EXPENSE LIMITATION AGREEMENT CONGRESSIONAL EFFECT FAMILY OF FUNDS
This
Agreement is made and entered into effective July 20, 2009, by and between the
Congressional Effect Fund (the “Fund”), a series of shares of the Congressional
Effect Family of Funds, a Delaware statutory trust (the “Trust”) and
Congressional Effect Management, LLC, a Delaware limited liability company (the
“Adviser”).
WHEREAS,
the Trust is a Delaware statutory trust organized under the Certificate of Trust
(“Trust Instrument”), dated December 21, 2007, as amended, and is registered
under the Investment Company Act of 1940, as amended (the “1940 Act”), as an
open-end management company of the series type; and
WHEREAS,
the Fund is a series of the Trust; and
WHEREAS,
the Fund and the Adviser have entered into an Investment Advisory Agreement
dated May 5, 2008, (“Advisory Agreement”), pursuant to which the Adviser
provides investment advisory services to the Fund; and
WHEREAS,
the Fund and the Adviser have determined that it is appropriate and in the best
interests of the Fund and its shareholders to limit the expenses of the Fund,
and, therefore, have entered into this Agreement, in order to maintain the
Fund’s expense ratios within the Operating Expense Limit, as defined
below.
NOW,
THEREFORE, in consideration of the mutual covenants herein contained, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
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1.
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Expense
Limitation.
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(a) Applicable Expense
Limit. To the extent that the aggregate expenses of every
character, including but not limited to investment advisory fees of the Adviser
(but excluding interest, taxes, brokerage commissions, other expenditures which
are capitalized in accordance with generally accepted accounting principles,
other extraordinary expenses not incurred in the ordinary course of such Fund’s
business and acquired fund fees and expenses) incurred by the Fund in any fiscal
year (“Fund Operating Expenses”), exceed the Operating Expense Limit, as defined
in Section 1(b) below, such excess amount (the “Excess Amount”) shall be the
liability of the Adviser.
(b) Operating Expense
Limit. The Fund’s maximum Operating Expense Limit in any year
shall be 1.75% of the average daily net assets of the Fund.
(c) Method of
Computation. To determine the Adviser’s liability with respect
to the Excess Amount, each month the Fund Operating Expenses for the Fund shall
be annualized as of the last day of the month. If the annualized Fund
Operating Expenses for any month exceeds the Operating Expense Limit of the
Fund, the Adviser shall first waive or reduce its investment advisory fee for
such month by an amount sufficient to reduce the annualized Fund Operating
Expenses to an amount no higher than the Operating Expense Limit. If the amount
of the waived or reduced investment advisory fee for any such month is
insufficient to pay the Excess Amount, the Adviser may also remit to the Fund an
amount that, together with the waived or reduced investment advisory fee, is
sufficient to pay such Excess Amount.
(d) Year-End
Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an adjustment payment shall be made by the
appropriate party in order that the amount of the investment advisory fees
waived or reduced and other payments remitted by the Adviser to the Fund with
respect to the previous fiscal year shall equal the Excess Amount.
(e) Recapture. If
the Adviser so requests, any Fund Operating Expenses waived or reimbursed by the
Adviser pursuant to this Agreement shall be repaid to the Adviser by the
Portfolio in the first, second and third fiscal years following the fiscal year
in which any such reimbursement or waiver occurs, if the total annual Fund
Operating Expenses for the applicable following year, after giving effect to the
repayment, do not exceed 1.75% of the average daily net assets of the Fund (or
any lower expense limitation or limitations to which the parties may otherwise
agree).
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2.
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Term
and Termination of Agreement.
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This
Agreement with respect to the Fund shall continue in effect until the last day
of July 2010, and from year to year thereafter provided each such continuance is
specifically approved by a majority of the Trustees of the Trust who (i) are not
“interested persons” of the Trust or any other party to this Agreement, as
defined in the 1940 Act, and (ii) have no direct or indirect financial interest
in the operation of this Agreement (“Non-Interested
Trustees”). Nevertheless, this Agreement may be terminated by either
party hereto, without payment of any penalty, upon written notice ninety (90)
days prior to the end of the then-current term of the Agreement to the other
party at its principal place of business; provided that, in the case of
termination by the Trust, such action shall be authorized by resolution of a
majority of the Non-Interested Trustees of the Trust or by a vote of a majority
of the outstanding voting securities of the Trust. Any termination pursuant to
this paragraph 2 shall become effective, unless otherwise specifically agreed
upon, on the last day of the then-current term of the Agreement.
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3.
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Miscellaneous.
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(a) 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.
(b) Interpretation. Nothing
herein contained shall be deemed to require the Trust or the Fund to take any
action contrary to the Trust’s Declaration of Trust 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 Trust’s Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Trust or the
Funds.
(c) Definitions. Any
question of interpretation of any term or provision of this Agreement, including
but not limited to the investment advisory 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 or the 1940 Act,
shall have the same meaning as and be resolved by reference to such Advisory
Agreement or the 1940 Act.
IN
WITNESS WHEREOF, the parties have caused this Agreement to be signed by their
respective officers thereunto duly authorized and their respective corporate
seals to be hereunto affixed, as of the day and year first above
written.
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CONGRESSIONAL
EFFECT FUND, A SERIES OF THE CONGRESSIONAL EFFECT FAMILY OF
FUNDS
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/s/ Xxxx X. Xxxxxx
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By:
Xxxx X. Xxxxxx, Trustee
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CONGRESSIONAL
EFFECT MANAGEMENT, LLC
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/s/ Xxxx X. Xxxxxx
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By:
Xxxx X. Xxxxxx, Managing Member
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