CALIFORNIA INVESTMENT TRUST II
OPERATING EXPENSES AGREEMENT
THIS OPERATING EXPENSES AGREEMENT (the "Agreement") is effective as of the
11th day of November 2003, by and between CALIFORNIA INVESTMENT TRUST II, a
Massachusetts business trust (hereinafter called the "Trust"), on behalf of each
series of the Trust listed in APPENDIX A hereto, as may be amended from time to
time (hereinafter referred to individually as a "Fund" and collectively as the
"Funds"), and CCM PARTNERS, a limited partnership organized and existing under
the laws of the State of California (hereinafter called the "Advisor").
WITNESSETH:
WHEREAS, the Advisor renders advice and services to the Funds pursuant to
the terms and provisions of the Investment Advisory Agreements between the Trust
and the Advisor dated January 18, 2000 and January 28, 2000 (collectively, the
"Investment Advisory Agreement"); and
WHEREAS, the Funds are responsible for, and have assumed the obligation
for, payment of certain expenses pursuant to the Investment Advisory Agreement
that have not been assumed by the Advisor; and
WHEREAS, the Advisor desires to limit the Funds' respective Operating
Expenses (as that term is defined in Paragraph 2 of this Agreement) pursuant to
the terms and provisions of this Agreement, and the Trust (on behalf of the
Funds) desires to allow the Advisor to implement those limits;
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:
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1. LIMIT ON OPERATING EXPENSES. The Advisor hereby agrees to limit each
Fund's Operating Expenses to the respective annual rate of total Operating
Expenses specified for that Fund in APPENDIX A of this Agreement (the "Expense
Caps").
2. DEFINITION. For purposes of this Agreement, the term "Operating
Expenses" with respect to a Fund is defined to include all expenses necessary or
appropriate for the operation of the Fund including the Advisor's investment
advisory or management fee as described in the Investment Advisory Agreement,
and other expenses described in the Investment Advisory Agreement, but does not
include front-end or contingent deferred loads, taxes, interest, brokerage
commissions, short sale dividend expenses, expenses incurred in connection with
any merger or reorganization or extraordinary expenses such as litigation.
3. REIMBURSEMENT OF FEES AND EXPENSES. The Advisor, pursuant to the
Investment Advisory Agreement, retains its right to receive reimbursement of
reductions of its investment advisory fee and Operating Expenses paid by it that
are not its responsibility as described in the Investment Advisory Agreement.
4. RECOUPMENT BALANCE. Any fee reduced by the Advisor, or Operating
Expenses paid by it (collectively, "subsidies"), pursuant to this Agreement may
be reimbursed by a Fund to the Advisor no later than the end of the third fiscal
year following the year to which the subsidy relates if the aggregate expenses
for that period do not exceed any more restrictive limitation to which the
Advisor has agreed (subsidies available for reimbursement to the Advisor under
this paragraph are collectively referred to as the "Recoupment Balance") and the
Board of Trustees approves the reimbursement. For example, subsidized Operating
Expenses relating to the period September 1, 2002 through August 31, 2003 would
no longer be eligible for reimbursement after September 1, 2006. The Advisor
generally seeks reimbursement on a rolling three-year basis whereby the oldest
subsidies are recouped first. The Advisor may not request or receive
reimbursement of the
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Recoupment Balance before payment of the Fund's operating expenses for the
current year and cannot cause the Fund to exceed the Expense Cap or any other
agreed upon expense limitation for that year in making such reimbursement. The
Advisor agrees not to request or seek reimbursement of subsidized Operating
Expenses that are no longer eligible for reimbursement.
5. TERM. This Agreement shall become effective on the date specified herein
and shall remain in effect until December 31, 2004, unless sooner terminated as
provided in Paragraph 6 of this Agreement. 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 the Board of
Trustees of the Trust (and separately by the disinterested Trustees of the
Trust).
6. TERMINATION. This Agreement may be terminated at any time by the Trust
on behalf of any one or more of the Funds or by the Board of Trustees of the
Trust, upon sixty (60) days' written notice to the Advisor without payment of
any penalty. The Advisor may decline to renew this Agreement by written notice
to the Trust at least thirty (30) days before its annual expiration date.
7. ASSIGNMENT. This Agreement and all rights and obligations hereunder may
not be assigned without the written consent of the other party.
8. 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.
9. 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 of effect.
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10. 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 Investment Company Act of 1940, as amended, and the
Investment Advisers Act of 1940, as amended, and any rules and regulations
promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and attested by their duly authorized officers, all on the day and
year first above written.
CALIFORNIA INVESTMENT TRUST CCM PARTNERS
By: By:
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Name: Name:
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Title: Title:
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APPENDIX A
(UPDATED NOVEMBER 11, 2003)
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Operating
Fund Expense Limit Effective Date
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o U.S. Government Securities Fund Undesignated Class - 1.00% December 4, 1985
Class K - 1.50% October 31, 2003
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o Short-Term U.S. Government Bond Fund Undesignated Class - 1.00% January 18, 2000
Class K - 1.50% October 31, 2003
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o The United States Treasury Trust Undesignated Class - 1.00% April 26, 1989
Class K - 1.50% October 31, 2003
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o S&P 500 Fund Undesignated Class - 1.00% April 20, 1992
Class K - 1.50% October 31, 2003
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o S&P MidCap Fund Undesignated Class - 1.00% April 20, 1992
Class K - 1.50% October 31, 2003
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o S&P SmallCap Fund Undesignated Class - 1.00% October 2, 1996
Class K - 1.50% October 31, 2003
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o Equity Income Fund Undesignated Class - 1.00% September 4, 1996
Class K - 1.50% October 31, 2003
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o Nasdaq-100 Index Fund Undesignated Class - 1.00% January 18, 2000
Class K - 1.50% October 31, 2003
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o European Growth & Income Fund Undesignated Class - 1.00% January 18, 2000
Class K - 1.50% October 31, 2003
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CALIFORNIA INVESTMENT TRUST CCM PARTNERS
By: By:
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Name: Name:
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Title: Title:
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Date: Date:
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