EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT (the "Agreement"), effective as of May 24,
2004 by and between Xxxxxxx Xxxxx & Company, L.L.C., an Illinois limited
liability company (the "Advisor") and Xxxxxxx Xxxxx Funds (the "Trust"), on
behalf of the Xxxxxxx Xxxxx International Equity Fund series of the Trust (the
"Fund").
WHEREAS, the Trust is a Delaware statutory 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 Advisor have entered into a Management Agreement
dated December 15, 1999 ("Advisory Agreement"), pursuant to which the Advisor
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 Advisor 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 for the period ending December 31, 2004 or for the
period January 1, 2005 through April 30, 2005, including but not limited to
investment advisory fees of the Advisor, 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 Advisor 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 1.25% (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 1.25% plus any shareholder/distribution
service fees under Rule 12b-1 and/or shareholder service fees as described in
the 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.
1.4 Method of Computation. To determine the Advisor'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 Advisor 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 Trust may
offset amounts owed to the Fund pursuant to this Agreement against the advisory
fee payable to the Advisor. Furthermore, to the extent that the Excess Amount
exceeds such waived or reduced investment advisory fees, the Advisor may
voluntarily reimburse the Fund for any operating expenses.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
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 Advisor 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
first three years subsequent to the Fund's commencement of operations, to the
extent that the Fund's annualized Operating Expenses plus the amount so
reimbursed equals, for such day, the Operating Expense Limit, provided that such
amount paid to the Advisor 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 shall terminate upon the earlier of termination of the
Advisory Agreement or on April 30, 2005. The obligation of the Advisor 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.
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.
2
4.5 Limitation of Liability. This Agreement is executed by or on behalf of
the Trust, and Advisor 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 Advisor 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
---------------------------
Name: Xxxxx Xxxxx
Title: President
XXXXXXX XXXXX & COMPANY, L.L.C.
By: /s/ Xxxxxxx X. Xxxxx
----------------------------
Name: Xxxxxxx X. Xxxxx
Title: Principal & CFO
3
