx
Certified
this ____ day of June, 2008.
