SUB-ADVISORY AGREEMENT
This
Sub-Advisory Agreement is made as of the 18th day of
November 2008, by and between One Compass Advisors (the “Adviser”), a separate
division of New Covenant Trust Company, N.A., and Xxxxxx X. Xxxxx & Co.
Incorporated (the “Sub-Adviser”).
WHEREAS, pursuant to an
agreement dated as of June 30th, 1999 (the “Advisory Agreement”) as amended and
restated on May 14, 2001, the Adviser serves as
investment adviser to New Covenant Funds, a Delaware statutory trust and an
open-end management investment company (the “Trust”), which has filed a
registration statement (the “Registration Statement”) under the Investment
Company Act of 1940, as amended (the “1940 Act”) and the Securities Act of 1933;
and
WHEREAS, the Trust is
comprised of four separate investment portfolios, one of which is New Covenant
Income Fund (the “Fund”); and
WHEREAS, the Adviser desires
to avail itself of the services, information, advice, assistance and facilities
of an investment adviser experienced in the management of a portfolio of
securities to assist the Adviser in performing services for a portion of the
Fund; and
WHEREAS, the Sub-Adviser
represents that it has the legal power and authority to perform the services
contemplated hereunder without violation of applicable law (including the
Investment Advisers Act of 1940), and desires to provide such services to the
Trust and the Adviser.
NOW, THEREFORE, in
consideration of the terms and conditions hereinafter set forth, it is agreed as
follows:
§1. Appointment of the
Sub-Adviser. The Adviser hereby appoints the Sub-Adviser to provide a
continuous investment program for that portion of the Fund designated by the
Adviser as assigned to the Sub-Adviser (the “Segment” of the Fund), subject to
such written instructions aid supervision as the Adviser may from time to time
furnish. The Sub-Adviser hereby accepts such appointment and agrees to render
the services and to assume the obligations herein set forth for the compensation
herein provided. The Sub-Adviser will provide the services under this Agreement
with respect to the Segment in accordance with the Fund’s investment objective,
policies and applicable restrictions as stated in the Fund’s most recent
Prospectus and Statement of Additional Information and as the same may, from
time to time, be supplemented or amended and in resolutions of the Trust’s Board
of Trustees. The Adviser agrees to furnish to the Sub-Adviser from time to time
copies of all Prospectuses and Statements of Additional Information and of all
amendments of, or supplements to, such Prospectuses and Statements of Additional
Information and of all resolutions of the Trust’s Board of Trustees applicable
to the Sub-Adviser’s services hereunder. The Sub-Adviser shall for all purposes
herein be deemed to be an independent contractor and shall, except as expressly
provided or authorized (whether herein or otherwise), have no authority to act
for or represent the Adviser, the Fund or the Trust in any way.
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§2. Sub-Advisory
Services. Subject to such written instructions and supervision as the
Adviser may from time to time furnish, the Sub-Adviser will provide an
investment program for the Segment, including investment research and management
with respect to securities and investments, including cash and cash equivalents
in the Segment, and will determine time to time what securities and other
investments will be purchased, retained or sold by and within the
Segment. The Sub-Adviser will implement such determinations through
the placement, on behalf of the Fund, of orders for the execution of portfolio
transactions through such brokers or dealers as it may select. The Adviser will
instruct the Trust’s Custodian to forward promptly to the Adviser proxy and
other materials relating to the exercise of such shareholder rights and the
Adviser will determine from time to time the manner in which voting rights,
rights to consent to corporate action and other rights pertaining to the Fund's
investments should be exercised.
In
fulfilling its responsibilities hereunder, the Sub-Adviser agrees that it
will:
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(a)
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use
the same skill and care in providing such services as it uses in providing
services to other fiduciary accounts for which it has investment
responsibilities;
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(b)
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conform
with all applicable rules and regulations of the United States Securities
and Exchange Commission (“SEC”) and in addition will conduct its
activities under this Agreement in accordance with any applicable
regulations of any government authority pertaining to the investment
advisory activities of the Sub-Adviser and shall furnish such written
reports or other documents substantiating such compliance as the Adviser
reasonably may request from time to
time;
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(c)
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not
make loans to any person or carry shares of beneficial interest in the
Trust or make loans to the Trust;
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(d)
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place
orders pursuant to investment determinations for the Fund either directly
with the issuer or with an underwriter, market maker or broker or dealer.
In placing orders, the Sub-Adviser will use its reasonable best efforts to
obtain best execution of such orders. Consistent with this obligation, the
Sub-Adviser may, to the extent permitted by law, effect
portfolio securities transactions through brokers and dealers who provide
brokerage and research services (within the meaning of Section 28(e) of
the Securities Exchange Act of 1934) to or for the benefit of the Fund
and/or other accounts over which the Sub-Adviser exercises investment
discretion. Subject to the review of the Trust's Board of Trustees from
time to time with respect to the extent and continuation of the policy,
the Sub-Adviser is authorized to cause the Fund to pay a broker or dealer
who provides such brokerage and research services a commission for
effecting a securities transaction for the Fund which is in excess of the
amount of commission another broker or: dealer would have charged for
effecting that transaction if the Sub-Adviser determines in good faith
that such commission was reasonable in relation to the value of the
brokerage and research services
provided by such broker or dealer, viewed in terms of either that
particular transaction or the overall responsibilities of the Sub-Adviser
with respect to the accounts as to which it exercises investment
discretion. The Trust or the Adviser may, from time to time in writing,
direct the Sub-Adviser to place orders through one or more brokers or
dealers and, thereafter, the Sub-Adviser will have no responsibility for
ensuring best execution with respect to such orders. In no instance will
portfolio securities be purchased from or sold to the Sub-Adviser or any
affiliated person of the Sub-Adviser as principal except as may be
permitted by the 1940 Act or an exemption therefrom. If the Sub-Adviser
determines in good faith that the transaction is in the best interest of
each client, securities may be purchased on behalf of the Fund from, or
sold on behalf of the Fund to, another client of the Sub-Adviser in
compliance with Rule 17a-7 under the 1940
Act;
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(e)
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maintain
all necessary or appropriate records with respect to the Fund’s securities
transactions for the Segment in accordance with all applicable laws, rules
and regulations, including but not limited to Section 31(a) of the 1940
Act, and will furnish the Trust’s Board of Trustees and the Adviser such
periodic and special reports as the Board and Adviser reasonably may
request;
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(f)
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treat
confidentially and as proprietary information of the Adviser and the Trust
all records and other information relative to the Adviser and the Trust
and prior, present, or potential shareholders, and will not use such
records and information for any purpose other than the performance of its
responsibilities 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;
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(g)
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maintain
its policy and practice of conducting its fiduciary functions
independently. In making investment decisions for the Fund, the
Sub-Adviser’s personnel will not inquire or take into consideration
whether the issuers of securities proposed for purchase or sale for the
Fund’s account are customers of the Adviser, other sub-advisers, the
Sub-Adviser or of their respective parents, subsidiaries or affiliates. In
dealing with such customers, the Sub-Adviser and its subsidiaries and
affiliates will not inquire or take into consideration whether securities
of those customers are held by the Trust; and render, upon request of the
Adviser or the Trust's Board of Trustees, written reports concerning the
investment activities of the Sub-Adviser with respect to the Sub-Adviser’s
Segment of the Fund.
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§3. Expenses. During the
term of this Agreement, the Sub-Adviser will pay all expenses incurred by it in
performing its services under this Agreement. The Sub-Adviser shall not be
liable for any expenses of the Adviser or the Trust, including without
limitation (a) their interest and taxes, (b) brokerage commissions and other
costs in connection with the purchase or sale of securities or other investment
instruments with respect to the Fund and (c) custodian fees and
expenses.
§4. Records. In
compliance with the requirements of Rule 31a-3 under the 1940 Act, the
Sub-Adviser hereby agrees that all records, if any, which it maintains for the
Fund are the property of the Fund and further agrees to surrender promptly to
the Adviser or the Trust any such records upon the Adviser’s or the Trust’s
request and that such records shall be available for inspection by the SEC. The
Sub-Adviser further agrees to preserve for the periods and at the places
prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 3 la-1 under the 1940 Act.
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§5. Compensation of the
Sub-Adviser.
(a) In consideration of services
rendered pursuant to this Agreement, the Adviser will pay the Sub-Adviser a fee,
in arrears, equal to an annual rate in accordance with Schedule A hereto, paid
quarterly.
(b) Such fee for each calendar
quarter shall be calculated based on the average of the market value of the
assets under management as of the end of each of the three months in the quarter
just ended, as provided by the Adviser.
(c) If the Sub-Adviser should
serve for less than the whole of any calendar quarter, its compensation shall be
determined as provided above on the basis of the ending market value of the
assets managed in the month in which the termination occurs and shall be payable
on a pro rata basis for the period of the calendar
quarter for which it has served as Sub-Adviser hereunder.
§6.
Services
Not Exclusive. The services of the Sub-Adviser hereunder are not to be
deemed exclusive, and the Sub-Adviser shall be free to render similar services
to others and to engage in other activities, so long as the services rendered
hereunder are not impaired. It is understood that the action taken by the
Sub-Adviser under this Agreement may differ from the advice given or the timing
or nature of action taken with respect to other clients of the Sub-Adviser, and
that a transaction in a specific security may not be accomplished for all
clients of the Sub-Adviser at the same time or at the same price.
§7. Use of Names. The
Adviser shall not use the name; logo, trade or service xxxx or derivative of
the foregoing of
the Sub-Adviser or any of the Sub-Adviser’s affiliates in any prospectus, sales
literature or other materials ~whether or not relating to the Trust in any manner not approved
prior hereto 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 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.
§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 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.
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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 the
Agreement or (iii) any matter for which the Sub-Adviser does not have liability
in accordance with the first sentence of this Section 8.
§9. Limitation of Trust’s
Liability. The Sub-Adviser acknowledges that it has received notice of
and accepts the limitations upon the Trust’s and the Fund’s liability set forth
in its Trust Instrument 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.
§10. Duration, Renewal,
Termination and Amendment. This Agreement will become
effective as of the date first written above, provided that it shall have been
approved by vote of a majority of the Trustees, including a majority of the
disinterested Trustees cast in person at a meeting called for the purpose of
voting on such approval, and, unless sooner terminated as provided herein, shall
continue in effect until June 30, 2010.
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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 shall be terminated 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 may be made by the Sub-Adviser without the consent of the Adviser
and the Board of Trustees of the Trust.
This Agreement may be amended at
any time by the Adviser and the Sub-Adviser,
subject to approval by the Trust’s Board of Trustees and, if required by the
1940 Act and applicable SEC rules and regulations, a vote of a majority of the
Fund’s outstanding voting securities. Notwithstanding the foregoing,
the Trust shall be under no obligation to obtain shareholder approval to
materially amend this Agreement unless required to obtain such approval pursuant
to any orders or
rules and regulations which may have been issued by the Securities and Exchange
Commission.
§11. Confidential
Relationship. Any information and advice furnished by either party to
this Agreement to the other shall be treated
as confidential and shall not be disclosed to third parties except as required
by law or as required or permitted by this Agreement.
§12. Severability. If any
provision of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby.
§13. Miscellaneous. This
Agreement constitutes the full and complete agreement of the parties hereto with
respect to the subject matter hereof and each party agrees to perform such
further actions and execute such further documents as are necessary to
effectuate the purposes hereof. To the extent not preempted by federal law, this
Agreement shall be construed and enforced in accordance with and governed by the
laws of the State of Indiana. The captions in this Agreement are included for
convenience only and in no way define or delimit any of the provisions
hereof or otherwise affect their construction or effect. This Agreement may be
executed in several counterparts, all of which together shall for all purposes
constitute one Agreement, binding on all parties.
§14. Notices. All notices
and other communications hereunder shall be in writing (including telex or
similar writing) and shall be deemed given
if delivered in person or by messenger, cable, telegram or telex or facsimile
transmission or by a reputable overnight delivery service which provides
evidence of receipt to the parties at the following addresses or telex or
facsimile transmission numbers (or at such other address or number for a party
as shall be specified by like notice):
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(a) if
to the Sub-Adviser, to:
Xxxxxx X.
Xxxxx & Co. Incorporated
000 Xxxx Xxxxxxxxx
Xxxxxx
Xxxxxxxxx,
XX 00000
Facsimile
transmission number: (000) 000-0000
Phone
number: (000) 000-0000
Attention: Xxxxxxx
X. Xxxxxxxxxx
(b) if
to the Adviser, to:
One
Compass Advisors
000 Xxxx
Xxxxxxx Xxxxxx, Xxxxx X
Xxxxxxxxxxxxxx,
XX 00000
Facsimile
transmission number: (000) 000-0000
Attention: Xxxx
X. Xxxxxxxx
Each such
notice or other communication shall be effective (i) if given by telex or
facsimile transmission, when such telex or facsimile is transmitted to the
number specified in this section and the appropriate answer back or confirmation
is received, and (ii) if given by any other means, when delivered at the address
specified in this section.
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IN WITNESS WHEREOF, the
parties have duly executed this Agreement as of the date first written
above.
ONE
COMPASS ADVISORS
By: /s/
Xxxx X. Xxxxxxxx, CFA
Name: Xxxx
X. Xxxxxxxx, CFA
Title: Sr.
VP & CIO
XXXXXX
X. XXXXX & CO. INCORPORATED
By: /s/
Xxxxxxx X. Xxxxxxxxxx
Name: Xxxxxxx
X. Xxxxxxxxxx
Title: Managing
Director and Senior Portfolio Manager
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SCHEDULE
A
To the
Sub-Advisory Agreement between
One
Compass Advisors and
Xxxxxx X.
Xxxxx & Co. Incorporated
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Name of Fund
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Compensation
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New
Covenant Income Fund
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0.15%
on all assets under management by
sub-adviser
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