EXHIBIT (D)(5)
SUB-ADVISORY AGREEMENT
AGREEMENT made as of the 1st day of December, 2005, by and among THE
CATHOLIC FUNDS, INC. a Maryland corporation (the "Fund Company"), CATHOLIC
FINANCIAL SERVICES CORPORATION, a Wisconsin corporation (the "Adviser" and
"Distributor"), and XXXXXXX CAPITAL MANAGEMENT, LLC, a Wisconsin limited
liability company (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
Catholic Equity Fund and, subject to the mutual agreement of
the parties, of any other series of mutual fund of the Fund
Company presently designated or designated in the future. The
parties' agreement to appoint the Sub-Adviser as sub-adviser
for any such additional series shall be reflected by modifying
Exhibit A attached to this Agreement accordingly. The Catholic
Equity Fund and any such additional series are 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 portfolio of each Fund.
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
Bylaws 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) along
with any amendments thereto, 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, reckless
disregard of its obligations or duties hereunder or
violation of applicable law ("disabling conduct") on
the part of the Sub-Adviser (or any of its officers,
directors, general partner(s), agents or employees
(each a "Sub-Adviser Affiliate")), neither the
Sub-Adviser nor any Sub-Adviser Affiliate shall 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 actions performed
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 each Sub-Adviser Affiliate against
any liability arising from their conduct under this
Agreement to the extent permitted by the Fund
Company's Articles of Incorporation, Bylaws and
applicable law. This Section 2(c) shall survive the
termination of this Agreement.
(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. The
Sub-Adviser will, however, promptly notify the
Adviser when the Sub-Adviser undertakes to manage the
assets of any other mutual fund sponsored by a
Catholic organization. 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,
have no authority to act for or represent the Fund
Company in any way or otherwise be deemed an agent of
the Fund Company.
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(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 and any amendment thereto 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).
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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.
(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 for which the
Sub-Adviser has investment or voting discretion.
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.
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.
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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 written
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.
7. DURATION AND TERMINATION
(a) This Agreement shall go into effect with
respect to The Catholic Equity 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(s) on the date(s) specified on Exhibit A hereto.
Once effective with respect to any Fund, 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, 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.
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8. NOTIFICATION OF OWNERSHIP CHANGE
For so long as the Sub-Adviser is organized as a
limited liability company, it will notify the Adviser of any
change in its ownership within a reasonable time of such
change.
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. CATHOLIC FINANCIAL SERVICES CORPORATION
By: /s/ Xxxxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxx
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Xxxxxxxx X. Xxxxxx, President Xxxxx X. Xxxxx, President
XXXXXXX CAPITAL MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxxxx
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Signature
Name: Xxxxx X. Xxxxxxxx
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(Please print or type)
Title: President
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EXHIBIT A
THE CATHOLIC FUNDS, INC.
XXXXXXX CAPITAL MANAGEMENT, LLC
SUB-ADVISORY AGREEMENT
1. Catholic Equity Fund:
a. Effective Date: Effective date of Post-Effective Amendment No.
10 to The Catholic Funds, Inc.'s SEC Registration Statement on
Form N-1A, which Amendment was filed with the SEC on December
1, 2005.
b. Management Fee: computed daily and paid monthly at the annual
rate of 20 basis points (0.20%) on the first $250 million of
the Fund's average daily net assets, 18 basis points (0.18%)
on the Fund's average daily net assets in excess of $250
million but below $500 million, and 15 basis points (0.15%) of
the Fund's average daily net assets in excess of $500 million.
A-1
