EXPENSE LIMITATION AGREEMENT
----------------------------
TFS CAPITAL LLC
0000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxx, Xxxxxxxx 00000
_____, 2005
TFS CAPITAL INVESTMENT TRUST
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Dear Sirs:
TFS Capital LLC confirms our agreement with you as follows:
1. You are an open-end, diversified management investment company
registered under the Investment Company Act of 1940 (the "Act") and are
authorized to issue shares of separate series (funds), with each fund having its
own investment objective, policies and restrictions. You propose to engage in
the business of investing and reinvesting the assets of each of your funds in
accordance with applicable limitations. Pursuant to an Investment Advisory
Agreement dated as of ______, 2005 (the "Advisory Agreement"), you have employed
us to manage the investment and reinvestment of such assets of your TFS Small
Cap Fund (the "Fund").
2. We hereby agree that, notwithstanding any provision to the contrary
contained in the Advisory Agreement, we shall limit as provided herein the
aggregate ordinary operating expenses incurred by the Fund, including but not
limited to the fees ("Advisory Fees") payable to us under the Advisory Agreement
(the "Limitation"). Under the Limitation, we agree that, through the life of the
Fund (subject to Section 4), such expenses shall not exceed a percentage (the
"Percentage Expense Limitation") of the average daily net assets of the Fund
equal to 1.75% on an annualized basis. Such Limitation shall be calculated daily
using the Base Fee of 1.25% under the Advisory Agreement and will not be
adjusted for any subsequent increase or decrease in the
advisory fee as a result of the application of the Performance Fee Adjustment
under the Advisory Agreement. Operating expenses includes all Fund expenses
except brokerage, taxes, borrowing costs such as interest and dividend expenses
on securities sold short and extraordinary expenses. To determine our liability
for the Fund's expenses in excess of the Percentage Expense Limitation, the
amount of allowable fiscal-year-to-date expenses shall be computed daily by
prorating the Percentage Expense Limitation based on the number of days elapsed
within the fiscal year of the Fund, or limitation period, if shorter (the
"Prorated Limitation"). The Prorated Limitation shall be compared to the
expenses of the Fund recorded through the current day in order to produce the
allowable expenses to be recorded for the current day (the "Allowable
Expenses"). If Advisory Fees and other expenses of the Fund for the current day
exceed the Allowable Expenses, Advisory Fees for the current day shall be
reduced by such excess ("Unaccrued Fees"). In the event such excess exceeds the
amount due as Advisory Fees, we shall be responsible to the Fund to pay or
absorb the additional excess ("Other Expenses Exceeding Limit"). If there are
cumulative Unaccrued Fees or cumulative Other Expenses Exceeding Limit, these
amounts shall be paid to us by you subject to the following conditions: (1) no
such payment shall be made to us with respect to Unaccrued Fees or Other
Expenses Exceeding Limit that arose more than three years prior to the proposed
date of payment, and (2) such payment shall be made only to the extent that it
does not cause the Fund's aggregate expenses, on an annualized basis, to exceed
the Percentage Expense Limitation.
3. Nothing in this Agreement shall be construed as preventing us from
voluntarily limiting, waiving or reimbursing your expenses outside the
provisions of this Agreement during any time period.
4. This Agreement shall become effective on the date hereof and supercedes
any expense limitation agreement previously entered into with respect to the
Fund. This Agreement may be terminated by either party hereto upon not less than
60 days' prior written notice to the other party, provided, however, that (1) we
may not terminate this Agreement without the approval of your Board of Trustees,
and (2) this Agreement will
terminate automatically if, as and when we cease to serve as investment adviser
of the Fund. Upon the termination or expiration hereof, we shall have no claim
against you for any amounts not reimbursed to us pursuant to the provisions of
paragraph 2.
5. This Agreement shall be construed in accordance with the laws of the
State of Virginia, provided, however, that nothing herein shall be construed as
being inconsistent with the Act.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
TFS CAPITAL LLC
By: /s/ Xxxxx Xxxxx
-----------------------------------------
Agreed to and accepted as of
the date first set forth above.
TFS CAPITAL INVESTMENT TRUST
By: /s/ Xxxxx Xxxxx
------------------------
