EXPENSE LIMITATION AND
REIMBURSEMENT AGREEMENT
This AGREEMENT is made this ___ day of ___________ 2008, between CNI
Charter Funds (the "Trust"), a Delaware statutory trust, City National Asset
Management, Inc. ("CNAM"), a California corporation, and SKBA Capital
Management, LLC ("SKBA"), a Delaware limited liability company.
WHEREAS, CNAM has entered into an Investment Management Agreement with
the Trust pursuant to which CNAM agrees to provide, or arrange for the provision
of, investment advisory and management services to certain series of the Trust,
including the Opportunistic Value Fund series of the Trust (the "Fund"); and
WHEREAS, SKBA has entered into a Investment Manager Agreement with CNAM
(the "SKBA Agreement") pursuant to which SKBA agrees to provide investment
sub-advisory services to the Fund; and
WHEREAS, the Trust, CNAM and SKBA believe that limiting the total
expenses of shares of the Fund is in the best interests of the Fund;
NOW, THEREFORE, the parties hereto do hereby agree as follows:
1. Limit on Operating Expenses. CNAM and SKBA hereby agree to limit the
Operating Expenses of each class of the Fund to the respective annual rate of
total Operating Expenses specified for that class in Appendix A of this
Agreement (each, an "Expense Cap"). The Expense Caps may be implemented by
waivers of investment advisory fees and/or reimbursement of expenses, at the
discretion of SKBA. If SKBA chooses to implement the Expense Caps by waiver of
investment advisory fees, CNAM agrees to waive the investment advisory fees
payable to it by the Fund pursuant to the Investment Management Agreement in the
amounts necessary to achieve the Expense Caps, and SKBA agrees that the
investment sub-advisory fees payable to it by CNAM pursuant to the SKBA
Agreement shall be reduced by the same amounts. SKBA further agrees that any
reimbursement of expenses to limit Operating Expenses in accordance with an
Expense Cap shall be the responsibility of SKBA.
2. Definition. For purposes of this Agreement, the term "Operating
Expenses" with respect to the Fund is defined to include all expenses necessary
or appropriate for the operation of the Fund, including CNAM's investment
advisory or management fee as described in the Investment Management Agreement
and other expenses described in the Investment Management Agreement, but does
not include any front-end or contingent deferred loads, taxes, interest,
brokerage commissions, or extraordinary expenses such as litigation.
3. Reimbursement of Fees and Expenses. SKBA, pursuant to the SKBA
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 Sub-Advisory Agreement.
4. Recoupment Balance. Any fee reduced by SKBA, or Operating Expenses
paid by it (collectively, "subsidies"), pursuant to this Agreement may be
reimbursed by the Fund to SKBA 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 an Expense Cap
in effect at the time the subsidies were incurred or any more restrictive
limitation to which SKBA has agreed (subsidies available for reimbursement to
SKBA under this paragraph are collectively referred to as the "Recoupment
Balance") and if the Board of Trustees approves the reimbursement. SKBA
generally shall seek reimbursement on a rolling three-year basis whereby the
oldest subsidies are recouped first. SKBA may not request or receive
reimbursement of the Recoupment Balance in any year before payment of the Fund's
operating expenses for such year and may not cause the Fund to exceed an Expense
Cap or any other agreed upon expense limitation for that year in making such
reimbursement. SKBA shall not to request or seek reimbursement of subsidized
Operating Expenses that are no longer eligible for reimbursement.
5. Term. This Agreement shall continue in effect until January 30, 2009
unless sooner terminated in accordance with Section 6 herein.
6. Termination. This Agreement may be terminated at any time by the
Trust on behalf of the Fund or by the Board of Trustees of the Trust upon sixty
(60) days' written notice to CNAM and SKBA without payment of any penalty and
shall automatically terminate upon the termination of the Investment Management
Agreement or SKBA Agreement.
7. Assignment. This Agreement and all rights and obligations hereunder
may not be assigned without the written consent of the other parties.
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.
10. Governing Law. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of Delaware 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 executed this Agreement as
of the date first above written.
CNI CHARTER FUNDS CITY NATIONAL ASSET MANAGEMENT, INC.
By: ___________________
By: ___________________ Name: Xxxxxxx X. Xxxx
Name: Xxxxxxx X. Xxxx Title: Chairman
Title: President
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SKBA CAPITAL MANAGEMENT, LLC
By: _____________________
Name: ______________________
Title: ___________________
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SCHEDULE A
The annualized expenses of each class of the Fund will be limited to the
following annual rate of average daily net assets shown below:
Class Expense Limitation
----- ------------------
Class E 0.75%
Institutional Class 1.00%
Class N 1.25%
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