Expense Cap Setting Methodology Clause Samples
The Expense Cap Setting Methodology clause defines how limits on reimbursable or allowable expenses are determined within an agreement. Typically, this clause outlines the process for calculating the maximum amount that can be charged for certain costs, such as administrative fees or operational expenses, often referencing specific formulas, benchmarks, or periodic reviews. Its core practical function is to provide predictability and control over costs, ensuring that expenses do not exceed agreed-upon thresholds and thereby protecting parties from unexpected financial burdens.
Expense Cap Setting Methodology. Unless otherwise agreed to by the parties, each Fund shall be subject to a fee cap (each a Fee Cap) such that the ratio of Covered Expenses (defined below) to net assets of the Fund’s Class A shares (or such other class as may be agreed by the parties) (the Specified Class) for a defined period agreed to by the parties (a Covered Period) shall not exceed the median expense ratio of the Fund’s peer group for such Specified Class, as reported by Lipper, Inc. as of a date agreed to by the parties (the Median Ratio) (or such lower expense ratio as may be agreed by the parties) and also such that the ratio of Covered Expenses to net assets of the Fund’s other classes shall not exceed the amounts set by reference to the Median Ratio pursuant to a methodology mutually agreed upon by the parties. Further, unless otherwise agreed to by the parties, no Fee Cap shall be required for a Fund for any Covered Period if the ratio of Covered Expenses to net assets of the Specified Class for the last fiscal year was less than the Median Ratio.