SUB-ADVISORY AGREEMENT
AGREEMENT made as of the ___ day of _____________, 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.
(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. 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 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).
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 and
its other customers.
(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.
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%
From the above fees, the Adviser pays the Sub-Adviser:
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%
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.
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:
Its:
CATHOLIC FINANCIAL SERVICES CORPORATION
By:
Its:
STRONG CAPITAL MANAGEMENT, INC.
By:
Its:
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