MANAGEMENT AGREEMENT
THIS MANAGEMENT AGREEMENT is made this 29th day of August, 1997,
between Countrywide Strategic Trust (the "Trust"), a business trust organized
under the laws of the Commonwealth of Massachusetts, and Countrywide
Investments, Inc. (the "Manager"), a corporation organized under the laws of the
State of Ohio.
WHEREAS, the Trust has been organized to operate as an investment
company registered under the Investment Company Act of 1940, as amended (the
"Act");
WHEREAS, the Trust's shares of beneficial interest are divided into
separate series and each such share of a series represents an undivided interest
in the assets, subject to the liabilities, located to that series, and each
series has separate investment objectives and policies; and
WHEREAS, the Growth/Value Fund (the "Fund"), a series of the Trust,
has been created for the purpose of investing and reinvesting its assets in
securities pursuant to the investment objectives and policies as set forth in
its registration statement under the Act and the Securities Act of 1933
("Registration Statement"), as heretofore amended and supplemented; and the
Trust desires to avail itself of the services, information, advice, assistance
and facilities of a manager and to have a manager provide or perform for it
various management, statistical, portfolio adviser selection and other services
for the Fund; and
WHEREAS, the Manager is registered as an investment adviser
under the Investment Advisers Act of 1940, as amended;
NOW, THEREFORE, the Trust and Manager agree as follows:
1. Employment of the Manager. The Trust hereby employs
the Manager to manage the investment and reinvestment of the assets of the Fund
in the manner set forth in subparagraph 2B of this Agreement, subject to the
direction of the Board of Trustees and the officers of the Trust, for the
period, in the manner, and on the terms hereinafter set forth. The Manager
hereby accepts such employment and agrees during such period to render the
services and to assume the obligations herein set forth. The Manager shall for
all purposes herein be deemed to be an independent contractor and shall, except
as expressly provided or authorized (whether herein or otherwise), have no
authority to act for or represent the Fund in any way or otherwise be deemed an
agent of the Fund.
2. Obligation of and Services to be Provided by the Manager. The
Manager undertakes to provide the services hereinafter set forth and to assume
the following obligations:
A. Corporate Management and Administrative Services. The Manager
shall furnish to the Fund, or retain another party or parties
to furnish, the following described services to the Fund: (i)
office space, which may be space within the offices of the
Manager or in such other place as may be agreed upon from time
to time, and (ii) office furnishings, facilities and
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equipment as may be reasonably required for managing and
administering the operations and conducting the business of
the Fund, including complying with the securities, tax and
other reporting requirements of the United States and the
various states in which the Fund does business, conducting
correspondence and other communications with the shareholders
of the Fund, and maintaining or supervising the maintenance of
all records in connection with the investment and business
activities of the Fund.
B. Investment Management Services.
(a) The Manager shall have overall supervisory
responsibility for the general management and
investment of the assets and portfolio securities of
the Fund subject to and in accordance with the
investment objectives and policies of the Fund, and
any directions which the Trust's Board of Trustees
may issue to the Manager from time to time.
(b) The Manager shall provide overall investment programs
and strategies for the Fund, shall revise such
programs as necessary and shall monitor and report
periodically to the Board of Trustees concerning the
implementation of the programs.
(c) The Manager, with the approval of the Board of
Trustees of the Trust as to particular
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appointments, intends to (i) appoint one or more
persons or companies (the "Adviser") and, subject to
the terms and conditions of this Agreement, the
Adviser shall have full investment discretion and
shall make all determinations with respect to the
investment of the Fund's assets and the purchase and
sale of portfolio securities with those assets, and
(ii) take such steps as may be necessary to implement
such appointments. The Manager shall be solely
responsible for paying the fees and expenses of the
Adviser for its services to the Fund. The Manager
shall not be responsible or liable for the investment
merits of any decision by the Adviser to purchase,
hold or sell a portfolio security for the Fund.
(d) The Manager shall evaluate advisers and shall
recommend to the Board of Trustees the Adviser
which the Manager believes is best suited to
invest the assets of the Fund; shall monitor and
evaluate the investment performance of the
Adviser; shall recommend changes in the Adviser
when appropriate; shall coordinate the investment
activities of the Adviser to ensure compliance
with applicable restrictions and limitations
applicable to the Fund; and shall compensate the
Adviser.
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(e) The Manager shall render regular reports to the
Trust, at regular meetings of the Board of Trustees,
of, among other things, the portfolio investments of
the Fund and measurement and analysis of the results
achieved by the Fund.
(f) The Manager shall employ or provide and compensate
the executive, administrative, secretarial and
clerical personnel necessary to provide the
services set forth in this subparagraph 2B, and
shall bear the expense thereof, except as may
otherwise be provided in Section 4 of this
Agreement. The Manager shall also compensate all
officers and employees of the Trust who are
officers or employees of the Manager.
(g) The Manager shall pay all advertising and promotion
expenses incurred in connection with the sale or
distribution of the Fund's shares to the extent such
expenses are not assumed by the Fund under its Plan
of Distribution.
C. Provision of Information Necessary for Preparation of
Securities Registration Statement, Amendments and Other
Materials.
The Manager will make available and provide financial,
accounting and statistical information required by the Trust
in the preparation of the Registration Statement, reports and
other documents required by federal and
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state securities laws, and such information as the Trust may
reasonably request for use in the preparation of the
Registration Statement, reports and other documents required
by federal and state securities laws.
D. Other Obligations and Services. The Manager shall make
available its officers and employees to the Board of Trustees
and officers of the Trust for consultation and discussions
regarding the administration and management of the Fund and
its investment activities.
3. Execution and Allocation of Portfolio Brokerage Commissions. The
Adviser, subject to the supervision of the Manager and the limitations contained
in this paragraph 3, shall place, on behalf of the Fund, orders for the
execution of portfolio transactions. The Adviser is not authorized by the Fund
to take any action, including the purchase or sale of securities for the Fund's
account, (a) in contravention of (i) any investment restrictions set forth in
the Act and the rules thereunder, (ii) specific instructions adopted by the
Board of Trustees and communicated to the Adviser, (iii) the investment
objectives, policies and restrictions of the Fund as set forth in the
Registration Statement, or (iv) instructions from the Manager communicated to
the Adviser, or (b) which would have the effect of causing the Fund to fail to
qualify or to cease to qualify as a regulated investment company under the
Internal Revenue Code of 1986, as amended, or any succeeding statute.
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Subject to the foregoing, the Adviser shall determine the securities to
be purchased or sold by the Fund and will place orders pursuant to the
determination of the Manager with or through such persons, brokers or dealers in
conformity with the policy with respect to brokerage as set forth in the
Registration Statement or as the Board of Trustees may direct from time to time.
It is recognized that, in providing the Fund with investment supervision of the
placing of orders for portfolio transactions, the Manager will give primary
consideration to securing the best qualitative execution, taking into account
such factors as price (including the applicable brokerage commission or dealer
spread), the execution capability, financial responsibility and responsiveness
of the broker or dealer and the brokerage and research services provided by the
broker or dealer. Consistent with this policy, the Manager may select brokers or
dealers who also provide brokerage and research services (as those terms are
defined in Section 28(e) of the Securities Exchange Act of 1934) to the other
accounts over which it exercises investment discretion. It is understood that
neither the Trust nor the Manager have adopted a formula for allocation of the
Fund's investment transaction business. It is also understood that it is
desirable for the Fund that the Manager and/or the Adviser have access to
supplemental investment and market research and security and economic analyses
provided by certain brokers who may execute brokerage transactions at a higher
commission to the Fund than may result when allocating brokerage to other
brokers on the basis of seeking the lowest
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commission. Therefore, the Manager is authorized to place orders for the
purchase and sale of securities for the Fund with such certain brokers, subject
to review by the Trust's Board of Trustees from time to time with respect to the
extent and continuation of this practice, provided that the Manager determines
in good faith that the amount of the commission is reasonable in relation to the
value of the brokerage and research services provided by the executing broker or
dealer. The determination may be viewed in terms of either a particular
transaction or the Manager's overall responsibilities with respect to the Fund
and to other accounts over which it exercises investment discretion. It is
understood that although the information may be useful to the Trust, the Manager
and the Adviser, it is not possible to place a dollar value on such information.
Consistent with the Rules of Fair Practice of the National Association of
Securities Dealers, Inc., and subject to seeking best qualitative execution, the
Manager may give consideration to sales of shares of the Fund as a factor in the
selection of brokers and dealers to execute portfolio transactions of the Fund.
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 other clients, the Manager, to
the extent permitted by applicable laws and regulations, may, but shall be under
no obligation to, aggregate the securities to be sold or purchased in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. In such event, allocation of the
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securities so purchased or sold, as well as 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 Trust with
respect to the Fund and to such other clients.
The Manager may delegate any of its responsibilities under this
paragraph 3 to the Adviser. Notwithstanding the delegation of any such
responsibilities, the Adviser will not execute any portfolio transactions for
the Fund's account with a broker or dealer which is an "affiliated person" (as
defined in the Act) of the Trust, the Manager or the Adviser without the prior
approval of the Manager. The Manager agrees that it will provide the Adviser
with a list of brokers and dealers which are "affiliated persons" of the Trust,
the Manager or the Adviser.
The Manager shall render regular reports to the Trust of the total
brokerage business placed by the Fund and the manner in which the allocation has
been accomplished.
4. Expenses of the Fund. It is understood that the Fund will pay, or
that the Fund will enter into arrangements that require third parties to pay,
all its expenses other than those expressly assumed by the Manager herein, which
expenses payable by the Fund shall include:
A. Expenses of all audits by independent public
accountants;
B. Expenses of transfer agent, dividend disbursing agent,
accounting and pricing agent and shareholder recordkeeping
services;
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C. Expenses of custodial services including recordkeeping
services provided by the custodian;
D. Expenses of obtaining security valuation quotations for
calculating the value of the Fund's net assets;
E. Salaries and other compensation of any of its executive
officers and employees, if any, who are not officers,
directors, stockholders or employees of the Manager or the
Adviser;
F. Taxes or governmental fees levied against the Fund;
G. Brokerage fees and commissions in connection with the
purchase and sale of the Fund's portfolio securities;
H. Costs, including the interest expenses, of borrowing
money;
I. Costs and/or fees incident to Board of Trustee and
shareholder meetings, the preparation and mailings of
prospectuses, reports and notices to the existing
shareholders of the Fund, the filing of reports with
regulatory bodies, the maintenance of the Trust's
existence as a business trust, membership in investment
company organizations, and the registration of shares
with federal and state securities authorities;
J. Legal fees, including the legal fees related to the
registration and continued qualification of the Fund's shares
for sale and legal fees arising from litigation to which the
Trust may be a party and indemnification of the Trust's
officers and Trustees with respect thereto;
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K. Costs of printing share certificates (in the event such
certificates are issued) representing shares of the
Fund;
L. Trustees' fees and expenses of Trustees who are not directors,
officers, employees or stockholders of the Manager, the
Adviser or any of their affiliates; and
M. The Fund's pro rata portion of the fidelity bond required by
Section 17(g) of the Act and other insurance premiums.
5. Activities and Affiliates of the Manager.
A. The services of the Manager hereunder are not to be
deemed exclusive, and the Manager and any of its affiliates
shall be free to render similar services to others. The
Manager shall use the same skill and care in the management of
the Fund's assets as it uses in the administration of other
accounts to which it provides asset management, consulting and
portfolio manager selection services, but shall not be
obligated to give the Fund more favorable or preferential
treatment vis-a-vis its other clients.
B. Subject to and in accordance with the Declaration of Trust and
Bylaws of the Trust and to Section 10(a) of the Act, it is
understood that Trustees, officers and agents of the Trust and
shareholders of the Fund are or may be interested in the
Manager or its affiliates as directors, officers, agents or
stockholders of the
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Manager or its affiliates; that directors, officers, agents
and stockholders of the Manager or its affiliates are or may
be interested in the Trust as Trustees, officers, agents,
shareholders or otherwise; that the Manager or its affiliates
may be interested in the Trust as shareholders or otherwise;
and that the effect of any such interests shall be governed by
said Declaration of Trust, Bylaws and the Act.
6. Compensation of the Manager. For all services to be rendered and
payments made as provided in this Agreement, the Fund will pay the Manager a
daily fee equal to the annual rate of 1% of the value of the daily net assets of
the Fund up to and including $50,000,000, 90/100 of 1% of the next $50 million
of such assets, 80/100 of 1% of the next $100 million of such assets, and 75/100
of 1% of such assets in excess of $200,000,000. Manager's fee shall be payable
monthly and shall be due with respect to any month as of the first business day
following the end of such month.
The value of the daily net assets of the Fund shall be determined
pursuant to the applicable provisions of the Declaration of Trust and to
resolutions to the Board of Trustees of the Trust. If, pursuant to such
provisions, the determination of net asset value is suspended for any particular
business day, then for the purposes of this paragraph 6, the value of the net
assets of the Fund as last determined shall be deemed to be the value of its net
assets as of the close of business on that day,
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or as of such other time as the value of the Fund's net assets may lawfully be
determined on that day. If the determination of the net asset value of the
Fund's shares has been suspended for a period including such month, the
Manager's compensation payable for such month shall be computed on the basis of
the value of the net assets of the Fund as last determined (whether during or
prior to such month).
7. Liabilities of the Manager. The Manager (including its directors,
officers, shareholders, employees, control persons and affiliates of any
thereof) shall not be liable for any error of judgment or mistake of law or for
any loss suffered by the Fund in connection with the matters to which this
Agreement relates, except a loss resulting from willful misfeasance, bad faith
or gross negligence on the part of the Manager in the performance of its duties
or from the reckless disregard by the Manager of its obligations and duties
under this Agreement ("disabling conduct"). However, the Manager will not be
indemnified for any liability unless (1) a final decision is made on the merits
by a court or other body before whom the proceeding was brought that the Manager
was not liable by reason of disabling conduct, or (2) in the absence of such a
decision, a reasonable determination is made, based upon a review of the facts,
that the Manager was not liable by reason of disabling conduct, by (a) the vote
of a majority of a quorum of trustees who are neither "interested persons" of
the Trust as defined in the Act nor parties to the proceeding ("disinterested,
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non-party trustees"), or (b) an independent legal counsel in a written opinion.
The Fund will advance attorneys' fees or other expenses incurred by the Manager
in defending a proceeding, upon the undertaking by or on behalf of the Manager
to repay the advance unless it is ultimately determined that the Manager is
entitled to indemnification, so long as the Manager meets at least one of the
following as a condition to the advance: (1) the Manager shall provide a
security for its undertaking, (2) the Fund shall be insured against losses
arising by reason of any lawful advances, or (3) a majority of a quorum of the
disinterested, non-party trustees of the Trust, or an independent legal counsel
in a written opinion, shall determine, based on a review of readily available
facts (as opposed to a full trial- type inquiry), that there is reason to
believe that the Manager ultimately will be found entitled to indemnification.
Any person employed by the Manager who may also be or become an employee of the
Trust shall be deemed, when acting within the scope of his employment by the
Trust, to be acting in such employment solely for the Trust and not as the
Manager's employee or agent.
8. Renewal and Termination.
A. This Agreement shall become effective upon its execution,
shall remain in force until February 28, 1999 and from year to
year thereafter, but only so long as such continuance is
specifically approved at least annually by the vote of a
majority of the Trustees who are not interested persons of the
Trust, the Manager or
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the Adviser, cast in person at a meeting called for the
purpose of voting on such approval and by a vote of the Board
of Trustees or of a majority of the outstanding voting
securities. The aforesaid provision that this Agreement may be
continued "annually" shall be construed in a manner consistent
with the Act and the rules and regulations thereunder.
B. This Agreement:
(a) may at any time be terminated without the payment of
any penalty either by vote of the Board of Trustees
of the Trust or by vote of a majority of the
outstanding voting securities of the Fund, on sixty
(60) days' written notice to the Manager;
(b) shall immediately terminate in the event of its
assignment; and
(c) may be terminated by the Manager on sixty (60) days'
written notice to the Trust.
C. As used in this Section 8, the terms "assignment," "interested
person" and "vote of a majority of the outstanding voting
securities" shall have the meanings set forth in the Act and
the rules and regulations thereunder.
D. Any notice under this Agreement shall be given in writing
addressed and delivered or mailed postpaid, to the other party
to this Agreement at its principal place of business.
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9. Severability. 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.
10. Limitation of Liability. It is expressly agreed that the
obligations of the Fund hereunder shall not be binding upon any of the Trustees,
shareholders, nominees, officers, agents or employees of the Trust, personally,
but bind only the trust property of the Fund, as provided in the Declaration of
Trust of the Trust. The execution and delivery of this Agreement have been
authorized by the Trustees of the Trust and the shareholders of the Fund and
signed by the officers of the Trust, acting as such, and neither such
authorization by such Trustees and shareholders nor such execution and delivery
by such officers shall be deemed to have been made by any of them individually
or to impose any liability on any of them personally, but shall bind only the
trust property of the Fund as provided in the Trust's Declaration of Trust.
11. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, and no amendment of this
Agreement shall be effective until approved by vote of the holders of a majority
of the outstanding voting securities of the Fund and by the Board of Trustees,
including a majority of the Trustees who are not interested persons of the
Manager or of the Trust, cast in person at a meeting called for the purpose of
voting on such approval.
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12. Governing Law. To the extent that state law has not been preempted
by the provisions of any law of the United States heretofore or hereafter
enacted, as the same may be amended from time to time, this Agreement shall be
administered, construed and enforced according to the laws of the State of Ohio.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed, as of the day and year first written above.
COUNTRYWIDE STRATEGIC TRUST
ATTEST: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: President
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COUNTRYWIDE INVESTMENTS, INC.
ATTEST: By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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/s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ Title: President
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