Exhibit (h)(3)
XXXXXXX INVESTORS TRUST
EXPENSE LIMITATION AGREEMENT
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EXPENSE LIMITATION AGREEMENT, made this 30th day of April, 2004, by and
among Xxxxxxx Asset Management Corporation (the "Adviser"), Xxxxxxx Securities,
Inc. (the "Distributor") and Xxxxxxx Investors Trust (the "Trust"), on behalf of
each class of shares of each of its series (each, a "Fund") from time to time
set forth in SCHEDULE A attached hereto.
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "1940 Act"), as an open-end management company, 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, which may
be amended from time to time, for compensation based on the value of the average
daily net assets of such Fund;
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, pursuant to
which the Distributor engages in marketing and distribution activities on behalf
of such Fund, which may be amended from time to time, for compensation based on
the value of the average daily net assets of such Fund;
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 the expenses of each class of such Fund set forth in
SCHEDULE A at specified levels. The Fund, the Adviser and the Distributor
therefore have entered into this Expense Limitation Agreement (the "Agreement")
in order to maintain the expense ratio of each class of each Fund at the level
specified in SCHEDULE A attached hereto for the period beginning on the date
hereof (or the commencement of operations of a Fund or class thereof, if later)
and ending on April 30, 2005; and
WHEREAS, each Fund is prepared to repay the Adviser and the Distributor
such waived advisory and Rule12b-1 fees and reimbursed expenses if such Fund
subsequently achieves a sufficient level of assets.
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 LIMITATION.
1.1 APPLICABLE EXPENSE LIMIT. During the Term (as defined in Section 2),
the Adviser and the Distributor each agrees to waive all or a portion of their
respective advisory fee and amounts, if any, payable pursuant to the Rule 12b-1
Plans to the extent necessary so that the total expenses of every character
incurred by the applicable class of shares of a Fund (excluding interest, taxes,
brokerage commissions, other expenditures which are capitalized in accordance
with generally accepted accounting principles, and other extraordinary expenses
not incurred in the ordinary course of such Fund's business (I.E., litigation))
(collectively, "Class Operating Expenses") exceed the Operating Expense Limit
(as defined in Section 1.2 below). During the Term, to the extent that Class
Operating Expenses incurred by the applicable class of shares of a Fund in any
fiscal year (after waiver of advisory fees of the Adviser and Rule 12b-1 fees
payable to the Distributor) exceed the Operating Expense Limit, such excess
amount (the "Excess Amount") shall be the liability of the Adviser. The parties
agree that to the extent Class Operating Expenses applicable to a class of a
Fund in any fiscal year do not exceed the Operating Expense Limit, the advisory
fee and Rule 12b-1 fees shall be payable by such Fund in the following order:
o first, the Distributor shall be entitled to receive the Rule 12b-1 fee
up to the amount payable under such Fund's Rule 12b-1 Plan applicable
to such class of shares; and
o thereafter, the Adviser shall be entitled to receive the advisory fee
up to the amount payable under the Advisory Agreement.
1.2 OPERATING EXPENSE LIMIT. The maximum Operating Expense Limit in any
year with respect to each class of a Fund shall be the amount specified in
SCHEDULE A based on a percentage of the average daily net assets of each class
of such Fund.
1.3 REIMBURSEMENT. The Adviser shall keep a record of the amounts of
advisory fees and Rule 12b-1 fees waived and Excess Amounts reimbursed pursuant
to Section 1.1 hereof ("Prior Expenses"). Subject to the last sentence of this
Section 1.3, if at any future date Class Operating Expenses of a class of shares
of a Fund are less than the Operating Expense Limit for such class, the Adviser
and the Distributor shall each be entitled to payment by the applicable class of
such Fund of the amount of such Prior Expenses, without interest thereon, except
to the extent that such payment will cause Class Operating Expenses of such
class of such Fund to exceed the Operating Expense Limit for that class. If
Class Operating Expenses of a class of a Fund subsequently exceed the Operating
Expense Limit for that class, the payment of Prior Expenses shall be suspended.
If subsequent payment of Prior Expenses shall be resumed to the extent that
Class Operating Expenses do not exceed the Operating Expense Limit, the
Operating Expense Limit in Section 1.1 shall (unless previously terminated in
accordance with the terms hereof) apply. The Adviser and the Distributor may
each seek reimbursement only for Prior Expenses waived or paid by it during the
three fiscal years prior to such reimbursement; PROVIDED, HOWEVER, that such
Prior Expenses may only be reimbursed hereunder to the extent they were waived
or paid after the date of this Agreement (or any similar agreement). The
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provisions of this Agreement shall survive the termination of this Agreement to
the extent necessary to permit any such reimbursement.
1.4 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 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.
1.5 METHOD OF COMPUTATION. To determine the Adviser's and the Distributor's
obligations hereunder, each month the Fund Operating Expenses for a Fund shall
be annualized as of the last day of the month. If the annualized Fund Operating
Expenses for any month of a Fund exceed the Operating Expense Limit of such
Fund, the Adviser and/or the Distributor shall waive or reduce their advisory
and/or Rule 12b-1 fees for such month by an equal amount, and if necessary the
Adviser shall remit an amount to the appropriate class or classes of such Fund,
sufficient to reduce the annualized Fund Operating Expenses to an amount no
higher than the Operating Expense Limit; PROVIDED, HOWEVER, that any waiver or
reduction of the advisory fees is applied equally across the classes of such
Fund.
1.6 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 waived or
reduced and other payments remitted by the Adviser to a Fund with respect to the
previous fiscal year shall equal the Excess Amount.
2. TERM; TERMINATION. The term ("Term") of the Applicable Expense Limit under
this Agreement shall begin on the date hereof (or the commencement of operations
of a Fund or class thereof, if later) and end on April 30, 2005. The Term of
this Agreement may be continued from year to year thereafter provided each such
continuance is specifically approved by each of the parties hereto, including
with respect to each Fund a majority of the non-interested Trustees of the
Trust; PROVIDED, HOWEVER, that no party shall be obligated to extend the Term of
this Agreement. This Agreement shall terminate automatically with respect to a
Fund and to the Adviser or the Distributor upon the termination of the Advisory
Agreement or the Rule 12b-1 plan, respectively, unless otherwise agreed by the
Adviser or the Distributor.
3. MISCELLANEOUS.
3.1 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.
3.2 INTERPRETATION. Nothing herein contained shall be deemed to require the
Trust 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
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deprive the Trust's Board of Trustees of its responsibility for and control of
the conduct of the affairs of the Trust.
3.3 DEFINITIONS. Any question of interpretation of any term or provision of
this Agreement, including but not limited to the advisory 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, Rule 12b-1 Plan or the 1940 Act, shall have the same meaning
as and be resolved by reference to such Agreement or 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 orders
of the Securities and Exchange Commission ("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 will be deemed to incorporate the effect of that rule,
regulation or order. Otherwise the provisions of this Agreement will be
interpreted in accordance with the substantive laws of the State of New York.
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
By: _________________________
Xxxxxxx X. Xxxxx
Its: Executive Vice President, Chief Financial
Officer, Treasurer and Secretary
XXXXXXX ASSET MANAGEMENT CORPORATION
By: _______________________
Xxx X. Xxxxxxx
Its: Chairman, Chief Executive Officer and Director
XXXXXXX SECURITIES, INC.
By: _______________________
Xxx X. Xxxxxxx
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Its: Chairman, Chief Executive Officer and Director
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SCHEDULE A
OPERATING EXPENSE LIMITS
This Agreement relates to the following classes of the:
Maximum Operating
EXPENSE LIMIT
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Xxxxxxx Financial Industries Fund
-- Class A shares 1.75%
-- Class C shares The expense cap
applicable to Class
A shares plus 0.75%
