THE CATHOLIC ALLIANCE FUNDS, INC.
INVESTMENT ADVISORY AGREEMENT
This Agreement is made this ___ day of __________, 1999, by and between The
Catholic Alliance Funds, Inc. ("CAF"), a Maryland corporation registered under
the Investment Company Act of 1940 ("1940 Act") as an open-end diversified
management investment company, and Catholic Financial Services Corporation
("Manager"), a Wisconsin corporation registered under the Investment Advisers
Act of 1940 as an investment adviser.
1. APPOINTMENT. CAF hereby appoints Manager to furnish investment
advisory and portfolio management services with respect to the portion
of its assets represented by the shares of common stock issued in each
series listed in SCHEDULE A hereto, as such schedule may be amended
from time to time (each such series hereinafter referred to as a
"Fund"). Manager accepts such appointment and agrees to perform the
services described herein. Manager shall use its best efforts and
judgment in rendering the advice and performing the services
contemplated by this Agreement.
2. INVESTMENT MANAGEMENT SERVICES. Manager shall manage the investment
operations of CAF and each Fund, subject to the terms of this
Agreement and to the supervision and control of CAF's Board of
Directors ("Directors"). Manager agrees to perform, or arrange for the
performance of, the following services with respect to each Fund:
(a) to obtain and evaluate such information relating to economies,
industries, businesses, securities and commodities markets, and
individual securities, commodities and indices as it may deem
necessary or useful in discharging its responsibilities
hereunder;
(b) to formulate and maintain a continuing investment program in a
manner consistent with and subject to (i) CAF's articles of
incorporation and bylaws; (ii) the Fund's investment objectives,
policies, and restrictions as set forth in written documents
furnished by CAF to Manager; (iii) all securities, commodities,
and tax laws and regulations applicable to the Fund and CAF; and
(iv) any other written limits or directions furnished by the
Directors to Manager;
(c) unless otherwise directed by the Directors, to determine from
time to time, securities, commodities, interests, or other
investments to be purchased, sold, retained, or lent by the Fund,
and to implement those decisions, including the selection of
entities with or through which such purchases, sales, or loans
are to be effected;
(d) to use reasonable efforts to manage the Fund so that it will
qualify as a regulated investment company under subchapter M of
the Internal Revenue Code of 1986, as amended;
(e) to make recommendations as to the manner in which voting rights,
rights to consent to CAF or Fund action, and any other rights
pertaining to CAF or the Fund shall be exercised; provided the
Manager shall have no authority or responsibility to execute any
voting proxies or consents on behalf of CAF or any Fund, but
rather shall promptly forward to CAF all proxy and other
solicitation materials it receives with respect to any such
voting rights or consents;
(f) to make available to CAF promptly upon request all of the Fund's
records and ledgers, and any reports or information reasonably
requested by CAF; and
(g) to the extent required by law, to furnish to regulatory
authorities any information or reports relating to the services
provided pursuant this Agreement.
Except as otherwise instructed from time to time by the Directors,
with respect to execution of transactions for CAF on behalf of a Fund,
Manager 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 Manager. In
connection with the selection of all such parties for the placement of
all such orders, Manager 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 Manager which
Manager may lawfully and appropriately use in its investment
management and advisory capacities, whether or not such research and
analysis may also be useful to Manager in connection with its services
to other clients. In recognition of such services or brokerage
services provided by a broker or dealer, Manager is hereby 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 Manager determines in good faith that the commission or
spread is reasonable in relation to the value of the services so
provided.
CAF hereby authorizes any entity or person associated with Manager
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. CAF hereby
consents to the retention by such entity or person of compensation for
such transaction in accordance with Rule 11a2-2(T)(a)(iv).
Manager may, where it deems to be advisable, aggregate orders for its
other customers together with any securities of the same type to be
sold or purchased for CAF, one or more Funds, and/or other clients of
Manager in order to obtain best execution or lower brokerage
commissions. In such event, Manager 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 CAF, the Funds, and Manager's other
customers.
Manager shall for all purposes be deemed to be an independent
contractor and not an agent of CAF and shall, unless otherwise
expressly provided or authorized, have no authority to act for or
represent CAF in any way.
3. ADMINISTRATIVE SERVICES. Manager shall supervise the business and
affairs of CAF and each Fund, and shall provide such services and
facilities as may be required for effective administration of CAF and
Funds as are not provided by employees or other agents engaged by CAF;
provided that Manager shall not have any obligation to provide under
this Agreement any such services which are the subject of a separate
agreement or arrangement between CAF and Manager, any affiliate of
Manager, or any third-party administrator.
4. USE OF AFFILIATED COMPANIES AND SUBCONTRACTORS. In connection with
the services to be provided by Manager under this Agreement, Manager
may, to the extent it deems appropriate, and subject to compliance
with the requirements of applicable laws and regulations and upon
receipt of written approval of the Directors, make use of (i) its
affiliated companies, if any, and their directors, trustees, officers,
and employees and (ii) subcontractors selected by Manager, provided
that Manager shall supervise and remain fully responsible for the
services of all such third parties in accordance with and to the
extent provided by this Agreement. All costs and expenses associated
with services provided by any such third parties shall be borne by
Manager or such parties.
5. EXPENSES BORNE BY CAF. Except to the extent expressly assumed by
Manager herein or under a separate agreement between CAF and Manager
and except to the extent required by law to be paid by Manager,
Manager shall not be obligated to pay any costs or expense incidental
to the organization, operations, or business of CAF. Without
limitation, such costs and expense shall include, but not be limited
to:
(a) all charges of depositories, custodians, and other agencies for
the safekeeping and servicing of its cash, securities, and other
property;
(b) all expenses of maintaining and servicing shareholder accounts,
including all charges for transfer, shareholder recordkeeping,
dividend disbursing, redemption, and other agents for the benefit
of the Funds (including, without limitation, fund accounting and
administration agents);
(c) all charges for equipment or services used for obtaining price
quotations or for communication between Manager and CAF and the
custodian, transfer agent, or any other agent selected by CAF;
(d) all charges for administrative and accounting services provided
to CAF by Manager, or any other provider of such services;
(e) all charges for services of CAF's independent auditors and for
services to CAF by legal counsel;
(f) all compensation of Directors, other than those affiliated with
Manager, all expenses incurred in connection with their services
to CAF, and all expenses of meetings of the Directors or
committees thereof;
(g) all expenses incidental to holding meetings of shareholders of
CAF ("Shareholders"), including printing and supplying to each
record-date Shareholder notice and proxy solicitation material,
and all other proxy solicitation expense;
(h) all expenses of printing of annual or more frequent revisions of
CAF prospectus(es) and of supplying to each then existing
Shareholder a copy of a revised prospectus;
(i) all expenses related to preparing and transmitting certificates,
if any, representing shares of CAF;
(j) all expenses of bond and insurance coverage required by law or
deemed advisable by the Board of Directors;
(k) all brokers' commissions and other normal charges incident to the
purchase, sale, or lending of portfolio securities;
(l) all taxes and governmental fees payable to federal, state, or
other governmental agencies, domestic or foreign, including all
stamp or other transfer taxes;
(m) all expenses of registering and maintaining the registration of
CAF under the 1940 Act and, to the extent no exemption is
available, expenses of registering CAF's shares under the
Securities Act of 1933, of qualifying and maintaining
qualification of CAF and CAF's shares for sale under securities
laws of various states or other jurisdictions, and of
registration and qualification of CAF under all other laws
applicable to CAF or its business activities;
(n) all interest on indebtedness, if any, incurred by CAF or a Fund;
and
(o) all fees, dues, and other expenses incurred by CAF in connection
with membership of CAF in any trade association or other
investment company organization.
6. ALLOCATION OF EXPENSES BORNE BY CAF. Any expenses borne by CAF that
are attributable solely to the organization, operation, or business of
a Fund shall be paid solely out of Fund assets. Any expense borne by
CAF which is not solely attributable to a Fund, nor solely to any
other series of shares of CAF, shall be apportioned in such manner as
Manager determines is fair and appropriate or as otherwise specified
by the Board of Directors.
7. EXPENSES BORNE BY MANAGER. Manager at its own expense shall furnish
all executive and other personnel, office space, and office facilities
required to render the investment management and administrative
services set forth in this Agreement. Manager shall pay all expenses
of establishing, maintaining, and servicing the accounts of
Shareholders in each Fund listed in Schedule A to this Agreement.
However, Manager shall not be required to pay or provide any credit
for services provided by CAF's custodian or other agents without
additional cost to CAF.
In the event that Manager pays or assumes any expense of CAF or a Fund
not required to be paid or assumed by Manager under this Agreement,
Manager shall not be obligated hereby to pay or assume the same or
similar expense in the future; provided, however, that nothing
contained herein shall be deemed to relieve Manager of any obligation
to CAF or a Fund under any separate agreement or arrangement between
the parties.
8. MANAGEMENT FEE; REDUCTION OF COMPENSATION AND REIMBURSEMENT OF
EXPENSES. For the services rendered, facilities provided, and charges
assumed and paid by Manager hereunder, CAF shall pay to Manager out of
the assets of each Fund fees at the annual rate for such Fund set
forth in SCHEDULE A to this Agreement. For each Fund, the management
fee shall accrue on each calendar day, and shall be payable monthly on
the
first business day of the next succeeding calendar month. The daily
fee accrual shall be computed by multiplying the fraction of one
divided by the number of days in the calendar year by the applicable
annual rate of fee, and multiplying this product by the net assets of
the Fund, determined in the manner established by the Board of
Directors, as of the close of business on the last preceding business
day on which the Fund's net asset value was determined.
Manager may voluntarily reduce any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement and may
agree to make payments to limit the expenses which are the
responsibility of a Fund under this Agreement. Any such reduction or
payment shall be applicable only to such specific reduction or payment
and shall not constitute an agreement to reduce any future
compensation or reimbursement due to Manager hereunder or to continue
future payments. Any such reduction will be agreed upon prior to
accrual of the related expense or fee and will be estimated daily. Any
Fund expense paid by Manager voluntarily or pursuant to an agreed
expense limitation shall be reimbursed by the appropriate Fund to
Manager in the first, second or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the withholding,
reduction, or payment to the extent permitted by applicable law if the
aggregate expenses for the next succeeding fiscal year, second
succeeding fiscal year, or third succeeding fiscal year do not exceed
any limitation to which Manager has agreed. Such reimbursement may be
paid prior to the Fund's payment of current expenses if so requested
by Manager even if such payment may require Manager to waive or reduce
its fees hereunder or to pay current Fund expenses. Manager may agree
not to require payment of any portion of the compensation or
reimbursement of expenses.
9. RETENTION OF SUBADVISER. Subject to obtaining the initial and
periodic approvals required under Section 15 of the 1940 Act, Manager
may retain one or more subadvisers at Manager's own cost and expense
for the purpose of furnishing one or more of the services described in
Section 2 hereof with respect to CAF or one or more Funds. Retention
of a subadviser shall in no way reduce the responsibilities or
obligations of Manager under this Agreement, and Manager shall be
responsible to CAF and its Funds for all acts or omissions of any
subadviser in connection with the performance of Manager's duties
hereunder.
10. NONEXCLUSIVITY. The services of Manager to CAF hereunder are not to
be deemed exclusive, and Manager shall be free to render similar
services to others.
11. STANDARD OF CARE. Neither Manager, nor any of its directors,
officers, shareholders, agents, or employees shall be liable to CAF or
its Shareholders for any error of judgment, mistake of law, loss
arising out of any investment, or any other act or omission in the
performance by Manager of its duties under this Agreement, except for
loss or liability resulting from willful misfeasance, bad faith, or
gross negligence on Manager's part or from reckless disregard by
Manager of its obligations and duties under this Agreement. Nothing in
this Agreement shall be construed to protect any officer of Manager
from liability for violation of Section 17(h) or (i) of the 1940 Act.
12. ABSENCE OF LIABILITY OF DIRECTORS AND SHAREHOLDERS. Any obligation of
CAF hereunder shall be binding only upon the assets of CAF (or the
applicable Fund thereof) and shall not be binding upon any Director,
officer, employee, agent, or Shareholder of CAF. Neither the
authorization of any action by the Directors or Shareholders of CAF
nor the execution of this Agreement on behalf of CAF shall impose any
liability upon any Director or any Shareholder. Nothing in this
Agreement shall be construed to protect any Director or officer of CAF
from liability for violation of Section 17(h) or (i) of the 1940 Act.
13. OWNERSHIP OF RECORDS; INTERPARTY REPORTING. All records required to
be maintained and preserved by CAF pursuant to the provisions of rules
or regulations of the Securities and Exchange Commission under Section
31(a) of the 1940 Act or other applicable laws or regulations that are
maintained and preserved by Manager on behalf of CAF and any other
records the parties mutually agree shall be maintained by Manager on
behalf of CAF are the property of CAF and shall be surrendered by
Manager promptly on request by CAF; provided, however, that Manager
may at its own expense make and retain copies of any such records.
CAF shall furnish or otherwise make available to Manager such copies
of financial statements, proxy statement, reports, and other
information relating to the business and affairs of each Shareholder
in a Fund as Manager may, at any time or from time to time, reasonably
require in order to discharge its obligations under this Agreement.
Manager shall prepare and furnish to CAF as to each Fund statistical
data and other information in such form at such intervals as CAF may
reasonably request.
14. USE OF MANAGER'S NAME. CAF may use the name "The Catholic Alliance
Funds, Inc." and the names of the Funds listed in SCHEDULE A or any
other name derived from the name "The Catholic Alliance Funds, Inc."
only for so long as this Agreement or any extension, renewal, or
amendment hereof remains in effect, including any similar agreement
with any organization which shall have succeeded to the business of
Manager as
investment adviser. At such time as this Agreement or any extension,
renewal, or amendment hereof, or such other similar agreement shall no
longer be in effect, CAF will cease to use any name derived from the
name "The Catholic Alliance Funds, Inc." or otherwise connected with
Manager, or with any organization which shall have succeeded to
Manager's business as investment adviser.
15. AMENDMENT. This Agreement may not be materially amended with respect
to CAF or any Fund without the affirmative votes (a) of a majority of
the Board of Directors, including a majority of those Directors who
are not "interested persons" of CAF or of Manager, voting in person at
a meeting called for the purpose of voting on such approval, and (b)
of a "majority of the outstanding shares" of CAF or, with respect to
an amendment affecting an individual Fund, a "majority of the
outstanding shares" of the Fund. The terms "interested persons" and
"vote of a majority of the outstanding shares" shall be construed in
accordance with their respective definitions in the 1940 Act and, with
respect to the latter term, in accordance with Rule 18f-2 under the
1940 Act.
16. EFFECTIVE DATE AND TERMINATION. This Agreement shall become effective
with respect to any Fund as of the effective date for that Fund
specified in SCHEDULE A hereto. This Agreement may be terminated at
any time, without payment of any penalty, as to any Fund by the Board
of Directors of CAF, or by a vote of a majority of the outstanding
shares of that Fund, upon at least sixty (60) days' written notice to
Manager. This Agreement may be terminated by Manager at any time upon
at least sixty (60) days' written notice to CAF. This Agreement shall
terminate automatically in the event of its "assignment" (as defined
in the 1940 Act). Unless terminated as hereinbefore provided, this
Agreement shall continue in effect with respect to any Fund for a
period of two years following the effective date for such Fund
specified in SCHEDULE A, and shall remain in effect thereafter from
year to year only so long as such continuance is specifically approved
with respect to the Fund at least annually (a) by a majority of those
Directors who are not interested persons of CAF or Manager, voting in
person at a meeting called for the purpose of voting on such approval,
and (b) by either the Board of Directors or CAF, or by a "vote of a
majority of the outstanding shares" of the Fund.
17. COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original.
18. HEADINGS. Headings are placed herein for convenience of reference
only and shall not be taken as a part hereof or control or affect the
meaning, construction or effect of this Agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
as of the day and year first above written.
THE CATHOLIC ALLIANCE FUNDS, INC.
By:
Attest:
CATHOLIC FINANCIAL SERVICES CORPORATION
By:
Attest:
THE CATHOLIC ALLIANCE FUNDS, INC.
MANAGEMENT AGREEMENT
SCHEDULE A
The Funds of The Catholic Alliance Funds, Inc. currently subject to this
Agreement are as follows:
1. EQUITY INCOME FUND
A. EFFECTIVE DATE: Concurrent with effectiveness of the Registration
Statement on Form N-1A of The Catholic Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund, calculated in
accordance with Paragraph 8 of the Investment Management
Agreement, shall be at an annual rate of 0.80 of 1% of the
average daily net assets of the Fund.
2. LARGE-CAP GROWTH FUND
A. EFFECTIVE DATE: Concurrent with effectiveness of the Registration
Statement on Form N-1A of The Catholic Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund, calculated in
accordance with Paragraph 8 of the Investment Management
Agreement, shall be at an annual rate of 0.90 of 1% of the
average daily net assets of the Fund.
3. DISCIPLINED CAPITAL APPRECIATION FUND
A. EFFECTIVE DATE: Concurrent with effectiveness of the Registration
Statement on Form N-1A of The Catholic Alliance Funds, Inc.
B. MANAGEMENT FEE: The management fee for this Fund, calculated in
accordance with Paragraph 8 of the Investment Management
Agreement, shall be at an annual rate of 0.90 of 1% of the
average daily net assets of the Fund.