American Century California Tax-Free and Municipal Funds
MANAGEMENT AGREEMENT
This MANAGEMENT AGREEMENT ("Agreement") is made as of the 1st day of
August, 2006 by and between AMERICAN CENTURY CALIFORNIA TAX-FREE AND MUNICIPAL
FUNDS, a Massachusetts business trust and registered investment company (the
"Company"), and AMERICAN CENTURY INVESTMENT MANAGEMENT, INC., a Delaware
corporation (the "Investment Manager").
WHEREAS, a majority of those members of the Board of Trustees of the
Company (collectively, the "Board of Directors", and each Trustee individually a
"Director") who are not "interested persons" as defined in Investment Company
Act (hereinafter referred to as the "Independent Directors"), during its most
recent annual evaluation of the terms of the Agreement pursuant to Section 15(c)
of the Investment Company Act, has approved the continuance of the Agreement as
it relates to each series of shares of the Company set forth on Schedule B
attached hereto (the "Funds").
NOW, THEREFORE, IN CONSIDERATION of the mutual promises and agreements
herein contained, the parties agree as follows:
1. Investment Management Services. The Investment Manager shall supervise
the investments of each Fund. In such capacity, the Investment Manager shall
maintain a continuous investment program for each such Fund, determine what
securities shall be purchased or sold by each Fund, secure and evaluate such
information as it deems proper and take whatever action is necessary or
convenient to perform its functions, including the placing of purchase and sale
orders.
2. Compliance with Laws. All functions undertaken by the Investment Manager
hereunder shall at all times conform to, and be in accordance with, any
requirements imposed by:
(a) the Investment Company Act and any rules and regulations promulgated
thereunder;
(b) any other applicable provisions of law;
(c) the Declaration of Trust of the Company as amended from time to time;
(d) the By-Laws of the Company as amended from time to time;
(e) the Multiple Class Plan; and
(f) the registration statement(s) of the Company, as amended from time to
time, filed under the Securities Act of 1933 and the Investment Company Act.
3. Board Supervision. All of the functions undertaken by the Investment
Manager hereunder shall at all times be subject to the direction of the Board of
Directors, its executive committee, or any committee or officers of the Company
acting under the authority of the Board of Directors.
4. Payment of Expenses. The Investment Manager will pay all the expenses of
each class of each Fund that it shall manage, other than interest, taxes,
brokerage commissions, portfolio insurance, extraordinary expenses, the fees and
expenses of the Independent Directors (including counsel fees), and expenses
incurred in connection with the provision of shareholder services and
distribution services under a plan adopted pursuant to Rule 12b-1 under the
Investment Company Act. The Investment Manager will provide the Company with all
physical facilities and personnel required to carry on the business of each
class of each Fund that it shall manage, including but not limited to office
space, office furniture, fixtures and equipment, office supplies, computer
hardware and software and salaried and hourly paid personnel. The Investment
Manager may at its expense employ others to provide all or any part of such
facilities and personnel.
5. Account Fees. The Board of Directors may impose fees for various account
services, proceeds of which may be remitted to the appropriate Fund or the
Investment Manager at the discretion of the Board of Directors. At least 60
days' prior written notice of the intent to impose such fee must be given to the
shareholders of the affected series.
6. Management Fees.
(a) In consideration of the services provided by the Investment Manager,
each class of a Fund shall pay to the Investment Manager a management fee that
is calculated as described in this Section 6 using the fee schedules described
herein.
(b) Definitions
(1) An "Investment Team" is the Portfolio Managers that the Investment
Manager has designated to manage a given portfolio.
(2) An "Investment Strategy" is the processes and policies implemented by
the Investment Manager for pursuing a particular investment objective managed by
an Investment Team.
(3) A "Primary Strategy Portfolio" is each Fund, as well as any other
series of any other registered investment company for which the Investment
Manager serves as the investment manager and for which American Century
Investment Services, Inc. serves as the distributor; provided, however, that a
registered investment company that invests its assets exclusively in the shares
of other registered investment companies shall not be a Primary Strategy
Portfolio. Any exceptions to the above requirements shall be approved by the
Board of Directors.
(4) A "Secondary Strategy Portfolio" is another account managed by the
Investment Manager that is managed by the same Investment Team as that assigned
to manage any Primary Strategy Portfolio that shares the same board of directors
or board of trustees as the Company. Any exceptions to this requirement shall be
approved by the Board of Directors.
(5) An "Investment Category" for a Fund is the group to which the Fund is
assigned for determining the first component of its management fee. Each Primary
Strategy Portfolio is assigned to one of the three Investment Categories
indicated below. The Investment Category assignments for the Funds appear in
Schedule B to this Agreement. The amount of assets in each of the Investment
Categories ("Investment Category Assets") is determined as follows:
a) Money Market Fund Category Assets. The assets which are used to
determine the fee for this Investment Category is the sum of the assets of all
of the Primary Strategy Portfolios and Secondary Strategy Portfolios that invest
primarily in debt securities and are subject to Rule 2a-7 under the Investment
Company Act.
b) Bond Fund Category Assets. The assets which are used to determine the
fee for this Investment Category is the sum the assets of all of the Primary
Strategy Portfolios and Secondary Strategy Portfolios that invest primarily in
debt securities and are not subject to Rule 2a-7 under the Investment Company
Act.
c) Equity Fund Category Assets. The assets which are used to determine the
fee for this Investment Category is the sum the assets of all of the Primary
Strategy Portfolios and Secondary Strategy Portfolios that invest primarily in
equity securities.
(6) The "Per Annum Investment Category Fee Dollar Amount" for a Fund is the
dollar amount resulting from applying the applicable Investment Category Fee
Schedule for the Fund (as shown on Schedule A) using the applicable Investment
Category Assets.
(7) The "Per Annum Investment Category Fee Rate" for Fund is the percentage
rate that results from dividing the Per Annum Investment Category Fee Dollar
Amount for the Fund by the applicable Investment Category Assets for the Fund.
(8) The "Complex Assets" is the sum of the assets in all of the Primary
Strategy Portfolios.
(9) The "Per Annum Complex Fee Dollar Amount" for a class of a Fund shall
be the dollar amount resulting from application of the Complex Assets to the
Complex Fee Schedule for the class as shown in Schedule C.
(10) The "Per Annum Complex Fee Rate" for a class of a Fund is the
percentage rate that results from dividing the Per Annum Complex Fee Dollar
Amount for the class of a Fund by the Complex Assets.
(11) The "Per Annum Management Fee Rate" for a class of a Fund is the sum
of the Per Annum Investment Category Fee Rate applicable to the Fund and the Per
Annum Complex Fee Rate applicable to the class of the Fund.
(c) Daily Management Fee Calculation. For each calendar day, each class of
each Fund shall accrue a fee calculated by multiplying the Per Annum Management
Fee Rate for that class times the net assets of the class on that day, and
further dividing that product by 365 (366 in leap years).
(d) Monthly Management Fee Payment. On the first business day of each
month, each class of each series Fund shall pay the management fee to the
Investment Manager for the previous month. The fee for the previous month shall
be the sum of the Daily Management Fee Calculations for each calendar day in the
previous month.
(e) Additional Series or Classes. In the event that the Board of Directors
shall determine to issue any additional series of shares for which it is
proposed that the Investment Manager serve as investment manager, the Company
and the Investment Manager shall enter into an Addendum to this Agreement
setting forth the name of the series and/or classes, as appropriate, the
Applicable Fee and such other terms and conditions as are applicable to the
management of such series and/or classes, or, in the alternative, enter into a
separate management agreement that relates specifically to such series or
classes of shares.
7. Continuation of Agreement. This Agreement shall become effective for
each Fund as of the date first set forth above and shall continue in effect for
each Fund until August 1, 2007, unless sooner terminated as hereinafter
provided, and shall continue in effect from year to year thereafter for each
Fund only as long as such continuance is specifically approved at least annually
(i) by either the Board of Directors or by the vote of a majority of the
outstanding voting securities of such Fund, and (ii) by the vote of a majority
of the Directors, who are not parties to the Agreement or interested persons of
any such party, cast in person at a meeting called for the purpose of voting on
such approval. The annual approvals provided for herein shall be effective to
continue this Agreement from year to year if given within a period beginning not
more than 90 days prior to August 1st of each applicable year, notwithstanding
the fact that more than 365 days may have elapsed since the date on which such
approval was last given.
8. Termination. This Agreement may be terminated, with respect to any Fund,
by the Investment Manager at any time without penalty upon giving the Company 60
days' written notice, and may be terminated, with respect to any Fund, at any
time without penalty by the Board of Directors or by vote of a majority of the
outstanding voting securities of such Fund on 60 days' written notice to the
Investment Manager.
9. Effect of Assignment. This Agreement shall automatically terminate with
respect to any Fund in the event of its assignment by the Investment Manager.
The term "assignment" for this purpose having the meaning defined in Section
2(a)(4) of the Investment Company Act.
10. Other Activities. Nothing herein shall be deemed to limit or restrict
the right of the Investment Manager, or the right of any of its officers,
directors or employees (who may also be a Director, officer or employee of the
Company), to engage in any other business or to devote time and attention to the
management or other aspects of any other business, whether of a similar or
dissimilar nature, or to render services of any kind to any other corporation,
firm, individual or association.
11. Standard of Care. In the absence of willful misfeasance, bad faith,
gross negligence, or reckless disregard of its obligations or duties hereunder
on the part of the Investment Manager, it, as an inducement to it to enter into
this Agreement, shall not be subject to liability to the Company or to any
shareholder of the Company for any act or omission in the course of, or
connected with, rendering services hereunder or for any losses that may be
sustained in the purchase, holding or sale of any security.
12. Separate Agreement. The parties hereto acknowledge that certain
provisions of the Investment Company Act, in effect, treat each series of shares
of a registered investment company as a separate investment company.
Accordingly, the parties hereto hereby acknowledge and agree that, to the extent
deemed appropriate and consistent with the Investment Company Act, this
Agreement shall be deemed to constitute a separate agreement between the
Investment Manager and each Fund.
13. Use of the Name "American Century". The name "American Century" and all
rights to the use of the name "American Century" are the exclusive property of
American Century Proprietary Holdings, Inc. ("ACPH"). ACPH has consented to, and
granted a non-exclusive license for, the use by the Company of the name
"American Century" in the name of the Company and any Fund. Such consent and
non-exclusive license may be revoked by ACPH in its discretion if ACPH, the
Investment Manager, or a subsidiary or affiliate of either of them is not
employed as the investment adviser of each Fund. In the event of such
revocation, the Company and each Fund using the name "American Century" shall
cease using the name "American Century" unless otherwise consented to by ACPH or
any successor to its interest in such name.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers as of the day and year first
written above.
American Century Investment Management, Inc. American Century California Tax-Free and Municipal Funds
/s/ Xxxxxxx X. Xxxxxxxxxxx /s/ Xxxxx X. Xxxxxxxxxx
Xxxxxxx X. Xxxxxxxxxxx Xxxxx X. Xxxxxxxxxx
Senior Vice President Vice President
-----------------------------------------------------------------------------------------------------------------------------------
American Century Schedule A: Investment Category Fee Schedules
-----------------------------------------------------------------------------------------------------------------------------------
Schedule A
Investment Category Fee Schedules
Money Market Funds
======================================================== ==========================================================================
Rate Schedules
Category Assets Schedule 1 Schedule 2 Schedule 3 Schedule 4
-------------------------------- ------------------------ ------------------------ ----------------------- ------------------------
-------------------------------- ------------------------ ------------------------ ----------------------- ------------------------
First $1 billion 0.2500% 0.2700% 0.3500% 0.2300%
Next $1 billion 0.2070% 0.2270% 0.3070% 0.1870%
Next $3 billion 0.1660% 0.1860% 0.2660% 0.1460%
Next $5 billion 0.1490% 0.1690% 0.2490% 0.1290%
Next $15 billion 0.1380% 0.1580% 0.2380% 0.1180%
Next $25 billion 0.1375% 0.1575% 0.2375% 0.1175%
Thereafter 0.1370% 0.1570% 0.2370% 0.1170%
================================ ======================== ======================== ======================= ========================
Bond Funds
============================= =====================================================================================================
Rate Schedules
Category Assets
Schedule 1 Schedule 2 Schedule 3 Schedule 4 Schedule 5 Schedule 6
---- -------------------- -------------------- -------------------- --------------------- -------------------- --------------------
------------------------- -------------------- -------------------- --------------------- -------------------- --------------------
First $1 billion 0.2800% 0.3100% 0.3600% 0.6100% 0.4100% 0.6600%
Next $1 billion 0.2280% 0.2580% 0.3080% 0.5580% 0.3580% 0.6080%
Next $3 billion 0.1980% 0.2280% 0.2780% 0.5280% 0.3280% 0.5780%
Next $5 billion 0.1780% 0.2080% 0.2580% 0.5080% 0.3080% 0.5580%
Next $15 billion 0.1650% 0.1950% 0.2450% 0.4950% 0.2950% 0.5450%
Next $25 billion 0.1630% 0.1930% 0.2430% 0.4930% 0.2930% 0.5430%
Thereafter 0.1925% 0.2425% 0.4925% 0.2925% 0.5425%
============================= ==================== ==================== ==================== ================= ====================
Equity Funds
================================== ===============================================================
Rate Schedules
Category Assets Schedule 1 Schedule 2
---------------------------------- ------------------------------- -------------------------------
---------------------------------- ------------------------------- -------------------------------
First $1 billion 0.5200% 0.7200%
Next $5 billion 0.4600% 0.6600%
Next $15 billion 0.4160% 0.6160%
Next $25 billion 0.3690% 0.5690%
Next $50 billion 0.3420% 0.5420%
Next $150 billion 0.3390% 0.5390%
Thereafter 0.3380% 0.5380%
================================== =============================== ===============================
American Century Schedule B: Complex Fee Schedules
-----------------------------------------------------------------------------------------------------------------------------------
Schedule B
Investment Category Assignments
American Century California Tax-Free and Municipal Funds
====================================================== ===================================================== ======================
Series Category Applicable Fee
Schedule Number
------------------------------------------------------------------------------ ----------------------------------------------------
------------------------------------------------------------------------------ ----------------------------------------------------
California Tax-Free Money Market Fund Money Market Funds 2
------------------------------------------------------------------------------ ----------------------------------------------------
------------------------------------------------------------------------------ ----------------------------------------------------
California Limited-Term Tax-Free Fund Bond Funds 1
------------------------------------------------------------------------------ ----------------------------------------------------
------------------------------------------------------------------------------ ----------------------------------------------------
California Tax-Free Bond Fund Bond Funds 1
------------------------------------------------------------------------------ ----------------------------------------------------
------------------------------------------------------------------------------ ----------------------------------------------------
California Long-Term Tax-Free Fund Bond Funds 1
------------------------------------------------------------------------------ ----------------------------------------------------
------------------------------------------------------------------------------ ----------------------------------------------------
California High-Yield Municipal Fund Bond Funds 2
============================================================================== ====================================================
-----------------------------------------------------------------------------------------------------------------------------------
American Century California Tax-Free and Municipal Funds Schedule C: Complex Fee Schedules
-----------------------------------------------------------------------------------------------------------------------------------
Schedule C
Complex Fee Schedules
====================================================== ============================================================================
Rate Schedules
Complex Assets Advisor Class Institutional Class All Other Classes
--------------------------------------------- --------------------------------- -------------------------------- ------------------
--------------------------------------------- --------------------------------- -------------------------------- ------------------
First $2.5 billion 0.0600% 0.1100% 0.3100%
Next $7.5 billion 0.0500% 0.1000% 0.3000%
Next $15.0 billion 0.0485% 0.0985% 0.2985%
Next $25.0 billion 0.0470% 0.0970% 0.2970%
Next $25.0 billion 0.0370% 0.0870% 0.2870%
Next $25.0 billion 0.0300% 0.0800% 0.2800%
Next $25.0 billion 0.0200% 0.0700% 0.2700%
Next $25.0 billion 0.0150% 0.0650% 0.2650%
Next $25.0 billion 0.0100% 0.0600% 0.2600%
Next $25.0 billion 0.0050% 0.0550% 0.2550%
Thereafter 0.0000% 0.0500% 0.2500%
====================================================== ================================= ================================ =========
====================================================================== ============== ============ ============== ========== ======
Series Investor Institu- Advisor A B C R Class
Class tional Class Class Class Class
Class
---------------------------------------------------------------------- -------------- ------------ -------------- -----------------
>>California High-Yield Municipal Fund Yes No No Yes Yes Yes No
>>California Tax Free Money Market Fund Yes No No No No No No
>>California Tax-Free Bond Fund Yes No No No No No No
>>California Long-Term Tax-Free Fund Yes No No No No No No
>>California Limited-Term Tax-Free Fund Yes No No No No No No
====================================================================== ============== ============ ============== =================
