AMENDED AND RESTATED EXPENSE LIMITATION AGREEMENT
Exhibit (k)(3)
AMENDED AND RESTATED
EXPENSE LIMITATION AGREEMENT, dated as of June 6, 2013, by and between BlackRock Advisors, LLC ("BlackRock") and BlackRock Alternatives Allocation TEI Portfolio LLC (the "Fund").
WHEREAS, the Fund is a Delaware limited liability company and is registered under the Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end management investment company;
WHEREAS, the Fund is a feeder fund in a master-feeder structure and invests substantially all of its investable assets in BlackRock Alternatives Allocation FB Portfolio, Ltd., a Cayman Islands exempted limited company limited by shares (the "Offshore Fund") and the Offshore Fund in turn invest all or substantially all of its investable assets in the BlackRock Alternatives Allocation Master Portfolio LLC (the "Master Fund");
WHEREAS, in exchange for fees specified in the investment advisory agreement between BlackRock and the Fund, BlackRock provides advisory services to the Fund; and
WHEREAS, the Fund and BlackRock have determined that it is appropriate and in the best interests of the Fund and its shareholders to maintain expenses of the Fund at a level below the level to which it would normally be subject.
NOW, THEREFORE, the parties hereto agree as follows:
| 1. | EXPENSE LIMITATION. |
1.1 EXPENSE LIMIT. To the extent that the aggregate expenses incurred by the Fund, which include all of the Fund's expenses (whether incurred directly by the Fund or indirectly at the Offshore Fund or the Master Fund level) ("Operating Expenses") other than expenses disclosed in the Fund's registration statement filed with the Securities and Exchange Commission as not being included as part of the expense limit (which currently include (i) the management fee, (ii) interest expense, if any, (iii) any taxes paid by the Offshore Fund or the Master Fund, (iv) expenses incurred directly or indirectly by the Fund as a result of expenses related to investing in, or incurred by, a portfolio fund or other permitted investment in which the Fund or Master Fund invests, (v) any trading-related expenses, including, but not limited to, clearing costs and commissions, (vi) dividends on short sales, if any, (vii) any other extraordinary expenses not incurred in the ordinary course of the Fund's, Offshore Fund's, or Master Fund's business (including, without limitation, litigation expenses) and (viii) if applicable, distribution and investor services related fees paid to the distributor for the Fund's securities or financial intermediaries engaged by such distributor – collectively, the "Excluded Expenses"), for the period beginning and ending on the Fund’s fiscal year end which is March 31 (each,
an "Applicable Year") exceed the Operating Expense Limit, as defined in Section 1.2 below, such excess amount (the "Excess Amount") shall be the liability of BlackRock. In the event that any Applicable Year is for a period less than 365 days (for example, the Fund's initial year of operations or because this Agreement is terminated in the middle of a fiscal year), the Operating Expenses shall be annualized for purposes of calculating the Excess Amount. The list of Excluded Expenses in this Agreement shall be automatically amended on the effective date of the Fund's Registration Statement or any amendment thereto if the list of Excluded Expenses set forth in the prospectus included in the Registration Statement differs from the list in this Agreement and such new list of Excluded Expenses was approved by a majority of the Non-Interested Directors (defined below).
1.2 OPERATING EXPENSE LIMIT. The Fund's "Operating Expense Limit" in any Applicable Year shall be 50 basis points of the Fund's average month-end net assets for the Applicable Year, or such other rate as may be agreed to in writing by the parties.
1.3 METHOD OF COMPUTATION. To determine BlackRock's liability with respect to the Excess Amount, as of the last day of each month, if the annualized Operating Expenses for the Fund for that month shall exceed the Operating Expense Limit of the Fund (based on the Fund's net assets (prior to recording any reimbursement for the current month and excluding management fee and distribution fee, where applicable) as of the last day of the month), BlackRock shall (i) waive or reduce its fees from the Fund for such month and/or (ii) remit to the Fund an amount that is sufficient to pay such Excess Amount, and such waiver, reduction or remittance shall occur in the month following the month in which the liability was incurred.
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the first quarter of each Applicable Year, an adjustment payment shall be made by the appropriate party in order that the amount of the fees waived or reduced and other payments remitted by BlackRock to the Fund with respect to the previous Applicable Year shall equal the Excess Amount.
| 2. | REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS. |
2.1 REIMBURSEMENT. In any Applicable Year during which the total assets of the Fund are greater than $50 million and in which BlackRock or an affiliate serves as investment adviser or administrator to the Fund, if the estimated aggregate Operating Expenses of the Fund for the Applicable Year are less than the Operating Expense Limit for that Applicable Year, BlackRock shall be entitled to reimbursement by the Fund, in whole or in part as provided below, of the fees waived or reduced and other payments remitted by BlackRock to the Fund pursuant to Section 1 hereof. The total amount of reimbursement to which BlackRock may be entitled (the "Reimbursement Amount") shall equal, at any time, the sum of all fees previously waived or reduced by BlackRock, the expenses reimbursed by BlackRock and all other payments remitted by BlackRock to the Fund, pursuant to Section 1 hereof, during any of the previous two
Applicable Years, less any reimbursement previously paid by the Fund to BlackRock with respect to such waivers, reductions, reimbursements and payments during such period. The Reimbursement Amount shall not include any additional charges or fees whatsoever, including, e.g., interest accruable on the Reimbursement Amount. The Board shall be notified quarterly of any reimbursements paid to BlackRock in the previous quarter.
2.2 METHOD OF COMPUTATION. To determine the Fund’s payments, if any, to reimburse BlackRock for the Reimbursement Amount, each month the Operating Expenses for that month shall be annualized for the Applicable Year as of the last day of the month. If such annualized Operating Expenses for any month are less than the Operating Expense Limit of the Fund (based on the Fund's net assets (prior to recording any reimbursement for the current month and excluding management fee and distribution fee, where applicable) as of the last day of the month), the Fund shall pay to BlackRock an amount sufficient to increase the annualized Operating Expenses to an amount no greater than the Operating Expense Limit (based on the Fund's net assets (prior to recording any reimbursement for the current month and excluding management fee and distribution fee, where applicable) as of the last day of the month), provided that such amount paid to BlackRock will in no event exceed the total Reimbursement Amount. Payment of such reimbursement to BlackRock shall be made even if on such payment date the then current Operating Expenses incurred by the Fund exceed the Operating Expense Limit. In the event the Operating Expense Limit is changed subsequent to an Applicable Year in which the respective portion of the Reimbursement Amount was incurred, the amount available to reimburse BlackRock in accordance with this Section 2.2 shall be calculated by reference to the Operating Expense Limit for the Fund in effect at the time the respective portion of the Reimbursement Amount was incurred, rather than the subsequently changed Operating Expense Limit.
2.3 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the first quarter of each Applicable Year, an adjustment payment shall be made by the appropriate party in order that the actual Operating Expenses of the Fund for the prior Applicable Year (including any reimbursement payments hereunder with respect to such Applicable Year) do not exceed the Operating Expense Limit.
2.4 SURVIVAL. This Section 2, including, for the avoidance of doubt, the Fund’s reimbursement obligations, shall survive the termination of this Agreement.
| 3. | TERM AND TERMINATION OF AGREEMENT. |
This Agreement shall continue in effect until July 31, 2014 and from year to year thereafter provided such continuance is specifically approved by a majority of the Directors of the Fund who (i) are not "interested persons" of the Fund 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 Directors"). Nevertheless, this Agreement may be terminated prior to expiration by the Fund, without payment of any penalty, upon 90 days’ prior written notice to BlackRock at its principal place of business (or at an earlier date as may be agreed to by both parties); provided that such
action shall be authorized by resolution of a majority of the Non-Interested Directors of the Fund or by a vote of a majority of the outstanding voting securities of the Fund (as defined in the 1940 Act).
| 4. | MISCELLANEOUS. |
4.1 INDIRECT EXPENSES. BlackRock and the Fund acknowledge and agree that the Fund's Operating Expenses include the Fund's allocated portion of Operating Expenses incurred indirectly at the Master Fund level. BlackRock acknowledges that, in order to maintain the Fund's Operating Expenses below the Operating Expense Limit, part of its liability for any Excess Amount may require it to pay a portion of the Master Fund's Operating Expenses. The Fund acknowledges that BlackRock's payment of a portion of the Master Fund's Operating Expenses in order to maintain the Fund's Operating Expenses below the Operating Expense Limit may benefit other feeder funds investing in the Master Fund to a greater degree than the Fund. Moreover, the Fund also acknowledges that, to the extent BlackRock pays a portion of the Master Fund's Operating Expenses in order to maintain another feeder fund's operating expenses below such feeder fund's operating expense limit pursuant to an expense limitation agreement between BlackRock and such feeder fund, such payment may result in the Fund's Operating Expenses being below the Operating Expense Limit and the Fund owing BlackRock a Reimbursement Amount pursuant to Section 2 hereof.
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. This Agreement shall be construed in accordance with the laws of the State of New York. Nothing herein contained shall be deemed to require the Fund to take any action contrary to the Fund’s limited liability company operating agreement or bylaws, 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 of its responsibility for and control of the conduct of the affairs of the Fund.
4.4 DEFINITIONS. Any questions of interpretation of any term or provision of this Agreement, including but not limited to 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 1940 Act, shall have the same meaning as and be resolved by reference to the 1940 Act.
4.5 AMENDMENT TO THIS AGREEMENT. This Agreement may be amended only by a written agreement signed by each of the parties to which the amendment relates.
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.
| BLACKROCK ALTERNATIVES ALLOCATION TEI PORTFOLIO LLC | ||
| By: | ||
| Name: | Xxxx Xxxxxxxxx | |
| Title: | President and Chief Executive Officer | |
| BLACKROCK ADVISORS, LLC | ||
| By: | ||
| Name: | Xxxx Xxxxxxx | |
| Title: | Managing Director | |
