EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT ("Agreement"), effective as of January 1,
2005, by and between the Xxxxxx Xxxx Investment Funds, a Massachusetts Business
Trust, on behalf of the Xxxxxx Xxxx Total Return Bond Fund (the "Total Return
Bond Fund"), and Xxxxxx Xxxx Investment Management, LLC, a corporation organized
under the laws of the State of Delaware (the "Adviser").
W I T N E S S E T H:
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WHEREAS, the Total Return Bond Fund and the Adviser have entered into
an Investment Advisory Agreement, effective October 2, 2002 ("Advisory
Agreement"), pursuant to which the Adviser renders investment management
services to the Total Return Bond Fund for compensation based on the value of
the average daily net assets of the Total Return Bond Fund; and
WHEREAS, the Total Return Bond Fund and the Adviser have determined
that it is appropriate and in the best interests of the Total Return Bond Fund
and its shareholders to maintain Total Return Bond Fund expenses at a level
below that to which the Total Return Bond Fund would normally be subject during
the term of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMIT.
1.1. LIMITATION. To the extent that the aggregate expense of
every character incurred by the Total Return Bond Fund during the term
of this Agreement including, but not limited to, investment management
fees of the Adviser (but excluding interest, taxes, brokerage
commissions, and other expenditures which are capitalized in accordance
with generally accepted accounting principles, and other extraordinary
expenses not incurred in the ordinary course of the Total Return Bond
Fund's business) ("Fund Operating Expenses"), exceeds the "Expense
Limit," which is 0.69% and 0.44% of the average daily net assets of the
Class A and Class I shares, respectively, of the Total Return Bond
Fund, such excess amount ("Excess Amount") shall be the liability of
the Adviser.
1.2. METHOD OF COMPUTATION. To determine the Adviser's
liability for the Excess Amount, at each month end the fiscal year to
date Fund Operating Expenses accrued shall be compared with the fiscal
year to date Expense Limit. If at the end of any month the Fund
Operating Expenses exceed the Expense Limit, the Adviser shall first
waive or reduce its investment management fee for such month, as
appropriate, to the extent necessary to pay such Excess Amount. In the
event the Excess Amount exceeds the amount of the investment management
fee for such month, the Adviser, in addition to waiving its entire
investment management fee for such month, shall also remit to the Total
Return Bond Fund the difference between the Excess Amount and the
amount due as the investment management fee.
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1.3. YEAR-END ADJUSTMENT. If necessary, on or before the last
day of the first month following the termination of this Agreement, or
as soon as practicable thereafter, an adjustment payment shall be made
by the appropriate party in order to ensure that the actual Fund
Operating Expenses for the period covered by this Agreement (including
any reimbursement payments made under Section 2 of this Agreement) do
not exceed the Expense Limit.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1. REIMBURSEMENT. If, in any year in which the Advisory
Agreement remains in effect, estimated aggregate Fund Operating
Expenses for the fiscal year are less than the Expense Limit for that
year, the Adviser shall be entitled to reimbursement by the Total
Return Bond Fund, in whole or in part as provided below, of the
investment management fees waived or reduced, and other payments
remitted by the Adviser to the Total Return Bond Fund pursuant to
Section 1 hereof. The total amount of reimbursement to which the
Adviser may be entitled ("Reimbursement Amount") shall equal, at any
time, the sum of all investment management fees waived or reduced by
the Adviser, and all other payments, if any, remitted by the Adviser to
the Total Return Bond Fund pursuant to Section 1 hereof, commencing
with the effective date of this Agreement and continuing through each
of the next three (3) fiscal years, less any reimbursement paid from
time to time by the Total Return Bond Fund to the Adviser pursuant to
this Agreement with respect to such waivers, reductions, and payments.
The Reimbursement Amount, and any portion thereof, shall not include
any additional charges or fees whatsoever including, but not limited
to, interest accruable on the Reimbursement Amount.
2.2. METHOD OF COMPUTATION. To determine the amount of the
Total Return Bond Fund's payment, if any, to reimburse the Adviser for
the Reimbursement Amount, at each month end the fiscal year to date
Fund Operating Expenses accrued shall be compared with the fiscal year
to date Expense Limit. If at the end of any month the Fund Operating
Expenses are less than the Expense Limit, the Total Return Bond Fund
shall pay to the Adviser an amount sufficient to increase the
annualized Fund Operating Expenses to an amount no greater than the
Expense Limit, provided that such amount paid to the Adviser will in no
event exceed the Reimbursement Amount.
2.3. YEAR-END ADJUSTMENT. If necessary, on or before the last
day of the first month of each succeeding fiscal year, or as soon as
practicable thereafter, an adjustment payment shall be made by the
appropriate party in order to ensure that the actual Fund Operating
Expenses for the prior fiscal year (including any reimbursement
payments made hereunder with respect to such fiscal year) do not exceed
the Expense Limit.
3. TERMINATION OF AGREEMENT. This Agreement shall continue in effect
until the earlier of (a) the termination of the Advisory Agreement; or
(b) February 28, 2006.
4. MISCELLANEOUS.
4.1. NOTICES. Any notice under this Agreement shall be given
in writing, addressed and delivered, or mailed postpaid, (a) if to the
Adviser, to Xxxxxx Xxxx Investment Management, LLC, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000; and (b) if to the Total Return Bond Fund, at the
foregoing office of the Adviser.
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4.2. CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate
any of the provisions hereof or otherwise affect their construction or
effect.
4.3. INTERPRETATION. Nothing herein contained shall be deemed
to require the Total Return Bond Fund to take any action contrary to
its Articles of Incorporation or By-Laws, or any applicable statutory
or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Board members of its responsibility
for and control of the conduct of the affairs of the Total Return Bond
Fund.
4.4. DEFINITIONS. Any question of interpretation of any term
or provision of this Agreement including, but not limited to, the
investment management fee, the computations of net asset values, and
the allocation of expenses, having a counterpart in or otherwise
derived from the terms and provisions of the Advisory Agreement, shall
have the same meaning as and be resolved by reference to such Advisory
Agreement.
4.5. AMENDMENT. This Agreement may be amended or modified only
upon the written consent of the parties hereto.
4.6. GOVERNING LAW. Except insofar as the Investment Company
Act of 1940, as amended, or other federal laws and regulations may be
controlling, this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized, as of the day and year
first above written.
Xxxxxx Xxxx Investment Management,
on behalf of the Xxxxxx Xxxx Total Return
Bond Fund, Inc.
By: __________________________________
Title: __________________________________
Xxxxxx Xxxx Investment Management, LLC
By: __________________________________
Title: __________________________________
