EXPENSE LIMITATION AND REIMBURSEMENT AGREEMENT
EXPENSE LIMITATION AND REIMBURSEMENT AGREEMENT, made as of
January 22nd, 2003, between Pennsylvania Avenue Advisers LLC, a
District of Columbia limited liability company (the "Company"), and The
Pennsylvania Avenue Event-Driven Fund, a series of The Pennsylvania
Avenue Funds, a Delaware Business Trust (the "Fund").
WHEREAS, the Company wishes to reduce the expenses of the Fund
until the Fund achieves a certain level of assets; and
WHEREAS, the Fund wishes to have the Company enter into such an
agreement and is prepared to repay such expenses if the Fund
subsequently achieves a sufficient level of asset;
NOW, THEREFORE, the parties agree as follows:
1. The Company agrees to reduce its fees or to reimburse the Fund
for its ordinary operating expenses in order that the total expenses of
the Fund (other than extraordinary expenses, such as litigation) with
respect to Investor Class shares do not exceed 1.50% per annum of
average daily net assets attributable to Investor Class shares. The
Company also agrees to reduce the portion the Fund's expenses
attributable to Adviser Class shares by the same number of basis points
such expenses are reduced for Investor Class shares.
2. The Company may discontinue such expense limitation at any
time by supplementing the Fund's prospectus prior to such
discontinuance and by prior notice to the Board of Trustees of the
Fund.
3. This Agreement shall continue in effect with respect to all
classes of the Fund until one year after the effective date of the
Fund's registration statement and shall thereafter continue in effect
with respect to each class of the Fund from year to year provided such
continuance is specifically approved by a majority of the Trustees of
the Fund who (i) are not "interested persons" of the Fund 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"). This Agreement shall terminate
automatically upon the termination of the investment advisory agreement
between the Fund and the Company.
4. This Agreement shall be governed by the laws of the State of
Delaware.
In witness whereof, the parties hereto have caused this
Agreement to be signed as of the 22nd day of January 2003.
Pennsylvania Avenue Funds By __/s/ THOMAS_KIRCHNER _______
XXXXXX XXXXXXXX, President
Pennsylvania Avenue Funds By _____/s/_GARY_TERNULLO_______
XXXX XXXXXXXX, Trustee
Pennsylvania Avenue Funds By ___/s/_GALE_WITOONCHATREE____
XXXX WITOONCHATREE, Trustee
Pennsylvania Avenue Advisers LLC By __/s/ THOMAS_KIRCHNER __
XXXXXX XXXXXXXX, Managing Member
