INVESTMENT MANAGEMENT AGREEMENT
AGREEMENT made as of the 31st day of May, 1997 by and between Xxxx Xxxxxx
California Tax-Free Daily Income Trust, an unincorporated business trust
organized under the laws of the Commonwealth of Massachusetts (hereinafter
called the "Fund"), and Xxxx Xxxxxx InterCapital Inc., a Delaware corporation
(hereinafter called the "Investment Manager"):
WHEREAS, The Fund is engaged in business as an open-end management
investment company and is registered as such under the Investment Company Act of
1940, as amended (the "Act"); and
WHEREAS, The Investment Manager is registered as an investment adviser under
the Investment Advisers Act of 1940, and engages in the business of acting as
investment adviser; and
WHEREAS, The Fund desires to retain the Investment Manager to render
management and investment advisory services in the manner and on the terms and
conditions hereinafter set forth; and
WHEREAS, The Investment Manager desires to be retained to perform services
on said terms and conditions:
Now, Therefore, this Agreement
W I T N E S S E T H:
that in consideration of the premises and the mutual covenants hereinafter
contained, the Fund and the Investment Manager agree as follows:
1. The Fund hereby retains the Investment Manager to act as investment
manager of the Fund and, subject to the supervision of the Trustees, to
supervise the investment activities of the Fund as hereinafter set forth.
Without limiting the generality of the foregoing, the Investment Manager
shall obtain and evaluate such information and advice relating to the
economy, securities markets and securities as it deems necessary or useful to
discharge its duties hereunder; shall continuously manage the assets of the
Fund in a manner consistent with the investment objectives and policies of
the Fund; shall determine the securities to be purchased, sold or otherwise
disposed of by the Fund and the timing of such purchases, sales and
dispositions; and shall take such further action, including the placing of
purchase and sale orders on behalf of the Fund, as the Investment Manager
shall deem necessary or appropriate. The Investment Manager shall also
furnish to or place at the disposal of the Fund such of the information,
evaluations, analyses and opinions formulated or obtained by the Investment
Manager in the discharge of its duties as the Fund may, from time to time,
reasonably request.
2. The Investment 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 or useful to the
performance of its obligations under this Agreement. Without limiting the
generality of the foregoing, the staff and personnel of the Investment
Manager shall be deemed to include persons employed or otherwise retained by
the Investment Manager to furnish statistical and other factual data, advice
regarding economic factors and trends, information with respect to technical
and scientific developments, and such other information, advice and
assistance as the Investment Manager may desire. The Investment Manager
shall, as agent for the Fund, maintain the Fund's records and books of
account (other than those maintained by the Fund's transfer agent, registrar,
custodian and other agents). All such books and records so maintained shall
be the property of the Fund and, upon request therefor, the Investment
Manager shall surrender to the Fund such of the books and records so
requested.
3. The Fund will, from time to time, furnish or otherwise make
available to the Investment Manager such financial reports, proxy statements
and other information relating to the business and affairs of the Fund as the
Investment Manager may reasonably require in order to discharge its duties
and obligations hereunder.
4. The Investment Manager shall bear the cost of rendering the
investment management and supervisory services to be performed by it under
this Agreement, and shall, at its own expense, pay the compensation of the
officers and employees, if any, of the Fund, and provide such office space
and equipment and such clerical and bookkeeping services as the Fund shall
reasonably require in the conduct of its business, including the
pricing of Fund shares, and preparation of prospectuses, proxy statements and
reports required to be filed with Federal and state securities commissions
(except insofar as the participation or assistance of independent accountants
and attorneys is, in the opinion of the Investment Manager, necessary or
desirable). The Investment Manager shall also bear the cost of telephone
service, heat, light, power and other utilities provided to the Fund, and the
cost of printing (in excess of costs borne by the Fund) and distributing
prospectuses and supplements thereto of the Fund used for sales purposes.
5. The Fund assumes and shall pay or cause to be paid all other
expenses of the Fund, including without limitation: the charges and expenses
of any registrar, any custodian or depository appointed by the Fund for the
safekeeping of its cash, portfolio securities and other property, and any
stock transfer or dividend agent or agents appointed by the Fund; brokers'
commissions chargeable to the Fund in connection with portfolio securities
transactions to which the Fund is a party; all taxes, including securities
issuance and transfer taxes, and fees payable by the Fund to Federal, State
or other governmental agencies; the cost and expense of engraving or printing
share certificates representing shares of the Fund; all costs and expenses in
connection with the registration and maintenance of registration of the Fund
and its shares with the Securities and Exchange Commission and various states
and other jurisdictions (including filing fees and legal fees and
disbursements of counsel); the cost and expense of printing (including
typesetting) and distributing prospectuses of the Fund and supplements
thereto to the Fund's shareholders; all expenses of shareholders' and
Trustees' meetings and of preparing, printing and mailing proxy statements
and reports to shareholders and prospective shareholders; fees and travel
expenses of Trustees or members of any advisory board or committee who are
not employees of the Investment Manager or any corporate affiliate of the
Investment Manager; all expenses incident to the payment of any dividend,
distribution, withdrawal or redemption, whether in shares or in cash; charges
and expenses of legal counsel and independent accountants in connection with
any matter relating to the Fund (not including compensation or expenses of
attorneys employed by the Investment Manager); membership dues of the
Investment Company Institute; interest payable on Fund borrowings; postage;
insurance premiums on property or personnel (including officers and Trustees)
of the Fund which inure to its benefit; extraordinary expenses (including but
not limited to legal claims and liabilities and litigation costs and any
indemnification related thereto); and all other charges and costs of the
Fund's operation unless otherwise explicitly provided herein.
6. For the services to be rendered, the facilities furnished, and the
expenses assumed by the Investment Manager, the Fund shall pay to the
Investment Manager monthly compensation determined by applying the following
annual rates to the Fund's daily net assets: 0.50% of the portion of the
daily net assets not exceeding $500 million; 0.425% of the portion of the
daily net assets exceeding $500 million but not exceeding $750 million;
0.375% of the portion of the daily net assets exceeding $750 million but not
exceeding $1 billion; 0.35% of the portion of the daily net assets exceeding
$1 billion but not exceeding $1.5 billion; 0.325% of the portion of the daily
net assets exceeding $1.5 billion but not exceeding $2 billion; 0.30% of the
portion of the daily net assets exceeding $2 billion but not exceeding $2.5
billion; 0.275% of the portion of the daily net assets exceeding $2.5 billion
but not exceeding $3 billion; and 0.25% of the portion of the daily net
assets exceeding $3 billion. Except as hereinafter set forth, compensation
under this Agreement shall be calculated and accrued daily and the amounts of
the daily accruals shall be paid monthly. Such calculations shall be made by
applying 1/365ths of the annual rates to the Fund's net assets each day
determined as of the close of business on that day or the last previous
business day. If this Agreement becomes effective subsequent to the first day
of a month or shall terminate before the last day of a month, compensation
for that part of the month this Agreement is in effect shall be prorated in a
manner consistent with the calculation of the fees as set forth above.
Subject to the provisions of paragraph 7 hereof, payment of the Investment
Manager's compensation for the preceding month shall be made as promptly as
possible after completion of the computation contemplated by paragraph 7
hereof.
7. In the event the operating expenses of the Fund, including amounts
payable to the Investment Manager pursuant to paragraph 6 hereof, for any
fiscal year ending on a date on which this Agreement is in effect, exceed the
expense limitations applicable to the Fund imposed by state securities laws
or regulations thereunder, as such limitations may be raised or lowered from
time to time, the Investment Manager shall reduce its management fee to the
extent of such excess and, if required, pursuant to any such laws or
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regulations, will reimburse the Fund for annual operating expenses in excess of
any expense limitation that may be applicable; provided, however, there shall be
excluded from such expenses the amount of any interest, taxes, brokerage
commissions and extraordinary expenses (to the extent permitted by state
securities laws or regulations thereunder) paid or payable by the Fund. Such
reduction, if any, shall be computed and accrued daily, shall be settled on a
monthly basis, and shall be based upon the expense limitation applicable to the
Fund as at the end of the last business day of the month. Should two or more
such expense limitations be applicable as at the end of the last business day of
the month, that expense limitation which results in the largest reduction in the
Investment Manager's fee shall be applicable.
For purposes of this provision, should any applicable expense
limitation be based upon the gross income of the Fund, such gross income
shall include, but not be limited to, interest on debt of fixed income
securities in the Fund's portfolio accrued to and including the last day of
the Fund's fiscal year, and dividends declared but not paid on any equity
securities in the Fund's portfolio, the record dates for which fall on or
prior to the last day of such fiscal year, but shall not include gains from
the sales of securities.
8. The Investment Manager will use its best efforts in the
supervision and management of the investment activities of the Fund, but in
the absence of willful misfeasance, bad faith, gross negligence or reckless
disregard of its obligations hereunder, the Investment Manager shall not be
liable to the Fund or any of its investors for any error of judgment or
mistake of law or for any act or omission by the Investment Manager or for
any losses sustained by the Fund or its investors.
9. Nothing contained in this Agreement shall prevent the Investment
Manager or any affiliated person of the Investment Manager from acting as
investment adviser or manager for any other person, firm or corporation and
shall not in any way bind or restrict the Investment Manager or any such
affiliated person from buying, selling or trading any securities or
commodities for their own accounts or for the account of others for whom they
may be acting. Nothing in this Agreement shall limit or restrict the right of
any director, officer or employee of the Investment Manager to engage in any
other business or to devote his or her time and attention in part to the
management or other aspects of any other business whether of a similar or
dissimilar nature.
10. This Agreement shall remain in effect until April 30, 1999 and
from year to year thereafter provided such continuance is approved at least
annually by the vote of holders of a majority (as defined in the Act) of the
outstanding voting securities of the Fund or by the Board of Trustees of the
Fund; provided that in either event such continuance is also approved
annually by the vote of a majority of the Trustees of the Fund who are not
parties to this Agreement or "interested persons" (as defined in the Act) of
any such party, which vote must be cast in person at a meeting called for the
purpose of voting on such approval; provided, however, that (a) the Fund may,
at any time and without the payment of any penalty, terminate this Agreement
upon thirty days' written notice to the Investment Manager, either by
majority vote of the Board of Trustees of the Fund or by the vote of a
majority of the outstanding voting securities of the Fund; (b) this Agreement
shall immediately terminate in the event of its assignment (within the
meaning of the Act) unless such automatic termination shall be prevented by
an exemptive order of the Securities and Exchange Commission; and (c) the
Investment Manager may terminate this Agreement without payment of penalty on
thirty days' written notice to the Fund. Any notice under this Agreement
shall be given in writing, addressed and delivered, or mailed post-paid, to
the other party at the principal office of such party.
11. This Agreement may be amended by the parties without the vote or
consent of shareholders of the Fund to supply any omission, to cure, correct
or supplement any ambiguous, defective or inconsistent provision hereof, or
if they deem it necessary to conform this Agreement to the requirements of
applicable federal laws or regulations, but neither the Fund nor the
Investment Manager shall be liable for failing to do so.
12. This Agreement shall be construed in accordance with the law of
the State of New York and the applicable provisions of the Act. To the extent
the applicable law of the State of New York, or any of the provisions herein,
conflicts with the applicable provisions of the Act, the latter shall control.
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13. The Investment Manager and the Fund each agree that the name
"Xxxx Xxxxxx," which comprises a component of the Fund's name, is a property
right of Xxxx Xxxxxx Xxxxxxxx Inc. The Fund agrees and consents that (i) it
will only use the name "Xxxx Xxxxxx" as a component of its name and for no
other purpose, (ii) it will not purport to grant to any third party the right
to use the name "Xxxx Xxxxxx" for any purpose, (iii) the Investment Manager
or its parent, Xxxxxx Xxxxxxx, Xxxx Xxxxxx, Discover & Co., or any corporate
affiliate of the Investment Manager's parent, may use or grant to others the
right to use the name "Xxxx Xxxxxx," or any combination or abbreviation
thereof, as all or a portion of a corporate or business name or for any
commercial purpose, including a grant of such right to any other investment
company, (iv) at the request of the Investment Manager or its parent, the
Fund will take such action as may be required to provide its consent to the
use of the name "Xxxx Xxxxxx," or any combination or abbreviation thereof, by
the Investment Manager or its parent or any corporate affiliate of the
Investment Manager's parent, or by any person to whom the Investment Manager
or its parent or any corporate affiliate of the Investment Manager's parent
shall have granted the right to such use, and (v) upon the termination of any
investment advisory agreement into which the Investment Manager and the Fund
may enter, or upon termination of affiliation of the Investment Manager with
its parent, the Fund shall, upon request by the Investment Manager or its
parent, cease to use the name "Xxxx Xxxxxx" as a component of its name, and
shall not use the name, or any combination or abbreviation thereof, as a part
of its name or for any other commercial purpose, and shall cause its
officers, Trustees and shareholders to take any and all actions which the
Investment Manager or its parent may request to effect the foregoing and to
reconvey to the Investment Manager or its parent any and all rights to such
name.
14. The Declaration of Trust establishing Xxxx Xxxxxx California
Tax-Free Daily Income Trust, dated March 29, 1988, a copy of which, together
with all amendments thereto (the "Declaration"), is on file in the office of
the Secretary of the Commonwealth of Massachusetts, provides that the name
Xxxx Xxxxxx California Tax-Free Daily Income Trust refers to the Trustees
under the Declaration collectively as Trustees, but not as individuals or
personally; and no Trustee, shareholder, officer, employee or agent of Xxxx
Xxxxxx California Tax-Free Daily Income Trust shall be held to any personal
liability, nor shall resort be had to their private property for the
satisfaction of any obligation or claim or otherwise, in connection with the
affairs of said Xxxx Xxxxxx California Tax-Free Daily Income Trust, but the
Trust Estate only shall be liable.
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Agreement on the day and year first above written in New York, New York.
XXXX XXXXXX CALIFORNIA TAX-FREE DAILY INCOME
TRUST
By:
.................................................................
Attest:
................................................................
XXXX XXXXXX INTERCAPITAL INC.
By:
.................................................................
Attest:
................................................................
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