--------------------------------------------------------------------------------
Exhibit 23 (d) (1)
Investment Advisory Contract
--------------------------------------------------------------------------------
INVESTMENT MANAGEMENT AGREEMENT
-------------------------------
THIS INVESTMENT MANAGEMENT AGREEMENT made as of the 31st day of December,
1985, by and between CALIFORNIA INVESTMENT TRUST II, a Massachusetts Business
Trust (hereinafter called the "Trust"), and CCM Partners, a California Limited
Partnership (hereinafter called the "Manager").
W I T N E S S E T H:
- - - - - - - - - -
WHEREAS, the Trust is an open-end management investment company, registered
as such under the Investment Company Act of 1940; and
WHEREAS, the Manager is registered as an investment adviser under the
Investment Advisers Act of 1940, 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 Trust and to each of the separate series formed under the Trust
(such series hereinafter referred to individually as a 'Fund" and collectively
as the 'Funds') pursuant to the terms and provisions of this Agreement, and the
manager is interested in xxxxxxxxxx said advice and services.
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:
1. The Trust hereby employs the Manager and the Manager hereby accepts such
employment, to render investment advice and investment management services with
respect to the assets of the Trust and each of the Funds, subject to the
supervision and direction of the Trust's Board of Trustees. The Manager shall,
except as otherwise provided for herein, render or make available all services
needed for the management and operation of the Trust and the Funds, and shall,
as part of its duties hereunder, (i) furnish the Trust with advice and
recommendations with respect to the investment of the Funds' assets and the
purchase and sale of their portfolio securities, including the taking of such
other steps as may be necessary to implement such advice and recommendations,
(ii) furnish the Trust with reports, statements and other data on securities,
economic conditions and other pertinent subjects which the Trust's Board of
Trustees may request, and (iii) in general superintend and manage the
investments of the Trust and the Funds, subject to the ultimate supervision and
direction of the Trust's Board of Trustees.
2. The Manager shall use its best judgment and efforts in rendering the
advice and services to the Trust as contemplated by this Agreement.
3. The manager shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Trust in any way, or
in any way be deemed
2
an agent for the Trust. It is expressly understood and agreed that the services
to be rendered by the Manager to the Trust 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.
4. The Manager agrees to use its best efforts in the furnishing of such
advice and recommendations to the Trust and the Funds, in the preparation of
reports and information, and in the management of the Funds' assets, all
pursuant to this Agreement, and for this purpose 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, 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
may desire and request.
5. The Trust will from time to time furnish to the Manager detailed
statements of the investments and assets of the Trust and the Funds and
information as to their respective investment objectives and needs, and will
make available to the Manager such financial reports, proxy statements, legal
and other information relating to the
3
Funds' investments as may be in the possession of the Trust or available to it,
together with such other information as the Manager may reasonably request.
6. The Manager shall bear and pay the costs of rendering the services to be
performed by it under this Agreement. The Trust and each Fund shall bear and pay
for all other expenses of their operation, including, but not limited to,
expenses incurred in connection with the issuance, registration and transfer of
their shares; fees of their custodian, transfer and shareholder servicing agent;
costs and expenses of pricing and calculating each Fund's daily net asset value
and of maintaining its books of account as required by the Investment Company
Act of 1940; expenditures in connection with meetings of the Trust's
shareholders and trustees, except those called solely to accommodate the
Manager; salaries of officers and fees and expenses of trustees or members of
any advisory board or committee of the Trust who are not members of, affiliated
with or interested persons of the Manager; salaries of and costs related to
personnel involved in placing orders for the execution of the Funds' portfolio
transactions or in maintaining registration of the Funds' shares under state
securities laws; insurance premiums on property or personnel of the Trust which
inure to its benefit; the cost of preparing and printing reports, proxy
statements, prospectuses, and statements of additional information of the Trust
or other communications for distribution to its shareholders; legal, auditing
and accounting fees; trade association dues; fees and expenses of registering
and maintaining registration of the Trust's shares for sale under Federal and
applicable State securities laws; and all other charges and costs of the Trust's
operation plus any extraordinary and non-recurring expenses, except as herein
otherwise
4
prescribed. To the extent the Manager incurs any costs or performs any services
which are an obligation of the Trust, as set forth herein, the Trust shall
promptly reimburse the Manager for such costs and expenses. To the extent the
services for which the Trust is obligated to pay are performed by the Manager,,
the Manager shall be entitled to recover from the Trust only to the extent of
the Manager's costs for such services, including the cost of personnel, office
space, and other facilities applicable to the furnishing of such services.
7. (a) Each Fund shall pay to the Manager, and the Manager agrees to
accept, as full compensation for all administrative and investment management
services furnished or provided to the Trust and the Funds pursuant to this
Agreement, a management fee computed at the following annual percentages of the
average daily net assets of each Fund:
0.50% on the first $100 million of net assets; plus
0.45% on net assets from $100 million to and including $500 million; plus
0.40% on net assets in excess of $500 million.
(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) To the extent that the gross operating costs and expenses of each
Fund (excluding any extraordinary expenses, such as litigation) exceed 1.00% of
such
5
Fund's average daily net asset value for any one (1) fiscal year, -the Manager
shall reimburse such Fund for the amount of such excess expenses.
(d) 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.
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.
(e) The Manager may waive any portion of the compensation or
reimbursement of expenses due to it pursuant to this Agreement. Any such waiver
shall be applicable only with respect to the specific items waived and shall not
constitute a waiver of any future compensation or reimbursement due to the
Manager hereunder.
8. The Manager agrees that neither it nor any of its officers or employees
shall take any short position in the shares of the Trust. 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 Investment Company Act of 1940, as amended.
6
9. Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its 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.
10. (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 to any shareholder of the Trust 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 Funds.
(b) 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
7
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 1011) within thirty (30) days after a
bill or statement has been received from the Trust therefore 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.
(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 Investment Company Act
of 1940, as amended.
11. The Trust's employment of the Manager is not an exclusive arrangement,
and one or more Funds may from time to time employ other individuals or entities
to furnish them with the services provided for herein. In the event that one or
more of the Funds elect to terminate or not continue this Agreement with the
Manager, then the Manager shall have no duty and be under no obligation-to
continue providing such Fund or Funds the services provided for herein.
12. This Agreement shall remain in effect until December 31, 1987, unless
sooner terminated as hereinafter provided, and shall continue in effect with
respect to
8
each of the Funds for periods not exceeding one (1) year thereafter so long as
such continuation is approved 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 desiring to continue the Agreement, and (ii) the vote of a majority of
the trustees of the Trust who are not parties to this Agreement or interested
persons thereof, cast in person at a meeting called for the purpose of voting on
such approval.
13. This Agreement may be terminated by each of the Funds at any time with
respect to such Fund, 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 terminating Fund or Funds, upon sixty (60) days' written notice to the
Manager, and by the Manager upon sixty (60) days' written notice to the
respective Fund.
14. This Agreement shall terminate automatically with respect to all Funds
in the event of any transfer or assignment thereof, as defined in the Investment
Company Act of 1940, as amended.
15. 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 the: Trust and
each of the Funds.
16. If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.
9
17. The terms "majority of the outstanding voting securities" and
"interested persons" shall have the meanings as set forth in the Investment
Company Act of 1940, as amended.
18. The Manager acknowledges that it has received notice of and accepts the
limitations of the Trust's liability set forth in Article VIII of its Agreement
and Declaration of Trust. The Manager agrees that the Trust's obligations
hereunder shall be limited to the Trust and to the assets of-each respective
Fund, and that the Manager shall not seek satisfaction of any such obligation
from the shareholders of the Trust nor from any Trustee, officer, employee or
agent of the Trust.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the day and year first above written.
CALIFORNIA INVESTMENT TRUST II
By ______________________________
Vice President
CCM PARTNERS,
A California Limited Partnership
By ______________________________
General Partner
10
ADDENDUM TO THE INVESTMENT MANAGEMENT AGREEMENT
BY AND BETWEEN CALIFORNIA INVESTMENT TRUST II,
ON BEHALF OF THE UNITED STATES TREASURY TRUST
AND CCM PARTNERS
California Investment Trust II, on behalf of The United States Treasury
Trust, does hereby adopt and agree to be bound under- the terms and conditions
of the Investment Management Agreement to which this Addendum is attached this
.. day of April, 1989, provided that the management fee to be paid hereunder
shall, for the initial fiscal period of The United States Treasury Trust ending
August 31, 1989, amount to no more than 0.15% per annum of the average daily net
assets of The United States Treasury Trust during said fiscal period.
CALIFORNIA INVESTMENT TRUST II
ON BEHALF OF THE UNITED STATES
TREASURY TRUST
By ______________________________
Xxxxxxx X. XxXxxxxxxx,
Vice President
CCM PARTNERS
By ______________________________
Xxxxxxx X. Xxxxxxx,
General Partner
