EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of August 30, 2005 by and between
X.X. Xxxxxxxxx + Co. Asset Management, LLC (the "Adviser") and The Advisors'
Inner Circle Fund II (the "Trust") (the "Agreement"), on behalf of each series
of the Trust set forth in Schedule A attached hereto (each a "Fund," and
collectively, the "Funds").
WHEREAS, the Trust is a Massachusetts business trust organized under an
Agreement and Declaration of Trust, dated July 24, 1992, as amended and restated
as of February 18, 2004 and August 10, 2004 (the "Declaration of Trust"), and is
registered under the Investment Company Act of 1940, as amended (the "1940
Act"), as an open-end management company of the series type, and each Fund is a
series of the Trust;
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory
Agreement dated August 30, 2005 (the "Advisory Agreement"), pursuant to which
the Adviser provides investment advisory services to each Fund for compensation
based on the value of the average daily net assets of each such Fund;
WHEREAS, the Trust and the Adviser have determined that it is appropriate and in
the best interests of each Fund and its shareholders to maintain the expenses of
each Fund at a level below the level to which each such Fund would normally be
subject in order to maintain each Fund's expense ratios at the Maximum Annual
Operating Expense Limit (as hereinafter defined) specified for such Fund in
Schedule A hereto;
NOW THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1. APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses of
every character incurred by a Fund in any fiscal year, including but not limited
to investment advisory fees of the Adviser (but excluding interest, taxes,
brokerage commissions, other expenditures which are capitalized in accordance
with generally accepted accounting principles, other extraordinary expenses not
incurred in the ordinary course of such Fund's business and amounts payable
pursuant to any plan adopted in accordance with Rule 12b-l under the 0000 Xxx)
and expenses for which payment has been made through the use of all or a portion
of brokerage commissions (or markups or markdowns) generated by that Fund ("Fund
Operating Expenses"), exceed the Maximum Annual Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be
the liability of the Adviser.
1.2. MAXIMUM ANNUAL OPERATING EXPENSE LIMIT. The Maximum Annual Operating
Expense Limit with respect to each Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of each Fund.
That Maximum Annual Operating Expense Limit for each Fund contemplates that
certain expenses for each Fund may be paid through the use of all or a portion
of brokerage commissions (or markups or markdowns) generated by that Fund.
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1.3. METHOD OF COMPUTATION. To determine the Adviser's liability with respect to
the Excess Amount, each month the Fund Operating Expenses for each 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 Maximum Annual Operating Expense
Limit of such Fund, the Adviser shall first waive or reduce its investment
advisory fee for such month by an amount sufficient to reduce the annualized
Fund Operating Expenses to an amount no higher than the Maximum Annual Operating
Expense Limit. If the amount of the waived or reduced investment advisory fee
for any such month is insufficient to pay the Excess Amount, the Adviser may
also remit to the appropriate Fund or Funds an amount that, together with the
waived or reduced investment advisory fee, is sufficient to pay such Excess
Amount.
1.4. 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 investment advisory fees
waived or reduced and other payments remitted by the Adviser to the Fund or
Funds with respect to the previous fiscal year shall equal the Excess Amount.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS
2.1. REIMBURSEMENT. If in any year in which the Advisory Agreement is still in
effect and the estimated aggregate Fund Operating Expenses of such Fund for the
fiscal year are less than the Maximum Annual Operating Expense Limit for that
year, subject to approval by the Trust's Board of Trustees as provided in
Section 2.2 below, the Adviser shall be entitled to reimbursement by such Fund,
in whole or in part as provided below, of the investment advisory fees waived or
reduced and other payments remitted by the Adviser to such 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 advisory fees previously waived or reduced by the Adviser and all
other payments remitted by the Adviser to the Fund, pursuant to Section 1
hereof, during any of the previous three (3) fiscal years, less any
reimbursement previously paid by such Fund to the Adviser, pursuant to this
Section 2, with respect to such waivers, reductions, and payments. The
Reimbursement Amount shall not include any additional charges or fees
whatsoever, including, e.g., interest accruable on the Reimbursement Amount.
2.2. BOARD APPROVAL. No reimbursement shall be paid to the Adviser with respect
to any Fund pursuant to this Section 2 unless the Trust's Board of Trustees has
determined in advance that the payment of such reimbursement to the Adviser is
in the best interests of such Fund and its shareholders.
2.3. METHOD OF COMPUTATION. To determine each Fund's accrual, if any, to
reimburse the Adviser for the Reimbursement Amount, each month the Fund
Operating Expenses of each Fund shall be annualized as of the last day of the
month. If the annualized Fund Operating Expenses of a Fund for any month are
less than the Maximum Annual Operating Expense Limit of such Fund, such Fund
shall accrue into its net asset value an amount payable to the Adviser
sufficient to increase the annualized Fund Operating Expenses of that Fund to an
amount no greater than the Maximum Annual Operating Expense Limit of that Fund,
provided that such amount paid to
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the Adviser will in no event exceed the total Reimbursement Amount. For
accounting purposes, amounts accrued pursuant to this Section 2 shall be a
liability of the Fund for purposes of determining the Fund's net asset value.
2.4. PAYMENT AND YEAR-END ADJUSTMENT. Amounts accrued pursuant to this Agreement
shall be payable to the Adviser as of the last day of each month. 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 actual Fund
Operating Expenses of a Fund for the prior fiscal year (including any
reimbursement payments hereunder with respect to such fiscal year) do not exceed
the Maximum Annual Operating Expense Limit.
3. TERM AND TERMINATION OF AGREEMENT
This Agreement shall continue in effect with respect to all Funds until November
30, 2006 and shall thereafter continue in effect with respect to each Fund from
year to year provided such continuance is specifically approved by a majority of
the Trustees of the Trust who are not "interested persons" of the Trust or any
other party to this Agreement, as defined in the 1940 Act ("Non-Interested
Trustees"). Nevertheless, this Agreement may be terminated by either party
hereto, without payment of any penalty, upon ninety (90) days' prior written
notice to the other party at its principal place of business; provided that, in
the case of termination by the Adviser, such action shall be authorized by
resolution of a majority of the Non-Interested Trustees of the Trust or by a
vote of a majority of the outstanding voting securities of the Trust.
4. MISCELLANEOUS
4.1. 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.
4.2. INTERPRETATION. Nothing herein contained shall be deemed to require the
Trust or the Funds to take any action contrary to the Trust's Declaration of
Trust 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 Trust's
Board of Trustees of its responsibility for and control of the conduct of the
affairs of the Trust or the Funds. The parties to this Agreement acknowledge and
agree that all litigation arising hereunder, whether direct or indirect, and of
any and every nature whatsoever shall be satisfied solely out of the assets of
the affected Fund and that no Trustee, officer or holder of shares of beneficial
interest of the Fund shall be personally liable for any of the foregoing
liabilities. The Trust's Declaration of Trust, as amended from time to time, is
on file in the Office of the Secretary of State of the Commonwealth of
Massachusetts. Such Declaration of Trust describes in detail the respective
responsibilities and limitations on liability of the Trustees, officers, and
holders of shares of beneficial interest.
4.3. DEFINITIONS. Any question of interpretation of any term or provision of
this Agreement, including but not limited to the investment advisory fee, the
computations of net asset values, and the allocation of expenses, having a
counterpart in or otherwise derived from the terms and
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provisions of the Advisory Agreement or the 1940 Act, shall have the same
meaning as and be resolved by reference to such Advisory Agreement or the 0000
Xxx.
4.4. ENFORCEABILITY. Any term or provision of this Agreement which is invalid or
unenforceable in any jurisdiction shall, as to such jurisdiction be ineffective
to the extent of such invalidity or unenforceability without rendering invalid
or unenforceable the remaining terms or provisions of this Agreement or
affecting the validity or enforceability of any of the terms or provisions of
this Agreement in any other jurisdiction.
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.
THE ADVISORS INNER CIRCLE FUND II,
on behalf of each series of the Trust set forth in Schedule A
/s/ XXXXX XXXXXX
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[Name] Xxxxx Xxxxxx
[Title] Vice President
X.X. XXXXXXXXX + CO. ASSET MANAGEMENT, LLC
/s/ XXXXXX X. XXXXX III
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[Name] Xxxxxx X. Xxxxx III
[Title] President & Chief Operating Officer
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SCHEDULE A
MAXIMUM ANNUAL OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds of the Trust:
NAME OF FUND MAXIMUM ANNUAL
OPERATING EXPENSE LIMIT
Xxxxxxxxx Small Cap Technology Fund - Institutional Shares 1.25%
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