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Exhibit 23 (d) (2)
Investment Advisory Contract
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MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT made as of the 13th day of April, 1992, by and
between CALIFORNIA INVESTMENT TRUST II, a Massachusetts business trust (the
"Trust"), on behalf of each series of the Trust (the "Fund(s)") listed in the
Appendix attached hereto, as such may be amended from time to time 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(s) 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(s) 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(s) and shall supervise investments of the Fund(s) on behalf of the Fund(s)
in accordance with the investment objectives, programs and restrictions of the
Fund(s) 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 Funds. Without limiting the generality of the foregoing, the
Manager shall: (i) furnish the Fund(s) with advice and recommendations with
respect to the investment of each Fund's assets and the purchase and sale of
portfolio securities for the Fund(s), including the taking of such other steps
as may be necessary to implement such advice and recommendations; (ii) furnish
the Fund(s) 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(s), 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(s) (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
each Fund's investment activities as the Board may reasonably request. The
Manager, in its sole discretion, may delegate any one or more of these functions
to a sub-adviser to each Fund (the "Sub-Adviser").
(b) BROKERAGE. The Manager or a Sub-Adviser acting pursuant to an agreement
with 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 each 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 each 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 or Sub-Adviser may act as one of the
Fund's brokers in the purchase and sale of portfolio securities for the Fund(s),
consistent with the requirements of the 1940 Act.
It is also understood that it may be desirable for the Fund(s) that the
Manager and the Sub-Adviser to 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(s) 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(s) 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 each Fund benefits, directly or indirectly, from such practice. It is
understood by both parties that the Manager or the Sub-Adviser may select
broker-dealers for the execution of a Fund's portfolio transactions who provide
research and analysis as the Manager or the Sub-Adviser 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 or the
Sub-Adviser in connection with its services to other clients.
On occasions when the Manager or the Sub-Adviser deems the purchase or sale
of a security to be in the best interest of one or more of the Funds as well as
of other clients, the Manager or the Sub-Adviser, 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 or the Sub-Adviser in the manner it
considers to be the most equitable and consistent with its fiduciary obligations
to the Fund(s) 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(s) 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(s) in any way, or in any way be deemed an agent for the Trust or for
the Fund(s). It is expressly understood and agreed that the services to be
rendered by the Manager to the Fund(s) 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 FUNDS TO MANAGER. Each Fund from time to time will furnish to the
Manager (and the Sub-Adviser) 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 each Fund's investments as may be in its
possession or available to it, together with such other information as the
Manager or the Sub-Adviser 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 each 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) Each 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(s) 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 each 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 each 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(s), 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 a Fund as set forth herein, such 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 a Fund is obligated to pay are performed by the Manager, the Manager
shall be entitled to recover from such Fund to the extent of the Manager's
actual costs for providing such services.
8. INVESTMENT ADVISORY AND MANAGEMENT FEE
(a) Each 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 such Fund pursuant to this Agreement,
a management fee as set forth in the Fee Schedule attached here to 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 each 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 a
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.
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 from the Manager shall be
reimbursed by the appropriate 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
any of the Funds. 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 any 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.
(a) 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(s) or to any shareholder of the Fund(s) 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(s).
(b) The Fund(s) shall indemnify and hold harmless the Manager, its general
partner and partners, shareholders, directors, officers and employees of each of
them (any such person, an "Indemnified Party") against any loss, liability,
claim, damage or expense (including the reasonable cost of investigating and
defending any alleged loss, liability, claim, damage or expenses and reasonable
counsel fees incurred in connection therewith) arising out of the Indemnified
Party's performance or non-performance of any duties under this Agreement;
provided, however, that nothing herein shall be deemed to protect any
Indemnified Party against any liability to which such Indemnified Party would
otherwise be subject by reason of willful misfeasance, bad faith or negligence
in the performance of duties hereunder or by reason of reckless disregard of
obligations and duties under this Agreement.
(c) 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. In the event this
Agreement is terminated with respect to any Fund, this Agreement shall remain in
full force and effect with respect to all other Funds listed on the Appendix
hereto, as the same may be amended.
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 any
one or more of the Funds 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 any one specific 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 Funds.
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
By: /s/ Xxxxxxx X. XxXxxxxxxx
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Xxxxxxx X. XxXxxxxxxx
Vice President
CCM PARTNERS,
a California Limited Partnership
By: /s/ Xxxxxxx X. Xxxxxxx
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RFS Partners,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx, Inc.,
its General Partner
By: /s/ Xxxxxxx X. Xxxxxxx
Xxxxxxx X. Xxxxxxx
President
CCM PARTNERS
APPENDIX
to Management Agreement
Dated April 13, 1992,
as amended on September 4, 1996
FUND NAMES
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The provisions of the Management Agreement between the Trust and the
Manager apply to the following series of the Trust:
1. S&P 500 Index Fund
2. S&P MidCap Index Fund
3. S&P SmallCap Index Fund
4. Equity Income Fund
FEE SCHEDULE
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Each Fund shall pay to the Manager, as full compensation for all investment
management, advisory and administrative services furnished or provided to such
Fund, pursuant to the Management Agreement made as of April 13, 1992, as amended
on September 4, 1996, a management fee based upon each Fund's average daily net
assets at the following per annum rates:
1. S&P 500 Index Fund: 0.25%
2. S&P MidCap Index Fund: 0.40%
3. S&P SmallCap Index Fund: 0.50% of the first $500 million average daily net
assets, 0.45% of the next $500 million average daily net assets and 0.40%
for average daily net assets above 1 billion.
4. Equity Income Fund: 0.50% of the first $500 million average daily net
assets, 0.45% of the next $500 million average daily net assets and 0.40%
for average daily net assets above 1 billion.
