INVESTMENT MANAGER AGREEMENT
AGREEMENT made as of 12/14/05 by and between CCM Advisors, LLC, a
limited liability company organized under the laws of the state of Delaware (the
"Adviser") and Xxxx Xxxxxxxxx Asset Management, LLC, a company organized under
the laws of Ohio (the "Investment Manager"), on behalf of the AHA Full Maturity
Fixed Income Fund (the "Fund "), a series of CNI Charter Funds (the "Trust"):
WHEREAS, the Trust is registered as an open-end management investment
company under the Investment Company Act of 1940, as amended (the "1940 Act");
WHEREAS, the Trust issues shares (the "Shares") in its CNI Charter AHA
Full Maturity Fixed Income Fund series (the "Fund") registered under the 1940
Act pursuant to a registration statement filed with the Securities and Exchange
Commission (the "SEC"), as amended from time to time (the "Registration
Statement");
WHEREAS, the Investment Manager is an investment adviser registered
under the Investment Advisers Act of 1940, as amended (the "Advisers Act") and
has filed notification filings under all applicable state securities laws;
WHEREAS, the Adviser is employed by the Trust to act as investment
adviser for and to manage, or arrange for the management of, the investment and
reinvestment of the assets of such portion of the assets of the Fund as the
Adviser shall from time to time designate (the "Account"), to the extent
requested by and subject to the supervision and control of, the Board of
Trustees of the Trust (the "Board");
WHEREAS, the Trust and the Adviser desire to retain the Investment
Manager to render investment advisory services to the Account; and
WHEREAS, the Investment Manager is willing to provide investment
advisory services to the Account, in the manner and on the terms and conditions
set forth below;
NOW, THEREFORE, in consideration of their mutual promises, the Adviser
and the Investment Manager agree as follows:
ARTICLE 1
Employment of Investment Manager
1.1 The Adviser hereby employs the Investment Manager to
manage the investment and reinvestment of the assets of the Account, to the
extent requested by and subject to the supervision and control of, the Adviser
and the Board for the period and upon the terms herein set forth.
1.2 The Investment Manager accepts such employment and agrees
during such period at its own expense to render such services, and to assume the
obligations herein set forth for the compensation herein provided.
1.3 The Investment Manager shall for all purposes be deemed to
be an independent contractor, and unless otherwise expressly provided or
authorized shall have no authority to act for or represent the Trust or the Fund
in any way or otherwise be deemed an agent of the Trust, the Fund or the
Adviser. Notwithstanding the foregoing, the Investment Manager shall, for the
purposes of this agreement, have authority to act as agent for the Fund, subject
to supervision by the Adviser and the Board.
1.4 The services of the Investment Manager herein provided are
not to be deemed exclusive and the Investment Manager shall be free to render
similar services or other services to others so long as its services hereunder
shall not be impaired thereby.
ARTICLE 2
Duties of Investment Manager
2.1 Investment Management Services.
(a) Subject to the general supervision of the Board and
the Adviser, the Investment Manager shall provide a continuous and discretionary
investment program for the Account and determine the composition of the assets
of the Account, including determination of the purchase, retention or sale of
the securities, cash and other investments for the Account. In performing these
duties, the Investment Manager shall:
(i) perform research and obtain and evaluate
pertinent economic, statistical, and financial
data relevant to the investment policies of the
Fund as set forth in the Registration Statement;
(ii) seek out and implement specific investment
opportunities, consistent with any investment
strategies approved by the Board;
(iii) take such steps as are necessary to implement
any overall investment strategies approved by
the Board for the Fund, including making and
carrying out day-to-day decisions to acquire or
dispose of permissible investments, managing
investments and any other property of the
Account, and providing or obtaining such
services as may be necessary in managing,
acquiring or disposing of investments;
(iv) regularly report to the Board with respect to
the implementation of any approved overall
investment strategy and any other activities in
connection with management of the assets of the
Account, including furnishing, within 60 days
after the end of each calendar quarter, a
statement of all purchases and sales during the
quarter and a schedule of investments and other
assets of the Account as of the end of the
quarter;
(v) maintain all required accounts, records,
memoranda, instructions or authorizations
relating to the acquisition or disposition of
investments for the Account;
(vi) provide such information as is reasonably
requested to assist in the determination of the
net asset value of the shares of the Fund in
accordance with applicable law; and
-2-
(vii) not consult with any other sub-adviser of any
other portion of the Fund or any other series of
the Trust concerning transactions of the Fund or
any other series of the Trust in which (a) the
Investment Manager of any of its affiliated
persons serves as principal underwriter, or (b)
such other sub-adviser or any of its affiliated
persons serves as principal underwriter.
(b) The Investment Manager acknowledges that neither the
Adviser nor its employees shall be required to evaluate the merits of investment
selections or decisions made by the Investment Manager or be required to approve
the selections or decisions, or to confirm their compliance with applicable
investment policies and restrictions; these responsibilities being within the
duties of the Investment Manager.
(c) The Investment Manager's services shall be subject
always to the control and supervision of the Adviser and the Board, the
restrictions of the Agreement and Declaration of Trust (the "Declaration of
Trust") and Bylaws of the Trust, as amended from time to time, the provisions of
the 1940 Act, the statements relating to the Fund's investment objective or
objectives, investment policies and investment restrictions as set forth in the
then-current Registration Statement, and any applicable provisions of the
Internal Revenue Code of 1986, as amended (the "Code"). The Adviser has
furnished or will furnish the Investment Manager with copies of the Registration
Statement, Declaration of Trust, and Bylaws as currently in effect and agrees
during the continuance of this agreement to furnish the Investment Manager with
copies of any amendments or supplements thereto before or at the time the
amendments or supplements become effective. The Investment Manager will be
entitled to rely on all documents furnished by the Adviser.
(d) The Investment Manager represents that it shall make
every effort to ensure that the Fund continuously qualifies as a Regulated
Investment Company under Subchapter M of the Code or any successor provision.
Except as instructed by the Board or the Adviser, the Investment Manager shall
also make decisions for the Account as to the manner in which voting rights,
rights to consent to corporate action and any other rights pertaining to the
Account's portfolio securities shall be exercised. Should the Board at any time
make any determination as to investment policy and notify the Investment Manager
thereof, the Investment Manager shall be bound by such determination for the
period, if any, specified in such notice or until similarly notified that such
determination has been revoked.
(e) In connection with the acquisition or disposition of
securities described in Section 2.1(a) (iii), the Investment Manager may place
orders for the purchase or sale of Account investments for the account of the
Fund with brokers or dealers selected by it and, to that end, the Investment
Manager is authorized as agents of the Fund to give instructions to the
custodian of the Fund as to deliveries of securities and payments of cash for
the account of the Fund. In connection with the selection of brokers or dealers
and the placing of purchase and sale orders with respect to assets of the
Account, the Investment Manager is directed at all times to seek to obtain the
best combination of net price and execution under the circumstances within the
policy guidelines as set forth in the current Registration Statement. Subject to
this requirement and the provisions of the Advisers Act, the 1940 Act, and other
applicable provisions of law, the Investment Manager may select brokers or
dealers with which it, the Adviser or the Fund is affiliated.
-3-
(f) In addition to seeking the best combination of net
price and execution under the circumstances, the Investment Manager may also
take into consideration research and statistical information and wire and other
quotation services provided by brokers and dealers to the Adviser and Investment
Manager. The Investment Manager is also authorized to effect individual
securities transactions at commission rates in excess of the minimum commission
rates available, if the Investment Manager determines in good faith that such
amount of commission is reasonable in relation to the value of the brokerage and
research services provided by such broker or dealer, viewed in terms of either
that particular transaction or Investment Manager's overall responsibilities
with respect to the Account. The policies with respect to brokerage allocation,
determined from time to time by the Board are those disclosed in the
Registration Statement. The execution of such transactions shall not be deemed
to represent an unlawful act or breach of any duty created by this agreement or
otherwise. The Investment Manager periodically will evaluate the statistical
data, research and other investment services provided to it by brokers and
dealers. Such services may be used by the Investment Manager in connection with
the performance of its obligations under this agreement or in connection with
other advisory or investment operations including using such information in
managing its own accounts.
(g) Nothing in this agreement shall preclude the
aggregation of orders for sale or purchase of securities or other investments by
two or more series of the Trust or by the Trust and other accounts
(collectively, "Advisory Clients") managed by the Adviser or the Investment
Manager to the Fund, provided that: (i) the Adviser or Investment Manager's
actions with respect to the aggregation of orders for multiple Advisory Clients,
including the Fund, are consistent with the then-current positions in this
regard taken by the Securities and Exchange Commission or its staff through
releases, "no-action" letters, or otherwise; and (ii) the Investment Manager's
policies with respect to the aggregation of orders for multiple Advisory Clients
have been previously submitted to the Adviser.
(h) The Investment Manager will advise the Adviser and, if
instructed by the Adviser, the Fund's custodian on a prompt basis each day by
electronic telecommunication or facsimile of each confirmed purchase and sale of
a portfolio security specifying the name of the issuer, the full description of
the security including its class, amount or number of shares of the security
purchased or sold, the market price, the commission, government charges and
gross or net price, trade date, settlement date and identity of the clearing
broker. Under no circumstances may the Trust, the Adviser, the Investment
Manager, SEI Investments Mutual Fund Services or any affiliates of such parties
act as principal in a securities transaction with the Fund or any other
investment company managed by the Adviser unless (i) permitted by an exemptive
provision, rule or order under the 1940 Act and (ii) upon obtaining prior
approval of the securities transaction from the Adviser. Any such transactions
shall be reported quarterly to the Board.
(i) The Investment Manager shall inform the Adviser and
the Board on a current basis of changes in investment strategy or tactics or key
personnel. It shall also be the duty of the Investment Manager to furnish to the
Board such information as may reasonably be necessary for the Board to evaluate
this agreement or any proposed amendments thereto for the purposes of casting a
vote pursuant to Section 7.
-4-
(j) The Investment Manager 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 will conform with all
applicable rules and regulations of the SEC pertaining to its investment
advisory activities.
(k) The Investment Manager acknowledges and agrees that
(i) the names "CNI Charter" and "CNI Charter Funds" are the property of City
National Bank, (ii) the name "AHA" is the property of the American Hospital
Association, and (iii) the Investment Manager will publicly disseminate
information concerning the Fund and the Trust only if such information has been
approved in advance by the Trust.
ARTICLE 3
Allocation of Charges and Expenses
3.1 The Investment Manager will bear its own costs of
providing services hereunder. Other than as specifically indicated herein the
Investment Manager shall not be responsible for the Fund's or the Adviser's
expenses, including, without limitation: the day to day expenses related to the
operation and maintenance of office space, facilities and equipment; expenses
incurred in the organization of the Fund, including legal and accounting
expenses and certain costs of registering securities of the Fund under federal
securities law and qualifying for sale under state securities laws; any share
redemption expenses; expenses of portfolio transactions; shareholder servicing
costs; pricing costs; interest on borrowings by the Fund; charges of the
custodian and transfer agent, if any; cost of auditing services; all taxes and
fees; certain insurance premiums; investor services (including allocable
personnel and telephone expenses); the cost of paying dividends and capital
gains distributions and any extraordinary expenses, including litigation costs
in legal actions involving the Fund, or costs related to indemnification of
Trustees, officers and employees of the Trust.
3.2 The Fund shall be free to retain at its expense other
persons to furnish it with any services whatsoever, including, without
limitation, statistical, factual or technical information or advice.
ARTICLE 4
Compensation of the Investment Manager
4.1 For the services to be rendered as provided herein, the
Adviser shall pay to the Investment Manager for each month of the Fund's fiscal
year on the last day of each such month a fee based upon the average daily net
assets of the Account, as determined pursuant to the Fund's Registration
Statement, at the following annual rate as a percentage of the Account's average
daily net assets:
20 basis points (0.20%)
4.2 For the month and year in which this agreement becomes
effective or terminates there shall be an appropriate proration on the basis of
the number of days that the agreement is in effect during the month and year
respectively.
-5-
4.3 If the net asset value is not required to be determined on
any particular business day, then for the purpose of the foregoing computations,
the net asset value of a share as last determined shall be deemed to be the net
asset value of a share as of the close of business on that day.
4.4 In connection with purchases or sales of portfolio
securities for the account of the Fund, neither the Investment Manager nor any
officer, director, shareholder or other affiliate of the Investment Manager
shall: (i) act as agent and accept any compensation other than its compensation
provided for in this agreement, except in the course of such person's business
as an underwriter or broker; or (ii) act as broker and accept any commission,
fee, or other remuneration in excess of the limits prescribed in the 1940 Act
and the rules promulgated thereunder.
4.5 The Investment Manager agrees that in all matters relating
to the management of the investment of the assets of the Fund, it will act in
conformity with the Registration Statement, Declaration of Trust, and Bylaws of
the Trust then in effect as provided to the Investment Manager in accordance
with Section 2.1 (c).
ARTICLE 5
Limitations of Liability
5.1 The Investment Manager shall give the Fund the benefit of
the Investment Manager's best judgment and efforts in rendering services under
this agreement; provided, that the Investment Manager shall not be liable for
any error of judgment or import of law, or for any loss suffered by the Trust in
connection with the matters to which this agreement relates, except loss
resulting from: (i) willful misfeasance, bad faith or gross negligence on the
part of the Investment Manager in the performance of its obligations and duties
under this agreement; (ii) its reckless disregard of its obligations and duties
under this agreement; or (iii) a breach of Section 2.1(d) of this agreement. The
terms of this Section 5.1 shall survive termination of this agreement.
ARTICLE 6
Books and Records
6.1 In compliance with the requirements of Rule 31a-3 under
the 1940 Act, the Investment Manager shall maintain separate books and detailed
records of all matters pertaining to the Fund (the "Fund's Books and Records"),
including without limitation a daily ledger of such assets and liabilities
relating thereto and brokerage and other records of all securities transactions.
The Fund's Books and Records shall be available by overnight delivery of copies
or for telecopying without delay to the Adviser during any day that the Fund is
open for business. The Investment Manager shall 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.
6.2 The Investment Manager agrees that all books and records
which it maintains for the Fund are the property of the Trust and further agrees
to surrender promptly to the Trust any such books, records or information upon
the Trust's request. All such books and records shall be made available, within
five business days of a written request, to the Trust's
-6-
accountants or auditors during regular business hours at the Adviser's offices.
The Trust or its authorized representative shall have the right to copy any
records in the possession of the Investment Manager which pertain to the Trust.
Such books, records, information or reports shall be made available to properly
authorized government representatives consistent with state and federal law
and/or regulations. In the event of the termination of this agreement, all such
books, records or other information shall be returned to the Trust free from any
claim or assertion of rights by the Investment Manager.
6.3 The Investment Manager further agrees that it will not
disclose or use any records or information obtained pursuant to this agreement
in any manner whatsoever except as authorized in this agreement and that it will
keep confidential any information obtained pursuant to this agreement and
disclose such information only if the Trust has authorized such disclosure, or
if such disclosure is required by federal or state regulatory authorities.
ARTICLE 7
Duration and Termination of this Agreement
7.1 This agreement shall not become effective unless and until
the later of the time at which it is approved by the Board, including a majority
of Trustees who are not parties to this agreement or interested persons of any
such party to this agreement, or the time at which it is approved by a majority
of the Fund's outstanding voting securities as required by the 1940 Act. This
agreement shall come into full force and effect on the later of such two dates.
The agreement shall continue in effect for two years and shall thereafter
continue in effect from year to year so long as such continuance is specifically
approved at least annually by: (i) the Board, or by the vote of a majority of
the Fund's outstanding voting securities; and (ii) a majority of those Trustees
who are not parties to this agreement or interested persons of any such party
cast in person at a meeting called for the purpose of voting on such approval.
7.2 Termination.
(a) This agreement may be terminated at any time, without
penalty, by vote of the Board or by vote of the holders of a majority of such
Fund's outstanding voting securities, or by the Adviser or Investment Manager,
on sixty (60) days' written notice to the other party.
(b) This agreement may be terminated at any time without
the payment of any penalty by vote of the Board in the event that it shall have
been established by a court of competent jurisdiction that the Investment
Manager or any officer or director of the Investment Manager has taken any
action which results in a breach of the covenants of the Investment Manager set
forth herein.
(c) This agreement shall automatically terminate in the
event of its assignment.
-7-
ARTICLE 8
Amendments to this Agreement
8.1 This agreement may be amended by the parties only if such
amendment is specifically approved by: (i) if required by law the vote of a
majority of the Fund's outstanding voting securities, and (ii) a majority of
those Trustees who are not parties to this agreement or interested persons of
any such party cast in person at a meeting called for the purpose of voting on
such approval.
8.2 Notwithstanding anything herein to the contrary, this
agreement may be amended by the parties without the vote or consent of
shareholders of the Fund to supply any omission, to cure, correct or supplement
any ambiguous, defective or inconsistent provision hereof, or if they deem
necessary to conform this Agreement to the requirements of applicable federal
laws or regulations, but neither the Adviser or Investment Manager shall be
liable for failing to do so.
ARTICLE 9
Notices
9.1 Any notice shall be sufficiently given when sent by
registered or certified mail to the other party at the address of such party set
forth below or at such other address as such party may from time to time specify
in writing to the other party.
If to the Adviser:
CCM Advisors, LLC.
000 X. XxXxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxxxxx 00000
Attn: Xxxxxxx Xxx
If to the Investment Manager:
Xxxx Xxxxxxxxx Asset Management, LLC
0000 Xxxx 0xx Xxxxxx, Xxxxx 0000
Xxxxxxxxx, XX 00000
Attn: Xxxxx X. Xxxxx
ARTICLE 10
Miscellaneous Provisions
10.1 Other Relationships. It is understood that the officers,
Trustees, agents, shareholders and other affiliates of the Trust are or may be
interested in the Adviser or Investment Manager as officers, directors, agents,
shareholders, affiliates or otherwise, and that the officers, directors,
shareholders, agents and other affiliates of the Adviser or Investment Manager
may be interested in the Trust otherwise than as shareholders.
-8-
10.2 Definitions of Certain Terms. The terms "assignment,"
"affiliated person" and "interested person", when used in this agreement, shall
have the respective meanings specified in the 1940 Act. The term "majority of
the outstanding voting securities" means the lesser of: (a) 67% or more of the
votes attributable to Shares of the Fund or the Trust, as appropriate, present
at a meeting if the holders of more than 50% of such votes are present or
represented by proxy; or (b) more than 50% of the votes attributable to Shares
of the Fund or the Trust, as appropriate.
10.3 Applicable Law.
(a) This agreement shall be construed and the provisions
hereof interpreted under and in accordance with the laws of Illinois without
regard to conflicts of law principles or precedents.
(b) This agreement shall be subject to the provisions of
the Securities Act of 1933, as amended, the 1940 Act and the Securities Exchange
Act of 1934, as amended, and the rules and regulations and rulings thereunder,
including such exemptions from those statutes, rules and regulations as the SEC
may grant and the terms hereof shall be interpreted and construed in accordance
therewith.
10.4 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.
10.5 Captions. The captions in this agreement are included for
convenience of reference only and in no way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
10.6 Counterparts. This agreement may be executed
simultaneously in multiple counterparts, each of which taken together shall
constitute one and the same instrument.
10.7 Cooperation with Authorities. Each party hereto shall
cooperate with the other party and all appropriate governmental authorities
(including without limitation the SEC) and shall permit such authorities
reasonable access to its books and records in connection with any investigation
or inquiry relating to this agreement or the transactions contemplated hereby.
10.8 Cumulative Rights. The rights, remedies and obligations
contained in this agreement are cumulative and are in addition to any and all
rights, remedies and obligations, at law or in equity, which the parties hereto
are entitled to under state and federal laws.
10.9 Compensation of Officers, Trustees and Employees. No
Trustee, officer or employee of the Trust shall receive from the Trust any
salary or other compensation as a Trustee, officer or employee of the Fund while
at the same time holding a position as a director, officer, partner, member or
employee of the Investment Manager. This paragraph shall not apply to
consultants and other persons who are not regular members of the Investment
Manager's staff.
-9-
IN WITNESS WHEREOF, the parties hereto have caused this
agreement to be executed in their names and on their behalf by their duly
authorized officers all on the day and year first above written.
CCM ADVISORS, LLC
By: /s/ Xxxxxxx X. Xxxxxxx
Title: Managing Director/ CIO
XXXX XXXXXXXXX ASSET MANAGEMENT,
LLC
(Investment Manager)
By: /s/ Xxxxx X. Xxxxx
Title: COO
-10-
