Exhibit 99.h(4)
FORM OF OPERATING EXPENSE LIMITATION AGREEMENT
THIS OPERATING EXPENSE LIMITATION AGREEMENT, dated as of December 3, 2012,
is made and entered into by and between Broadmark Funds, a Delaware statutory
trust (the "Trust"), on behalf of each series of the Trust (each, a "Fund" and
together the "Funds") set forth on Schedule A attached hereto, and Broadmark
Asset Management LLC (the "Adviser").
WHEREAS, the Adviser has been appointed the investment adviser of each of
the Funds pursuant to an Investment Management Agreement between the Trust, on
behalf of the Funds, and the Adviser (the "Investment Management Agreement");
and
WHEREAS, the Funds, and each of their respective classes, are responsible
for, and have assumed the obligation for, payment of certain expenses pursuant
to the Investment Management Agreement that have not been assumed by the
Adviser; and
WHEREAS, the Adviser desires to limit each Fund's Operating Expenses (as
that term is defined in Paragraph 2 of this Agreement) pursuant to the terms and
provisions of this Agreement, and the Trust (on behalf of the Funds) desires to
allow the Adviser to implement those limits;
NOW THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties, intending to be legally bound hereby,
mutually agree as follows:
1. LIMIT ON OPERATING EXPENSES. The Adviser hereby agrees, subject to
Paragraph 3 hereof, for an initial two-year period, to reduce the fees payable
to it under the Investment Management Agreement between the Trust and the
Adviser, and/or reimburse other expenses of each Fund, to the extent necessary
to limit the current operating expenses of each class of shares of the Fund
(excluding brokerage costs, interest, taxes, dividends, acquired fund fees and
expenses and extraordinary expenses, such as litigation and indemnification
costs) to the amount of the "Maximum Operating Expense Limit" applicable to each
such class of shares as set forth on Schedule A attached hereto.
In the event that the current operating expenses of any class of shares of
a Fund, as accrued each month, exceed the Maximum Operating Expense Limit for
that class, the Adviser will reduce the fees payable to it and/or pay to that
class, on a monthly basis, the excess expense within fifteen (15) calendar days,
or such other period as determined by the Board of Trustees of the Trust (the
"Board" or the "Trustees"), of being notified that an excess payment is due. In
the event that the Board determines that an excess expense payment due date will
be other than fifteen (15) calendar days, the Trust will provide the Adviser
with ten (10) calendar days' written notice prior to the implementation of such
other excess expense payment due date.
2. DEFINITION. For purposes of this Agreement, the term "Operating
Expenses," with respect to each class of Fund shares, is defined to include all
expenses necessary or appropriate for the operation of the Funds and each of
their respective classes of shares, including the Adviser's investment
management fee, which fee is detailed in the Investment Management Agreement,
and, if applicable, any distribution services (Rule 12b-1) fees and other
expenses described in the Investment Management Agreement, but it does not
include any brokerage costs, interest, taxes, dividends, acquired fund feeds and
expenses or extraordinary expenses, such as litigation or indemnification costs.
3. REIMBURSEMENT OF FEES AND EXPENSES. Each Fund agrees to pay to the
Adviser, in the first, second and third fiscal years following the fiscal year
in which any such limitation or reimbursement occurs, the amount of fees
(including any amounts foregone through limitation or reimbursed pursuant to
Paragraph 1 hereof) that, but for Paragraph 1 hereof, would have been payable by
the Fund to the Adviser pursuant to the Investment Management Agreement or which
have been reimbursed in accordance with Paragraph 1 (the "Deferred Fees"),
subject to the limitations provided in this Paragraph 3. Such repayment shall be
made monthly, but only if the operating expenses of the Fund (exclusive of the
fees and expenses set forth in Paragraph 1), without regard to such repayment,
are at an annual rate (as a percentage of the average daily net assets of the
Fund) equal to or less than the "Maximum Operating Expense Limit" for each
respective class of shares of the Fund, as set forth on Schedule A. Furthermore,
the amount of Deferred Fees paid by a Fund in any month shall be limited so that
the sum of: (a) the amount of such payment and (b) the other operating expenses
of the Fund (exclusive of the fees and expenses set forth in Paragraph 1) do not
exceed the above-referenced "Maximum Operating Expense Limit" for each
respective class of shares of the Fund. In no event will a Fund be obligated to
pay any fees waived or deferred by the Adviser with respect to any other series
of the Trust.
4. TERM. This Agreement shall become effective with respect to any Fund on
the date that the Investment Management Agreement becomes effective with respect
to that Fund, and, unless sooner terminated as provided in Paragraph 5 of this
Agreement, shall remain in effect for an initial period of not less than two
years, and from year to year thereafter, provided that each such continuance is
specifically approved by a majority of the Trustees of the Trust who (i) are not
"interested persons" (as defined in the Investment Company Act of 1940, as
amended (the "1940 Act")) of the Trust or any other party to this Agreement, and
(ii) have no direct or indirect financial interest in the operation of this
Agreement ("Non-Interested Trustees").
5. TERMINATION. This Agreement may be terminated with respect to any Fund,
at any time and without payment of any penalty, by the Board, on behalf of the
Fund, upon sixty (60) days' written notice to the Adviser. This Agreement may
not be terminated by the Adviser during the initial two-year period, and
thereafter may not be terminated by the Adviser without the consent of the
Board, which consent will not be unreasonably withheld. This Agreement will
automatically terminate with respect to a Fund if the Investment Management
Agreement of such Fund is terminated, with such termination effective upon the
effective date of the Investment Management Agreement's termination.
6. AMENDMENTS. This Agreement may be amended or modified with respect to
any Fund by a written agreement properly authorized and executed by both parties
hereto; provided that, if required by law, such amendment shall also have been
approved by vote of a majority of the outstanding voting securities of such Fund
and by a majority of the Non-Interested Trustees, cast in person at a meeting
called for the purpose of voting on such approval.
7. ASSIGNMENT. This Agreement and all rights and obligations hereunder may
not be assigned without the written consent of the other party.
8. SEVERABILITY. If any provision of this Agreement shall be held or made
invalid by a court decision, statute or rule, or shall be otherwise rendered
invalid, the remainder of this Agreement shall not be affected thereby.
9. GOVERNING LAW. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Delaware, without giving effect to the
conflict of laws principles thereof; provided that nothing herein shall be
construed to preempt, or to be inconsistent with, any federal law, regulation or
rule, including the 1940 Act, and the Investment Advisers Act of 1940, as
amended, and any rules and regulations promulgated thereunder.
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
BROADMARK FUNDS BROADMARK ASSET MANAGEMENT LLC
By: By:
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Name: Name:
Title: Title:
Schedule A
Maximum Operating Expense Limits
Fund Name and Class of Shares Maximum Operating
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Expense Limit*
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Broadmark Tactical Plus Fund
Investor Shares 1.84%
Institutional Shares 1.49%
* Expressed as a percentage of average daily net assets.
