EXPENSE LIMITATION AGREEMENT
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DESTINATION CAPITAL MANAGEMENT, INC
Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000
Xxxxxx Xxxxx, Xxxxxxxxxx 00000
April 18, 2005
THE DESTINATION FUNDS
000 Xxxxxxxx Xxxxx, Xxxxx 000
Xxxxxxxxxx, Xxxx 00000
Dear Sirs:
Destination Capital Management, Inc. confirms our agreement with you as
follows:
1. You are an open-end, diversified management investment company
registered under the Investment Company Act of 1940 (the "Act") and are
authorized to issue shares of separate series (funds), with each fund having its
own investment objective, policies and restrictions. You propose to engage in
the business of investing and reinvesting the assets of each of your funds in
accordance with applicable limitations. Pursuant to an Investment Advisory
Agreement dated as of April 18, 2005 (the "Advisory Agreement"), you have
employed us to manage the investment and reinvestment of such assets of your
Destination Select Equity Fund (the "Fund").
2. We hereby agree that, notwithstanding any provision to the contrary
contained in the Advisory Agreement, we shall limit as provided herein the
aggregate ordinary operating expenses incurred by the Fund, including but not
limited to the fees ("Advisory Fees") payable to us under the Advisory Agreement
(the "Limitation"). Under the Limitation, we agree that, for a three year
period, beginning with the Fund's public offering (subject to Section 4), such
expenses shall not exceed a percentage (the "Percentage Expense Limitation") of
the average daily net assets of the Fund equal to 1.25% on an annualized basis.
Ordinary operating expenses includes all Fund expenses
except brokerage, taxes, borrowing costs (such as interest and dividend expenses
on securities sold short) and extraordinary expenses. To determine our liability
for the Fund's expenses in excess of the Percentage Expense Limitation, the
amount of allowable fiscal-year-to-date expenses shall be computed daily by
prorating the Percentage Expense Limitation based on the number of days elapsed
within the fiscal year of the Fund, or limitation period, if shorter (the
"Prorated Limitation"). The Prorated Limitation shall be compared to the
expenses of the Fund recorded through the current day in order to produce the
allowable expenses to be recorded for the current day (the "Allowable
Expenses"). If Advisory Fees and other expenses of the Fund for the current day
exceed the Allowable Expenses, Advisory Fees for the current day shall be
reduced by such excess ("Unaccrued Fees"). In the event such excess exceeds the
amount due as Advisory Fees, we shall be responsible to the Fund to pay or
absorb the additional excess ("Other Expenses Exceeding Limit"). If there are
cumulative Unaccrued Fees or cumulative Other Expenses Exceeding Limit, these
amounts shall be paid to us by you subject to the following conditions: (1) no
such payment shall be made to us with respect to Unaccrued Fees or Other
Expenses Exceeding Limit that arose more than three years prior to the proposed
date of payment, and (2) such payment shall be made only to the extent that it
does not cause the Fund's aggregate expenses, on an annualized basis, to exceed
the Percentage Expense Limitation.
3. Nothing in this Agreement shall be construed as preventing us from
voluntarily limiting, waiving or reimbursing your expenses outside the contours
of this Agreement during any time period.
4. This Agreement shall become effective on the date hereof and supercedes
any expense limitation agreement previously entered into with respect to the
Fund. This Agreement will terminate automatically if, as and when we cease to
serve as investment adviser of the Fund. Upon the termination or expiration of
this Agreement, we shall have no claim against you for any amounts not
reimbursed to us pursuant to the provisions of paragraph 2.
5. This Agreement shall be construed in accordance with the laws of the
State of Delaware, provided, however, that nothing herein shall be construed as
being inconsistent with the Act.
If the foregoing is in accordance with your understanding, will you kindly
so indicate by signing and returning to us the enclosed copy hereof.
Very truly yours,
DESTINATION CAPITAL MANAGEMENT, INC
By: /s/ Xxxxxxx X. Xxxxxxxxx
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Agreed to and accepted as of
the date first set forth above.
THE DESTINATION FUNDS
By: /s/ Xxxxxxx X. Xxxxxxxxx
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