EXHIBIT (E)(3)
[CATHOLIC FINANCIAL SERVICES CORPORATION LETTERHEAD]
December 1, 2005
Xx. Xxxxx Xxxxxxxx
X.X. Xxxxxxx and Company
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
Re: LETTER AGREEMENT FOR CONTINUOUS OFFERING OF SHARES OF THE
CATHOLIC FUNDS, INC. BY SELECTED DEALERS
Dear Sirs:
Catholic Financial Services Corporation, 0000 Xxxx Xxxxx Xxxxxx,
Xxxxxxxxx, Xxxxxxxxx 00000, (the "Company") desires to enter into an agreement
with you for making available to your customers and reselling to us shares of
each series of The Catholic Funds, Inc. ("CF") (each such series hereinafter
referred to as a "Fund") and whose shares are offered to the public at an
offering price which may or may not include a front-end sales charge or a
contingent deferred sales charge (hereinafter referred to as "Shares"). Upon
acceptance of this Agreement by us, you understand that you may offer Shares and
act as authorized agent for your customers' purchases of Shares from us,
subject, however, to all of the following terms and conditions, and to our
right, without notice, to suspend or terminate the sale of the Shares of any one
or more of the Funds:
Shares will be made available at the current offering price, subject to
acceptance by us at our office in Milwaukee, Wisconsin and delivery to the
transfer agent, all as defined in the prospectus. All purchase orders,
redemption orders and applications of your customers submitted by you are
subject to acceptance or rejection in our sole discretion and, if accepted, each
purchase will be deemed to have been consummated in Milwaukee, Wisconsin.
You agree to abide by the provisions of the Investment Company Act of
1940, as amended (the "1940 Act"), the Securities Act of 1933, as amended, and
the Securities Exchange Act of 1934, as amended, and all applicable rules and
regulations of the Securities and Exchange Commission ("SEC") and the NASD,
including without limitation, the NASD Rules of Fair Practice, whether or not
you are a broker-dealer subject to the jurisdiction of the SEC and NASD. Without
limiting the generality of the foregoing, you agree that you will not withhold
placing customers' orders for Shares so as to profit yourself as a result of
such withholding. You further agree to comply with all applicable State and
Federal laws and the rules and regulations of authorized regulatory agencies.
You agree that you will not offer Shares in any state or other jurisdiction
unless we have advised you in advance that such sale is exempt from the
qualification requirements of such state's securities laws.
X.X. Xxxxxxx and Company
December 1, 2005
Page 2
Without limiting the generality of the preceding paragraph, we and you
each agree to abide by the provisions of the Financial Services Modernization
Act of 1999 (Xxxxx-Xxxxx-Xxxxxx Act), including regulations of the SEC and U.S.
Department of Treasury adopted thereunder, and with any and all other applicable
state privacy laws, rules and regulations, and to restrict access to nonpublic
personal information of your customers and of shareholders of the Fund to those
of our respective employees who have a need to know the information to fulfill
the respective obligations of the parties to this agreement and otherwise to
fulfill the intents and purposes of this agreement. We and you each agree to
implement and maintain appropriate reasonable measures that comply with federal
and state regulations designed to safeguard nonpublic personal information of
your customers and shareholders of the Funds and otherwise to ensure their
security and confidentiality of that information.
You acknowledge that you have received and reviewed copies of CF's
policies prohibiting late trading and market timing, and you have reviewed CF's
prospectus disclosure with respect to those trading practices. You represent
that you have systems and procedures in place adequate to monitor for trading
activity that would be inconsistent with those policies, and you covenant that
you will cooperate with CF and its transfer agent to monitor compliance with
those policies and to enforce them in the manner described in the policies.
We and you further agree and acknowledge that each of us is a financial
institution subject to the USA PATRIOT Act of 2001 and the Bank Secrecy Act
(collectively, the "AML Laws"), which require, among other things, that
financial institutions adopt compliance programs to guard against money
laundering. We and you each represent and warrant to the other that it is in
compliance with and will continue to comply with the AML Laws and applicable
regulations in all relevant respects. We and you each further agree to take such
further steps, and cooperate with one another as reasonably may be necessary, to
facilitate compliance with the AML Laws, including but not limited to the
provision of copies of our respective written procedures, policies and controls
related thereto ("AML Operations"). You represent that you will grant to the
Company, the Company's anti-money laundering compliance officer and regulatory
agencies, reasonable access to copies of your AML Operations, books and records
pertaining to the Company only. It is expressly understood and agreed that the
Company and the Company's compliance officer shall have no access to any of your
AML Operations, books or records pertaining to other of your clients.
X.X. Xxxxxxx and Company
December 1, 2005
Page 3
You will make available to your customers Shares of a Fund only in
accordance with the terms and conditions of the then current Prospectus and
Statement of Additional Information (collectively referred to as the
"Prospectus") relating to that Fund, and you will make no representations about
such Shares not included in said Prospectus or in any authorized supplemental
material supplied or authorized by us. You will use reasonable efforts in the
offer of Shares and agree to be responsible for the proper instruction and
training of all brokerage personnel in this area employed by you, in order that
the Shares will be offered in accordance with the terms and conditions of this
Agreement and all applicable laws, rules and regulations. You agree to hold us
harmless and indemnify us, CF and our and their respective officers, directors
and employees in the event that you or any of your current or former employees
or agents should violate any law, rule or regulation, or any provision of this
Agreement, which violation may result in any loss or liability to us, CF, any
Fund or any of our affiliates or affiliates of CF. If, by an investor by reason
of any such violation, we are required to refund amounts paid by the investor,
you agree to return to us any agency commissions previously paid by us to you
with respect to the transaction for which the refund is made.
Furthermore, you agree to indemnify us, our affiliates and CF against
any and all claims, demands, controversies, actions, losses, damages,
liabilities, expenses, arbitrations, complaints or investigations, including
without limitation reasonable attorneys' fees and court costs that are the
result of or arise directly or indirectly, in whole or in part, from us, our
affiliates or CF acting upon instructions for the purchase, exchange or
redemption of uncertificated book shares received through our manual or
automated phone system or the Fund/SERV program of National Securities Clearing
Corporation; provided such loss, liability or damages are not the result of our
breach of any of the provisions of this Agreement or the negligence,
recklessness or intentional misconduct of us, our affiliates or CF.
The Company, in turn, agrees to indemnify you, and your affiliates
against any and all claims, demands, controversies, actions, losses, damages,
liabilities, expenses, arbitrations, complaints or investigations, including
without limitation reasonable attorneys' fees and court costs, which you or any
of your affiliates may become subject to and which arise under or out of this
Agreement, provided such loss, liability or damage is not the result of a breach
by you of any of the provisions of this Agreement or your own negligence,
recklessness or intentional misconduct.
All expenses which you incur in connection with your activities under
this Agreement shall be borne by you. In connection with all purchase or
redemption orders, you are acting as agent for your customer and each
transaction is for the account of your customer and not for your own account.
Termination or cancellation of this Agreement shall not relieve you from the
requirements of this paragraph as to transactions or occurrences arising prior
to such termination.
X.X. Xxxxxxx and Company
December 1, 2005
Page 4
You will be entitled to agency commissions from the Company on the sale
of Shares as described in the current Prospectus for the relevant Fund at the
time of the sale. The Company reserves the right to increase, decrease or
discontinue payment of agency commissions for sale of Shares at any time in its
sole discretion upon written notice to you and any orders placed after the
effective date of such change will be subject to the rate(s) of agency
commissions in effect at the time of receipt of the payment by us. No
commissions shall be paid on any transactions in states where the Fund is not
registered or where the Dealer and/or the sales representative are not properly
licensed. The Company will keep you apprised in writing of the states in which
each Fund's Shares are qualified for sale from time to time.
You also agree to assist the Company with the development and
implementation of a marketing program and sales network for sales of Shares,
said services to include the following:
o Collaborate and consult with the Company in its
efforts to develop a selling dealer network and
assist the Company to obtain selling agreements from
appropriate members of your wholesale network with
whom the Company presently has no selling agreement.
o Promoting sales of Shares through: (i) financial
intermediaries in your wholesaling network who
execute selling agreements with the Company; (ii)
your selling staff that specializes in sales to
institutional clients; and (iii) Xxxxxxx Consulting
Services.
o Assist the Company with the development of collateral
sales materials.
o Provide consulting services to the Company with
respect to marketing strategies and product
positioning.
As consideration for providing these services, and in addition to the
agency commissions described in the preceding paragraph, the Company agrees to
pay to you the special selling compensation for sales of shares of the Catholic
Equity Fund as described on Exhibit A attached hereto.
The parties agree and understand that the foregoing services to be
provided by you do not include, and the Company shall remain responsible for:
(i) printing and fulfillment arrangements and costs of all collateral sales
materials; (ii) all initiatives with respect to the advocacy of Catholic values
undertaken on behalf of the Fund, including the preparation and distribution of
newsletters addressing these topics; (iii) the development, preparation and
distribution of a newsletter to the Company's own registered representatives;
and (iv) regulatory compliance of all collateral sales materials, including
those prepared in response to special requests from selling dealers.
X.X. Xxxxxxx and Company
December 1, 2005
Page 5
Where a front-end sales charge applies to the purchase of a Fund's
shares, an investor will be entitled to a reduction in the sales charge on
purchases made under a letter of intent in accordance with the current
Prospectus of the relevant Fund. In such a case, your agency commission will be
paid based upon the reduced sales charge, but adjustment to a higher agency
commission will thereafter be made to reflect actual purchases by the investor
if he should fail to fulfill his letter of intent.
Except for sales pursuant to plans established by the Funds with an
agent and providing for the periodic investment of new monies, orders will not
be accepted for less than the minimum number of shares or dollar amounts set
forth in the then current Prospectus of the Fund.
Payments for purchases of Shares made by telephone or wire order
(including purchase orders received through our manual or automated phone
system, or via the Fund/SERV program of National Securities Clearing
Corporation), and all necessary account information required by us to establish
an account or to settle a redemption order, including, without limitation, the
tax identification number of the purchaser, shall be provided to us and received
by us within three business days after our acceptance of your order or such
shorter time as may be required by law. If such payment and other settlement
information are not timely received by us, you understand that we reserve the
right, without notice, to cancel the purchase or redemption order, or, at our
option in the case of a purchase order, to sell the Shares ordered by you back
to the relevant Fund, and in either case you may be held responsible for any
loss, including loss of profit, suffered by us or any relevant Fund resulting
from your failure to make the aforesaid timely payment or settlement. If sales
of any Fund's Shares are contingent upon the Fund's receipt of Federal Funds in
payment for such Shares, you will forward promptly to us any purchase orders
and/or payments received by you for such Shares from your customers. With
respect to purchase orders of uncertificated book shares placed via Fund/SERV,
you shall retain in your files all documents required to establish an account or
to settle a redemption order. You will provide us with the copies of such
documents at our request.
You agree that you will act as agent with respect to Shares only if
they are purchased from us or repurchased by us from your customers. If Shares
are purchased from us by your customers, you warrant that such purchases are
only for investment. If Shares are purchased by you from your customers for
redemption to us, you agree that such customers will be paid not less than the
applicable redemption or repurchase price then quoted by the Fund.
We may consider any order you place for Fund Shares to be the total
holding of Shares by the investor, and we may assume that the investor is not
entitled to any reduction in sales price beyond that accorded to the amount of
that purchase order as determined by the schedule set forth in the then current
Prospectus for the relevant Fund(s), unless you advise us otherwise when you
place the order.
X.X. Xxxxxxx and Company
December 1, 2005
Page 6
You may place redemption orders with us for Shares owned by your
customers, but only in accordance with the terms of the current Prospectus. You
understand and agree that by placing a redemption order with us by wire or
telephone (including redemption orders for uncertificated book shares placed via
our manual or automated phone system or via the Fund/SERV program of National
Securities Clearing Corporation), you represent to us that a request for the
redemption of the Shares covered by the redemption order has been delivered to
you by the registered owner(s) of such Shares, and that such request has been
executed in the manner and with the signature(s) of such registered owner(s)
guaranteed as required by the then current Prospectus of the applicable Fund(s).
Such redemption orders shall be subject to the following additional conditions:
(a) You shall furnish us with the exact registration and
account number to be redeemed at the time you place a redemption order by wire
or telephone. Other than for redemption orders of uncertificated book shares
placed via Fund/SERV, you shall tender to us, within three business days of your
placing such redemption order: (i) a stock power or letter, duly signed by the
registered owner(s) of the Shares which are the subject of the order, duly
guaranteed, (ii) any Share certificates required for such redemption, and (iii)
any additional documents which may be required by the applicable Fund or its
transfer agent, in accordance with the terms of the then current Prospectus of
the applicable Fund and the policies of the transfer agent. With respect to
redemption orders of uncertificated book shares placed via Fund/SERV, you shall
retain in your files all documents required by us to effect such transaction.
You will provide us with the original of such documents at our request.
(b) The redemption price will be the next net asset value per
share of the Shares computed after our receipt, prior to the close of the New
York Stock Exchange ("NYSE"), of an order placed by you to redeem such Shares,
except that orders placed by you after the close of the NYSE on a business day
will be based on the Fund's net asset value per share determined that day, but
only if such orders were received by you from your customer prior to the close
of business of the NYSE that day and if you placed your redemption order with us
prior to our normal close of business that day.
(c) In connection with a redemption order you have placed, if
you fail to make delivery of all required certificates and documents in a timely
manner, as stated above (other than for redemption orders placed via Fund/SERV),
or if the registered owner(s) of the Shares subject to the redemption order
redeems such Shares prior to your settlement of the order, we have the right to
cancel your redemption order. If any cancellation of a redemption order or if
any error in the timing of the acceptance of a redemption order placed by you
shall result in a loss to us or the applicable Fund, you shall promptly
reimburse us for such loss.
X.X. Xxxxxxx and Company
December 1, 2005
Page 7
If any Shares sold to your customers under the terms of this Agreement
are redeemed by any of the Funds (including without limitation redemptions
resulting from an exchange for Shares of another Fund) or are repurchased by us
as agent for the Fund or are tendered to a Fund for redemption within seven
business days after our confirmation to your customers of your original purchase
order for such Shares, you shall promptly repay us the full amount of the agency
commission (including any supplemental commission) allowed to you on the
original sale, provided we notify you of such repurchase or redemption.
Termination, amendment or cancellation of this Agreement shall not relieve you
from the requirements of this paragraph.
You will comply with, and conform your practices to, any and all
written compliance standards and policies and procedures that we may from time
to time provide to you. You understand and agree that we are in no way
responsible for the manner of your performance of, or for any of your acts or
omissions in connection with, the services you provide under this Agreement. In
no transaction shall you have any authority whatsoever to act as agent of a
Fund, of CF, of us or of any other Selected Dealer, and nothing in this
Agreement shall constitute either of us the agent of the other or shall
constitute you, on the one hand, and CF or any of the Funds on the other hand,
as the agent of the other. Except as otherwise indicated herein, all
transactions in Shares between you and us are as principal, each for its own
account.
Any notice to you shall be duly given if mailed or telegraphed to you
at your address as registered from time to time with the NASD. Any notice to the
Company shall be sent to 0000 Xxxx Xxxxx Xxxxxx, Xxxxxxxxx, Xxxxxxxxx 00000,
Attention: Xxxxxx X. Xxxxxxxx, Director of Mutual Fund Operations.
You may terminate this Agreement by written notice to us, which
termination shall become effective ten days after the date of mailing such
notice to us. You agree that we have and reserve the right, in our sole
discretion without notice to you, to suspend sales of Shares of any of the
Funds, at any time, or to withdraw entirely the offering of Shares of any of the
Funds (or any particular class of Shares of one or more Funds), at any time, or,
in our sole discretion, to modify, amend or cancel this Agreement upon written
notice to you of such modification, amendment or cancellation, which shall be
effective on the date stated in such notice. Without limiting the foregoing: (a)
we may terminate this Agreement if you violate any of the provisions of this
Agreement, said termination to become effective on the date we mail such notice
to you; (b) any provision hereof to the contrary notwithstanding, the
appointment of a trustee for all or substantially all of your business assets,
or your violation of applicable state or Federal laws or rules and regulations
of authorized regulatory agencies will terminate this Agreement effective upon
the date we mail notice to you of such termination; and (c) this Agreement shall
terminate automatically and without notice upon your expulsion or suspension by
the NASD. Our failure to terminate this Agreement for a particular cause shall
not constitute a waiver of our right to terminate this Agreement at a later date
for the same or any other cause. All notices hereunder shall be to the
respective parties at the addresses listed hereon, unless such address is
changed by written notice sent to the last address of the other party provided
under this Agreement.
X.X. Xxxxxxx and Company
December 1, 2005
Page 8
This Agreement shall become effective as of the date when
Post-Effective Amendment No. 10 to CF's Registration Statement on Form N-1A
becomes effective with the SEC. This Agreement and all the rights and
obligations of the parties hereunder shall be governed by and construed under
the laws of the State of Wisconsin applicable to agreements to be performed in
Wisconsin, without giving effect to choice of law rules. This Agreement is not
assignable or transferable, except that we may without notice or consent from
you, assign or transfer this Agreement to any successor firm or corporation
which becomes the Distributor or Sub-Distributor of Shares of the Funds or
assign any of our duties under this Agreement to any entity controlled by or
controlling the Company or under common control with the Company.
Sincerely,
/s/ Xxxxxx X. Xxxxxxxx
----------------------
Xxxxxx X. Xxxxxxxx
Director of Mutual Fund Operations
X.X. XXXXXXX AND COMPANY
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxx 0000
Xxxxxxxxx, Xxxxxxxxx 00000
/s/ Xxxxx X. Xxxxxxxx
----------------------------------------
Signature
Xxxxx X. Xxxxxxxx
----------------------------------------
Name (please print)
Senior Managing Director
----------------------------------------
Title
EXHIBIT A
SELLING COMPENSATION
CATHOLIC EQUITY FUND
In addition to the standard agency commissions and other selling
compensation payable by Catholic Financial Services Corporation ("CFSC") to
selected dealers as described in the current Prospectus and Statement of
Additional Information of the Catholic Equity Fund from time to time, CFSC shall
pay to X.X. Xxxxxxx and Company ("X.X. Xxxxxxx"), out of its own funds, a
finder's fee in connection with the sale of shares of the Catholic Equity Fund
effected by or through X.X. Xxxxxxx pursuant to this Agreement, excluding shares
acquired by investors through the reinvestment of dividend or capital gains
distributions. The finder's fee shall be payable by CFSC to X.X. Xxxxxxx at the
times that CFSC pays to X.X. Xxxxxxx the standard agency commissions (each such
date a "Payment Date"). The finder's fee shall be at the following rates:
Class A Shares - One quarter of one percent (0.25%) of the
net amount invested by the investor
Class D Shares - One quarter of one percent (0.25%) of the
net amount invested by the investor
Class I Shares - Fifteen Hundredths of one percent (0.15%)
of the net amount invested by the investor from $2.0
million up to and including $5.0 million, and one
tenth of one percent (0.10%) of the net amount
invested in excess of $5.0 million
This finder's fee shall be refunded by X.X. Xxxxxxx to CFSC with
respect to purchase of Class A Shares in amounts greater than $1.0 million if
the investor redeems the subject shares within 12 months of purchase. Any such
refund shall be paid by X.X. Xxxxxxx to CFSC on the next Payment Date following
the date of redemption. For any Payment Date, CFSC and X.X. Xxxxxxx may net
CFSC's obligation to pay any standard agency commissions and finder's fees to
X.X. Xxxxxxx against X.X. Xxxxxxx'x obligation to make any refund payment to
CFSC, in which case the appropriate party shall pay the net amount owing to the
other party on the relevant Payment Date.
A-1
