EXHIBIT 9(D)
FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of __________ __, 1997,
between EQ Financial Services, Inc., a Delaware corporation (the "Adviser"),
and the 787 Trust, a Delaware business trust (the "Trust"), on behalf of the
Xxxxxx Growth and Income Portfolio (the "Portfolio").
WHEREAS, the Trust is registered under the Investment Company Act of
1940, as amended (the "Investment Company Act"), as an open-end diversified
management company of the series type, and the Portfolio is one of the series
of the Trust; and
WHEREAS, the Trust and the Adviser have entered into an Investment
Advisory Agreement (the "Advisory Agreement"), pursuant to which the Adviser
will render investment advisory services to the Portfolio for compensation
based on the value of the average daily net assets of the Portfolio; and
WHEREAS, the Trust and the Adviser have determined that it is
appropriate and in the best interests of the Portfolio and its shareholders to
maintain the expenses of the Portfolio at a level below the level to which the
Portfolio would normally be subject during its start-up period.
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 the Portfolio in any fiscal year,
including but not limited to investment advisory 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 the
Portfolio's business) ("Portfolio Operating Expenses"), exceed the 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 Operating Expense Limit. The Operating Expense Limit in any year
shall be 0.[xx]% of the average daily net assets of the Portfolio, or such
other rate as may be agreed to in writing by the parties.
1.3 Method of Computation. To determine the Adviser's liability with
respect to the Excess Amount, each month the Portfolio Operating Expenses for
the Portfolio shall be annualized as of the last day of the month. If the
annualized Portfolio Operating Expenses for any month exceed the Operating
Expense Limit, the Adviser shall first waive or reduce its investment
management fee for such month by an amount sufficient to reduce the annualized
Portfolio Operating Expenses to an amount no higher than the Operating Expense
Limit. If the
amount of the waived or reduced investment management fee for any such month
is insufficient to pay the Excess Amount, the Adviser also shall remit to the
Portfolio an amount that, together with the waived or reduced 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 advisory fees waived or
reduced and other payments remitted by the Adviser to the Portfolio 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 during which total Portfolio assets
are greater than $___________ million and in which the Advisory Agreement is
still in effect, the estimated aggregate Portfolio Operating Expenses for the
fiscal year are less than the Operating Expense Limit for that year, subject
to quarterly approval by the Trust's Board of Trustees as provided in Section
2.2 below, the Adviser shall be entitled to reimbursement by the Portfolio, in
whole or in part as provided below, of the management fees waived or reduced
and other payments remitted by the Adviser to the Portfolio pursuant to
Section 1 hereof. The total amount of reimbursement to which the Adviser may
be entitled (the "Reimbursement Amount") shall equal, at any time, the sum of
all investment management fees previously waived or reduced by the Adviser and
all other payments remitted by the Adviser to the Portfolio, pursuant to
Section 1 hereof, during any of the previous [two (2)] fiscal years, less any
reimbursement previously paid by the Portfolio to the Adviser, pursuant to
Sections 2.2 or 2.3 hereof, 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
pursuant to this provision in any semi-annual period, unless the Trust's Board
of Trustees has determined that the payment of such reimbursement is in the
best interests of the Portfolio and its shareholders. The Trust's Board of
Trustees shall determine at least semi-annually in advance whether any
reimbursement may be paid to the Adviser for such period.
2.3 Method of Computation. To determine the Portfolio's payments, if
any, to reimburse the Adviser for the Reimbursement Amount, each month the
Portfolio Operating Expenses shall be annualized as of the last day of the
month. If the annualized Portfolio Operating Expenses for any month are less
than the Operating Expense Limit, the Portfolio shall pay to the Adviser an
amount sufficient to increase the annualized Portfolio Operating Expenses to
an amount no greater than the Operating Expense Limit, provided that such
amount paid to the Adviser will in no event exceed the total Reimbursement
Amount.
2.4 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 actual Portfolio Operating Expenses
for the prior fiscal year (including any reimbursement payments hereunder with
respect to such fiscal year) do not exceed the Operating Expense Limit.
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3. Termination of Agreement.
This Agreement shall continue in effect for a period of one year from
the date of its execution and from year to year thereafter provided such
continuance is specifically approved by a majority of the Trustees of the
Trust who (a) are not "interested persons" of the Trust or any other party of
this Agreement, as defined in the Act, and (b) have no direct or indirect
financial interest in the operation of this Agreement ("Non-Interest
Trustees"). Nevertheless, this Agreement may be terminated by either party
hereto, without payment of any penalty, upon 90 days' prior written notice to
the other party at its principal place of business; provided that, in the case
of termination by the Trust on behalf of the Portfolio, 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
Portfolio.
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 Portfolio or the Trust to take any action contrary to the Trust's
Agreement and 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 Portfolio.
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
provisions of the Advisory Agreement, shall have the same meaning as and be
resolved by reference to such agreement.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate or trust seals to be hereunto affixed, as of the day and
year first above written.
ATTEST: 787 TRUST, ON BEHALF OF XXXXXX
GROWTH AND INCOME PORTFOLIO
______________________________ By:________________________________________
Secretary Title:_____________________________________
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ATTEST: EQ FINANCIAL SERVICES, INC.
______________________________ By:________________________________________
Secretary Title:_____________________________________
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