MANAGEMENT CONTRACT
AGREEMENT made as of the 1st day of March, 1998, by and between CLEARWATER
INVESTMENT TRUST, a Massachusetts business trust (the "Trust"), and CLEARWATER
MANAGEMENT CO., INC., a Minnesota corporation (the "Manager").
WITNESSETH:
WHEREAS, the Trust desires to utilize the services of the Manager as the
manager for the Trust and of the existing series of the Trust, Clearwater Growth
Fund and Clearwater Small Cap Fund (each a "Fund"), and any further series of
the Trust as may be set forth on Appendix A hereto; and
WHEREAS, the Manager is willing to perform such services on the terms and
conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and benefits set
forth herein, it is agreed as follows:
1. The Manager's Services.
(a) Subject always to the supervision of the Trustees of the Trust and the
investment policies and restrictions applicable to each Fund as set forth in the
registration statement of the Trust filed with the Securities and Exchange
Commission (the "SEC"), the Manager is hereby authorized and directed and hereby
agrees to develop, recommend and implement such investment programs and
strategies for the Funds as may from time to time in the circumstances appear
most appropriate to the achievement of the respective investment objectives of
the Funds as stated in the aforesaid registration statement, to provide research
and analysis relative to the investment program and investments of each Fund, to
determine what securities should be purchased and sold and what portion of the
assets of each Fund should be held in cash or cash equivalents or other assets
and to monitor on a continuing basis the performance of the portfolio securities
of the Fund. In addition, the Manager will place orders for the purchase and
sale of securities and will advise the custodian for each Fund on a prompt basis
of each purchase and sale of a portfolio security for such Fund specifying the
name of the issuer, the description and amount or number of shares of the
security purchased, the market price, commission and gross or net price, trade
date, settlement date and identity of the effecting broker or dealer. From time
to time as the Trustees of the Trust may reasonably request, the Manager will
furnish to the Trust's officers and to each of its Trustees reports on portfolio
transactions and reports on issues of securities held in each Fund, all in such
detail as
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any such Trustee may reasonably request. The Manager will also inform the
Trust's officers and Trustees on a current basis of changes in investment
strategy or tactics. The Manager will make its officers and employees available
to meet with the Trust's officers and Trustees at least quarterly on due notice
to review the investments and investment program of each Fund in the light of
current and prospective economic and market conditions. In the performance of
its duties hereunder, the Manager will comply with the provisions of the
Declaration of Trust and By-laws of the Trust, each as amended from time to
time, and will use its best efforts to safeguard and promote the welfare of the
Trust and to comply with other policies which the Trustees may from time to time
adopt and shall exercise the same care and diligence expected of the Trustees.
(b) Except as otherwise provided herein, the Manager, at its own expense,
shall furnish the Trust with office space in the offices of the Manager or in
such other place as may be agreed upon from time to time, and all necessary
office facilities, equipment and personnel for managing the affairs and
investments of the Funds, and shall arrange, if desired by the Trust, for
members of the Manager's organization to serve as officers or agents of the
Trust.
(c) The Manager shall pay directly or reimburse the Trust for all expenses
not hereinafter specifically assumed by the Trust or a Fund. The Trust on behalf
of each Fund will pay commissions and other direct charges relating to the
purchase and sale of portfolio securities and other assets, taxes, interest and
extraordinary expenses, including without limitation litigation expenses.
(d) It shall be the duty of the Manager to furnish to the Trustees of the
Trust such information as may reasonably be necessary in order for the Trustees
to evaluate this Contract or any proposed amendments hereto for the purposes of
casting a vote pursuant to Sections 5 or 7 hereof.
(e) In the performance of its duties hereunder, the Manager is and shall be
an independent contractor and, unless otherwise expressly provided or
authorized, shall have no authority to act for or represent the Trust in any way
or otherwise be deemed to be an agent of the Trust.
2. Subadvisers. It is understood that the Manager may employ one or more
subinvestment advisers (each a "Subadviser") to provide investment advisory
services to the Funds by entering into a written agreement with each such
Subadviser; provided, that any such agreement first shall be approved on behalf
of the respective Fund in accordance with the requirements of the Investment
Company Act of 1940, as amended (the "1940 Act"), as such requirements are
modified by rule, regulation, interpretation or order of the SEC. The authority
given to the Manager in Sections 1 through 7 hereof may be delegated by it under
any such agreement; provided, that any Subadviser shall be subject to the same
restrictions and limitations
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on investments and brokerage discretion as the Manager. The Trust agrees that
the Manager shall not be accountable to the Trust or either Fund or either
Fund's shareholders for any loss or other liability relating to specific
investments directed by any Subadviser, even though the Manager retains the
right to reverse any such investment, because, in the event a Subadviser is
retained, the Trust and the Manager will rely almost exclusively on the
expertise of such Subadviser for the selection and monitoring of specific
investments.
3. Other Agreements, etc. It is understood that any of the shareholders,
trustees, officers and employees of the Trust may be a shareholder, director,
officer or employee of, or be otherwise interested in, the Manager, any
interested person (as defined in the 0000 Xxx) of the Manager, any organization
in which the Manager may have an interest or any organization which may have an
interest in the Manager, and that the Manager, any such interested person or any
such organization may have an interest in the Trust. It is also understood that
the Trust and the Manager may have advisory, management, service or other
contracts with other individuals or entities, and may have other interests and
business; provided, that the Manager shall not undertake any seriously
conflicting duties or loyalties which would affect its prior fiduciary duty to
the Trust.
4. Manager's Compensation.
(a) The Trust on behalf of Clearwater Growth Fund ("Growth Fund") shall pay
to the Manager, as compensation for the Manager's services to the Growth Fund
and as reimbursement to the Manager for the payment of the Growth Fund's
expenses, a fee at the annual rate of 0.45% of the Growth Fund's average daily
net assets. The management fee payable by the Growth Fund hereunder shall be
calculated and accrued daily as a percentage of such Fund's average daily net
assets and shall be payable quarterly after the end of each calendar quarter on
or before the 15th day of January, April, July and October with respect to the
preceding quarter. In the event of termination of this Contract with respect to
the Growth Fund, the fee provided for in this paragraph shall be computed on the
basis of the period ending on the last business day on which this Contract is in
effect subject to a pro rata adjustment based on the number of days elapsed in
the current quarter as a percentage of the total number of days in such quarter.
(b) The Trust on behalf of Clearwater Small Cap Fund ("Small Cap Fund")
shall pay to the Manager, as compensation for the Manager's services to the
Small Cap Fund and as reimbursement to the Manager for the payment of the Small
Cap Fund's expenses, a fee at the annual rate of 1.35% of the Small Cap Fund's
average daily net assets. The management fee payable by the Small Cap Fund
hereunder shall be calculated and accrued daily as a percentage of such Fund's
average daily net assets and shall be payable quarterly after the end of each
calendar quarter on or before the 15th day of January, April, July and October
with respect to
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the preceding quarter. In the event of termination of this Contract with respect
to the Small Cap Fund, the fee provided for in this paragraph shall be computed
on the basis of the period ending on the last business day on which this
Contract is in effect subject to a pro rata adjustment based on the number of
days elapsed in the current quarter as a percentage of the total number of days
in such quarter.
(c) The method of determining the net assets of each Fund for purposes of
calculating the fee payable to the Manager hereunder shall be the same as the
method of determining net assets for purposes of establishing the offering and
redemption price of shares of the Fund. If this Contract shall be effective for
only a portion of a calendar quarter with respect to a Fund, the applicable fee
shall be prorated for that portion of such calendar quarter during which this
Contract is in effect.
(d) The Manager may from time to time agree not to impose all or a portion
of its fee with respect to either Fund otherwise payable hereunder (in advance
of the time such fee or a portion thereof would otherwise accrue) and/or
undertake to pay or reimburse such Fund for all or a portion of its expenses not
otherwise required to be borne or reimbursed by the Manager. Any such fee
reduction or undertaking may be discontinued or modified by the Manager at any
time.
5. Assignment and Amendment. This Contract shall automatically terminate,
without the payment of any penalty, in the event of its assignment (as defined
in the 1940 Act); provided, that such termination shall not relieve either party
of any liability incurred hereunder. The terms of this Contract shall not be
changed unless such change is approved in accordance with the requirements of
the 1940 Act, as such requirements are modified by rule, regulation,
interpretation or order of the SEC.
6. Avoidance of Inconsistent Position.
(a) In connection with purchases and sales of portfolio securities for the
account of each Fund, neither the Manager nor any of its Directors, officers or
employees will act as a principal or agent or receive any commission except as
permitted by the 1940 Act. The Manager shall arrange for the placing of all
orders for the purchase and sale of portfolio securities for each Fund's account
with brokers or dealers selected by the Manager. In the selection of such
brokers or dealers and the placing of such orders, the Manager is directed at
all times to seek for each Fund the most favorable execution and net price
available except as described herein. It is understood that it is desirable for
each Fund that the Manager have access to supplemental investment and market
research and security and economic analyses provided by brokers who may execute
brokerage transactions at a higher cost to the Fund than may result when
allocating brokerage to other brokers on the basis of
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seeking the most favorable price and efficient execution. Therefore, the Manager
is authorized to place orders for the purchase and sale of securities for a Fund
with such brokers, subject to review by the Trust's Trustees from time to time
with respect to the extent and continuation of this practice. It is understood
that the services provided by such brokers may be useful to the Manager in
connection with the Manager's services (or its affiliates' services) to other
clients.
(b) On occasions when the Manager deems the purchase or sale of a security
to be in the best interest of a Fund as well as other clients, the Manager, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be sold or purchased in order to obtain the best execution and
lower brokerage commissions, if any. In such event, allocation of the securities
so purchased or sold, as well as the expenses incurred in the transaction, will
be made by the Manager in the manner it considers to be the most equitable and
consistent with its fiduciary obligations to the Fund and to such clients.
7. Effective Period and Termination of this Contract.
(a) This Contract shall become effective on the date hereof and shall
remain in full force and effect as to each Fund until two years from the date
set forth above and from year to year thereafter, but only so long as its
continuance is approved in accordance with the requirements of the 1940 Act, as
such requirements are modified by rule, regulation, interpretation or order of
the SEC, subject to the respective rights of the Trust and the Manager to
terminate this contract as provided in paragraphs (b) and (c) hereof.
(b) The Trust may at any time and without penalty terminate this Contract
as to any Fund or as to the Trust as a whole by not more than sixty (60) days'
nor less than thirty (30) days' written notice given to the Manager; or
(c) The Manager may at any time and without penalty terminate this Contract
as to any Fund or as to the Trust as a whole by not less than one hundred twenty
(120) days' written notice given to the Trust.
8. Complete Agreement. This Contract states the entire agreement of the
parties hereto, and is intended to be the complete and exclusive statement of
the terms hereof. It may not be added to or changed orally, and may not be
modified or rescinded except by a writing signed by the parties hereto and in
accordance with Section 5 hereof and the applicable requirements of the 1940 Act
as such requirements are modified by rule, regulation, interpretation or order
of the SEC.
9. Nonliability of the Manager. In the absence of willful misfeasance, bad
faith or gross negligence on the part of the Manager, or of reckless disregard
of its obligations and duties hereunder, the Manager shall not be subject to any
liability to
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the Trust, to any shareholder of the Trust, or to any person, firm or
organization, for any act or omission in the course of, or connected with,
rendering services hereunder. Nothing herein, however, shall derogate from the
Manager's obligations under applicable federal and state securities laws.
10. Limitation of Liability of the Trustees, Officers and Shareholders. A
copy of the Declaration of Trust of the Trust is on file with the Secretary of
State of The Commonwealth of Massachusetts, and notice is hereby given that this
instrument is executed on behalf of the Trustees of the Trust as Trustees and
not individually and that the obligations of this instrument with respect to a
Fund or to the Trust in general are not binding upon any of the Trustees,
officers or shareholders of the Trust but are binding only upon the assets and
property of that Fund or of the Trust, as the case may be.
11. Notices. Any notice, instruction, request or other communications
required or contemplated by this Contract shall be in writing and shall be duly
given when deposited by first-class mail, postage prepaid, or consigned to a
nationally recognized overnight delivery service addressed to (or delivered by
hand with confirmation to) the Trust or the Manager at the applicable address
set forth below:
If to Trust:
Clearwater Investment Trust
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxx, Xxxxxxxxx 00000
If to Manager:
Clearwater Management Co., Inc.
000 Xxxxxxxxx Xxxxxx, Xxxxx 0000
Xx. Xxxx, Xxxxxxxxx 00000
12. Disclosure Statement. The Trust acknowledges receipt of the Manager's
written disclosure statement required by Rule 204-3 under the Investment
Advisers Act of 1940 not less than 48 hours prior to entering into this
Contract.
13. Governing Law. This Contract and all performance hereunder shall be
governed by, interpreted, construed and enforced in accordance with the laws of
the State of Minnesota.
14. Severability. Any term or provision of this Contract which is invalid
or unenforceable in any jurisdiction shall, as to such jurisdiction, be
ineffective to the extent of such invalidity or unenforceability without
rendering invalid or unenforceable the remaining terms or provisions of this
Contract or affecting the
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validity or enforceability of any of the terms or provisions of this Contract in
any other jurisdiction.
15. Counterparts. This Contract may be executed in two or more
counterparts, each of which shall be deemed an original, and all of which
together shall constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this Contract to be
executed by their duly authorized officers and as of the day and year first
written above.
CLEARWATER INVESTMENT TRUST
By: /s/Xxxxxxxxx X. Xxxxxxxxxxxx
Name: Xxxxxxxxx X. Xxxxxxxxxxxx
Title: Chairman
CLEARWATER MANAGEMENT CO., INC.
By: /s/Xxxxxx. X. Xxxxxx
Name: Xxxxxx. X. Xxxxxx
Title: Chairman
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