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Exhibit 23 (d) (2)
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Investment Management Agreement
MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made as of January 13, 2000, by and between
California Investment Trust II, a Massachusetts business trust (the "Trust"), on
behalf the series of the Trust identified in the Appendix attached hereto (the
"Fund"), and CCM PARTNERS, a limited partnership organized and existing under
the laws of the State of California (the "Manager").
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940, as amended (the "1940 Act");
and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, as amended, and is engaged in the business of
supplying investment advice, investment management and administrative services,
as an independent contractor; and
WHEREAS, the Trust desires to retain the Manager to render advice and
services to the Fund pursuant to the terms and provisions of this Agreement, and
the Manager is interested in furnishing said advice and services;
NOW THEREFORE, the Trust and the Manager mutually agree as follows:
1. APPOINTMENT OF MANAGER. The Trust hereby employs the Manager and the
Manager hereby accepts such employment, to render investment advice and
management services with respect to the assets of the Fund for the period and on
the terms set forth in this Agreement, subject to the supervision and direction
of the Trust's Board of Trustees.
2. DUTIES OF MANAGER.
(a) General Duties. The Manager shall act as investment manager to the Fund
and shall supervise investments of the Fund on behalf of the Fund in accordance
with the investment objectives, programs and restrictions of the Fund as
provided in the Trust's governing documents, including, without limitation, the
Trust's Agreement and Declaration of Trust and By-Laws, and such other
limitations as the Trustees may impose from time to time in writing to the
Manager. The Manager shall, except as otherwise provided for herein, render or
make available all services needed for the management, administration and
operation of the Fund. Without limiting the generality of the foregoing, the
Manager shall: (i) furnish the Fund with advice and recommendations with respect
to the investment of the Fund's assets and the purchase and sale of portfolio
securities for the Fund, including the taking of such other steps as may be
necessary to implement such advice and recommendations; (ii) furnish the Fund
with reports, statements and other data on securities, economic conditions and
other pertinent subjects which the Trust's Board of Trustees may reasonably
request; (iii) manage the investments of the Fund, subject to the ultimate
supervision and direction of the Trust's Board of Trustees; (iv) provide persons
satisfactory to the Trust's Board of Trustees to act as officers and employees
of the Trust and the Fund (such officers and employees, as well as certain
Trustees, may be trustees, directors, officers, partners, or employees of the
Manager or its affiliates); and (v) render to the
Trust's Board of Trustees such periodic and special reports with respect to the
Fund's investment activities as the Board may reasonably request.
(b) Brokerage. The Manager shall place orders for the purchase and sale of
securities either directly with the issuer or with a broker or dealer selected
by the Manager. In placing the Fund's securities trades, it is recognized that
the Manager will give primary consideration to securing the most favorable price
and efficient execution, so that the Fund's total cost or proceeds in each
transaction will be the most favorable under all the circumstances. Within the
framework of this policy, the Manager may consider the financial responsibility,
research and investment information, and other services provided by brokers or
dealers who may effect or be a party to any such transaction or other
transactions to which other clients of the Manager may be a party. It is
understood that an affiliate of the Manager may act as one of the Fund's brokers
in the purchase and sale of portfolio securities for the Fund, consistent with
the requirements of the 1940 Act.
It is also understood that it may be desirable for the Fund that the
Manager have access to investment and market research and securities and
economic analyses provided by brokers and others. It is also understood that
brokers providing such services may execute brokerage transactions at a higher
cost to the Fund than might result from the allocation of brokerage to other
brokers on the basis or seeking the most favorable price and efficient
execution. Therefore, the purchase and sale of securities for the Fund may be
made with brokers who provide such research and analysis, subject to review by
the Trust's Board of Trustees from time to time with respect to the extent and
continuation of this practice to determine whether the Fund benefits, directly
or indirectly, from such practice. It is understood by both parties that the
Manager may select broker-dealers for the execution of the Fund's portfolio
transactions who provide research and analysis as the Manager may lawfully and
appropriately use in its investment management and advisory capacities, whether
or not such research and analysis may also be useful to the Manager in
connection with its services to other clients.
On occasions when the Manager deems the purchase or sale of a security to
be in the best interest of the Fund as well as of other clients, the Manager, to
the extent permitted by applicable laws and regulations, may aggregate the
securities to be so purchased or sold in order to obtain the most favorable
price or lower brokerage commissions and the most efficient execution. 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 other clients.
3. BEST EFFORTS AND JUDGMENT. The Manager shall use its best judgment and
efforts in rendering the advice and, services to the Fund as contemplated by
this Agreement.
4. INDEPENDENT CONTRACTOR. The Manager shall, for all purposes herein, be
deemed to be an independent contractor, and shall, unless otherwise expressly
provided and authorized to do so, have no authority to act for or represent the
Trust or the Fund in any way, or in any way be deemed an agent for the Trust or
for the Fund. It is expressly understood and agreed that the services to be
rendered by the Manager to the Fund under the provisions of this Agreement are
not to be deemed exclusive, and the Manager shall be free to render similar or
different services to others so long as its ability to render the services
provided for in this Agreement shall not be impaired thereby.
5. MANAGER'S PERSONNEL. The Manager shall, at its own expense, maintain
such staff and employ or retain such personnel and consult with such other
persons as it shall from time to time determine to be necessary to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Manager shall be
deemed to include persons employed or retained by the Manager to furnish
statistical information, research, and other factual information, advice
regarding economic factors and trends, information with respect to technical and
scientific developments, and such other information, advice and assistance as
the Manager or the Trust's Board of Trustees may desire and reasonably request.
6. REPORTS BY FUND TO MANAGER. Each Fund from time to time will furnish to
the Manager detailed statements of its investments and assets, and information
as to its investment objective and needs, and will make available to the Manager
such financial reports, proxy statements, legal and other information relating
to the Fund's investments as may be in its possession or available to it,
together with such other information as the Manager may reasonably request.
7. EXPENSES.
(a) The Manager shall bear and pay the costs of rendering the services to
be performed by it under this Agreement. In addition, with respect to the
operation of the Fund, the Manager is responsible for (i) the compensation of
any of the Trust's trustees, officers, and employees who are affiliates of the
Manager, (ii) the expenses of printing and distributing the Fund's prospectuses,
statements of additional information, and sales and advertising materials (but
not the legal, auditing or accounting fees attendant thereto) to prospective
investors (but not to existing shareholders), and (iii) providing office space
and equipment reasonably necessary for the operation of the Fund.
(b) The Fund is responsible for and has assumed the obligation for payment
of all of its expenses, other than as stated in Subparagraph 7(a) above,
including but not limited to: fees and expenses incurred in connection with the
issuance, registration and transfer of its shares; brokerage and commission
expenses; all expenses of transfer, receipt, safekeeping, servicing and
accounting for the cash, securities and other property of the Trust for the
benefit of the Fund including all fees and expenses of its custodian,
shareholder services agent and accounting services agent; interest charges on
any borrowings; costs and expenses of pricing and calculating its daily net
asset value and of maintaining its books of account required under the 1940 Act;
taxes, if any; expenditures in connection with meetings of the Fund's
Shareholders and Board of Trustees that are properly payable by the Fund;
salaries and expenses of officers and fees and expenses of members of the
Trust's Board of Trustees or members of any advisory board or committee who are
not members of, affiliated with or interested persons of the Manager; insurance
premiums on property or personnel of the Fund which inure to its benefit,
including liability and fidelity bond insurance; the cost of preparing and
printing reports, proxy statements, prospectuses and statements of additional
information of the Fund or other communications for distribution to existing
shareholders; legal, auditing and accounting fees; trade association dues; fees
and expenses (including legal fees) of registering and maintaining registration
of its shares
for sale under federal and applicable state and foreign securities laws; all
expenses of maintaining and servicing shareholder accounts, including all
charges for transfer, shareholder recordkeeping, dividend disbursing,
redemption, and other agents for the benefit of the Fund, if any; and all other
charges and costs of its operation plus any extraordinary and non-recurring
expenses, except as herein otherwise prescribed.
(c) To the extent the Manager incurs any costs by assuming expenses which
are an obligation of the Fund as set forth herein, the Fund shall promptly
reimburse the Manager for such costs and expenses, except to the extent the
Manager has otherwise agreed to bear such expenses. To the extent the services
for which the Fund is obligated to pay are performed by the Manager, the Manager
shall be entitled to recover from the Fund to the extent of the Manager's actual
costs for providing such services.
8. INVESTMENT ADVISORY AND MANAGEMENT FEE
(a) The Fund shall pay to the Manager, and the Manager agrees to accept, as
full compensation for all administrative and investment management and advisory
services furnished or provided to the Fund pursuant to this Agreement, a
management fee as set forth in the Fee Schedule attached hereto as the Appendix,
as may be amended in writing from time to time by the Trust and the Manager.
(b) The management fee shall be accrued daily by the Fund and paid to the
Manager on the first business day of the succeeding month.
(c) The initial fee under this Agreement shall be payable on the first
business day of the first month following the effective date of this Agreement
and shall be prorated as set forth below. If this Agreement is terminated prior
to the end of any month, the fee to the Manager shall be prorated for the
portion of any month in which this Agreement is in effect which is not a
complete month according to the proportion which the number of calendar days in
the month during which the Agreement is in effect bears to the number of
calendar days in the month, and shall be payable within ten (10) days after the
date of termination.
(d) The fees payable to the Manager under this Agreement will be reduced to
the extent required under the most stringent expense limitation applicable to
the Fund imposed by any state in which shares of the Fund are qualified for
sale. The Manager may reduce any portion of the compensation or reimbursement of
expenses due to it pursuant to this Agreement and may agree to make payments to
limit the expenses that are the responsibility of a Fund under this Agreement.
Except as the Manager may otherwise agree with respect to the Fund, any such
reduction or payment shall be applicable only to such specific reduction or
payment and shall not constitute an agreement to reduce any future compensation
or reimbursement due to the Manager hereunder or to continue future payments.
Any such reduction will be agreed to prior to accrual of the related expense or
fee and will be estimated daily and reconciled and paid on a monthly basis. Any
fee withheld pursuant to this paragraph 8(d) from the Manager shall be
reimbursed by the Fund to the Manager in the first fiscal year or the second
fiscal year next succeeding the fiscal year of the withholding to the extent
permitted by the applicable state law if the aggregate expenses for the next
succeeding fiscal year or second succeeding fiscal year do not exceed the
applicable state limitation or any more restrictive limitation to which the
Manager has agreed.
(e) The Manager may agree not to require payment of any portion of the
compensation or reimbursement of expenses otherwise due to it pursuant to this
Agreement prior to the time such compensation or reimbursement has accrued as a
liability of the Fund. Any such agreement shall be applicable only with respect
to the specific items covered thereby and shall not constitute an agreement not
to require payment of any future compensation or reimbursement due to the
Manager hereunder.
9. TRADING IN FUND SHARES. The Manager agrees that neither it nor any of
its partners, officers or employees shall take any short position in the shares
of the Fund. This prohibition shall not prevent the purchase of such shares by
any of the officers and partners or bona fide employees of the Manager or any
trust, pension, profit-sharing or other benefit plan for such persons or
affiliates thereof, at a price not less than the net asset value thereof at the
time of purchase, as allowed pursuant to rules promulgated under the 1940 Act.
10. CONFLICTS WITH TRUST'S GOVERNING DOCUMENTS AND APPLICABLE LAWS. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust's Agreement and Declaration of Trust, By-Laws, or
any applicable statute or regulation, or to relieve or deprive the Board of
Trustees of the Trust of its responsibility for and control of the conduct of
the affairs of the Trust and the Fund.
11. MANAGER'S LIABILITIES AND INDEMNIFICATION.
(a) The Manager shall have responsibility for the accuracy and completeness
(and liability for the lack thereof) of the statements in the Fund's offering
materials (including the prospectus, the statement of additional information,
advertising and sales materials), except for information supplied by the Trust
or another third party for inclusion therein.
(b) The Manager shall be liable to the Fund for any loss (including
brokerage charges) incurred by the Fund as a result of any improper investment
made by the Manager.
(c) In the absence of willful misfeasance, bad faith, gross negligence, or
reckless disregard of the obligations or duties hereunder on the part of the
Manager, the Manager shall not be subject to liability to the Trust or the Fund
or to any shareholder of the Fund 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 by the Fund.
(d) Notwithstanding the foregoing, the Manager agrees to reimburse the
Trust for any and all costs, expenses, and counsel and trustees' fees reasonably
incurred by the Trust in the preparation, printing and distribution of proxy
statements, amendments to its Registration Statement, holdings of meetings of
its shareholders or trustees, the conduct of factual investigations, any legal
or administrative proceedings (including any applications for exemptions or
determinations by the Securities and Exchange Commission) which the Trust incurs
as the result of action or inaction of the Manager or any of its partners where
the action or inaction necessitating such expenditures (i) is directly or
indirectly related to any transactions or proposed transaction in the interests
or control of the Manager or its affiliates (or litigation related to any
pending or proposed future transaction in such interests or control) which shall
have been undertaken without the prior, express approval of the Trust's Board of
Trustees; or (ii) is within the sole control of the Manager or any of its
affiliates or any of their officers, partners,
employees, or agents. So long as this Agreement is in effect, the Manager shall
pay to the Trust the amount due for expenses subject to this Subparagraph 10(b)
within thirty (30) days after a bill or statement has been received from the
Trust therefor. This provision shall not be deemed to be a waiver of any claim
which the Trust may have or may assert against the Manager or others for costs,
expenses, or damages heretofore incurred by the Trust or for costs, expenses" or
damages the Trust may hereafter incur which are not reimbursable to it
hereunder.
(e) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or partner or officer of the Manager, from
liability in violation of Sections 17(h) and (i) of the 1940 Act.
12. NON-EXCLUSIVITY. The Trust's employment of the Manager is not an
exclusive arrangement, and the Trust may from time to time employ other
individuals or entities to furnish it with the services provided for herein.
13. TERM. This Agreement shall become effective as of the date of execution
and shall remain in effect for a period of two (2) years, unless sooner
terminated as hereinafter provided. This Agreement shall continue in effect
thereafter for additional periods not exceeding one (1) year so long as such
continuation is approved for each Fund at least annually by (i) the Board of
Trustees of the Trust or by the vote of a majority of the outstanding voting
securities of each Fund and (ii) the vote of a majority of the Trustees of the
Trust who are not parties to this Agreement nor interested persons thereof, cast
in person at a meeting called for the purpose of voting on such approval.
14. TERMINATION. This Agreement may be terminated by the Trust on behalf of
the Fund at any time without payment of any penalty, by the Board of Trustees of
the Trust or by vote of a majority of the outstanding voting securities of the
Fund, upon sixty (60) days' written notice to the Manager, and by the Manager
upon sixty (60) days' written notice to the Fund.
15. TERMINATION BY ASSIGNMENT. This Agreement shall terminate automatically
in the event of any transfer or assignment thereof, as defined in the 1940 Act.
16. TRANSFER, ASSIGNMENT. This Agreement may not be transferred, assigned,
sold or in any manner hypothecated or pledged without the affirmative vote or
written consent of the holders of a majority of the outstanding voting
securities of each Fund.
17. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
18. DEFINITIONS. The terms "majority of the outstanding voting securities"
and "interested persons" shall have the meanings as set forth in the 1940 Act.
19. NOTICE OF LIMITATION AN LIABILITY. The Manager acknowledges that it has
received notice of and accepts the limitations of the Trust's liability set
forth in Article III, Section 6(b) of its Agreement and Declaration of Trust.
The Manager agrees that the Trust's obligations under this Agreement with
respect to the Fund shall be limited to the Fund and to its
assets, and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Fund nor from any trustee, officer, employee or
agent of the Trust or the Fund, nor from the assets of shareholders of any other
series of the Trust.
20. CAPTIONS. The captions in this Agreement are included for convenience
of reference only and in no way define or limit any of the provisions hereof or
otherwise affect their construction or effect.
21. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of California without giving effect to
the conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act and the Investment Advisers Act of 1940 and any
rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the day
and year first written above.
CALIFORNIA INVESTMENT TRUST II CCM PARTNERS
a Massachusetts Business Trust a California Limited Partnership
By: /s/ Xxxxxxx X. XxXxxxxxxx By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. XxXxxxxxxx RFS Partners,
Vice President its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxxx, Inc.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Co-trustee
of Xxxxxxx X. Xxxxxxx Trust,
Sole Shareholder of Xxxxxxx X.
Xxxxxxx, Inc.
APPENDIX
TO MANAGEMENT AGREEMENT
Dated January 13, 2000 (the "Management Agreement")
The provisions of the Management Agreement between the Trust and the
Manager apply to the following series of the Trust: Nasdaq-100 Index Fund.
FEE SCHEDULE
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The Fund shall pay to the Manager, as full compensation for all investment
management, advisory and administrative services furnished or provided to the
Fund, pursuant to the Management Agreement, a management fee based upon the
Fund's average daily net assets at the per annum rates:
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0.50% of average net assets up to $500
million, plus
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0.45% of average net assets above $500
million and below $1 billion, plus
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0.40% of average net assets over $1
billion
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FEE LIMITATIONS
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California Investment Trust Funds: To the extent that the gross operating costs
and expenses of the Fund (excluding any extraordinary expenses, such as
litigation) exceed 1.00% of the Fund's average daily net asset value for any one
fiscal year, the Manager shall reimburse the Fund for the amount of such excess
expenses.
