INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of June 1, 1999 between THE COMMUNITY REINVESTMENT ACT
QUALIFIED INVESTMENT FUND, a Delaware business trust (the "Trust") and CRAFUND
ADVISORS, INC., a Delaware corporation (the "Manager").
WHEREAS, the Fund is registered as an open-end, management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended (the "Advisers Act"); and
WHEREAS, the Trust desires to retain the Manager to provide, or to arrange
for the provision of, investment advisory services to an investment portfolio of
the Trust and may retain the Manager to serve in such capacity to any additional
investment portfolios of the Trust, as now or hereafter may be identified in
Schedule A hereto (such investment portfolio and any such additional investment
portfolios together called the "Funds") and the Manager represents that it is
willing and possesses legal authority to so furnish such services without
violation of applicable laws and regulations;
NOW, THEREFORE, in consideration of the mutual covenants herein contained,
it is agreed between the parties hereto as follows:
1. APPOINTMENT. The Trust hereby appoints the Manager to act as the
investment manager to the Fund for the period and on the terms set forth in this
Agreement. The Manager accepts such appointment and agrees to furnish the
services herein set forth for the compensation herein provided. Additional
investment portfolios may from time to time be added to those covered by this
Agreement by the parties executing a new Schedule A which shall become effective
upon its execution and shall supersede any Schedule A having an earlier date.
2. MANAGEMENT. Subject to the supervision of the Trust's Board of Trustees,
the Manager will perform the following services:
(i) Provide a continuous investment program and strategy for the
Funds, including investment research and management with respect to all
securities and investments and cash equivalents in the Funds, determining
from time to time what securities and other investments will be invested,
reinvested, owned, held or traded by the Funds. The Manager will provide
the services under this Agreement in accordance with the particular Fund's
investment objective, policies and restrictions as stated in the Prospectus
of the Fund and resolutions of the Trust's Board of Trustees adopted from
time to time;
(ii) The Manager shall, to the extent requested by the Board of
Trustees, provide the personnel to act as officers of the Trust and pay the
salaries
of such officers, and shall furnish office facilities and equipment, and
related services necessary for the operation of the Trust;
(iii) Transmit information concerning purchases and sales of the
Trust's portfolio securities to the custodian for proper settlement;
(iv) Supply the Trust and its Board of Trustees with reports and
statistical data as requested; and
(v) Prepare a quarterly brokerage allocation summary and monthly
security transaction listing for the Trust.
3. OTHER COVENANTS.
The Manager further agrees that:
(i) It will maintain its registration under the Advisers Act, adopt a
Code of Ethics and provide reports with respect thereto to the Board of
Trustees of the Trust, and will conform with all applicable Rules and
Regulations of the Securities and Exchange Commission;
(ii) It will place orders pursuant to its investment determinations
for the Trust either directly with the issuer or with any broker or dealer.
In executing portfolio transactions and selecting brokers or dealers, the
Manager will use its best efforts to seek on behalf of the Fund the best
overall terms available. In assessing the best overall terms available for
any transaction, the Manager shall consider all factors that it deems
relevant, including the breadth of the market in the security, the price of
the security, the financial condition and execution capability of the
broker or dealer, and the reasonableness of the commission, if any, both
for the specific transaction and on a continuing basis. In evaluating the
best overall terms available, and in selecting the broker dealer to execute
a particular transaction, the Manager may also consider the brokerage and
research services (as those terms are defined in Section 28(e) of the
Securities Exchange Act of 1934) provided to the Fund and/or other accounts
over which the Manager or an affiliate of the Manager exercises investment
discretion. The Manager is authorized to pay to a broker or dealer who
provides such brokerage and research services a commission for executing a
portfolio transaction for the Fund which is in excess of the amount of
commission another broker or dealer would have charged for effecting that
transaction if, but only if, the Manager determines in good faith that such
commission was reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of
that particular transaction or in terms of the overall responsibilities of
the Manager to the Fund. In addition, the Manager is authorized to take
into account the sale of shares of the Trust in allocating to brokers or
dealers purchase and sale orders for the Fund's portfolio securities,
provided that the Manager believes that the quality of the transaction and
the commission are comparable to what they
- 2 -
would be with other qualified firms. The Manager will make investment
decisions for the Trust independently from those of other clients of the
Manager. However, the same security may be held in the portfolio of more
than one client or Fund when the same security is believed suited for the
investment objectives of more than one client or Fund. Should two or more
clients of the Manager simultaneously be engaged in the purchase or sale of
the same security, to the extent possible, the transactions will be
allocated as to price and amount in a manner fair and equitable to each
client and Fund;
(iii) It will maintain or supervise the maintenance of all books and
records with respect to the securities transactions of the Trust and will
furnish the Trust's Board of Trustees with such periodic and special
reports as the Board may request;
(iv) It will treat confidentially and as proprietary information of
the Trust all records and other information relative to the Trust and
prior, present or potential shareholders, and will not use such records and
information for any purpose other than performance of its responsibilities
and duties hereunder (except after prior notification to and approval in
writing by the Trust, which approval may not be withheld where the Manager
would be exposed to civil or criminal contempt proceedings for failure to
comply, when requested to divulge such information by duly constituted
authorities); and
(v) All software code owned by the Manager or under its control, used
in the performance of its obligations under this Agreement, will be Year
2000 Compliant. For purposes of this paragraph, "Year 2000 Compliant" means
that the software will continue to operate after December 31, 1999 without
creating any logical or mathematical inconsistencies concerning any date
after December 31, 1999 and without decreasing the functionality of the
system applicable to dates prior to January 1, 2000 including, but not
limited to, making changes to (i) date and data century recognition; (ii)
calculations which accommodate same- and multi-century formulas and date
values; and (iii) input/output of date values which reflect century dates.
4. SUB-ADVISOR. It is understood that the Manager may from time to time
employ or associate with itself such person or persons as the Manager believes
to be fitted to assist it in the performance of this Agreement (each a
"Sub-Advisor"); provided, however, that the compensation of such person or
persons shall be paid by the Manager and that the Manager shall be as fully
responsible to the Trust for the acts and omissions of any such person as it is
for its own acts and omissions; and provided further, that the retention of any
Sub-Advisor shall be approved as may be required by the 1940 Act. In the event
that any Sub-Advisor appointed hereunder is terminated, the Manager may provide
investment advisory services pursuant to this Agreement to the Trust without
further shareholder approval.
5. SERVICES NOT EXCLUSIVE. The investment management services furnished by
the Manager hereunder are deemed not to be exclusive, and the Manager shall be
free to
- 3 -
furnish similar services to others so long as its services under this Agreement
are not impaired thereby. The Manager will for all purposes herein be deemed to
be an independent contractor and will, unless otherwise expressly authorized,
have no authority to act for or represent the Trust in any way or otherwise be
deemed to be its agent.
6. BOOKS AND RECORDS. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Manager hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Manager further agrees to preserve for the periods prescribed by Rule 31a-2
under the 1940 Act the records required to be maintained by Rule 31a-1 under the
1940 Act, and to permit the Trust access to the Manager's records upon the
Trust's request.
7. EXPENSES. During the term of this Agreement, the Manager will pay all
expenses incurred by it in connection with its activities under this Agreement
other than the cost of securities (including brokerage commissions, if any)
purchased for the Trust.
8. COMPENSATION. For the services provided and the expenses assumed
pursuant to this Agreement, the Trust will pay the Manager and the Manager will
accept as full compensation therefor a fee as set forth on Schedule A hereto.
The obligations of the Trust to pay the above-described fee to the Manager will
begin as of the date of the initial public sale of shares in the Trust;
provided, however, that the Manager may from time to time waive some or all of
such fees until such time as it notifies the Trust that it has terminated such
waiver. Upon any termination of this Agreement before the end of any month, the
fee for such part of a month shall be prorated according to the proportion which
such period bears to the full monthly period and shall be payable upon the date
of termination of this Agreement.
For the purpose of determining fees payable to the Advisor, the value
of the net assets of a Fund shall be computed in the manner described in the
Trust's Declaration of Trust or in the Prospectus or Statement of Additional
Information of the Fund as from time to time is in effect.
9. LIMITATION OF LIABILITY. The Manager shall not be liable for any error
of judgment or mistake of law or for any loss suffered by the Trust in
connection with the performance of this Agreement, except a loss resulting from
a breach of fiduciary duty with respect to the receipt of compensation for
services or a loss resulting from willful misfeasance, bad faith or gross
negligence on the part of the Manager in the performance of its duties or from
reckless disregard by it of its obligations and duties under this Agreement. Any
person, even though also an officer, partner, employee, or agent of the Manager,
who may be or become an officer, director, employee or agent of the Trust shall
be deemed, when rendering service to the Trust or acting on any business of the
Trust (other than services or business in connection with the Manager's duties
as investment advisor hereunder), to be rendering such services to or acting
solely for the Trust and not as an officer, partner, employee or agent or one
under the control or direction of the Manager even though paid by it.
- 4 -
10. DURATION AND TERMINATION. This Agreement will become effective on the
date first written above, and unless sooner terminated as provided herein, shall
continue in effect until May 31, 2001. Thereafter, if not terminated, this
Agreement shall continue in effect for successive annual periods, provided such
continuance is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not
interested persons of any party to this Agreement, cast in person at a meeting
called for the purpose of voting on such approval, and (b) by the Trust's Board
of Trustees or by vote of a majority of the outstanding voting securities of the
particular Fund. Notwithstanding the foregoing, this Agreement may be terminated
at any time, without the payment of any penalty, by the Trust (by vote of the
Trust's Board of Trustees or by vote of a majority of the outstanding voting
securities of the particular Fund), or by the Manager on sixty days' written
notice. This Agreement will immediately and automatically terminate in the event
of its assignment. (As used in this Agreement, the terms "majority of the
outstanding voting securities," "interested persons" and "assignment" shall have
the same meaning as such terms in the 1940 Act.)
11. AMENDMENT OF THIS AGREEMENT. No provision of this Agreement may be
amended or terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, waiver, discharge or termination
is sought. No amendment of this Agreement shall be effective until approved in
accordance with the requirements of the 1940 Act.
12. MISCELLANEOUS. Any notice made pursuant to this Agreement shall be
given in writing, addressed and delivered or mailed postage prepaid,
return-receipt requested, to the other party to this Agreement at its principal
place of business. Notice given by a party's attorney shall be deemed to be
notice given by the party. The captions in this Agreement are included for
convenience of reference only and in no way define or delimit any of the
provisions hereof or otherwise affect their construction or effect. If any
provisions of this Agreement shall be held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement shall not be
affected thereby. This Agreement shall be binding upon and shall inure to the
benefit of the parties hereto and their respective successors and shall be
governed by Maryland law.
- 5 -
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
THE COMMUNITY REINVESTMENT ACT
QUALIFIED INVESTMENT FUND
By: /s/ Xxxxx Xxxxx
---------------------------
Authorized Officer
CRAFUND ADVISORS, INC.
By: /s/ Xxxxxxx X. Xxxxxx
---------------------------
Authorized Officer
- 6 -
SCHEDULE A
TO THE
INVESTMENT MANAGEMENT AGREEMENT
BETWEEN
THE COMMUNITY REINVESTMENT ACT QUALIFIED INVESTMENT FUND
AND
CRAFUND ADVISORS, INC.
DATED AS OF JUNE 1, 1999
NAME OF FUND COMPENSATION* DATE
------------ ------------- ----
The Community Reinvestment Act Annual Rate of 0.50% of such June 1, 1999
Qualified Investment Fund Fund's average net assets
*All Fees are computed daily and paid monthly.
CRAFUND ADVISORS, INC. THE COMMUNITY REINVESTMENT ACT
QUALIFIED INVESTMENT FUND
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx Xxxxx
----------------------------- ---------------------------
Name: Xxxxxxx X. Xxxxxx Name: Xxxxx Xxxxx
--------------------------- -------------------------
Title: V.P. Title: President
-------------------------- ------------------------
