Exhibit H(2)
XXXXX STREET FUNDS, INC.
April 1, 1999
Xxxxxx X. Xxxxx & Co. Incorporated
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
The Northwestern Mutual Life Insurance Company
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
Northwestern Mutual Investment Services, Inc.
000 Xxxx Xxxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxx 00000
RE: AGREEMENT TO WAIVE FEES CHARGED TO XXXXX STREET FUNDS, INC.
Gentlemen:
This letter constitutes an agreement between Xxxxxx X. Xxxxx & Co.
Incorporated ("Baird"), The Northwestern Mutual Life Insurance Company ("NML"),
Northwestern Mutual Investment Services, Inc. ("NMIS") and Xxxxx Street Funds,
Inc. ("MSF") by and between each of the parties hereto as follows:
For the fiscal year of MSF beginning April 1, 1999, and ending March 31,
2000, Baird, NML and NMIS agree to waive their fees to the extent necessary so
that Net Total Operating Expenses of each Class of each Fund of MSF, after the
waiver, do not exceed the amount indicated as the maximum Net Total Operating
Expenses (the "Expense Cap") in the then-effective prospectus for MSF (the
"Prospectus"). These fee waivers shall occur in the following order for each
Fund of MSF: first, NMIS shall waive its investment advisory fee, provided that
such waiver is allocated among the Classes of the Fund in proportion to the
relative net asset values of such Classes (a "Pro-Rata Waiver"). Second, NML
shall waive its Administration Agreement fee, provided that such waiver is
allocated among the Classes of the Fund in proportion to the relative net asset
values of such Classes. Third, Baird shall waive its Distribution Plan
(Rule 12b-1 Plan) fees. Fourth, Baird shall waive its Shareholder Services
Agreement fees. Finally, to the extent necessary to prevent the Net Total
Operating Expenses of any Class of any Fund from exceeding the Expense Cap for
such Class after each of the foregoing waivers, NMIS shall pay or reimburse
MSF's expenses.
To the extent that the Net Total Operating Expense ratios of the Classes of
a particular Fund cannot both be reduced simultaneously to the maximum Net Total
Operating Expense ratio set forth in the Prospectus through the use of a Pro-
Rata Waiver by NMIS and NML, then Baird agrees to waive its Distribution Plan
and Shareholder Servicing Agreement fees for the appropriate Class of such Fund
so as to reach the Expense Cap for that Class of such Fund. In such
circumstances, Baird shall first waive its Distribution Plan fees and then its
Shareholder
Servicing Agreement fees, to the extent necessary for such Class to reach the
Expense Cap for the fiscal year ending March 31, 2000.
Notwithstanding any other provision herein, the fees waived by Baird
hereunder shall not exceed the amounts payable by Baird to NML under Section 3
of the Distribution and Marketing Agreement between NML, Baird and NMIS dated
March 31, 1997. NML agrees that it shall not be entitled to receive such
amounts from Baird as are waived by Baird under this Letter Agreement.
Very truly yours,
XXXXX STREET FUNDS, INC.
By: XXXX X. XXXX
------------
Name: Xxxx X. Xxxx
Title: Vice President and Treasurer
Agreed to and accepted:
XXXXXX X. XXXXX & CO. INCORPORATED
By: XXXX X. XXXXXXX
---------------
Name: Xxxx X. Xxxxxxx
Title: Senior Vice President - Compliance Director
THE NORTHWESTERN MUTUAL LIFE
INSURANCE COMPANY
By: XXXX X. XXXX
------------
Name: Xxxx X. Xxxx
Title: Senior Vice President
NORTHWESTERN MUTUAL INVESTMENT
SERVICES, INC.
By: XXXX X. XXXX
------------
Name: Xxxx X. Xxxx
Title: Executive Vice President
118892
