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EXHIBIT (h)(ii)
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT (the "Agreement"), effective as of
September 30, 1999 by and between Xxxxxxx Xxxxx & Company, L.L.C., an Illinois
limited liability company (the "Adviser") and Xxxxxxx Xxxxx Mutual Funds, Inc.
(the "Company"), on behalf of the Xxxxxxx Xxxxx Value Discovery Fund series of
the Company (the "Fund").
WHEREAS, the Company is a Maryland corporation, 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 the Fund is a series of the Company;
WHEREAS, the Company and the Adviser have entered into a Management
Agreement dated December 23, 1996 ("Advisory Agreement"), pursuant to which the
Adviser provides investment management services to the Fund for compensation
based on the value of the average daily net assets of the Fund; and
WHEREAS, the Company and the Adviser have determined that it is
appropriate and in the best interests of the Fund and its shareholders to
maintain the expenses of the Fund at a level below the level to which the Fund
may otherwise be subject;
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1 Applicable Expense Limit. To the extent that the ordinary operating
expenses incurred by the Fund in any fiscal year, including but not limited to
investment advisory fees of the Adviser, but excluding interest, taxes,
brokerage commissions, other investment-related costs and extraordinary
expenses, such as litigation and other expenses not incurred in the ordinary
course of the Fund's business ("Fund Operating Expenses"), exceed the Operating
Expense Limit, as defined in Section 1.2 below, such excess amount (the "Excess
Amount") shall be the liability of the Adviser to the extent set forth in this
Agreement.
1.2 Operating Expense Limit. The Operating Expense Limit in any year
with respect to the Fund shall be 1.39% (annualized) of the average daily net
assets of the Fund for its Class I shares. For the Fund's Class A, B, C and N
shares, the Operating Expense Limit shall be 1.39% plus any
shareholder/distribution service fees under Rule 12b-1 under the 1940 Act and/or
shareholder service fees as described in the then current registration statement
offering shares of the Fund.
1.3 Duration of Operating Expense Limit. The Operating Expense Limit
with respect to the Fund shall remain in effect during the term of this
Agreement.
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1.4 Method of Computation. To determine the Adviser's obligation with
respect to the Excess Amount, each day the Fund Operating Expenses for the Fund
shall be annualized. If the annualized Fund Operating Expenses for any day of
the Fund exceed the Operating Expense Limit of the Fund, the Adviser shall waive
or reduce its investment advisory fee or absorb the other Fund expenses in an
amount sufficient to pay that day's Excess Amount. The Company may offset
amounts owed to the Fund pursuant to this Agreement against the advisory fee
payable to the Adviser. Furthermore, to the extent that the Excess Amount
exceeds such waived or reduced investment advisory fees, the Adviser shall, if
required pursuant to the securities laws or regulations of any state in which
the Fund's shares are qualified for sale, or may, voluntarily, reimburse the
Fund for any operating expenses.
2. TERM AND TERMINATION OF AGREEMENT.
The Agreement shall terminate either upon the termination of the
Advisory Agreement or on April 30, 2000. The obligation of the Adviser under
Section 1 of this Agreement shall survive the termination of the Agreement
solely as to expenses and obligations incurred prior to the date of such
termination.
3. MISCELLANEOUS.
3.1 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.
3.2 Interpretation. Nothing herein contained shall be deemed to require
the Company or the Fund to take any action contrary to the Company's 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
Company's Board of Directors of its responsibility for and control of the
conduct of the affairs of the Company or the Fund.
3.3 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.
3.4 Amendments. This Agreement may be amended only by a written
agreement signed by each of the parties hereto.
3.5 Assignment. This Agreement may be assigned to the successors in
interest of either party with the consent of the other party.
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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.
XXXXXXX XXXXX MUTUAL FUNDS, INC.
By: /s/ Xxxxx Xxxxx
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Name: Xxxxx Xxxxx
Title: President
XXXXXXX XXXXX & COMPANY, L.L.C.
By: /s/ Xxxxxx Xxxxxxx
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Name: Xxxxxx Xxxxxxx
Title: Principal
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