(d)(3)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 22 day of December, 1999, by and among THE
CATHOLIC FUNDS, INC. a Maryland corporation ("Fund"), CATHOLIC
FINANCIAL SERVICES CORPORATION, a Wisconsin corporation ("Adviser"), and
STRONG CAPITAL MANAGEMENT, INC., a Wisconsin corporation ("Sub-
Adviser").
W I T N E S S E T H
For good and valuable consideration, the receipt of which is hereby
acknowledged, it is hereby agreed by and among the parties hereto as follows:
1. In General
The Sub-Adviser agrees, as more fully set forth herein, to act as
Sub-Adviser to the Fund with respect to the investment and
reinvestment of the assets of The Catholic Money Market Fund
("Money Market Fund"). The Sub-Adviser agrees to supervise and
arrange the purchase of securities and the sale of securities held in
the Money Market Fund investment portfolio. It is understood that
the Fund may create one or more additional series of shares and
that, if it does so, this Agreement may be amended by the mutual
written consent of the parties to include such additional series under
the terms of this Agreement.
2. Duties and Obligations of the Sub-Adviser with Respect to Investments of
Assets of the Money Market Fund
(a) Subject to the succeeding provisions of this section and subject to
the oversight and review of the Adviser and the direction and control of the
Board of Directors of the Fund, the Sub-Adviser shall:
(i) Determine what securities shall be purchased or sold by the
Money Market Fund;
(ii) Arrange for the purchase and the sale of securities held in the
Money Market Fund; and
(iii) Provide the Adviser and the Directors with such reports as
may reasonably be requested in connection with the discharge of the
foregoing responsibilities and the discharge of the Adviser's
responsibilities under its Investment Advisory Agreement with the
Fund and those of the Distributor under its Distribution Agreement
with the Fund.
(b) Any investment purchases or sales made by the Sub-Adviser under
this section shall at all times conform to, and be in accordance with, any
requirements imposed by: (1) the provisions of the Investment Company
Act of 1940 (the Act) and of any rules or regulations in force thereunder;
and (2) the provisions of the Articles of Incorporation and By-Laws of the
Fund as amended from time to time; (3) any policies and determinations of
the Board of Directors of the Fund including its 2a-7 policy; and (4) the
fundamental investment policies of the Money Market Fund, as reflected in
its Registration Statement under the Act, or as amended by its shareholders;
provided that copies of the items referred to in clauses (2), (3) and (4) shall
have been furnished to the Sub-Adviser.
(c) The Sub-Adviser shall give the Fund the benefit of its best judgment
and effort in rendering services hereunder. In the absence of willful
misfeasance, bad faith, negligence or reckless disregard of its obligations or
duties ("disabling conduct") hereunder on the part of the Sub-Adviser (and
its officers, directors, agents, employees, controlling persons, shareholders
and any other person or entity affiliated with the Sub-Adviser) the Sub-
Adviser shall not be subject to liability to the Fund or to any shareholder of
the Fund for any act or omission in the course of, or connected with,
rendering services hereunder, including without limitation any error of
judgment or mistake of law or for any loss suffered by any of them in
connection with the matters to which this Agreement relates, except to the
extent specified in Section 36(b) of the Act concerning loss resulting from a
breach of fiduciary duty with respect to the receipt of compensation for
services. Except for such disabling conduct, the Fund shall indemnify the
Sub-Adviser (and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the Sub-
Adviser) against any liability arising from the Sub-Adviser's conduct under
this Agreement to the extent permitted by the Fund's Articles of
Incorporation, By-Laws and applicable law. The Adviser shall indemnify
the Sub-Adviser (and its officers, directors, agents, employees, controlling
persons, shareholders and any other person or entity affiliated with the Sub-
Adviser) for any liability arising from the Adviser's willful misfeasance,
bad faith, negligence, breach of its duties hereunder, or violation of
applicable law.
(d) Nothing in this Agreement shall prevent the Sub-Adviser or
any affiliated person (as defined in the Act) of the Sub-Adviser from
acting as investment advisor or manager for any other person, firm
or corporation and shall not in any way limit or restrict the Sub-
Adviser or any such affiliated person from buying, selling or trading
any securities for its or their own accounts or for the accounts of
others for whom it or they may be acting. In addition, the Sub-
Adviser expressly represents that it will undertake no activities that,
in its judgment, will adversely affect the performance of its
obligation to the Fund under this Agreement or under the Act. It is
agreed that the Sub-Adviser shall have no responsibility or liability
for the accuracy or completeness of the Fund's Registration
Statement under the Act and the Securities Act of 1933, except for
information supplied by the Sub-Adviser for inclusion therein. The
Sub-Adviser shall be deemed to be an independent contractor and,
unless otherwise expressly provided or authorized, have no authority
to act for or represent the Fund in any way or otherwise be deemed
an agent of the Fund.
(e) In connection with its duties to arrange for the purchase and
sale of the Money Market Fund's portfolio securities, the Sub-
Adviser shall follow the principles set forth in any investment
advisory agreement in effect from time to time between the Fund
and the Adviser, provided that a copy of any such agreement shall
have been provided to the Sub-Adviser. The Sub-Adviser will
promptly communicate to the Adviser and to the officers and the
Directors of the Fund such information relating to portfolio
transactions as they may reasonably request.
Without limiting the generality of the foregoing, with respect to the
execution of transactions on behalf of the Money Market Fund, and
except as otherwise instructed from time to time by the Board of
Directors of the Fund, the Sub-Adviser shall place, or arrange for the
placement of, all orders for purchases, sales or loans either directly
with the issuer or with a broker-dealer, or other counterparty or
agent selected by the Sub-Adviser.
The Fund hereby authorizes any entity or person associated with the
Sub-Adviser that is a member of a national securities exchange to
effect any transaction on the exchange for the account of a Fund to
the extent permitted by and in accordance with Section 11(a) of the
Securities Exchange Act of 1934 and Rule 11a2-2(T) thereunder.
The Fund hereby consents to the retention by such entity or person
of compensation for such transaction in accordance with Rule 11a2-
2(T)(a)(iv).
(f) The Sub-Adviser shall, where it deems it appropriate, make
recommendations to the Fund as to the manner in which voting
rights, rights to consent to the Fund or Fund Action , and any other
rights pertaining to the Fund shall be exercised; provided that the
Sub-Adviser shall have no obligation nor any authority to execute
any voting proxies or consents on behalf of the Fund, but rather shall
promptly forward to the Fund all proxy and other solicitation
materials that the Sub-Adviser may receive with respect to any such
voting rights or consents.
3. Allocation of Expenses
The Sub-Adviser agrees that it will furnish the Fund, at the Sub-
Adviser's expense, with all office space and facilities, equipment and
clerical personnel necessary for carrying out the Sub-Adviser's
duties under this Agreement. The Sub-Adviser will also pay all
compensation of those of the Fund's officers and employees, if any,
and of those Directors, if any, who in each case are affiliated persons
of the Sub-Adviser. The Sub-Adviser shall not be obligated to pay
any expenses of or for the Fund not expressly assumed by this
Section 3.
4. Certain Records
Any records required to be maintained and preserved pursuant to the
provisions of Rule 31a-1 and Rule 31a-2 under the Act which are
prepared or maintained by the Sub-Adviser on behalf of the Fund are
the property of the Fund and will be surrendered promptly to the
Fund or the Adviser on request.
5. Reference to the Sub-Adviser
Neither the Fund nor the Adviser or any affiliate or agent thereof
shall make reference to or use the name of the Sub-Adviser or any of
its affiliates in any advertising or promotional materials without the
prior approval of the Sub-Adviser, which approval shall not be
unreasonably withheld.
6. Compensation of the Sub-Adviser
The Money Market Fund shall pay management fees as follows:
For its services, the Adviser receives the following annual fee, computed
daily:
If the portfolio is $50 million or less: 0.30%
If the portfolio is over $50 million and less than $100 million: 0.25%
If the portfolio is at least $100 million and less than $200 million: 0.20%
If the portfolio is $200 million or more: 0.15%
The Adviser shall pay to the Sub-Adviser the following annual fees:
If the portfolio is $50 million or less: 0.20%
If the portfolio is over $50 million and less than $100 million: 0.15%
If the portfolio is at least $100 million and less than $200 million: 0.10%
If the portfolio is $200 million or more: 0.075%
Payments shall be made to the Sub-Adviser on the first day of
each month, calculated on the daily average value of the
Fund's assets and accrued on a daily basis.
However, neither the Adviser nor Sub-Adviser shall receive any fees
until the Money Market Fund has $25 million in assets or for the
first six months, whichever comes earlier, and once either has
occurred; the Adviser shall charge at an annual rate of 0.10% and
pay the Sub-Adviser at an annual rate of 0.05% for the next six
months or until the Money Market Fund has $50 million in assets,
whichever comes first. Thereafter the management fee schedule set
forth in this section applies without any waivers.
7. Duration and Termination
(a) This Agreement shall go into effect with respect to the Money
Market Fund upon its effective date. In the event the parties hereto
mutually agree that one or more series of the Fund should be
included as additional "Fund(s)" hereunder, this Agreement shall
become effective with respect to each such additional Fund on the
date specified in a separate amendment. Once effective with respect
to any Fund(s), this Agreement shall, unless terminated as
hereinafter provided, continue in effect for a period of two years
with respect to such Fund, and thereafter from year to year, but only
so long as such continuance is specifically approved at least annually
by a majority of the Fund's Board of Directors, or by the vote of the
holders of a "majority" (as defined in the Act) of the outstanding
voting securities of the relevant Fund(s), and, in either case, a
majority of the Directors who are not parties to this Agreement or
"interested persons" (as defined in the Act) of any such party cast in
person at a meeting called for the purpose of voting on such
approval.
(b) This Agreement may be terminated by the Sub-Adviser in its
entirety or with respect to any one or more specifically identified
Funds at any time without penalty upon giving the Fund and the
Adviser sixty (60) days' written notice (which notice may be waived
by the Fund and the Adviser) and may be terminated by the Fund or
the Adviser in its entirety or with respect to any specifically
identified Fund at any time without penalty upon giving the Sub-
Adviser sixty (60) days' written notice (which notice may be waived
by the Sub-Adviser), provided that such termination by the Fund
shall be directed or approved by the vote of a majority of all of its
Directors in office at the time or by the vote of the holders of a
"majority" (as defined in the Act) of the voting securities of the
Funds with respect to which the Agreement is to be terminated. This
Agreement shall automatically terminate in the event of its
"assignment" (as defined in the Act). This Agreement will also
automatically terminate in the event that the Investment Advisory
Agreement by and between the Fund and the Adviser is terminated
for any reason.
8. Representations and Warranties of Adviser
The Adviser represents and warrants to the Subadviser as follows:
(a) The Adviser is registered as an investment adviser under the
Investment Advisers Act of 1940 (the "Advisers Act");
(b) The Adviser is a corporation duly organized and validly
existing under the laws of the State of Wisconsin with the power to
own and possess its assets and carry on its business as it is now
being conducted;
(c) The execution, delivery and performance by the Adviser of
this Agreement are within and Adviser's powers and have been duly
authorized by all necessary action on the part of its shareholders, and
no action by or in respect of, or filing with, any governmental body,
agency or official is required on the part of the Adviser for the
execution, delivery and performance by the Adviser of this
Agreement, and the execution, delivery and performance by the
Adviser of this Agreement do not contravene or constitute a default
under (i) any provision of applicable law, rule or regulation, (ii) the
Adviser's governing instruments, or (iii) any agreement, judgment,
injunction, order, decree or other instrument binding upon the
Adviser;
(d) The Form ADV of the Adviser previously delivered is a true
and complete copy of the form filed with the Securities and
Exchange Commission and the information contained therein is
accurate and complete in all material respects and does not omit to
state any material fact necessary in order to make the statements
made, in light of the circumstances under which they were made, not
misleading;
(e) The Adviser acknowledges that it received a copy of the
Subadviser's Form ADV at least 48 hours prior to the execution of
this Agreement.
9. Representations and Warranties of Subadviser
The Subadviser represents and warrants to the Adviser and the Fund
as follows:
(a) The Subadviser is registered as an investment adviser under
the Advisers Act;
(b) The Subadviser is a corporation duly organized and validly
existing under the laws of the State of Wisconsin with the power to
own and possess its assets and carry on its business as it is now
being conducted;
(c) The execution, delivery and performance by the Subadviser
of this Agreement are within the Subadviser's powers and have been
duly authorized by all necessary action on the part of its
shareholders, and no action by or in respect of, or filing with, any
governmental body, agency or official is required on the part of the
Subadviser for the execution, delivery and performance by the
Subadviser of this Agreement, and the execution, delivery and
performance by the Subadviser of this Agreement do not contravene
or constitute a default under (i) any provision of applicable law, rule
or regulation, (ii) the Subadviser's governing instruments, or (iii)
any agreement, judgment, injunction, order, decree or other
instrument binding upon the Subadviser;
(d) The Form ADV of the Subadviser [previously delivered]
[attached hereto as Exhibit ?] is a true and complete copy of
the form filed with the Securities and Exchange Commission
and the information contained therein is accurate and
complete in all material respects and does not omit to state
any material fact necessary in order to make the statements
made, in light of the circumstances under which they were
made, not misleading.
10. Survival of Representations and Warranties
All representations and warranties made by the Subadviser and the
Adviser pursuant to Sections 8 and 9 hereof shall survive for the
duration of this Agreement and the parties hereto shall promptly
notify each other in writing upon becoming aware that any of the
foregoing representations and warranties are no longer true.
11. Notice
Any notice that is required to be given by the parties to each other under
the terms of this Agreement shall be in writing, delivered, or mailed
postpaid to the other party, or transmitted by facsimile with
acknowledgment of receipt, to the parties at the following addresses or
facsimile numbers, which may from time to time be changed by the parties
by notice to the other party:
(a)If to the Adviser:
Catholic Financial Services Corporation
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Attention:------------------------------------------
Facsimile:------------------------------------------
(b)If to the Fund
The Catholic Funds, Inc.
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Attention:------------------------------------------
Facsimile:------------------------------------------
(c)If to the Subadviser:
Strong Capital Management, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxxxxxx Xxxxx, Xxxxxxxxx, 00000
Attention: General Counsel
Facsimile: (000) 000-0000
12. Governing Law; Jurisdiction
This Agreement shall be governed by and construed in accordance
with the internal laws of the State of Wisconsin.
13. Counterparts
This Agreement may be executed in one or more
counterparts, all of which shall together constitute one and the
same instrument.
14. Severability
If any provision of this Agreement shall be held or made invalid by a
court decision or applicable law, the remainder of the Agreement
shall not be affected adversely and shall remain in full force and
effect.
15. Entire Agreement
This Agreement contains the entire understanding and agreement of
the parties with respect to the Fund.
IN WITNESS WHEREOF, the parties hereto have caused the foregoing
instrument to be executed by their duly authorized officers and their seals
to be hereto affixed, all as of the day and year first above written.
THE CATHOLIC FUNDS, INC.
By: Xxxxx X. Xxxxx
Its: President
CATHOLIC FINANCIAL SERVICES CORPORATION
By: Xxxxx X. Xxxxx
Its: President
STRONG CAPITAL MANAGEMENT, INC.
By:Xxxxx Xxxxxxxxxxx
Its: Vice President
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