XXXXXX CALIFORNIA MUNICIPAL FUND
MANAGEMENT AGREEMENT
Agreement made the 17th day of July, 2003 between Xxxxxx California Municipal
Fund (the Trust), a Massachusetts business trust, and Prudential Investments
LLC, a New York limited liability company (the Manager).
W I T N E S S E T H
WHEREAS, the Trust is a diversified, open-end management investment company
registered under the Investment Company Act of 1940, as amended (the 1940
Act); and
WHEREAS, the Trust desires to retain the Manager to render or contract to
obtain as hereinafter provided investment advisory services to the Trust and
one or more of its series (individually and collectively with the Trust,
referred to herein as the Trust) and the Trust also desires to avail itself
of the facilities available to the Manager with respect to the administration
of its day-to-day business affairs, and the Manager is willing to render such
investment advisory and administrative services;
NOW, THEREFORE, the parties agree as follows:
1. The Trust hereby appoints the Manager to act as manager of the Trust and
each series thereof, if any (each, a Portfolio) and as administrator of its
business affairs for the period and on the terms set forth in this Agreement.
The Manager accepts such appointment and agrees to render the services herein
described, for the compensation herein provided. Subject to the approval of
the Board of Trustees of the Trust, the Manager is authorized to enter into a
subadvisory agreement with Prudential Investment Management, Inc., Xxxxxxxx
Associates LLC, or any other subadviser, whether or not affiliated with the
Manager (each, a Subadviser), pursuant to which such Subadviser shall furnish
to the Trust the investment advisory services in connection with the
management of the Trust (each, a Subadvisory Agreement). Subject to the
approval of the Board of Trustees of the Trust, the Manager is authorized to
retain more than one Subadviser for the Trust, and if the Trust has more than
one Subadviser, the Manager is authorized to allocate the Trust's assets
among the Subadvisers. The Manager will continue to have responsibility for
all investment advisory services furnished pursuant to any Subadvisory
Agreement. The Trust and Manager understand and agree that the Manager may
manage the Trust in a "manager-of-managers" style with either a single or
multiple subadvisers, which contemplates that the Manager will, among other
things and pursuant to an Order issued by the Securities and Exchange
Commission (SEC): (i) continually evaluate the performance of each Subadviser
to the Trust, if applicable, through quantitative and qualitative analysis
and consultations with such Subadviser; (ii) periodically make
recommendations to the Board as to whether the contract with one or more
Subadvisers should be renewed, modified, or terminated; and (iii)
periodically report to the Board regarding the results of its evaluation and
monitoring functions. The Trust recognizes that a Subadviser's services may
be terminated or modified pursuant to the "manager-of-managers" process, and
that the Manager may appoint a new Subadviser for a Subadviser that is so
removed.
2. Subject to the supervision of the Board of Trustees, the Manager shall
administer the Trust's business affairs and, in connection therewith, shall
furnish the Trust with office facilities and with clerical, bookkeeping and
recordkeeping services at such office facilities and, subject to Section 1
hereof and any Subadvisory Agreement, the Manager shall manage the investment
operations of the Trust and the composition of the Trust's portfolio,
including the purchase, retention and disposition thereof, in
accordance with the Trust's investment objectives, policies and restrictions
as stated in the Trust's SEC registration statement, and subject to the
following understandings:
(a) The Manager (or a Subadviser under the Manager's supervision) shall
provide supervision of the Trust's investments, and shall determine from time
to time what investments or securities will be purchased, retained, sold or
loaned by the Trust, and what portion of the assets will be invested or held
uninvested as cash.
(b) The Manager, in the performance of its duties and obligations under this
Agreement, shall act in conformity with the Declaration of Trust of the Trust
and the Trust's SEC registration statement and with the instructions and
directions of the Board of Trustees, and will conform to and comply with the
requirements of the 1940 Act and all other applicable federal and state laws
and regulations. In connection therewith, the Manager shall, among other
things, prepare and file (or cause to be prepared and filed) such reports as
are, or may in the future be, required by the SEC.
(c) The Manager (or the Subadviser under the Manager's supervision) shall
determine the securities and futures contracts to be purchased or sold by the
Trust and will place orders pursuant to its determinations with or through
such persons, brokers, dealers or futures commission merchants (including but
not limited to Prudential Securities Incorporated) in conformity with the
policy with respect to brokerage as set forth in the Trust's registration
statement or as the Board of Trustees may direct from time to time. In
providing the Trust with investment supervision, it is recognized that the
Manager (or the Subadviser under the Manager's supervision) will give primary
consideration to securing the most favorable price and efficient execution.
Consistent with this policy, the Manager (or Subadviser under the Manager's
supervision) may consider the financial responsibility, research and
investment information and other services provided by brokers, dealers or
futures commission merchants who may effect or be a party to any such
transaction or other transactions to which other clients of the Manager (or
Subadviser) may be a party, the size and difficulty in executing an order,
and the value of the expected contribution of the broker-dealer to the
investment performance of the Trust on a continuing basis. The Manager (or
Subadviser) to the Trust each shall have discretion to effect investment
transactions for the Trust through broker-dealers (including, to the extent
legally permissible, broker-dealers affiliated with the Subadviser(s))
qualified to obtain best execution of such transactions who provide brokerage
and/or research services, as such services are defined in Section 28(e) of
the Securities Exchange Act, as amended (the "1934 Act"), and to cause the
Trust to pay any such broker-dealers an amount of commission for effecting a
portfolio transaction in excess of the amount of commission another
broker-dealer would have charged for effecting that transaction, if the
brokerage or research services provided by such broker-dealer, viewed in
light of either that particular investment transaction or the overall
responsibilities of the Manager (or the Subadviser) with respect to the Trust
and other accounts as to which they or it may exercise investment discretion
(as such term is defined in Section 3(a)(35) of the 1934 Act), are
reasonable in relation to the amount of commission.
On occasions when the Manager (or a Subadviser under the Manager's
supervision) deems the purchase or sale of a security or a futures contract
to be in the best interest of the Trust as well as other clients of the
Manager (or the Subadviser), the Manager (or Subadviser), to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities or futures contracts to be so sold or
purchased in order to obtain the most favorable price or lower brokerage
commissions and efficient execution. In such event, allocation of the
securities or futures contracts so purchased or sold, as well as the expenses
incurred in the transaction, will be made by the Manager (or the Subadviser)
in the manner it considers to be the most equitable and consistent with its
fiduciary obligations to the Trust and to such other clients.
(d) The Manager (or the Subadviser under the Manager's supervision) shall
maintain all books and records with respect to the Trust's portfolio
transactions and shall render to the Trust's Board of Trustees such periodic
and special reports as the Board may reasonably request.
(e) The Manager (or the Subadviser under the Manager's supervision) shall be
responsible for the financial and accounting records to be maintained by the
Trust (including those being maintained by the Trust's Custodian).
(f) The Manager (or the Subadviser under the Manager's supervision) shall
provide the Trust's Custodian on each business day information relating to
all transactions concerning the Trust's assets.
(g) The investment management services of the Manager to the Trust under this
Agreement are not to be deemed exclusive, and the Manager shall be free to
render similar services to others.
(h) The Manager shall make reasonably available its employees and officers
for consultation with any of the Trustees or officers or employees of the
Trust with respect to any matter discussed herein, including, without
limitation, the valuation of the Trust's securities.
3. The Trust has delivered to the Manager copies of each of the following
documents and will deliver to it all future amendments and supplements, if
any:
(a) Declaration of Trust;
(b) By-Laws of the Trust (such By-Laws, as in effect on the date hereof and
as amended from time to time, are herein called the "By-Laws");
(c) Certified resolutions of the Board of Trustees of the Trust authorizing
the appointment of the Manager and approving the form of this agreement;
(d) Registration Statement under the 1940 Act and the Securities Act of 1933,
as amended, on Form N-1A (the Registration Statement), as filed with the SEC
relating to the Trust and its shares of beneficial interest, and all
amendments thereto; and
(e) Prospectus and Statement of Additional Information of the Trust.
4. The Manager shall authorize and permit any of its officers and employees
who may be elected as Trustees or officers of the Trust to serve in the
capacities in which they are elected. All services to be furnished by the
Manager under this Agreement may be furnished through the medium of any such
officers or employees of the Manager.
5. The Manager shall keep the Trust's books and records required to be
maintained by it pursuant to Paragraph 2 hereof. The Manager agrees that all
records that it maintains for the Trust are the property of the Trust, and it
will surrender promptly to the Trust any such records upon the Trust's
request, provided however that the Manager may retain a copy of such records.
The Manager further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act any such records as are required to be maintained by
the Manager pursuant to Paragraph 2 hereof.
6. During the term of this Agreement, the Manager shall pay the following
expenses:
(i) the salaries and expenses of all employees of the Trust and the Manager,
except the fees and expenses of Trustees who are not affiliated persons of
the Manager or any Subadviser,
(ii) all expenses incurred by the Manager in connection with managing the
ordinary course of the Trust's business, other than those assumed by the
Trust herein, and
(iii) the fees, costs and expenses payable to a Subadviser pursuant to a
Subadvisory Agreement.
The Trust assumes and will pay the expenses described below:
(a) the fees and expenses incurred by the Trust in connection with the
management of the investment and reinvestment of the Trust's assets,
(b) the fees and expenses of Trustees who are not "interested persons" of the
Trust within the meaning of the 1940 Act,
(c) the fees and expenses of the Custodian that relate to (i) the custodial
function and the recordkeeping connected therewith, (ii) preparing and
maintaining the general accounting records of the Trust and the provision of
any such records to the Manager useful to the Manager in connection with the
Manager's responsibility for the accounting records of the Trust pursuant to
Section 31 of the 1940 Act and the rules promulgated thereunder, (iii) the
pricing or valuation of the shares of the Trust, including the cost of any
pricing or valuation service or services which may be retained pursuant to
the authorization of the Board of Trustees, and (iv) for both mail and wire
orders, the cashiering function in connection with the issuance and
redemption of the Trust's securities,
(d) the fees and expenses of the Trust's Transfer and Dividend Disbursing
Agent that relate to the maintenance of each shareholder account,
(e) the charges and expenses of legal counsel and independent accountants for
the Trust,
(f) brokers' commissions and any issue or transfer taxes chargeable to the
Trust in connection with its securities and futures transactions,
(g) all taxes and corporate fees payable by the Trust to federal, state or
other governmental agencies,
(h) the fees of any trade associations of which the Trust may be a member,
(i) the cost of share certificates representing, and/or non-negotiable share
deposit receipts evidencing, shares of the Trust,
(j) the cost of fidelity, directors' and officers' and errors and omissions
insurance,
(k) the fees and expenses involved in registering and maintaining
registration of the Trust and of its shares with the SEC, and paying notice
filing fees under state securities laws, including the preparation and
printing of the Trust's registration statement and the Trust's prospectuses
and statements of additional information for filing under federal and state
securities laws for such purposes,
(l) allocable communications expenses with respect to investor services and
all expenses of shareholders' and Trustees' meetings and of preparing,
printing and mailing reports and notices to shareholders in the amount
necessary for distribution to the shareholders,
(m) litigation and indemnification expenses and other extraordinary expenses
not incurred in the ordinary course of the Trust's business, and
(n) any expenses assumed by the Trust pursuant to a Distribution and Service
Plan adopted in a manner that is consistent with Rule 12b-1 under the 1940
Act.
7. For the services provided and the expenses assumed pursuant to this
Agreement, the Trust will pay to the Manager as full compensation therefor a
fee at the annual rate(s) as described on the attached Schedule A with
respect to the average daily net assets of the Trust. This fee will be
computed daily, and will be paid to
the Manager monthly. The Trust shall not pay any fee or other compensation to
the Manager for the services provided and the expenses assumed pursuant to
this Agreement.
8. The Manager shall not be liable for any error of judgment or for any loss
suffered by the Trust in connection with the matters to which this Agreement
relates, except a loss resulting from a breach of fiduciary duty with respect
to the receipt of compensation for services (in which case any award of
damages shall be limited to the period and the amount set forth in Section
36(b)(3) of the 0000 Xxx) or loss resulting from willful misfeasance, bad
faith or gross negligence on its part in the performance of its duties or
from reckless disregard by it of its obligations and duties under this
Agreement.
The Trust shall indemnify the Manager and hold it harmless from and against
all damages, liabilities, costs and expenses (including reasonable attorneys'
fees and amounts reasonably paid in settlements) incurred by the Manager in
or by reason of any pending, threatened or completed action, suit,
investigation or other proceeding (including an action or suit by or in the
right of the Trust or its security holders) arising out of or otherwise based
upon any action actually or allegedly taken or omitted to be taken by the
Manager in connection with the performance of any of its duties or
obligations under this Agreement; provided, however, that nothing contained
herein shall protect or be deemed to protect the Manager against or entitle
or be deemed to entitle the Manager to indemnification in respect of any
liability to the Trust or its security holders to which the Manager would
otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties, by reason of its reckless
disregard of their duties and obligations under this Agreement.
9. This Agreement shall continue in effect for a period of more than two
years from the date hereof only so long as such continuance is specifically
approved at least annually in conformity with the requirements of the 1940
Act; provided, however, that this Agreement may be terminated with respect to
the Trust at any time, without the payment of any penalty, by the Board of
Trustees of the Trust or by vote of a majority of the outstanding voting
securities (as defined in the 0000 Xxx) of the Trust, or by the Manager at
any time, without the payment of any penalty, on not more than 60 days' nor
less than 30 days' written notice to the Trust. This Agreement shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
10. Nothing in this Agreement shall limit or restrict the right of any
officer or employee of the Manager who may also be a Trustee, officer or
employee of the Trust to engage in any other business or to devote his or her
time and attention in part to the management or other aspects of any
business, whether of a similar or dissimilar nature, nor limit or restrict
the right of the Manager to engage in any other business or to render
services of any kind to any other corporation, firm, individual or
association.
11. Except as otherwise provided herein or authorized by the Board of
Trustees of the Trust from time to time, the Manager shall for all purposes
herein be deemed to be an independent contractor, and shall have no authority
to act for or represent the Trust in any way or otherwise be deemed an agent
of the Trust.
12. During the term of this Agreement, the Trust agrees to furnish the
Manager at its principal office all prospectuses, proxy statements, reports
to shareholders, sales literature, or other material prepared for
distribution to shareholders of the Trust or the public, which refer in any
way to the Manager, prior to use thereof and not to use such material if the
Manager reasonably objects in writing within five business days (or such
other time as may be mutually agreed) after receipt thereof. In the event of
termination of this Agreement, the Trust will continue to furnish to the
Manager copies of any of the above-mentioned materials which refer in any way
to the Manager. Sales literature may be furnished to the Manager hereunder by
first-class or overnight mail, facsimile transmission equipment or hand
delivery. The Trust shall furnish or otherwise make available to the Manager
such other information relating to the business affairs of the Trust as the
Manager at any time, or from time to time, reasonably requests in order to
discharge its obligations hereunder.
13. This Agreement may be amended by mutual consent, but the consent of the
Trust must be obtained in conformity with the requirements of the 1940 Act.
14. Any notice or other communication required to be given pursuant to this
Agreement shall be deemed duly given if delivered or mailed by registered
mail, postage prepaid, (1) to the Manager at Gateway Center Three, 000
Xxxxxxxx Xxxxxx, 0xx Xxxxx, Xxxxxx, XX 00000-0000, Attention: Secretary; or
(2) to the Trust at Gateway Center Three, 000 Xxxxxxxx Xxxxxx, Xxxxxx, XX
00000-0000, Attention: President.
15. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
16. The Trust may use the name "Xxxxxx California Municipal Fund" or any name
including the words "Xxxxxxxx," "Xxxxxx," or "JennisonDryden," or
"Prudential" 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 Manager's business as Manager
or any extension, renewal or amendment thereof remain in effect. At such time
as such an agreement shall no longer be in effect, the Trust will (to the
extent that it lawfully can) cease to use such a name or any other name
indicating that it is advised by, managed by or otherwise connected with the
Manager, or any organization which shall have so succeeded to such
businesses. In no event shall the Trust use the name Xxxxxx California
Municipal Fund" or any name including the words "Xxxxxxxx," "Xxxxxx,"
"JennisonDryden," or "Prudential" if the Manager's function is transferred or
assigned to a company of which The Prudential Insurance Company of America
does not have control.
17. A copy of the Declaration of Trust is on file with the Secretary of State
of the Commonwealth of Massachusetts.
18. Any question of interpretation of any term or provision of this Agreement
having a counterpart in or otherwise derived from a term or provision of the
1940 Act, shall be resolved by reference to such term or provision of the
1940 Act and to interpretations thereof, if any, by the United States courts
or, in the absence of any controlling decision of any such court, by rules,
regulations or orders of the Securities and Exchange Commission issued
pursuant to the 1940 Act. In addition, where the effect of a requirement of
the 1940 Act, reflected in any provision of this Agreement, is related by
rules, regulation or order of the Securities and Exchange Commission, such
provision shall be deemed to incorporate the effect of such rule, regulation
or order.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year above
written.
XXXXXX CALIFORNIA MUNICIPAL FUND
By: /s/ Xxxx X. Xxxx
Name: Xxxx X. Xxxx
Title: President
PRUDENTIAL INVESTMENTS LLC
By: /s/ Xxxxxx X. Xxxxx
Name: Xxxxxx X. Xxxxx
Title: Executive Vice President and
Chief Administrative Officer
SCHEDULE A
ANNUAL FEE RATE
Xxxxxx California Municipal Fund
California Series .50%
California Income Series .50%
California Money Market Series .50%
Schedule dated July 17, 2003