XXXXXX CALIFORNIA TAX EXEMPT INCOME FUND
MANAGEMENT CONTRACT
This Management Contract is dated as of February 27, 2014
between XXXXXX CALIFORNIA TAX EXEMPT INCOME FUND, a Massachusetts
business trust (the Fund), and XXXXXX INVESTMENT MANAGEMENT, LLC,
a Delaware limited liability company (the Manager).
In consideration of the mutual covenants herein contained,
it is agreed as follows:
1. SERVICES TO BE RENDERED BY MANAGER TO FUND.
(a) The Manager, at its expense, will furnish continuously
an investment program for the Fund or, in the case of a Fund that
has divided its shares into two or more series under Section
18(f)(2) of the Investment Company Act of 1940, as amended (the
1940 Act), each series of the Fund identified from time to time
on Schedule A to this Contract (each reference in this Contract
to a Fund or to the Fund is also deemed to be a reference to any
existing series of the Fund, as appropriate in the particular
context), will determine what investments will be purchased, held,
sold or exchanged by the Fund and what portion, if any, of the
assets of the Fund will be held uninvested and will, on behalf of
the Fund, make changes in such investments. Subject always to the
control of the Trustees of the Fund and except for the functions
carried out by the officers and personnel referred to in Section
1(d), the Manager will also manage, supervise and conduct the
other affairs and business of the Fund and matters incidental
thereto. In the performance of its duties, the Manager will
comply with the provisions of the Agreement and Declaration of
Trust and By-Laws of the Fund and the stated investment
objectives, policies and restrictions of the Fund, will use its
best efforts to safeguard and promote the welfare of the Fund and
to comply with other policies which the Trustees may from time to
time determine and will exercise the same care and diligence
expected of the Trustees.
(b) The Manager, at its expense, except as such expense is
paid by the Fund as provided in Section 1(d), will furnish (1)
all necessary investment and management facilities, including
salaries of personnel, required for it to execute its duties
faithfully; (2) suitable office space for the Fund; and (3)
administrative facilities, including bookkeeping, clerical
personnel and equipment necessary for the efficient conduct of
the affairs of the Fund, including determination of the net asset
value of the Fund, but excluding shareholder accounting services.
Except as otherwise provided in Section 1(d), the Manager will
pay the compensation, if any, of the officers of the Fund.
(c) The Manager, at its expense, will place all orders for
the purchase and sale of portfolio investments for the Funds
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 will use its best efforts to obtain for the
Fund the most favorable price and execution available, except to
the extent it may be permitted to pay higher brokerage
commissions for brokerage and research services as described
below. In using its best efforts to obtain for the Fund the most
favorable price and execution available, the Manager, bearing in
mind the Funds best interests at all times, will consider all
factors it deems relevant, including by way of illustration,
price, the size of the transaction, the nature of the market for
the security, the amount of the commission, the timing
of the transaction taking into account market prices and trends,
the reputation, experience and financial stability of the broker
or dealer involved and the quality of service rendered by the
broker or dealer in other transactions. Subject to such policies
as the Trustees of the Fund may determine, the Manager will not
be deemed to have acted unlawfully or to have breached any duty
created by this Contract or otherwise solely by reason of its
having caused the Fund to pay a broker or dealer that provides
brokerage and research services to the Manager an amount of
commission for effecting a portfolio investment transaction in
excess of the amount of commission another broker or dealer would
have charged for effecting that transaction, if the Manager
determines in good faith that such amount of commission was
reasonable in relation to the value of the brokerage and research
services provided by such broker or dealer, viewed in terms of
either that particular transaction or the Managers overall
responsibilities with respect to the Fund and to other clients of
the Manager as to which the Manager exercises investment
discretion. The Manager agrees that in connection with purchases
or sales of portfolio investments for the Funds account, neither
the Manager nor any officer, director, employee or agent of the
Manager shall act as a principal or receive any commission other
than as provided in Section 3.
(d) The Fund will pay or reimburse the Manager for the
compensation in whole or in part of such officers of the Fund and
persons assisting them as may be determined from time to time by
the Trustees of the Fund. The Fund will also pay or reimburse the
Manager for all or part of the cost of suitable office space,
utilities, support services and equipment attributable to such
officers and persons as may be determined in each case by the
Trustees of the Fund. The Fund will pay the fees, if any, of the
Trustees of the Fund.
(e) The Manager will not be obligated to pay any expenses
of or for the Fund not expressly assumed by the Manager pursuant
to this Section 1 other than as provided in Section 3.
(f) Subject to the prior approval of a majority of the
Trustees, including a majority of the Trustees who are not
interested persons and, to the extent required by the 1940 Act
and the rules and regulations under the 1940 Act, subject to any
applicable guidance or interpretation of the Securities and
Exchange Commission or its staff, by the shareholders of the Fund,
the Manager may, from time to time, delegate to a sub-adviser or
sub-administrator any of the Managers duties under this Contract,
including the management of all or a portion of the assets being
managed. In all instances, however, the Manager must oversee the
provision of delegated services, the Manager must bear the
separate costs of employing any sub-adviser or sub-administrator,
and no delegation will relieve the Manager of any of its
obligations under this Contract.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees,
officers and employees of the Fund may be a shareholder, director,
officer or employee of, or be otherwise interested in, the
Manager, and in any person controlled by or under common control
with the Manager, and that the Manager and any person controlled
by or under common control with the Manager may have an interest
in the Fund. It is also understood that the Manager and any
person controlled by or under common control with the Manager may
have advisory, management, service or other contracts with other
organizations and persons and may have other interests and
business.
3. COMPENSATION TO BE PAID BY THE FUND TO THE MANAGER.
The Fund will pay to the Manager as compensation for the
Managers services rendered, for the facilities furnished and for
the expenses borne by the Manager pursuant to paragraphs (a), (b),
and (c) of Section 1, a fee, based on the Funds Average Net
Assets, computed and paid monthly at the annual rates set forth
on Schedule B attached to this Contract, as from time to time
amended. The Funds Average Net Assets means the average of all of
the determinations of the Funds net asset value at the close of
business on each business day during each month while this
Contract is in effect. The fee is payable for each month within
15 days after the close of the month.
The fees payable by the Fund to the Manager pursuant to this
Section 3 will be reduced by any commissions, fees, brokerage or
similar payments received by the Manager or any affiliated person
of the Manager in connection with the purchase and sale of
portfolio investments of the Fund, less any direct expenses
approved by the Trustees incurred by the Manager or any
affiliated person of the Manager in connection with obtaining
such payments.
In the event that expenses of the Fund for any fiscal year
exceed the expense limitation on investment company expenses
imposed by any statute or regulatory authority of any
jurisdiction in which shares of the Fund are qualified for offer
or sale, the compensation due the Manager for such fiscal year
will be reduced by the amount of excess by a reduction or refund
thereof. In the event that the expenses of the Fund exceed any
expense limitation which the Manager may, by written notice to
the Fund, voluntarily declare to be effective subject to such
terms and conditions as the Manager may prescribe in such notice,
the compensation due the Manager will be reduced, and if
necessary, the Manager will assume expenses of the Fund, to the
extent required by the terms and conditions of such expense
limitation.
If the Manager serves for less than the whole of a month,
the foregoing compensation will be prorated.
4. ASSIGNMENT TERMINATES THIS CONTRACT; AMENDMENTS OF THIS
CONTRACT.
This Contract will automatically terminate, without the
payment of any penalty, in the event of its assignment, provided
that no delegation of responsibilities by the Manager pursuant to
Section 1(f) will be deemed to constitute an assignment. No
provision of this Contract may be changed, waived, discharged 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 Contract
is effective until approved in a manner consistent with the 1940
Act, the rules and regulations under the 1940 Act and any
applicable guidance or interpretation of the Securities and
Exchange Commission or its staff.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS CONTRACT.
This Contract is effective upon its execution and will
remain in full force and effect as to a Fund continuously
thereafter (unless terminated automatically as set forth in
Section 4 or terminated in accordance with the following
paragraph) through June 30, 2014, and will continue
in effect from year to year thereafter so long as its continuance
is approved at least annually by (i) the Trustees, or the
shareholders by the affirmative vote of a majority of the
outstanding shares of the respective Fund, and (ii) a majority of
the Trustees who are not interested persons of the Fund or of the
Manager, by vote cast in person at a meeting called for the
purpose of voting on such approval.
Either party hereto may at any time terminate this Contract
as to a Fund by not less than 60 days written notice delivered or
mailed by registered mail, postage prepaid, to the other party.
Action with respect to a Fund may be taken either (i) by vote of
a majority of the Trustees or (ii) by the affirmative vote of a
majority of the outstanding shares of the respective Fund.
Termination of this Contract pursuant to this Section 5 will
be without the payment of any penalty.
6. CERTAIN DEFINITIONS.
For the purposes of this Contract, the affirmative vote of a
majority of the outstanding shares of a Fund means the
affirmative vote, at a duly called and held meeting of
shareholders of the respective Fund, (a) of the holders of 67% or
more of the shares of the Fund present (in person or by proxy)
and entitled to vote at the meeting, if the holders of more than
50% of the outstanding shares of the Fund entitled to vote at the
meeting are present in person or by proxy or (b) of the holders
of more than 50% of the outstanding shares of the Fund entitled
to vote at the meeting, whichever is less.
For the purposes of this Contract, the terms affiliated
person, control, interested person and assignment have their
respective meanings defined in the 1940 Act, subject, however, to
the rules and regulations under the 1940 Act and any applicable
guidance or interpretation of the Securities and Exchange
Commission or its staff; the term approve at least annually will
be construed in a manner consistent with the 1940 Act and the
rules and regulations under the 1940 Act and any applicable
guidance or interpretation of the Securities and Exchange
Commission or its staff; and the term brokerage and research
services has the meaning given in the Securities Exchange Act of
1934 and the rules and regulations under the Securities Exchange
Act of 1934 and under any applicable guidance or interpretation
of the Securities and Exchange Commission or its staff.
7. NON-LIABILITY OF MANAGER.
In the absence of willful misfeasance, bad faith or gross
negligence on the part of the Manager, or reckless disregard of
its obligations and duties hereunder, the Manager shall not be
subject to any 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.
8. LIMITATION OF LIABILITY OF THE TRUSTEES, OFFICERS, AND
SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund
is on file with the Secretary of The Commonwealth of
Massachusetts, and notice is hereby given that this instrument is
executed on behalf of the Trustees of the Fund as Trustees and
not individually and that the obligations of or arising out of
this instrument are not binding upon any of the Trustees,
officers or shareholders individually but are binding only upon
the assets and property of the respective Fund.
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IN WITNESS WHEREOF, XXXXXX CALIFORNIA TAX EXEMPT INCOME FUND
and XXXXXX INVESTMENT MANAGEMENT, LLC have each caused this
instrument to be signed on its behalf by its President or a Vice
President thereunto duly authorized, all as of the day and year
first above written.
XXXXXX CALIFORNIA TAX EXEMPT INCOME
FUND
By: /s/ Xxxxxxxx X. Xxxxxxx
Xxxxxxxx X. Xxxxxxx
Executive Vice President, Principal
Executive Officer, and Compliance
Liaison
XXXXXX INVESTMENT MANAGEMENT, LLC
By: /s/ Xxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Director of Trustee Relations and
Authorized Person
Schedule A
Not applicable.
Schedule B
0.590% of the first $5 billion of Total Open-End Mutual Fund
Average Net Assets;
0.540% of the next $5 billion of Total Open-End Mutual Fund
Average Net Assets;
0.490% of the next $10 billion of Total Open-End Mutual Fund
Average Net Assets;
0.440% of the next $10 billion of Total Open-End Mutual Fund
Average Net Assets;
0.390% of the next $50 billion of Total Open-End Mutual Fund
Average Net Assets;
0.370% of the next $50 billion of Total Open-End Mutual Fund
Average Net Assets;
0.360% of the next $100 billion of Total Open-End Mutual Fund
Average Net Assets;
0.355% of any excess thereafter.
Total Open-End Mutual Fund Average Net Assets means the average
of all of the determinations of the aggregate net assets of all
open-end funds sponsored by Xxxxxx Management (excluding the net
assets of such funds investing in, or invested in by, other such
funds, such as Xxxxxx RetirementReady Funds and Xxxxxx Money
Market Liquidity Fund, to the extent necessary to avoid double-
counting of such net assets) at the close of business on each
business day during each month while the Management Contract is
in effect.
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