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Item 23 (d)(v)
SUB-ADVISORY AGREEMENT
This Sub-Advisory Agreement is made as of the 31st day of July, 2001 by
and between the NCF Investment Department of New Covenant Trust Company, N.A.,
an investment adviser registered under the Investment Advisors Act of 1940, as
amended, (the "Adviser") and Xxxxxxxx Xxxxxx Asset Management Company LLC (the
Sub-Adviser").
WHEREAS, pursuant to an amended and restated agreement between them
dated as of May 14, 2001, (the "Advisory Agreement"), the Adviser serves as
investment adviser to New Covenant Funds, a Delaware business trust and an
open-end management investment company (the "Trust"), which has filed a
registration statement (the "Registration Statement") under the Investment
Company Act of 1940, as amended (the "1940 Act") and the Securities Act of 1933;
and
WHEREAS, the Trust is comprised of four separate investment portfolios,
one of which is New Covenant Income Fund (the "Fund"); and
WHEREAS, the Adviser desires to avail itself of the services,
information, advice, assistance and facilities of an investment adviser
experienced in the management of a portfolio of securities to assist the Adviser
in performing services for a portion of the Fund; and
WHEREAS, the Sub-Adviser represents that it has the legal power and
authority to perform the services contemplated hereunder without violation of
applicable law (including the Investment Advisers Act of 1940), and desires to
provide such services to the Trust and the Adviser.
NOW, THEREFORE, in consideration of the terms and conditions
hereinafter set forth, it is agreed as follows:
Section 1. Appointment of the Sub-Adviser. The Adviser hereby appoints
the Sub-Adviser to provide a continuous investment program for that portion of
the Fund designated by the Adviser as assigned to the Sub-Adviser (the "Segment"
of the Fund), subject to such written instructions and supervision as the
Adviser may from time to time furnish. The Sub-Adviser hereby accepts such
appointment and agrees to render the services and to assume the obligations
herein set forth for the compensation herein provided. The Sub-Adviser will
provide the services under this Agreement with respect to the Segment in
accordance with the Fund's investment objective, policies and applicable
restrictions as stated in the Fund's most recent Prospectus and Statement of
Additional Information and as the same may, from time to time, be supplemented
or amended and in resolutions of the Trust's Board of Trustees. The Adviser
agrees to furnish to the Sub-Adviser from time to time copies of all
Prospectuses and Statements of Additional Information and of all amendments of,
or supplements to, such Prospectuses and Statements of Additional Information
and of all resolutions of the Trust's Board of Trustees applicable to the
Sub-Adviser's services hereunder. The Sub-Adviser shall for all purposes herein
be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser, the Fund or the Trust in any way.
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Section 2. Sub-Advisory Services. Subject to such written instructions
and supervision as the Adviser may from time to time furnish, the Sub-Adviser
will provide an investment program for the Segment, including investment
research and management with respect to securities and investments, including
cash and cash equivalents in the Segment, and will determine from time to time
what securities and other investments will be purchased, retained or sold by and
within the Segment. The Sub-Adviser will implement such determinations through
the placement, on behalf of the Fund, of orders for the execution of portfolio
transactions through such brokers or dealers as it may select. The Adviser will
instruct the Trust's Custodian to forward promptly to the Sub-Adviser proxy and
other materials relating to the exercise of such shareholder rights and, unless
otherwise instructed by the Adviser, the Sub-Adviser will determine from time to
time the manner in which voting rights, rights to consent to corporate action
and other rights pertaining to the Fund's investments should be exercised.
In fulfilling its responsibilities hereunder, the Sub-Adviser agrees
that it will:
(a) use the same skill and care in providing such services as it
uses in providing services to other fiduciary accounts for
which it has investment responsibilities;
(b) conform with all applicable rules and regulations of the
United States Securities and Exchange Commission ("SEC") and
in addition will conduct its activities under this Agreement
in accordance with any applicable regulations of any
government authority pertaining to the investment advisory
activities of the Sub-Adviser and shall furnish such written
reports or other documents substantiating such compliance as
the Adviser reasonably may request from time to time;
(c) not make loans to any person to purchase or carry shares of
beneficial interest in the Trust or make loans to the Trust;
(d) place orders pursuant to investment determinations for the
Fund either directly with the issuer or with an underwriter,
market maker or broker or dealer. In placing orders, the
Sub-Adviser will use its reasonable best efforts to obtain
best execution of such orders. Consistent with this
obligation, the Sub-Adviser may, to the extent permitted by
law, effect portfolio securities transactions through brokers
and dealers who provide brokerage and research services
(within the meaning of Section 28(c) of the Securities
Exchange Act of 1934) to or for the benefit of the Fund and/or
other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of
Trustees from time to time with respect to the extent and
continuation of the policy, the Sub-Adviser is authorized to
cause the Fund to pay a broker or dealer who provides such
brokerage and research services a commission for effecting a
securities transaction for the Fund which is in excess of the
amount of commission another broker or dealer would have
charged for effecting that transaction if the Sub-Adviser
determines in good faith that such commission was reasonable
in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the overall
responsibilities of the Sub-Adviser with respect to the
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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;
(e) maintain all necessary or appropriate records with respect to
the Fund's securities transactions for the Segment in
accordance with all applicable laws, rules and regulations,
including but not limited to Section 31 (a) of the 1940 Act,
and will furnish the Trust's Board of Trustees and the Adviser
such periodic and special reports as the Board and Adviser
reasonably may request;
(f) treat confidentially and as proprietary information of the
Adviser and the Trust all records and other information
relative to the Adviser and the Trust and prior, present, or
potential shareholders, and will not use such records and
information for any purpose other than the performance of its
responsibilities and duties hereunder, except that subject to
prompt notification to the Trust and the Adviser, the
Sub-Adviser may divulge such information to its independent
auditors and regulatory authorities, or when so requested by
the Adviser and the Trust; provided, however, that nothing
contained herein shall prohibit the Sub-Adviser from (1)
advertising or soliciting the public generally with respect to
other products or services, regardless of whether such
advertisement or solicitation may include prior, present or
potential shareholders of the Fund or (2) including the
Adviser and Trust on its general list of disclosable clients.
(g) maintain its policy and practice of conducting its fiduciary
functions independently. In making investment decisions for
the Fund, the Sub-Adviser's personnel will not inquire or take
into consideration whether the issuers of securities proposed
for purchase or sale for the Fund's account are customers of
the Adviser, other sub-advisers, the Sub-Adviser or of their
respective parents, subsidiaries or affiliates. In dealing
with such customers, the Sub-Adviser and its subsidiaries and
affiliates will not inquire or take into consideration whether
securities of those customers are held by the Trust; and
(h) render, upon request of the Adviser or the Trust's Board of
Trustees, written reports concerning the investment activities
of the Sub-Adviser with respect to the Sub-Adviser's Segment
of the Fund.
Section 3. Expense. During the term of this Agreement, the Sub-Adviser
will pay all expenses incurred by it in performing its services under this
Agreement. The Sub-Adviser shall not be liable for any expenses of the Adviser
or the Trust, including without limitation (a) their
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interest and taxes, (b) brokerage commissions and other costs in connection with
the purchase or sale of securities or other investment instruments with respect
to the Fund and (c) custodian fees and expenses.
Section 4. Records. In compliance with the requirements of Rule 3la-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records, if any,
which it maintains for the Fund are the property of the Fund and further agrees
to surrender promptly to the Adviser or the Trust any such records upon the
Adviser's or the Trust's request and that such records shall be available for
inspection by the SEC. The Sub-Adviser further agrees to preserve for the
periods and at the places prescribed by Rule 3la-2 under the 1940 Act the
records required to be maintained by Rule 31a-1 under the 1940 Act.
Section 5. Compensation of the Sub-Adviser.
(a) In consideration of services rendered pursuant to this Agreement,
the Adviser will pay the Sub-Adviser a fee, in arrears, equal to an annual rate
in accordance with Schedule A hereto, paid quarterly.
(b) Such fee for each calendar quarter shall be calculated based on the
average of the market value of the assets under management as of the end of each
of the three months in the quarter just ended, as provided by the Adviser.
(c) If the Sub-Adviser should serve for less than the whole of any
calendar quarter, its compensation shall be determined as provided above on the
basis of the ending market value of the assets managed in the month in which the
termination occurs and shall be payable on a pro rata basis for the period of
the calendar quarter for which it has served as Sub-Adviser hereunder.
Section 6. Services Not Exclusive. The services of the Sub-Adviser
hereunder are not to be deemed exclusive, and the Sub-Adviser shall be free to
render similar services to others and to engage in other activities, so long as
the services rendered hereunder are not impaired. It is understood that the
action taken by the Sub-Adviser under this Agreement may differ from the advice
given or the timing or nature of action taken with respect to other clients of
the Sub-Adviser, and that a transaction in a specific security may not be
accomplished for all clients of the Sub-Adviser at the same time or at the same
price.
Section 7. Use of Names. The Adviser shall not use the name, logo,
trade or service xxxx or derivative of the foregoing of the Sub-Adviser or any
of the Sub-Adviser's affiliates in any prospectus, sales literature or other
materials whether or not relating to the Trust in any manner not approved prior
thereto by the Sub-Adviser; provided, however, that the Sub-Adviser shall
approve all uses of its or its affiliate's name which merely refer in accurate
terms to its appointment hereunder or which are required by the SEC or a state
securities commission; and, provided further, that in no event shall such
approval be unreasonably withheld. The Sub-Adviser shall not use the name of the
Trust, the Fund or the Adviser in any materials relating to the Sub-Adviser in
any manner not approved prior thereto by the Adviser; provided, however, that
the Adviser shall approve all uses of its and the Fund's or the Trust's name
which merely refer in accurate terms to the appointment of the Sub-Adviser
hereunder, including placing the Trust's or the Adviser's name
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on the Sub-Adviser's list of representative clients, or which are required by
the SEC or a state securities commission, and, provided further, that in no
event shall such approval be unreasonably withheld.
Section 8. Liability of the Sub-Adviser. Absent willful misfeasance,
bad faith, gross negligence, or reckless disregard of obligations or duties
hereunder on the part of the Sub-Adviser, or loss resulting from breach of
fiduciary duty, the Sub-Adviser shall not be liable for any act or omission in
the course of, or connected with, rendering services hereunder or for any losses
that may be sustained in the purchase, holding or sale of any security.
Notwithstanding the foregoing, neither the Adviser nor the Trust shall be deemed
to have waived any rights it may have against the Sub-Adviser under federal or
state securities laws.
The Sub-Adviser shall indemnify and hold harmless the Trust and the
Adviser (and its affiliated companies and their respective officers, directors
and employees) from any and all claims, losses, liabilities or damages
(including reasonable attorney's fees and other related expenses) arising out of
or in connection with the willful misfeasance, bad faith, gross negligence, or
reckless disregard of obligations or duties including breach of fiduciary duty,
hereunder of the Sub-Adviser.
The Adviser shall hold harmless and indemnify the Sub-Adviser for any
loss, liability, cost, damage or expense (including reasonable attorney's fees
and costs) arising from any claim or demand by any person that is based upon (i)
the obligations of any other sub-adviser to the Fund, (ii) any obligation of the
Adviser under the Advisory Agreement that has not been delegated to the
Sub-Adviser under this Agreement or (iii) any matter for which the Sub-Adviser
does not have liability in accordance with the first sentence of this Section 8.
Section 9. Limitation of Trust's Liability. The Sub-Adviser
acknowledges that it has received notice of and accepts the limitations upon the
Trust's and the Fund's liability set forth in its Trust Instrument and under
Delaware law. The Sub-Adviser agrees that any of the Trust's obligations shall
be limited to the assets of the Fund and that the Sub-Adviser shall not seek
satisfaction of any such obligation from the shareholders of the Trust nor from
any Trustee, officer, employee or agent of the Trust.
The names "New Covenant Funds" and "Trustees of New Covenant Funds"
refer respectively to the Trust created and the Trustees, as trustees but not
individually or personally, acting from time to time under the Trust Instrument
dated as of September 30, 1998, to which reference is hereby made and a copy of
which is on file at the office of the Secretary of State of the State of
Delaware and elsewhere as required by law, and to any and all amendments thereto
so filed or hereafter filed. The obligations of "New Covenant Funds" entered
into in the name or on behalf thereof, or in the name or on behalf of any series
or class of shares of the Trust, by any of the Trustees, representatives or
agents are made not individually, but in such capacities, and are not binding
upon any of the Trustees, shareholders or representatives of the Trust
personally, but bind only the assets of the Trust, and all persons dealing with
any series or class of shares of the Trust must look solely to the assets of the
Trust belonging to such series or class for the enforcement of any claims
against the Trust.
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Section 10. Duration Renewal Termination and Amendment. This Agreement
will become effective as of the date first written above, provided that it shall
have been approved by vote of a majority of 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 an initial period of one (1) year.
Thereafter, if not terminated, this Agreement shall continue in effect
with respect to the Fund for successive one year periods provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of the disinterested Trustees cast in person at a meeting called for
the purpose of voting on such approval, and (b) by the vote of a majority of the
Trust's Board of Trustees or by the vote of a majority of all votes attributable
to the outstanding Shares of the Fund. This Agreement may be terminated as to
the Fund at any time, without payment of any penalty, by the Trust's Board of
Trustees, by the Adviser, or by a vote of a majority of the outstanding voting
securities of the Fund, upon 60 days' prior written notice to the Sub-Adviser,
or by the Sub-Adviser upon 60 days' prior written notice to the Adviser and the
Trust's Board of Trustees, or upon such shorter notice as may be mutually agreed
upon.
This Agreement shall terminate automatically and immediately upon
termination of the Advisory Agreement. This Agreement shall terminate
automatically and immediately in the event of its assignment. No assignment of
this Agreement shall be made by the Sub-Adviser without the consent of the
Adviser and the Board of Trustees of the Trust.
This Agreement may be amended at any time by the Adviser and the
Sub-Adviser, subject to approval by the Trust's Board of Trustees and, if
required by the 1940 Act and applicable SEC rules and regulations, a vote of a
majority of the Fund's outstanding voting securities. Notwithstanding the
foregoing, the Trust shall be under no obligation to obtain shareholder approval
to materially amend this Agreement unless required to obtain such approval
pursuant to any orders or rules and regulations which may have been issued by
the Securities and Exchange Commission.
Section 11. Confidential Relationship. Any information and advice
furnished by either party to this Agreement to the other shall be treated as
confidential and shall not be disclosed to third parties except as required by
law or as required or permitted by this Agreement.
Section 12. Severability. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby.
Section 13. Miscellaneous. This Agreement constitutes the full and
complete agreement of the parties hereto with respect to the subject matter
hereof and each party agrees to perform such further actions and execute such
further documents as are necessary to effectuate the purposes hereof. To the
extent not preempted by federal law, this Agreement shall be construed and
enforced in accordance with and governed by the laws of the State of Indiana.
The captions in this Agreement are included for convenience only and in no way
define or delimit any of the provisions hereof or otherwise affect their
construction or effect. This Agreement may be executed in several
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counterparts, all of which together shall for all purposes constitute one
Agreement, binding on all parties.
Section 14. Notices. All notices and other communications hereunder
shall be in writing (including telex or similar writing) and shall be deemed
given if delivered in person or by messenger, cable, telegram or telex or
facsimile transmission or by a reputable overnight delivery service which
provides evidence of receipt to the parties at the following addresses or telex
or facsimile transmission numbers (or at such other address or number for a
party as shall be specified by like notice):
(a) if to the Sub-Adviser, to:
Xxxxxxxx Xxxxxx Asset Management Company LLC
Xxx Xxxxxxxxx Xxxxxx
Xxxxxx, XX 00000
Attn: President
(b) if to the Adviser, to:
The NCF Investment Department of
New Covenant Trust Company, N.A.
000 Xxxx Xxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxxxxx, XX 00000
Facsimile transmission number: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Each such notice or other communication shall be effective (i) if given
by telex or facsimile transmission, when such telex or facsimile is transmitted
to the number specified in this section and the appropriate answer back or
confirmation is received, and (ii) if given by any other means, when delivered
at the address specified in this section.
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IN WITNESS WHEREOF, the parties have duly executed this Agreement as of
the date first written above.
THE NCF INVESTMENT DEPARTMENT OF
NEW COVENANT TRUST COMPANY, N.A.
By:
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Name:
------------------------------------------
Title:
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XXXXXXXX XXXXXX ASSET MANAGEMENT COMPANY LLC
By:
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Name:
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Title:
-----------------------------------------
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SCHEDULE A
To the Sub-Advisory Agreement
between
The NCF Investment Department of
New Covenant Trust Company, N.A.
and
Xxxxxxxx Mellon Asset Management Company LLC
Name of Fund Compensation Date
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New Covenant Income Fund Domestic Segment: July 31, 2001
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0.400% of first $10 Million in Assets;
0.250% of next $90 Million in Assets;
0.200% of next $100 Million in Assets;
0.180% of next $100 Million in Assets;
0.150% of next $200 Million in Assets;
0.120% of Assets over $500 Million.
Global High-Yield Segment:
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0.500% of Assets managed.
THE NCF INVESTMENT DEPARTMENT OF NEW COVENANT
TRUST COMPANY, N.A.
By:
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Name:
------------------------------------------
Title:
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XXXXXXXX XXXXXX ASSET MANAGEMENT COMPANY LLC
By:
--------------------------------------------
Name:
------------------------------------------
Title:
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