EXHIBIT (d)(3)
SUB-INVESTMENT ADVISORY AGREEMENT
AGREEMENT made this 1st day of January, 2004, between Menno Insurance
Service, Inc. d/b/a MMA Capital Management (the "Adviser"), and Evergreen
Investment Management Company, LLC (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 Praxis International 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 determine the
securities and investments to be purchased, sold or retained by the Fund in
accordance with the Adviser's stewardship investing guidelines. In cooperation
with the Sub-Adviser, the Adviser will provide guidance regarding individual
securities and/or sectors that shall not be purchased for the Fund and reserves
the right to remove securities from the Fund that do not meet the Adviser's
social screens. 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.
1
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
BISYS Fund Services, the Adviser, the Sub-Adviser or any
affiliated person of the Trust, BISYS Fund Services, the
Sub-Adviser or the Adviser, except to the extent permitted by the
1940 Act and the Commission. The Adviser shall provide to the
Sub-Adviser a list of each affiliate of the Adviser and the Trust
immediately upon entering into this Agreement and shall notify
the Sub-Adviser immediately in writing in the event of any
changes to such list. 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 affiliated, 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-l;
(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 and allow for inspection of said books and
records upon reasonable 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;
2
(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 85l(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(h)(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-l 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-l, 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-l. 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
l7j-l 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-l(d) and the records the Sub-Adviser
maintains pursuant to Rule l7j-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
3la-3 under the l940 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-l
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.
3
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 0.48% of the Fund's average daily net assets up to and including
$100 million, and 0.45% of the Fund's average daily net assets over $100
million.
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. Unless sooner terminated, this
Agreement shall continue until January 1, 2005, 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 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. 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 $3 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 International 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
4
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 International 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 International
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
5
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
Evergreen Investment Management Company, LLC
000 Xxxxx Xxxxx Xxxxxx, Xxxxx 000
Xxxxxxxxx, XX 00000
Fax Number 000-000-0000
15. The Fund and the Adviser acknowledge receipt of the
Sub-Adviser's Form ADV, Part II, at least 48 hours in advance of entering into
this Agreement.
16. 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: /s/ Xxxx X. Xxxxxxx
Name: Xxxx X. Xxxxxxx
Senior VP & Treasurer
EVERGREEN INVESTMENT MANAGEMENT
COMPANY, LLC
By: /s/ Xxxxxxx X. X'Xxxxx
Name: Xxxxxxx X. X'Xxxxx
President - Institutional
6
