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EXHIBIT (H)(VII)
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT (the "Agreement"), effective as of December
15, 1999 by and between Xxxxxxx Xxxxx & Company, L.L.C., an Illinois limited
liability company (the "Adviser") and Xxxxxxx Xxxxx Funds (the "Trust"), on
behalf of the Xxxxxxx Xxxxx Disciplined Large Cap Fund series of the Trust (the
"Fund").
WHEREAS, the Trust is a Delaware business 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 the Fund is a series of the Trust;
WHEREAS, the Trust and the Adviser have entered into a Management
Agreement dated December 15, 1999 ("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 Trust 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 1.11% (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 1.11% plus any shareholder/distribution
service fees under Rule 12b-1 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 in an amount sufficient to pay that day's
Excess Amount. The Trust 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. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 Reimbursement. If on any day during which the Advisory Agreement is in
effect, the estimated annualized Fund Operating Expenses of the Fund for that
day are less than the Operating Expense Limit, the Adviser shall be entitled to
reimbursement by the Fund of the investment advisory fees waived or reduced, and
any other expense reimbursements or similar payments remitted by the Adviser to
the Fund pursuant to Section 1 hereof (the "Reimbursement Amount") during any of
the previous five (5) years, to the extent that the annualized Fund Operating
Expenses plus the amount so reimbursed equals, for such day, the Operating
Expense Limit, provided that such amount paid to the Adviser will in no event
exceed the total Reimbursement Amount and will not include any amounts
previously reimbursed.
3. TERM AND TERMINATION OF AGREEMENT.
This Agreement may be terminated by the Trust or, after April 30, 2000, by
the Adviser, without payment of any penalty, upon sixty (60) days' prior written
notice to the Trust at its principal place of business. In any event, the
Agreement shall terminate upon the termination of the Advisory Agreement or
[five] years after the Fund's commencement of operations. The obligation of the
Adviser under Section 1 of this Agreement and of the Trust under Section 2 of
this Agreement shall survive the termination of the Agreement solely as to
expenses and obligations incurred prior to the date of such termination.
4. MISCELLANEOUS.
4.1 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.
4.2 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 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 Fund.
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4.3 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.
4.4 Amendments. This Agreement may be amended only by a written agreement
signed by each of the parties hereto.
4.5 Limitation of Liability. This Agreement is executed by or on behalf of
the Trust, and Adviser is hereby expressly put on notice of the limitation of
shareholder liability as set forth in the Agreement and Declaration of Trust, as
amended, of the Trust and agrees that the obligations assumed by the Trust
pursuant to this Agreement shall be limited in all cases to the Trust and its
assets, and Adviser shall not seek satisfaction of any such obligations from the
trustees, officers or shareholders of the Trust.
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 FUNDS
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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