FEE WAIVER AND EXPENSE LIMITATION AGREEMENT PROSPECTOR FUNDS, INC.
Agreement
made this 19th day of
September, 2007 between Prospector Partners Asset Management, LLC, a Delaware
limited liability company (the “Adviser”) and Prospector Funds, Inc., a Maryland
corporation (the “Company”), on behalf of its Series, Prospector Capital
Appreciation Fund and Prospector Opportunity Fund (each, a “Fund” and
collectively, the “Funds”).
WHEREAS,
the Company is an open-end, management investment company and is registered
as such under the Investment Company Act of 1940, as amended (the “1940 Act”);
and
WHEREAS,
the Adviser serves as the investment adviser of the Funds; and
NOW,
THEREFORE, the parties hereto agree as follows:
1. The
Adviser agrees to waive its fees or to pay or absorb the ordinary operating
expenses of each Fund, but excluding interest, organizational expenses,
brokerage commissions and extraordinary expenses of the Fund (“Operating
Expenses”) to the extent such Operating Expenses exceed 1.50% of such Fund’s
average daily net assets (the “Expense Limitation”).
2. This
Agreement will remain in effect with respect to each Fund until the third
anniversary of the date the Fund commenced operations, unless the Board of
Directors of the Fund approves its earlier termination or revision; provided,
however that any such early termination shall be subject to 30 days prior
written notice. This Agreement will terminate automatically upon the
termination of the investment advisory agreement in effect between the Company
and the Adviser unless a new investment advisory agreement with the Adviser (or
an affiliate of the Adviser) to replace the terminated agreement becomes
effective upon such termination.
3. The
Company agrees, on behalf of each Fund, to carry forward for a period not to
exceed three (3) years from the end of the fiscal year in which an expense is
paid, waived or absorbed by the Adviser any Operating Expenses in excess of the
Expense Limitation that are paid or assumed by the Adviser pursuant to this
Agreement (“Excess Operating Expenses”) as well as any organizational expenses
paid or assumed by the Adviser (“Organizational Expenses”) and, at the election
of the Adviser, may reimburse the Adviser in the amount of such Excess Operating
Expenses and Organizational Expenses as set forth herein. Such
reimbursement will be made as promptly as possible, but only to the extent it
does not cause the Operating Expenses for any year to exceed the Expense
Limitation in effect at the time of recovery with respect to the relevant
Fund. This Agreement of the Company to reimburse the Adviser for
Excess Operating Expenses and Organizational Expenses shall terminate in the
event the Adviser or any affiliate of the Adviser terminates the then effective
investment advisory agreement between the Company and the Adviser (or any
affiliate of the Adviser) without the consent of the Company (other than a
termination resulting from an assignment).
4. This
Agreement shall be construed in accordance with the laws of the state of
Connecticut and the applicable provisions of the 1940 Act. To the
extent the applicable law of the State of Connecticut, or any of the provisions
herein, conflict with the applicable provisions of the 1940 Act, the latter
shall control.
This
Agreement constitutes the entire agreement between the parties hereto with
respect to the matters described herein.
IN
WITNESS WHEREOF, the Company, on behalf of the Funds, and the Adviser have
caused this Agreement to be executed on the day and year above
written.
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PROSPECTOR
FUND, INC.
By: /s/
Xxxxx X. Xxxxxxxx, Xx.
Name:
Xxxxx X. Xxxxxxxx, Xx.
Title Treasurer
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PROSPECTOR
PARTNERS ASSET MANAGEMENT, LLC.
By:
/s/
Xxxx X. Xxxxxxxxx
Name:
Xxxx X. Xxxxxxxxx
Title: Managing
Member
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