EXPENSE LIMITATION AGREEMENT
PMFM INVESTMENT TRUST
This Agreement is made and entered into effective as of November 30,
2004, by and between the PMFM Core Advantage Portfolio Trust (the "Fund"), a
series of shares of the PMFM Investment Trust, a Delaware statutory trust (the
"Trust") and PMFM, Inc., a Georgia corporation (the "Advisor").
WHEREAS, the Trust is a Delaware statutory trust organized under the
Certificate of Trust ("Trust Instrument"), dated February 28, 2003 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
WHEREAS, the Fund is a series of the Trust; and
WHEREAS, the Fund and the Advisor have entered into an Investment
Advisory Agreement dated November 30, 2004 ("Advisory Agreement"), pursuant to
which the Advisor provides investment advisory services to the Fund; and
WHEREAS, the Fund and the Advisor have determined that it is
appropriate and in the best interests of the Fund and its shareholders to limit
the expenses of the Fund, and, therefore, have entered into this Agreement, in
order to maintain the Fund's expense ratios within the Operating Expense Limit,
as defined below.
NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the receipt and sufficiency of which is hereby acknowledged, the
parties hereto agree as follows:
1. Expense Limitation.
(a) Applicable Expense Limit. To the extent that the aggregate expenses of every
character, including but not limited to investment advisory fees of the Advisor
(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, if any, payable pursuant to a plan adopted in accordance
with Rule 12b-1 under the ▇▇▇▇ ▇▇▇) incurred by the Fund in any fiscal year
("Fund Operating Expenses"), exceed the Operating Expense Limit, as defined in
Section 1(b) below, such excess amount (the "Excess Amount") shall be the
liability of the Advisor.
(b) Operating Expense Limit. The Fund's maximum Operating Expense Limit in any
year shall be 2.25% of the average daily net assets of the Fund.
(c) Method of Computation. To determine the Advisor's liability with respect to
the Excess Amount, each month the Fund Operating Expenses for the Fund shall be
1
annualized as of the last day of the month. If the annualized Fund Operating
Expenses for any month exceeds the Operating Expense Limit of the Fund, the
Advisor 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 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 Advisor may also remit to the Fund an amount that, together
with the waived or reduced investment advisory fee, is sufficient to pay such
Excess Amount.
(d) 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 Advisor to the Fund with
respect to the previous fiscal year shall equal the Excess Amount.
2. Term and Termination of Agreement.
This Agreement with respect to the Fund shall continue in effect until
the last day of May, 2005, and from year to year thereafter provided each such
continuance is specifically approved by a majority of the Trustees of the Trust
who (i) are not "interested persons" of the Trust or any other party to this
Agreement, as defined in the 1940 Act, and (ii) have no direct or indirect
financial interest in the operation of this Agreement ("Non-Interested
Trustees"). Nevertheless, this Agreement may be terminated by either party
hereto, without payment of any penalty, upon written notice ninety (90) days
prior to the end of the then-current term of the Agreement to the other party at
its principal place of business; provided that, in the case of termination by
the Trust, 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. Any termination pursuant to this
paragraph 2 shall become effective, unless otherwise specifically agreed upon,
on the last day of the then-current term of the Agreement.
3. Miscellaneous.
(a) 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.
(b) Interpretation. Nothing herein contained shall be deemed to require the
Trust or the Fund 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.
(c) 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
2
counterpart in or otherwise derived from the terms and 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 1940 Act.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
PMFM CORE ADVANTAGE PORTFOLIO TRUST,
A SERIES OF THE PMFM INVESTMENT TRUST
/s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________
By: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
PMFM, INC.
/s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
____________________________
By: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: President
3
