CNI CHARTER FUNDS
INVESTMENT SUB-ADVISORY AGREEMENT
AGREEMENT executed as of August 2, 2001 by and between City National
Asset Management, Inc., a wholly-owned subsidiary of City National Bank, a
federally chartered bank and wholly-owned subsidiary of City National
Corporation, a bank holding company organized under the laws of the State of
Delaware (the "Adviser") and Xxxx, Xxxxxx & Xxxxxxxx, L.L.C., a wholly owned
subsidiary of City National Corporation, a limited liability company organized
under the laws of the State of Delaware, an investment advisor registered under
the Investment Advisors Act of 1940, as amended (the "Sub-Adviser").
WHEREAS, the Adviser is the investment manager for the CNI Charter
Funds (the "Trust"), an open-end management investment company registered under
the Investment Company Act of 1940, as amended ("1940 Act"); and
WHEREAS, the Adviser desires to retain the Sub-Adviser to furnish
investment advisory services for the RCB Small Cap Value Fund (the "Fund").
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:
1. Appointment. The Adviser hereby appoints the Sub-Adviser to provide
certain investment sub-advisory services to the Fund for the period and on the
terms set forth in this Agreement. The Sub-Adviser accepts such appointment and
agrees to furnish the services herein set forth for the compensation herein
provided.
2. Delivery of Documents. The Adviser has furnished, or caused the
Trust's Administrator to furnish, the Sub-Adviser with copies of each of the
following:
(a) the Trust's Agreement and Declaration of Trust dated as of
October 25, 1996, and all amendments thereto or restatements thereof (such
Declaration of Trust, as presently in effect and as it shall from time to time
be amended or restated, is herein called the "Declaration of Trust");
(b) the Trust's By-Laws and all amendments thereto;
(c) the resolutions of the Trust's Board of Trustees
authorizing the appointment of the Sub-Adviser and approving this Agreement;
1
(d) the Trust's Post-Effective Amendment No. 18 to its
Registration Statement as filed with the Securities and Exchange Commission (the
"SEC") on August 2, 2001; and
(e) the Trust's most recent prospectus and Statement of
Additional Information for the Fund (such prospectus and Statement of Additional
Information, as presently in effect, and all amendments and supplements thereto
are herein collectively called the "Prospectuses");
The Adviser will furnish the Sub-Adviser from time to time
with copies of all amendments of or supplements to the foregoing and information
on changes to the Trust's service providers, and copies of such other documents
and other information reasonably requested by the Sub-Adviser in order to permit
or assist the Sub-Adviser in fulfilling its duties under this Agreement.
The Sub-Adviser has furnished the Adviser with a copy of the
Sub-Adviser's Form ADV Part II.
3. Management. Subject always to the supervision of the Trust's Board
of Trustees and the Adviser, the Sub-Adviser will furnish an investment program
in respect of, and make investment decisions for, all assets of the Fund and
place all orders for the purchase and sale of securities, all on behalf of the
Fund. In the performance of its duties the Sub-Adviser will satisfy its
fiduciary duties to the Fund (as set forth in Section 7 below), and will monitor
the Fund's investments, and will comply with the provisions of the Trust's
Declaration of Trust and By-Laws, as amended from time to time, and the stated
investment objectives, policies and restrictions of the Fund as set forth in the
prospectus of the Fund, as amended from time to time. The Sub-Adviser and the
Adviser will each make its officers and employees available to the other from
time to time at reasonable times to review investment policies of the Fund and
to consult with each other regarding the investment affairs of the Fund and the
Sub-Adviser will at all times act consistently with the instructions and
directions given to it by the Adviser. The Sub-Adviser shall also make itself
reasonably available to the Board of Trustees of the Trust at such times as the
Board of Trustees shall request.
The Sub-Adviser represents and warrants that it is in
compliance with all applicable rules and regulations of the SEC pertaining to
its investment advisory activities and agrees that it:
(a) will conform with all applicable rules and regulations of
the SEC pertaining to its investment advisory activities;
(b) will place orders pursuant to its investment
determinations for the Fund either directly with the issuer or with any broker
or dealer. In placing orders with brokers or dealers, the Sub-Adviser will
attempt to obtain the best combination of prompt execution of orders in an
effective manner and at the most favorable price. On occasions when the
Sub-Adviser deems
2
the purchase or sale of a security to be in the best interest of the Fund as
well as the other clients of the Sub-Adviser, the Sub-Adviser, to the extent
permitted by applicable laws and regulations, may, but shall be under no
obligation to, aggregate the securities to be so purchased or sold in order to
obtain the most favorable price or lower brokerage commissions and efficient
execution. Consistent with this obligation, when the execution and price offered
by two or more brokers or dealers are comparable, the Sub-Adviser may, in its
discretion, purchase and sell portfolio securities to and from brokers and
dealers who provide the Sub-Adviser with research, advice and other services. In
no instance will portfolio securities be purchased from or sold to the Adviser,
the Sub-Adviser, SEI Investments or any affiliated person of either the Trust,
the Adviser, SEI Investments or the Sub-Adviser, except as may be permitted
under the 1940 Act and, in the case of any transaction with the Sub-Adviser or
any of its affiliated persons, with the prior written approval of the Adviser;
(c) will report regularly to the Adviser and will make
appropriate persons available for the purpose of reviewing at reasonable times
with representatives of the Adviser and the Board of Trustees of the Trust the
management of each of the Funds, including, without limitation, review of the
general investment strategy of each of the Funds, the performance of each of the
Funds in relation to standard industry indices, interest rate considerations and
general conditions affecting the marketplace and will provide various other
reports from time to time as reasonably requested by the Adviser;
(d) will maintain books and records with respect to the
Trust's securities transactions which it has affected and will furnish the
Adviser and the Board of Trustees of the Trust such periodic and special reports
as the Board of Trustees or the Adviser may request;
(e) will act upon instructions, if any, from the Adviser not
inconsistent with the fiduciary duties hereunder; and
(f) will treat confidentially and as proprietary information
of the Trust all such records and other information relative to the Trust
maintained by the Sub-Adviser, and will not use such records and information for
any purpose other than performance of its responsibilities and duties hereunder,
except after prior notification to and approval in writing by the Trust, which
approval shall not be unreasonably withheld and may not be withheld where in the
opinion of legal counsel to the Sub-Adviser, the Sub-Adviser may be exposed to
civil or criminal contempt proceeding for failure to comply, when requested to
divulge such information by duly constituted authorities, or when so requested
by the Trust. The Sub-Adviser further acknowledges and agrees that (i) the names
"CNI Charter" and "CNI Charter Funds" are the property of the Adviser, and (ii)
the Sub-Adviser will publicly disseminate information concerning the Fund and
the Trust only if such information has been approved in advance by the Adviser.
The Sub-Adviser shall, following consultation with the Adviser or in
accordance with policies and procedures approved by the Adviser, execute and
deliver, or cause its nominee to
3
execute and deliver, all proxies and notices of meetings and other notices
affecting or relating to the securities held by the Fund.
The Sub-Adviser hereby warrants that it is not presently, nor has it
been in the past three years, nor has it been advised that it may be in the
future, the subject of a Securities and Exchange Commission investigative
proceeding or a proceeding by any state securities commission, nor the subject
of any disciplinary hearing by a self-regulatory organization or other
governmental or quasi-governmental body, and shall promptly notify the Adviser
and the Trust of the commencement of any such proceedings or actions.
4. Books and Records. In compliance with the requirements of Rule 31a-3
under the 1940 Act, the Sub-Adviser hereby agrees that all records which it
maintains for the Trust are the property of the Trust and further agrees to
surrender promptly to the Trust any of such records upon the Trust's request.
The Sub-Adviser further agrees to preserve for the periods prescribed by Rule
31a-2 under the 1940 Act the records required to be maintained by Rule 31a-1
under the 1940 Act.
5. Expenses. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it in connection with its activities under this
Agreement other than the cost of securities (including brokerage commissions, if
any) purchased for the Trust.
6. Compensation.
(a) For the services provided and the expenses assumed
pursuant to this Agreement, the Adviser will pay the Sub-Adviser, and the
Sub-Adviser agrees to accept as full compensation therefor, a sub-advisory fee
payable monthly, in accordance with Schedule A hereto. The fee shall be based on
the average daily net assets for the month involved and will be prorated for a
period less than a full month.
(b) The Sub-Adviser voluntarily may reduce any portion of the
compensation or reimbursement of expenses due to it pursuant to this Agreement
and may agree to make payments to limit the expenses which are the
responsibility of the Adviser pursuant to the expense limitation and
reimbursement obligations respecting the Fund set forth in the Fund's then
current registration statement, as contemplated in the Adviser's then current
Investment Management Agreement (the "Management Agreement") with the Fund. Any
such reduction or payment shall be applicable only to such specific reduction or
payment and shall not constitute an agreement to reduce any future compensation
or reimbursement due to the Sub-Adviser hereunder or to continue future
payments. Any such reduction will be agreed upon prior to accrual of the related
expense or fee and will be estimated daily. Any fee withheld shall be
voluntarily reduced and any Fund expense paid by the Sub-Adviser voluntarily or
pursuant to an agreed expense limitation shall be reimbursed by the Adviser to
the Sub-Adviser in the first, second, or third (or any combination thereof)
fiscal year next succeeding the fiscal year of the
4
withholding, reduction, or payment to the extent permitted by applicable law,
and to the extent, if any, that the Adviser has been reimbursed therefor by the
Fund pursuant to the Management Agreement, and only if such reimbursements by
the Adviser (i) are requested by the Sub-Adviser, (ii) are approved by the
Trust's Board of Trustees, and (iii) can be achieved within the Fund's then
current expense limits, if any, for that succeeding first, second, or third
fiscal year as the case may be; provided that such reimbursements shall only be
paid after the Fund's current expenses of the fiscal year have been paid and if
such reimbursements do not require the Adviser or the Sub-Adviser to waive or
reduce its fees or pay current Fund expenses hereunder or under the Management
Agreement, as the case may be.
7. Services to Others. The Adviser understands, and has advised the
Trust's Board of Trustees, that the Sub-Adviser now acts, and may in the future
act, as an investment adviser to fiduciary and other managed accounts, and as
investment adviser, sub-investment adviser, and/or administrator to other
investment companies. The Adviser acknowledges that the Sub-Adviser may give
advice and take action in the performance of its duties with respect to any of
its other clients which may differ from advice given, or the time or nature of
action taken, with respect to the Fund, so long as it is the Sub-Adviser's
policy, to the extent practicable, to allocate investment opportunities to the
Fund over a period of time on a fair and equitable basis relative to other
clients. Nothing in this Agreement shall be deemed to impose upon the
Sub-Adviser any obligation to purchase or sell for the Fund any security or
property which the Sub-Adviser, its principals, affiliates or employees may
purchase or sell for its or their own accounts or for the account of any other
client, if in the good faith judgment of the Sub-Adviser such transaction or
investment appears unsuitable, impractical or undesirable for the Fund. In
addition, the Adviser understands, and has advised the Trust's Board of
Trustees, that the persons employed by the Sub-Adviser to assist in the
Sub-Adviser's duties under this Agreement will not devote their full time to
such service and nothing contained in this Agreement will be deemed to limit or
restrict the right of the Sub-Adviser or any of its affiliates to engage in and
devote time and attention to other businesses or to render services whatever
kind or nature. Provided, further, that notwithstanding the above, the
Sub-Adviser shall provide its services reasonably, and make itself available to
the Adviser or the Board of Trustees at reasonable times, in accordance with the
provisions of Section 3.
8. Limitation of Liability; Special Indemnity.
(a) The Adviser will not take any action against the
Sub-Adviser to hold the Sub-Adviser liable for any loss suffered by the Fund in
connection with the performance of the Sub-Adviser's duties under this
Agreement, except a loss resulting from the Sub-Adviser's willful misfeasance,
bad faith, negligence or reckless disregard of the obligations in the
performance of its duties under this Agreement.
(b) Without limitation to any and all liability the
Sub-Adviser may have under this Agreement or otherwise (whether in contract,
tort or otherwise), the Sub-Adviser agrees to
5
indemnify and hold harmless the Adviser, each of its directors and officers, the
Fund, the Trust, each of its Trustees and officers who have signed the
Registration Statement and each other person, if any, who controls the Trust
within the meaning of Section 15 of the Securities Act of 1933, with respect to
statements or omissions, if any, made in the Registration Statement or any
Prospectus of the Fund or any amendment or supplement thereof pertaining to the
Fund or the Trust in reliance upon, and in conformity with, information
furnished to the Trust with respect to the Sub-Adviser by or on behalf of or
with the approval of the Sub-Adviser for use in the Registration Statement or
any Prospectus or any amendment or supplement thereof. The Sub-Adviser's
obligations under this Paragraph (b) shall survive the termination of this
Agreement.
(c) Nothing herein contained shall be deemed to protect the
Sub-Adviser against liability to the Adviser, the Fund or the Trust or its
shareholders to which the Sub-Adviser would otherwise be subject by reason of
willful misfeasance, bad faith or negligence in the performance of the duties of
the Sub-Adviser or by reason or the reckless disregard by the Sub-Adviser of the
obligations and duties of the Sub-Adviser under this Agreement.
9. Duration and Termination. This Agreement will become effective as to
the Fund on the first day the Fund's shares are offered to the public provided
that it has been approved by vote of a majority of the outstanding voting
securities of the Fund in accordance with the requirements under the 1940 Act,
and, unless sooner terminated as provided herein, will continue in effect for
one year.
Thereafter, if not terminated, this Agreement will continue in effect
for successive periods of 12 months, each ending on the day preceding the
anniversary of the Agreement's effective date of each year, provided that such
continuation is specifically approved at least annually (a) by the vote of a
majority of those members of the Trust's Board of Trustees who are not
interested persons of the Trust, the Sub-Adviser, or the Adviser, cast in person
at a meeting called for the purpose of voting on such approval, and (b) by the
vote of a majority of the Trust's Board of Trustees or by the vote of a majority
of all votes attributable to the outstanding shares of the Fund. Notwithstanding
the foregoing, this Agreement may be terminated by the Adviser, the Trust's
Board of Trustees or by a vote of the majority of the outstanding voting
securities of the Fund at any time, without the payment of any penalty, on sixty
(60) days' written notice to the Sub-Adviser and may be terminated by the
Sub-Adviser at any time by ninety (90) days' written notice to the Adviser and
the Fund. This Agreement will immediately terminate in the event of its
assignment or upon termination of the investment advisory agreement between the
Adviser and the Trust with regard to the Fund. (As used in this Agreement, the
terms "majority of the outstanding voting securities", "interested persons" and
"assignment" have the same meaning of such terms in the 1940 Act.)
10. Amendment of this Agreement. No provision of this Agreement may be
changed, waived, discharged or terminated orally, but only by an instrument in
writing signed by the party against which enforcement of the change, waiver,
discharge or termination is sought.
6
11. Notice. Any notice required or permitted to be given by either
party to the other shall be deemed sufficient if sent by registered or certified
mail, postage prepaid, addressed by the party giving notice to the other party
at the last address furnished by the other party to the party giving notice: if
to the Adviser, at 000 Xxxxx Xxxxxxx Xxxxx, 0xx Xxxxx, Xxxxxxx Xxxxx, XX 00000,
and if to the Sub-Adviser at: 00000 Xxxxx Xxxxxx Xxxx., Xxxxx 0000, Xxx Xxxxxxx,
XX 00000, Attention: Xxxxx Xxxxx.
12. Miscellaneous. 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 or effect. If any
provision of this Agreement is held or made invalid by a court decision,
statute, rule or otherwise, the remainder of this Agreement will not be affected
thereby. This Agreement will be binding upon and shall inure to the benefit of
the parties hereto and their respective successors and will be governed by the
laws of the state of California.
The name "CNI Charter Funds" and "Trustees of the CNI Charter Funds"
refers respectively to the Trust created by, and the Trustees, as trustees but
not individually or personally, acting from time to time under, the Declaration
of Trust, and to any and all amendments thereto so filed or hereafter filed. The
obligations of "CNI Charter Funds" entered in the name or on behalf thereof by
any of the Trustees, representatives or agents are made not individually but
only in such capacities and are not binding upon any of the Trustees,
shareholders or representatives of the Trust personally, but bind only the
assets of the Trust, and persons dealing with the Fund must look solely to the
assets of the Trust belonging to such Fund for the enforcement of any claims
against the Trust.
The Sub-Adviser shall not be deemed to be an agent of the Adviser and in the
performance of its duties under this agreement, the Sub-Adviser shall be deemed
to be an independent contractor.
7
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
CITY NATIONAL ASSET MANAGEMENT, INC.
By: /s/ Xxxxxx X. Xxxxxx
-------------------------------
Name: Xxxxxx X. Xxxxxx
-----------------------------
Title: Chairman
-----------------------------
XXXX, XXXXXX & XXXXXXXX, L.L.C.
By: /s/ Xxxxx Xxx Xxxxx
-------------------------------
Name: Xxxxx Xxx Xxxxx
-----------------------------
Title: Principal and SVP
----------------------------
8
Schedule A
to
Investment Sub-Advisory Agreement
dated
August 2, 2001
The Adviser shall pay to the Sub-Adviser compensation with respect to the RCB
Small Cap Value Fund at an annual rate as follows:
0.85% of average daily net assets
