Exhibit (h)(4)
XXXXXXX INVESTORS TRUST
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, made as of this 15th day of April, 2009, by
and among Xxxxxxx Asset Management Corporation (the "Adviser"), Xxxxxxx
Securities, Inc. (the "Distributor") and Xxxxxxx Investors Trust (the "Trust"),
on behalf of each series identified and from time to time set forth on SCHEDULE
A attached hereto (each, a "Schedule A Fund") and each series identified and
from time to time set forth on SCHEDULE B attached hereto (each, a "Schedule B
Fund") (each Schedule A Fund and Schedule B Fund, a "Fund").
WHEREAS, the Trust is registered under the Investment Company Act of 1940,
as amended (the "1940 Act"), as an open-end management investment company and is
organized as a statutory trust under the laws of the State of Delaware, and each
Fund is a series of the Trust;
WHEREAS, the Trust, on behalf of each Fund, and the Adviser are parties to
an investment advisory agreement (the "Advisory Agreement"), pursuant to which
the Adviser provides investment advisory services to each Fund in consideration
of compensation based on the value of the average daily net assets of such Fund
(the "Advisory Fee");
WHEREAS, the Trust, on behalf of each Fund, and the Distributor are parties
to such Fund's plan adopted in accordance with Rule 12b-1 under the 1940 Act
(each, a "Rule 12b-1 Plan") relating to each class of shares of each Fund,
pursuant to which the Distributor engages in marketing and distribution
activities on behalf of such Fund in consideration for compensation based on the
value of the average daily net assets of such Fund (the "Rule 12b-1 Fee");
WHEREAS, the Adviser and the Distributor have voluntarily determined that
it is appropriate and in the best interests of each Fund and its shareholders to
maintain certain expenses of each class of the Funds at specified levels. The
Trust, on behalf of each Fund, the Adviser and the Distributor therefore have
entered into this Expense Limitation Agreement (this "Agreement") in order to
maintain the expense ratio of each class of each Schedule A Fund at the level
specified in SCHEDULE A attached hereto, or to limit the "other expenses" of
each class of each Schedule B Fund at the level specified in SCHEDULE B attached
hereto, as the case may be, on the terms and conditions set forth herein;
WHEREAS, each Schedule A Fund is prepared to repay the Adviser and the
Distributor, subject to the terms and conditions set forth herein, certain
waived Advisory Fees and Rule 12b-1 Fees if such Fund subsequently achieves a
sufficient level of assets;
WHEREAS, each Schedule A Fund and each Schedule B Fund is prepared to repay
the Adviser, subject to the terms and conditions set forth herein, certain
reimbursed Excess Amounts (as defined in Section 1.2) if such Fund subsequently
achieves a sufficient level of assets; and
WHEREAS, this Agreement supercedes, with respect to each Fund, the Excess
Expense Plan of the Trust adopted by the Trust's Audit Committee on February 16,
2001 (the "Excess Expense Plan");
NOW THEREFORE, in consideration of the mutual covenants set forth herein
and other good and valuable consideration, the receipt of which is hereby
acknowledged, the parties hereto agree as follows:
1. EXPENSE LIMITATIONS.
1.1 EXPENSE LIMIT APPLICABLE TO SCHEDULE A FUNDS. During the Term (as
defined in Section 2.1), the Adviser and the Distributor each agree to waive all
or a portion of their respective Advisory Fees and Rule 12b-1 Fees to the extent
necessary so that the "Total Annual Fund Operating Expenses" (as defined in Form
N-1A under the 0000 Xxx) incurred by the applicable class of shares of a
Schedule A Fund (excluding Non-Capped Expenses, as defined in Section 1.3)
("Capped Operating Expenses") do not exceed the Expense Limit (as defined in
Section 1.4) applicable to such class. During the Term, to the extent that
Capped Operating Expenses incurred by a class of shares of a Schedule A Fund in
any fiscal year (after the waiver of Advisory Fees by the Adviser and Rule 12b-1
Fees by the Distributor) exceed the Expense Limit for such class, such excess
amount (the "Schedule A Fund Excess Amount") shall be borne by the Adviser. The
parties hereto agree that to the extent Capped Operating Expenses applicable to
a class of shares of a Schedule A Fund in any fiscal year do not exceed the
Expense Limit for such class, the Advisory Fee and Rule 12b-1 Fee shall be
payable by such Schedule A Fund in respect of such class in the following order:
- first, the Distributor shall be entitled to receive the Rule 12b-1 Fee
up to the amount payable under such Schedule A Fund's Rule 12b-1 Plan
applicable to such class of shares; and
- thereafter, the Adviser shall be entitled to receive the Advisory Fee
up to the amount payable under the Advisory Agreement.
1.2 EXPENSE LIMIT APPLICABLE TO SCHEDULE B FUNDS. During the Term, the
Adviser agrees to pay or reimburse the expenses of each class of shares of each
Schedule B Fund to the extent necessary so that "Other Expenses" (as defined in
Form N-1A under the 0000 Xxx) incurred by such class (excluding Non-Capped
Expenses) ("Capped Other Expenses") do not exceed the Expense Limit applicable
to such class. During the Term, to the extent that Capped Other Expenses
incurred by a class of shares of a Schedule B Fund in any fiscal year exceed the
Expense Limit for such class, such excess amount (the "Schedule B Fund Excess
Amount") shall be borne by the Adviser. Each of a Schedule A Fund Excess Amount
and a Schedule B Fund Excess Amount shall be referred to herein as an "Excess
Amount."
1.3 NON-CAPPED EXPENSES. The following costs and expenses ("Non-Capped
Expenses") are outside of the Expense Limits: interest charges on Fund
borrowings, taxes, brokerage commissions, dealer spreads and other transaction
costs, expenditures that are capitalized in accordance with generally accepted
accounting principles, "Acquired Fund" (as defined in Form N-1A under the 0000
Xxx) fees and expenses, short sale dividends,
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extraordinary expenses not incurred in the ordinary course of a Fund's business
(i.e., litigation and indemnification), and any other costs and expenses that
may be approved by the Board of Trustees of the Trust (the "Board").
Extraordinary expenses are expenses that are unusual or are expected to recur
infrequently, and may include, but are not limited to: (i) expenses of the
reorganization, restructuring or merger of a Fund, including the acquisition of
all the assets of a Fund or the acquisition by a Fund of another fund's assets,
(ii) expenses of substantially rewriting and reformatting a Fund's disclosure
documents (as distinguished from routine annual revisions and updates), (iii)
expenses of holding, and soliciting proxies, for a shareholder meeting to
consider and vote upon changes to a Fund's investment policies and restrictions,
charter documents or other fundamental matters (as distinguished from routine
matters such as the election of Trustees or the approval or accountants), and
(iv) expenses of converting to a new custodian, transfer agent or other service
provider.
1.4 EXPENSE LIMIT. The maximum "Expense Limit" in any year with respect to
each class of shares of a Fund shall be the amount specified in SCHEDULE A or
SCHEDULE B, as the case may be, based on a percentage of the average daily net
assets of the applicable class.
1.5 REIMBURSEMENT. The Trust shall keep a record of the amounts of Advisory
Fees and Rule 12b-1 Fees waived in respect of Schedule A Funds pursuant to
Section 1.1 hereof and Excess Amounts reimbursed in respect of Schedule A Funds
and Schedule B Funds pursuant to Section 1.1 and Section 1.2 hereof (such waived
fees and reimbursed Excess Amounts, "Prior Expenses"). Subject to the last
sentence of this Section 1.5, if at any future date Capped Operating Expenses of
a class of shares of a Schedule A Fund are less than the Expense Limit for such
class, the Adviser and the Distributor shall be entitled to payment by such
class of the amount of the Prior Expenses that the Adviser and Distributor have
respectively waived and/or reimbursed in respect of such class, without interest
thereon, except to the extent that such payment will cause the Capped Operating
Expenses of such class to exceed the Expense Limit for that class. Subject to
the last sentence of this Section 1.5, if at any future date Capped Other
Expenses of a class of shares of a Schedule B Fund are less than the Expense
Limit for such class, the Adviser shall be entitled to payment by such class of
the amount of the Prior Expenses that the Adviser has paid or reimbursed in
respect of such class, without interest thereon, except to the extent that such
payment will cause the Capped Other Expenses of such class to exceed the Expense
Limit for that class. If the Capped Operating Expenses or Capped Other Expenses
of a class of shares of a Fund, as applicable, subsequently exceed the Expense
Limit for that class, the payment of Prior Expenses to the Adviser and/or the
Distributor, as applicable, shall be suspended. If subsequent payment of Prior
Expenses shall be resumed to the extent that Capped Operating Expenses or Capped
Other Expenses, as applicable, do not exceed the Expense Limit for the class,
the Expense Limit for such class shall apply (unless previously terminated in
accordance with Section 2 hereof). The Adviser and the Distributor may each seek
reimbursement only for Prior Expenses waived, reimbursed or paid by it during
the three fiscal years immediately prior to such reimbursement; PROVIDED,
HOWEVER, that such Prior Expenses may only be reimbursed hereunder to the extent
they were waived, reimbursed or paid after the Effective Date (as defined in
Section 2.1) applicable to the class from which reimbursement is sought (or the
effective date of the Excess Expense Plan or any prior agreement that is similar
to this Agreement). The provisions of this Agreement shall survive the
termination of this Agreement to the extent necessary to permit any such
reimbursement.
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1.6 LIMITATION OF LIABILITY. The obligations and expenses incurred,
contracted for or otherwise existing with respect to a Fund shall be enforced
against the assets of such Fund or the applicable class thereof and not against
the assets of any other class or any other Fund or series of the Trust. It is
understood and expressly stipulated that neither the holders of shares of a Fund
nor the Trustees of the Trust shall be personally liable hereunder.
1.7 METHOD OF COMPUTATION. To determine the Adviser's and the Distributor's
obligations hereunder, each month the Capped Operating Expenses or Capped Other
Expenses, as applicable, for a class of shares of a Fund shall be annualized as
of the last day of the month. If the annualized Capped Operating Expenses or
Capped Other Expenses, as applicable, of a class of shares of a Fund for any
month exceed the Expense Limit for such class, (i) if the Fund is a Schedule A
Fund, the Adviser and/or the Distributor shall waive all or a portion of their
respective Advisory Fees and/or Rule 12b-1 Fees for such month, and if necessary
the Adviser promptly shall remit an amount to the class, or bear an amount of
expenses, that is sufficient to reduce the annualized Capped Operating Expenses
to an amount that is no higher than the Expense Limit for such class, provided
that any waiver of Advisory Fees shall be applied to each class of the same Fund
PRO RATA based on the assets of each class, or (ii) if the Fund is a Schedule B
Fund, the Adviser promptly shall remit an amount to the class, or bear an amount
of expenses, that is sufficient to reduce the annualized Capped Other Expenses
to an amount that is no higher than the Expense Limit for such class.
1.8 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 Advisory Fees and Rule 12b-1
Fees waived, if any, and other payments remitted by the Adviser to a Fund with
respect to the previous fiscal year shall equal the Excess Amount for such
fiscal year.
1.9 VOLUNTARY FEE WAIVER/EXPENSE REIMBURSEMENT. Nothing herein shall
preclude the Adviser and/or the Distributor from either voluntarily waiving
Advisory Fees or Rule 12b-1 Fees, as applicable, that it is entitled to from any
class of any Fund and/or voluntarily reimbursing the expenses of any class of
any Fund in a manner that is not required by this Section 1, as the Adviser or
the Distributor, as applicable, in its sole and absolute discretion, deems
reasonable or appropriate. Any such voluntary waiver or voluntary expense
reimbursement may be modified or terminated by the Adviser or the Distributor,
as applicable, at any time, in its sole and absolute discretion, without the
approval of, but after notice to, the Board.
2. TERM; TERMINATION.
2.1 TERM. The term of this Agreement (the "Term") shall begin on the date
hereof (or, if later, the date a class of shares of a Fund is added to SCHEDULE
A or SCHEDULE B, as the case may be, with respect to such class) (the "Effective
Date") and end after the close of business on April 30th of the immediately
succeeding calendar year (or such other date as may be agreed to in writing by
all of the parties hereto), unless this Agreement is earlier terminated (in
whole or with respect only to the applicable Fund) in accordance with Section
2.2. The Term may be continued from year to year thereafter, provided that each
such continuance is specifically approved by all of the parties hereto,
including with respect to each Fund by a majority of the
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Trustees of the Trust who are not "interested persons," as defined in the 1940
Act. No party shall be obligated to extend the Term of this Agreement.
2.2 TERMINATION. This Agreement shall terminate:
(i) with respect to all Funds, upon the first May 1st after the
failure of the Agreement to be continued in accordance with Section
2.1;
(ii) with respect to a Schedule A Fund and to the Adviser or the
Distributor, as applicable, automatically upon the termination of the
Advisory Agreement or the Rule 12b-1 Plan of such Schedule A Fund,
unless otherwise agreed by the Adviser or the Distributor;
(iii) with respect to a Schedule B Fund and the Adviser, automatically
upon the termination of the Advisory Agreement of such Schedule B
Fund, unless otherwise agreed by the Adviser; or
(iv) upon a writing duly executed by the Adviser, the Distributor and
the Trust terminating the Agreement with respect to a specified Fund
or Funds.
3. MISCELLANEOUS.
3.1 REPORTS TO THE BOARD. The Adviser shall include in the compliance
report provided at each regular quarterly meeting of the Board information
enabling the Board to determine whether the Adviser and Distributor have fully
complied with the requirements of this Agreement. The Adviser shall also report
at each regular quarterly meeting of the Board the amount of Prior Expenses
recovered by the Adviser and the Distributor from each Fund during the preceding
calendar quarter.
3.2 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.
3.3 INTERPRETATION. Nothing herein contained shall be deemed to require the
Trust to take any action that is 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 Board of its
responsibility for and control of the conduct of the affairs of the Trust.
3.4 DEFINITIONS. Any question of interpretation of any term or provision of
this Agreement, including but not limited to the Advisory Fee or Rule 12b-1 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, a Rule 12b-1 Plan or the 1940 Act, shall have the same
meaning as and shall be resolved by reference to such Advisory Agreement or Rule
12b-1 Plan or the 1940 Act and to interpretations thereof, if any, by the United
States courts or, in the absence of any controlling decision of any such court,
by rules, regulations or
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orders of the Securities and Exchange Commission (the "SEC") issued pursuant to
the 1940 Act. In addition, if the effect of a requirement of the 1940 Act
reflected in any provision of this Agreement is revised by rule, regulation or
order of the SEC, that provision shall be deemed to incorporate the effect of
that rule, regulation or order. Otherwise the provisions of this Agreement shall
be interpreted in accordance with the substantive laws of the State of New York.
Notwithstanding anything herein to the contrary, any waiver of fees or
reimbursement of expenses under this Agreement shall be made in accordance with
Section 18 of the 1940 Act and subchapter M of the Internal Revenue Code
concerning preferential dividends.
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IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective officers as of the day and year first above written.
XXXXXXX INVESTORS TRUST on behalf of
each FUND set forth on SCHEDULE A and
SCHEDULE B attached hereto
By: /s/ XXXXXXX X. XXXXX
-----------------------------------
Xxxxxxx X. Xxxxx
Its: Executive Vice President,
Chief Financial Officer, Treasurer
and Secretary
XXXXXXX ASSET MANAGEMENT CORPORATION
By: /s/ XXX X. XXXXXXX
-----------------------------------
Xxx X. Xxxxxxx
Its: Chairman, Chief Executive Officer
and Director
XXXXXXX SECURITIES, INC.
By: /s/ XXX X. XXXXXXX
-----------------------------------
Xxx X. Xxxxxxx
Its: Chairman, Chief Executive Officer
and Director
[SIGNATURE PAGE TO EXPENSE LIMITATION AGREEMENT]
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SCHEDULE A
EXPENSE LIMITS
EXPENSE LIMIT* (% OF AVERAGE
FUND DATE ADDED TO SCHEDULE SHARE CLASS DAILY NET ASSETS OF THE CLASS)
---- ---------------------- ----------- ------------------------------
Xxxxxxx Fund May 1, 2007 Class A 1.59%
Xxxxxxx Fund May 1, 2007 Class B 2.34%
Xxxxxxx Fund May 1, 2007 Class C 2.34%
Financial Services Fund May 1, 2007 Class A 1.80%
Financial Services Fund May 1, 2007 Class B 2.55%
Financial Services Fund May 1, 2007 Class C 2.55%
* The Expense Limit for each class of each Schedule A Fund applies with
respect to such class' Capped Operating Expenses.
A-1
SCHEDULE B
EXPENSE LIMITS
EXPENSE LIMIT* (% OF AVERAGE
FUND DATE ADDED TO SCHEDULE SHARE CLASS DAILY NET ASSETS OF THE CLASS)
---- ---------------------- ----------- ------------------------------
Financial Industries Fund May 1, 2007 Class A 0.65%
Financial Industries Fund May 1, 2007 Class C 0.65%
* The Expense Limit for each class of each Schedule B Fund applies with
respect to such class' Capped Other Expenses.
B-1
