EXPENSE LIMITATION AGREEMENT
THE WESTPORT FUNDS
EXPENSE LIMITATION AGREEMENT, effective as of March 24, 1999 by and
between Westport Advisers, LLC (the "Adviser") and The Westport Funds (the
Trust"), on behalf of each series of the Trust set forth in Schedule A attached
hereto (each a "Fund," and collectively, the "Funds").
WHEREAS, the Trust is a Delaware business trust organized under a
Declaration of Trust ("Declaration of Trust"), 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 each Fund is a series of the Trust;
and
WHEREAS, each Fund consists of multiple classes as set forth in Schedule A
attached hereto; and
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory
Agreement dated November 25, 1997 (the "Advisory Agreement"), pursuant to which
the Adviser provides investment advisory services to each Fund listed in
Schedule A, which may be amended from time to time, for compensation based on
the value of the average daily net assets of each class of each Fund; and
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 class of each Fund, and, therefore, have entered into this
Expense Limitation Agreement ("the Agreement"), in order to maintain the expense
ratios of each class of each Fund at the levels specified Schedule A attached
hereto; and
NOW THEREFORE, the parties hereto agree that the Agreement provides as
follows:
1. Expense Limitation.
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1.1. 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, 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 amounts, if any, payable pursuant to a plan adopted
in accordance with Rule 12b-1 under the 1940 Act, if any) ("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.
1.2. Operating Expense Limit. The maximum Operating Expense Limit in any year
with respect to each class of each Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of each
class of each Fund.
1.3. 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 Operating
Expense Limit of such Fund, the Adviser shall waive or reduce its
investment advisory fee for such month by an amount, or remit an amount to
the appropriate class or classes of the Fund or Funds, sufficient to
reduce the annualized Fund Operating Expenses to an amount no higher than
the Operating Expense Limit; provided, however, that any waiver or
reduction of the advisory fee is applied equally across the classes of the
Fund.
1.4. 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.
2. Term and Termination of Agreement.
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This Agreement with respect to the Funds shall continue in effect
through December 31, 1999, and from year to year thereafter provided each
such continuance is specifically approved by a majority of the Trustees of
the Trust. This Agreement shall terminate automatically upon the
termination of the Advisory Agreement.
3. Miscellaneous.
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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
Trust or the Funds 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.
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.
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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.
THE WESTPORT FUNDS
ON BEHALF OF EACH OF ITS SERIES
By:
/s/Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Executive Vice President, Secretary and Treasurer
WESTPORT ADVISERS, LLC
By:/s/Xxxxxx X. Xxxxxxx, Xx.
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Xxxxxx X. Xxxxxxx, Xx.
Managing Director
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SCHEDULE A
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds and classes of the Trust:
Maximum Operating
Expense Limit
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Westport Fund -- Class R shares 1.50%
Westport Fund -- Class I shares 1.50%
Westport Small Cap Fund -- Class R shares 1.50%
Westport Small Cap Fund -- Class I shares 1.50%
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