FEE REDUCTION AGREEMENT
XXXXXXX XXXXX INVESTMENT TRUST
THIS AGREEMENT ("Agreement"), is dated this 28th day of February, 2009 and shall
be effective on March 1, 2009, is made by and between Xxxxxxx Xxxxx Asset
Management, L.P. (the "Adviser") and Xxxxxxx Xxxxx Investment Trust (the
"Trust"), on behalf its series portfolio, The Chesapeake Growth Fund (the
"Fund").
WHEREAS, the Trust is a Massachusetts business trust organized under an Amended
and Restated Declaration of Trust ("Declaration of Trust"), dated January 22,
1995, and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end managed investment company of the series type
and the Fund is a series of the Trust; and
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory
Agreement ("Advisory Agreement"), pursuant to which the Adviser provides
investment advisory services to the Fund for compensation based on the value of
the average daily net assets of the Fund (the "Advisory Fee"); and
WHEREAS, the Trust and the Adviser have determined that it is appropriate and in
the best interests of the Fund and its shareholders for the Adviser to reduce
its Advisory Fee, subject to recoupment by the Adviser under certain
circumstances as are described more fully below;
NOW, THEREFORE, in consideration of the mutual covenants herein contained, the
receipt and sufficiency of which is hereby acknowledged, the parties hereto
agree as follows:
1. FEE REDUCTION.
--------------
a. APPLICABLE EXPENSE LIMIT. To the extent the Fund's net assets are
less than $11 million AND the aggregate expenses of every character,
including but not limited to investment advisory fees of the Adviser
(but excluding (i) interest, (ii) taxes, (iii) brokerage
commissions, (iv) other expenditures which are capitalized in
accordance with generally accepted accounting principles, (v) other
extraordinary expenses not incurred in the ordinary course of the
Fund's business, (vi) dividend expense on short sales, and (vii)
expenses incurred under a plan of distribution adopted pursuant to
Rule 12b-1 under the 1940 Act), incurred by the Fund during the term
of this Agreement ("Fund Operating Expenses"), exceed the Operating
Expense Limit, as defined in Section 1(b) below, the Adviser shall
reduce its Advisory Fee in whole or in part, subject to its ability
to recoup the Advisory Fee as set forth under Section 2 below. In
determining the Fund Operating Expenses, expenses that the Fund
would have incurred but did not actually pay because of expense
offset or brokerage/services arrangements shall be added to the
aggregate expenses so as not to benefit the Adviser. Additionally,
fees reimbursed to the Fund relating to brokerage/services
arrangements shall not be taken into account in determining the Fund
Operating Expenses so as to benefit the Adviser. Finally, the
Operating Expense Limit described in this Agreement excludes any
"acquired fund fees and expenses" as that term is described in the
prospectus of the Fund.
b. OPERATING EXPENSE LIMIT. The Fund's operating expense limit (the
"Operating Expense Limit") shall be that percentage of the average
daily net assets of the Fund as set forth on SCHEDULE A attached
hereto and incorporated by this reference.
c. METHOD OF COMPUTATION. To determine the extent of the Adviser's
obligation to reduce its fees, each month the Fund Operating
Expenses for the Fund for that month shall be annualized as of the
last day of the month. If the annualized Fund Operating Expenses for
any month exceeds the Operating Expense Limit of the Fund and the
net assets of the Fund are less than $11 million as of the last day
of that month, the Adviser shall reduce the Advisory Fee for such
month by an amount sufficient to reduce the annualized Fund
Operating Expenses to an amount no higher than the Operating Expense
Limit. The Adviser's obligation shall be limited in that the Adviser
shall only be obligated to reduce the Advisory Fee and in no manner
shall this Agreement be construed to cause the Adviser to reimburse
the Fund for any other amounts. FOR THE SAKE OF CLARITY, IF THE
ADVISER HAS REDUCED ITS ADVISORY FEE IN ITS ENTIRETY AND THE FUND
OPERATING EXPENSES CONTINUE TO BE GREATER THAN THE OPERATING EXPENSE
LIMIT, THERE IS NO OBLIGATION UNDER THIS AGREEMENT FOR THE ADVISER
TO PROVIDE A PAYMENT AS REIMBURSEMENT FOR EXPENSES INCURRED BY THE
FUND SO AS TO LOWER THE FUND OPERATING EXPENSES TO A LEVEL NO
GREATER THAN THE OPERATING EXPENSE LIMIT.
2. RECOUPMENT.
-----------
a. REIMBURSEMENT. If in any year in which the Advisory Agreement is
still in effect, the net assets of the Fund are equal to or exceed
$11 million and the estimated aggregate Fund Operating Expenses of
the Fund for the term of this Agreement are less than the Operating
Expense Limit, the Adviser, shall be entitled to reimbursement by
the Fund, in whole or in part as provided below, of the fees reduced
by the Adviser 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 fees previously
reduced by the Adviser pursuant to Section 1 hereof, during any of
the previous three (3) years, less any reimbursement previously paid
by the Fund to the Adviser pursuant to this Section 2, with respect
to such reductions. The Reimbursement Amount shall not include any
additional charges or fees whatsoever, including, e.g., interest
accruable on the Reimbursement Amount.
b. METHOD OF COMPUTATION. To determine the Fund's accrual, if any, to
reimburse the Adviser for the Reimbursement Amount, each month the
Fund Operating Expenses for that month of the Fund shall be
annualized as of the last day of the month. If the annualized Fund
Operating Expenses of the Fund for any month are less than the
Operating Expense Limit of the Fund and net assets as of the last
day of that month are equal to or greater than $11 million, the 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 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, when the annualized Fund Operating Expenses of
the Fund are below the Operating Expense Limit, a liability will be
accrued daily for these amounts.
c. LIMITATION OF LIABILITY. The Adviser shall look only to the assets
of the Fund for which it reduced fees or remitted payments for
reimbursement under this Agreement and for payment of any claim
hereunder, and neither the Fund, nor any of the Trust's directors,
officers, employees, agents, or shareholders, whether past, present
or future shall be personally liable therefor.
3. TERM AND TERMINATION OF AGREEMENT. This Agreement shall remain in effect
until February 28, 2010. This Agreement shall terminate automatically upon
the termination of the Advisory Agreement; provided, however, that the
obligation of the Trust to reimburse the Adviser with respect to the Fund
shall survive the termination of this Agreement unless the Trust and the
Adviser agree otherwise.
4. MISCELLANEOUS.
--------------
a. 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.
b. INTERPRETATION. Nothing herein contained shall be deemed to require
the Trust or the Fund to take any action contrary to the Trust's
Declaration of Trust or bylaws, 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 Fund.
c. 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.
[Signature page follows.]
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 INVESTMENT TRUST
----------------------------------------
X. Xxxxxxxxx Xxxxxxx, Chairman
XXXXXXX XXXXX ASSET MANAGEMENT L.P.
----------------------------------------
X. Xxxxxxxxx Xxxxxxx, Chairman
SCHEDULE A
TO THE
FEE REDUCTION AGREEMENT
BETWEEN
XXXXXXX XXXXX INVESTMENT TRUST
AND
XXXXXXX XXXXX ASSET MANAGEMENT L.P.
DATED AS OF FEBRUARY 28, 2009
FUND OPERATING EXPENSE LIMIT EFFECTIVE DATE EXPIRATION DATE
---- ----------------------- -------------- ---------------
The Chesapeake Growth Fund 2.75% March 1, 2009 February 28, 2010
