EX-99.(d5)
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT ("Agreement"), effective as of July 24,
2006, by and between the Xxxxxx Xxxx Investment Funds, a Massachusetts Business
Trust, on behalf of the Xxxxxx Xxxx U.S. Microcap Fund ("Microcap"), the Xxxxxx
Xxxx U.S. Smallcap Fund ("Smallcap"), the Xxxxxx Xxxx U.S. Midcap Fund
("Midcap") and the Xxxxxx Xxxx U.S. Multicap Fund ("Multicap")(each a "Fund" and
collectively, the "Funds"), and Xxxxxx Xxxx Investment Management, LLC, a
corporation organized under the laws of the State of Delaware (the "Adviser").
W I T N E S S E T H:
-------------------
WHEREAS, the Funds and the Adviser have entered into an Investment
Advisory Agreement, effective July 24, 2006 ("Advisory Agreement"), pursuant to
which the Adviser renders investment management services to the Funds for
compensation based on the value of the average daily net assets of the Funds;
and
WHEREAS, the Funds and the Adviser have determined that it is
appropriate and in the best interests of the Funds and their shareholders to
maintain each Fund's expenses at a level below that to which the Funds would
normally be subject during the term of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMIT.
1.1. LIMITATION. To the extent that the aggregate expense of
every character incurred by the Xxxxxx Xxxx U.S. Microcap Fund during
the term of this Agreement including, but not limited to, investment
management fees of the Adviser (but excluding interest, taxes,
brokerage commissions, and other expenditures, which are capitalized in
accordance with generally accepted accounting principles, and other
extraordinary expenses not incurred in the ordinary course of a Fund's
business) ("Fund Operating Expenses"), exceeds the "Expense Limit,"
which is 1.80% and 1.50% of the average daily net assets of the Class A
and Class I shares, respectively of Microcap, such excess amount
("Excess Amount") shall be the liability of the Adviser.
To the extent that the Fund Operating Expenses incurred by the
Xxxxxx Xxxx U.S. Smallcap Fund during the term of this Agreement exceed
the "Expense Limit," which is 1.50% and 1.20% of the average daily net
assets of the Class A and Class I shares, respectively of Smallcap, any
Excess Amounts shall be the liability of the Adviser.
To the extent that the Fund Operating Expenses incurred by the
Xxxxxx Xxxx U.S. Xxxxxx Fund during the term of this Agreement exceed
the "Expense Limit," which is 1.35% and 1.05% of the average daily net
assets of the Class A and Class I shares, respectively of Midcap, any
Excess Amounts shall be the liability of the Adviser.
To the extent that the Fund Operating Expenses incurred by the
Xxxxxx Xxxx U.S. Multicap Fund during the term of this Agreement exceed
the "Expense Limit," which is 1.30% and 1.00% of the average daily net
assets of the Class A and Class I shares, respectively of Multicap, any
Excess Amounts shall be the liability of the Adviser.
1
1.2. METHOD OF COMPUTATION. To determine the Adviser's
liability for Excess Amount, at each month end the fiscal year to date
Fund Operating Expenses accrued shall be compared with the fiscal year
to date Expense Limits. If, at the end of any month, a Fund's Operating
Expenses exceed the respective Expense Limit, the Adviser shall first
waive or reduce its investment management fee for such month, as
appropriate, to the extent necessary to pay such Excess Amount. In the
event the Excess Amount exceeds the amount of the investment management
fee for such month, the Adviser, in addition to waiving its entire
investment management fee for such month, shall also remit to the
respective Fund(s) the difference between the Excess Amount and the
amount due as the investment management fee.
1.3. Year-End Adjustment. If necessary, on or before the last
day of the first month following the termination of this Agreement, or
as soon as practicable thereafter, an adjustment payment shall be made
by the appropriate party in order to ensure that the actual Fund
Operating Expenses for the period covered by this Agreement (including
any reimbursement payments made under Section 2 of this Agreement) do
not exceed the Expense Limit.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1. REIMBURSEMENT. If, in any year in which the Advisory
Agreement remains in effect, estimated aggregate Fund Operating
Expenses for the fiscal year are less than the Expense Limit for that
year, the Adviser shall be entitled to reimbursement by each Fund, in
whole or in part as provided below, of the investment management fees
waived or reduced, and other payments remitted by the Adviser to that
Fund pursuant to Section 1 hereof. The total amount of reimbursement to
which the Adviser may be entitled ("Reimbursement Amount") shall equal,
at any time, the sum of all investment management fees waived or
reduced by the Adviser, and all other payments, if any, remitted by the
Adviser to a Fund pursuant to Section 1 hereof, commencing with the
effective date of this Agreement and continuing through each of the
next three (3) fiscal years, less any reimbursement paid from time to
time by that Fund to the Adviser pursuant to this Agreement with
respect to such waivers, reductions, and payments. The Reimbursement
Amount, and any portion thereof, shall not include any additional
charges or fees whatsoever including, but not limited to, interest
accruable on the Reimbursement Amount.
2.2. METHOD OF COMPUTATION. To determine the amount of a
Fund's payment, if any, to reimburse the Adviser for the Reimbursement
Amount, at each month end the fiscal year to date Fund Operating
Expenses accrued shall be compared with the fiscal year to date Expense
Limit. If, at the end of any month the Fund Operating Expenses are less
than the Expense Limit, a Fund shall pay to the Adviser an amount
sufficient to increase the annualized Fund Operating Expenses to an
amount no greater than the Expense Limit, provided that such amount
paid to the Adviser will in no event exceed the Reimbursement Amount.
2.3. YEAR-END ADJUSTMENT. If necessary, on or before the last
day of the first month of each succeeding fiscal year, or as soon as
practicable thereafter, an adjustment payment shall be made by the
appropriate party in order to ensure that the actual Fund Operating
Expenses for the prior fiscal year (including any reimbursement
2
payments made hereunder with respect to such fiscal year) do not exceed
the Expense Limit.
3. TERMINATION OF AGREEMENT. This Agreement shall continue in effect
until the earlier of (a) the termination of the Advisory Agreement; or
(b) February 28, 2008.
4. MISCELLANEOUS.
4.1. NOTICES. Any notice under this Agreement shall be given
in writing, addressed and delivered, or mailed postpaid, (a) if to the
Adviser, to Xxxxxx Xxxx Investment Management, LLC, 000 Xxxxxxx Xxxxxx,
Xxx Xxxx, XX 00000; and (b) if to the Funds, at the foregoing office of
the Adviser.
4.2. 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.
4.3. INTERPRETATION. Nothing herein contained shall be deemed
to require the Funds to take any action contrary to its Articles of
Incorporation or By-Laws, 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 members of its responsibility for and
control of the conduct of the affairs of the Funds.
4.4. DEFINITIONS. Any question of interpretation of any term
or provision of this Agreement including, but not limited to, the
investment management 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, shall
have the same meaning as and be resolved by reference to such Advisory
Agreement.
4.5. AMENDMENT. This Agreement may be amended or modified only
upon the written consent of the parties hereto.
4.6. GOVERNING LAW. Except insofar as the Investment Company
Act of 1940, as amended, or other federal laws and regulations may be
controlling, this Agreement shall be governed by, and construed and
enforced in accordance with, the laws of the State of New York.
3
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized, as of the day and year
first above written.
Xxxxxx Xxxx Investment Funds,
on behalf of the Xxxxxx Xxxx U.S. Microcap Fund, the Xxxxxx
Xxxx U.S. Smallcap Fund, the Xxxxxx Xxxx U.S. Midcap Fund
and the Xxxxxx Xxxx U.S. Multicap Fund
By: /s/ Xxxxx Xxxxxx / Xxxx Xxxxxxxx
--------------------------------
Title: CFO / Treasurer
---------------
Xxxxxx Xxxx Investment Management, LLC
By: /s/ Xxxxxxx Xxxxxxxx
--------------------
Title: President
-----------------
