EXHIBIT (d)(3)
SUB-ADVISORY AGREEMENT WITH
XXXX INVESTMENT ADVISORS, INC.
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 17th day of February, 1999, by and among THE
CATHOLIC ALLIANCE FUNDS, INC. a Maryland corporation (the "Fund Company"),
CATHOLIC FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser"
and "Distributor"), and XXXX INVESTMENT ADVISORS, INC., a Kentucky corporation
(the "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 Company with respect
to the investment and reinvestment of the assets of the Equity
Income Fund and of any other series of common stock of the
Fund Company as the parties may mutually agree and specify
from time to time on EXHIBIT A hereto. The Equity Income Fund
and each other such series is referred to herein as a "Fund".
The Sub-Adviser agrees to supervise and arrange the purchase
of securities and the sale of securities held in the
investment portfolios of each Fund specified on EXHIBIT A. It
is understood that the Fund Company 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 FUNDS
(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 Company, the Sub-Adviser shall:
(i) Determine what securities shall be
purchased or sold by each Fund specified on EXHIBIT
A;
(ii) Arrange for the purchase and the sale
of securities held in each Fund specified on EXHIBIT
A; 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 Company and those of the
Distributor under its Distribution Agreement with the
Fund Company.
(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 Company as amended from time to time; (3)
any policies and determinations of the Board of Directors of
the Fund Company; and (4) the fundamental investment policies
of the relevant Fund, as reflected in the Fund Company's
registration statement under the Act, or as amended by the
shareholders of the Fund Company; 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 Company 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 Company or to any shareholder
of the Fund Company 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 Company 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 Company's Articles of
Incorporation, By-Laws and 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; except, however,
the Sub-Adviser expressly represents that while this Agreement
is in effect it will not undertake to manage the assets of any
other mutual fund sponsored by a Catholic organization,
without the prior written consent of the Fund Company. In
addition, the Sub-Adviser expressly represents that it will
undertake no activities which, in its judgment, will adversely
affect the performance of its obligation to the Fund Company
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 Company'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,
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have no authority to act for or represent the Fund Company in
any way or otherwise be deemed an agent of the Fund Company.
(e) In connection with its duties to arrange for the
purchase and sale of each 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 Company 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
Company 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 a
Fund, and except as otherwise instructed from time to time by
the Board of Directors of the Fund Company, 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. In connection with the selection of all
such parties for the placement of all such orders, the
Sub-Adviser shall attempt to obtain most favorable execution
and price, but may nevertheless in its sole discretion, as a
secondary factor, purchase and sell portfolio securities from
and to broker-dealers who provide research and analysis to the
Sub-Adviser which the Sub-Adviser lawfully and appropriately
may use in its capacity as Sub-Adviser, whether or not such
research and analysis also may be useful to the Sub-Adviser in
connection with its services to other clients. In recognition
of such research and analytical services or brokerage services
provided by a broker or dealer, the Sub-Adviser is authorized
to pay such broker or dealer a commission or spread in excess
of that which might be charged by another broker or dealer for
the same transaction if the Sub-Adviser determines in good
faith that the commission or spread is reasonable in relation
to the value of the services so provided.
The Fund Company 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 accordance with Section 11(a) of the SECURITIES EXCHANGE
ACT OF 1934 and Rule 11a2-2(T) thereunder. The Fund Company
hereby consents to the retention by such entity or person of
compensation for such transaction in accordance with Rule
11a2- 2(T)(a)(iv).
The Sub-Adviser may, where it deems it to be
advisable, aggregate orders for its other customers together
with any securities of the same type to be sold or purchased
for one or more Funds, and/or other clients of the Sub-Adviser
in order to obtain best execution or lower brokerage
commissions. In such event, the Sub-Adviser shall allocate the
shares so purchased or sold, as well as the expense incurred
in the transaction, in a manner it considers to be equitable
and fair, and consistent with its fiduciary obligations to the
Fund Company, the Funds and the Sub-Adviser's other customers.
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(f) The Sub-Adviser shall, where it deems it
appropriate, make recommendations to the Fund Company as to
the manner in which voting rights, rights to consent to the
Fund Company or Fund Action, and any other rights pertaining
to the Fund Company or any of the Funds 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 Company or any Fund, but rather shall promptly
forward to the Fund Company all proxy and other solicitation
materials that the Sub-Adviser may receive with respect to any
such voting rights or consents.
(g) The Sub-Adviser shall be responsible for
preparing and filing with the SEC all reports on Schedule 13F
required under Section 13(f) of the Securities Exchange Act of
1934 in connection with equity positions held by each Fund.
3. ALLOCATION OF EXPENSES
The Sub-Adviser agrees that it will furnish the Fund
Company, 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 Company's officers and employees, if any, and of those
Directors, if any, who in each case are affiliated persons of
the Sub-Adviser.
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 company are the property of the Fund
Company and will be surrendered promptly to the Fund Company
or the Adviser on request.
5. REFERENCE TO THE SUB-ADVISER
Neither the Fund Company 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 Adviser agrees to pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation for all
services rendered by the Sub-Adviser as such, a management fee
as specified on EXHIBIT A.
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7. DURATION AND TERMINATION
(a) This Agreement shall go into effect with respect
to the Equity Income Fund on the date specified on EXHIBIT A
attached hereto. In the event the parties hereto mutually
agree that one or more series of the Fund Company should be
included as additional "Fund(s)" hereunder, this Agreement
shall become effective with respect to each such additional
Fund on the date specified on EXHIBIT A hereto. 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 Company'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 Company and the Adviser sixty (60) days'
written notice (which notice may be waived by the Fund Company
and the Adviser) and may be terminated by the Fund Company or
the Adviser in its entirety or with respect to any one or more
specifically identified Funds 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 Company 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 each Fund 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 Company and the
Adviser is terminated for any reason.
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 ALLIANCE FUNDS, INC. CATHOLIC FINANCIAL SERVICES
CORPORATION
By: /s/ Xxxxx X. Xxxxx By: /s/ Xxxxx X. Xxxxx
------------------- -------------------
Xxxxx X. Xxxxx, President Xxxxx X. Xxxxx, President
XXXX INVESTMENT ADVISORS, INC.
By: /s/ Xxxxxx X. Xxxxxxxx
-----------------------
Xxxxxx X. Xxxxxxxx, President
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EXHIBIT A
THE CATHOLIC ALLIANCE FUNDS, INC.
XXXX INVESTMENT ADVISORS, INC.
SUB-ADVISORY AGREEMENT
1. Equity Income Fund
a. Effective Date: Effective date of The Catholic Alliance Funds,
Inc.'s SEC Registration Statement on Form N-1A.
b. Management Fee: computed daily and paid monthly at the annual
rate of:
0.38 of 1% on the first $10 million;
0.35 of 1% on the next $40 million; and
0.30 of 1% on average daily net assets over $50 million
