EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, is dated this
20th day of February, 2015, and shall be effective on March 1, 2015,
is made by and between FCA Corp (the “Adviser”) and Commonwealth International Series
Trust (the “Trust”) (“Agreement”), on behalf of the series of the Trust set forth
in Schedule A attached hereto (each a “Fund,” and collectively, the “Funds”).
WHEREAS, the Trust is a Massachusetts business
trust, and is registered under the Investment Company Act of 1940, as amended (“1940
Act”), as an open-end management investment company of the series type, and each
Fund is a series of the Trust;
WHEREAS, the Trust and the Adviser have
entered into an Advisory Agreement dated November 1, 2011 (“Advisory Agreement”),
pursuant to which the Adviser provides investment management services to each Fund
for compensation based on the value of the average daily net assets of each such
Fund;
WHEREAS, the Trust and the Adviser have
determined that it is appropriate and in the best interests of each Fund and its
shareholders to maintain the expenses of each Fund at a level below the level to
which each such Fund would normally be subject in order to maintain each Fund’s
expense ratio at the Maximum Annual Operating Expense Limit (as hereinafter defined)
specified in Schedule A hereto;
NOW THEREFORE, the parties hereto agree
as follows:
1. Expense Limitation.
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Applicable
Expense Limit. To the extent that the aggregate expenses of every character
incurred by a Fund in any fiscal year, including but not limited to investment advisory
fees of the Adviser (but excluding interest, taxes, brokerage commissions, distribution
fees pursuant to Rule 12b-1 Plans, acquired fund fees and expenses, dividend expense
on short sales, other expenditures which are capitalized in accordance with generally
accepted accounting principles and other extraordinary expenses not incurred in
the ordinary course of such Fund’s business) (“Fund Operating Expenses”), exceed
the Maximum Annual Operating Expense Limit, as defined in Section 1.2 below, such
excess amount (the “Excess Amount”) shall be the liability of the Adviser. |
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Maximum
Annual Operating Expense Limit. The Maximum Annual Operating Expense Limit with
respect to each Fund shall be the amount specified in Schedule A based on a percentage
of the average daily net assets of each Fund. |
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Method
of Computation. To determine the Adviser’s liability with respect to the
Excess Amount, each month the Fund Operating Expenses for each Fund shall be annualized
as of the last day of the month. If the annualized Fund Operating Expenses for any
month of a Fund exceed the Maximum Annual Operating Expense Limit of such 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 Maximum Annual 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 appropriate Fund or Funds
an amount that, together with the waived or reduced investment advisory fee, is
sufficient to pay such Excess Amount. |
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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 or Funds with respect to the previous fiscal
year shall equal the Excess Amount. |
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Reimbursement
of Fee Waivers and Expense Reimbursements. |
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Reimbursement.
If, during any fiscal quarter in which the Advisory Agreement is still in effect, |
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the estimated
aggregate Fund Operating Expenses of such Fund for the fiscal quarter are less than
the Maximum Annual Operating Expense Limit for that quarter, the Adviser shall be
entitled to reimbursement by such Fund, in whole or in part as provided below, of
the investment advisory fees waived or reduced and other payments remitted by the
Adviser to such 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 advisory fees previously waived or reduced by the
Adviser and all other payments remitted by the Adviser to the Fund, pursuant to
Section 1 hereof, during any of the previous three (3) fiscal years, less any reimbursement
previously paid by such Fund to the Adviser, pursuant to this Sections 2.1, with
respect to such waivers, reductions, and payments. The Reimbursement Amount shall
not include any additional charges or fees whatsoever, including, e.g., interest
accruable on the Reimbursement Amount. No Reimbursement pursuant to this Section
may be effected if the Reimbursement would cause the Fund Operating Expenses to
exceed the Maximum Annual Operating Expense Limit that was in place at the time
the fees and expenses that are the subject of the Reimbursement were waived and/or
reimbursed. |
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Board Review.
No Reimbursement Amount will be paid to the Adviser if the Trust’s Board
of Trustees determines that the payment of the Reimbursement Amount is not in the
best interests of shareholders. |
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Method
of Computation. To determine each Fund’s accrual, if any, to reimburse
the Adviser for the Reimbursement Amount, each month the Fund Operating Expenses
of each Fund shall be annualized as of the last day of the month. If the annualized
Fund Operating Expenses of a Fund for any month are less than the Maximum Annual
Operating Expense Limit of such Fund, such Fund shall accrue into its net asset
value an amount payable to the Adviser sufficient to increase the annualized Fund
Operating Expenses of that Fund to an amount no greater than the Maximum Annual
Operating Expense Limit of that Fund, provided that such amount paid to the Adviser
will in no event exceed the total Reimbursement Amount. For accounting purposes,
amounts accrued pursuant to this Section 2 shall be a liability of the Fund for
purposes of determining the Fund’s net asset value. |
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Payment
and Year-End Adjustment. Amounts accrued pursuant to this Agreement shall be
payable to the Adviser as of the last day of each month. 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 actual Fund Operating Expenses
of a Fund for the prior fiscal year (including any reimbursement payments hereunder
with respect to such fiscal year) do not exceed the Maximum Annual Operating Expense
Limit. |
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Term and Termination
of Agreement. |
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This Agreement
shall continue in effect with respect to each Fund until February 29, 2016 and shall
thereafter continue in effect with respect to each Fund from year to year for successive
one-year periods provided that Agreement may be terminated by either party hereto,
without payment of any penalty, upon ninety (90) days’ prior written notice
to the other party at its principal place of business; provided that, in the case
of termination by the Adviser, 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. |
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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. |
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Interpretation.
Nothing herein contained shall be deemed to require the Trust or the Funds
to take any action contrary to the Trust’s Agreement and Declaration of Trust
or by-laws, as amended |
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from time
to time, 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. The parties to this Agreement acknowledge and agree that all litigation
arising hereunder, whether direct or indirect, and of any and every nature whatsoever
shall be satisfied solely out of the assets of the affected Fund and that no Trustee,
officer or holder of shares of beneficial interest of the Fund shall be personally
liable for any of the foregoing liabilities. The Trust’s Agreement and Declaration
of Trust is on file with the Secretary of Corporations of the Commonwealth of Massachusetts.
The Agreement and Declaration of Trust and by-laws describe in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and holders
of shares of beneficial interest. |
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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. |
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Enforceability.
Any term or provision of this Agreement which is invalid or unenforceable in
any jurisdiction shall, as to such jurisdiction be ineffective to the extent of
such invalidity or unenforceability without rendering invalid or unenforceable the
remaining terms or provisions of this Agreement or affecting the validity or enforceability
of any of the terms or provisions of this Agreement in any other jurisdiction. |
IN WITNESS WHEREOF, the parties hereto have
caused this instrument to be signed on their behalf by their duly authorized officers
as of the date first above written.
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By: |
/s/ Xxxx Xxxxx |
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Name: |
Xxxx Xxxxx |
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Title: |
Chairman |
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FCA Corp |
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By: |
/s/ Xxxxxx
X. Xxxxxxx |
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Name: |
Xxxxxx X.
Xxxxxxx |
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Title: |
President |
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SCHEDULE A
to the
EXPENSE LIMITATION AGREEMENT (the “Agreement”)
between
COMMONWEALTH INTERNATIONAL
SERIES TRUST (the “Trust”)
and
FCA CORP
Dated as of February 20,
2015
This Agreement relates to the following
Funds of the Trust:
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Maximum
Annual |
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Operating
Expense |
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Limit
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| Africa Fund |
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1.50% |
