EXPENSE LIMITATION AND
REIMBURSEMENT AGREEMENT
This AGREEMENT is made this 28th day of January 2008, between CNI
Charter Funds (the "Trust"), a Delaware statutory trust, City National Asset
Management, Inc. ("CNAM"), a California corporation, and Xxxx, Xxxxxx &
Xxxxxxxx, LLC, a Delaware limited liability company ("RCB").
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;
and
WHEREAS, RCB has entered into a Investment Sub-Advisory Agreement with
CNAM pursuant to which RCB agrees to provide investment advisory and management
services to the RCB Small Cap Value Fund series of the Trust (the "Fund"); and
WHEREAS, the Trust, CNAM and RCB 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 RCB 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 RCB. If RCB 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 RCB agrees that the
investment sub-advisory fees payable to it by CNAM shall be proportionately
reduced. RCB further agrees that any reimbursement of expenses to limit
Operating Expenses in accordance with an Expense Cap shall be the responsibility
of RCB.
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. RCB, pursuant to the Investment
Sub-Advisory 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 RCB, or Operating Expenses
paid by it (collectively, "subsidies"), pursuant to this Agreement may be
reimbursed by the Fund to RCB 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 RCB has
agreed (subsidies available for reimbursement to RCB under this paragraph are
collectively referred to as the "Recoupment Balance") and if the Board of
Trustees approves the reimbursement. RCB generally shall seek reimbursement on a
rolling three-year basis whereby the oldest subsidies are recouped first. RCB
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. RCB 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 RCB without payment of any penalty and
shall automatically terminate upon the termination of the Investment Management
Agreement or Investment Sub-Advisory 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: /s/ Xxxxxxx X. Xxxx By: /s/ Xxxxxxx X. Xxxx
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Name: Xxxxxxx X. Xxxx Name: Xxxxxxx X. Xxxx
Title: President Title: Chairman
XXXX, XXXXXX & XXXXXXXX, LLC
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By: /s/ Xxxxxxx Xxxxxxx
-------------------
Name: Xxxxxxx Xxxxxxx
Title: CCO
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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
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Institutional Class 1.24%
Class N 1.49%
Class R 1.49%
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