Exhibit (k)(2)
FORM OF EXPENSE LIMITATION AGREEMENT
XXXXXXX XXXXX HEDGE FUND PARTNERS REGISTERED MASTER FUND, LLC
This EXPENSE LIMITATION AGREEMENT (the "Agreement") is made as of [ ],
2005 by and between Xxxxxxx Sachs Hedge Fund Partners Registered Master
Fund, LLC, a Delaware limited liability company (the "Fund"), and Xxxxxxx
Xxxxx Hedge Fund Strategies LLC, a Delaware limited liability company (the
"Adviser").
WHEREAS, the Fund is a closed-end management investment company and is
registered as such under the Investment Company Act of 1940, as amended
(the "Investment Company Act"); and
WHEREAS, the Fund and the Adviser have entered into an investment
management agreement dated [ ], 2005 (as it may be amended from time to
time, the "Investment Management Agreement"), pursuant to which the Adviser
provides certain investment management services to the Fund for
compensation based on the Fund's net assets as of each month end (the
"Investment Management Fee").
NOW, THEREFORE, the parties hereto agree as follows:
1. Capitalized terms not defined herein shall have the meaning
ascribed to them in the Limited Liability Company Agreement of the Fund.
2. The Adviser agrees to pay all of the Fund's organizational expenses
as determined by the Adviser in accordance with U.S. generally accepted
accounting principles.
3. (a) The Adviser agrees to waive the Investment Management Fee
payable to it pursuant to the Investment Management Agreement, or to pay an
amount to the Fund, such that the Fund's total expenses, including the
Fund's initial offering expenses and operating expenses, the Investment
Management Fee and the fees and expenses of the Fund's administrator, but
excluding the Extraordinary Expenses (as defined below) (the "Expenses"),
during the 12-month period beginning on the closing date for the purchase
of interests by a party other than The Xxxxxxx Sachs Group, Inc. or the
Adviser (the "Expense Limitation Period"), do not exceed 1.60% of the
average of the net assets of the Fund (prior to reduction for any
Extraordinary Expenses) as of each month-end during the Expense Limitation
Period, as such calculation may be appropriately adjusted to account for
any partial month periods. The amount of any such waiver or reimbursement
will be computed as of the end of each calendar month during the Expense
Limitation Period (subject to appropriate adjustment to account for any
partial month periods or intra-month subscriptions or repurchases) by
subtracting (i) the Expenses that accrued during such month, from (ii) an
amount equal 1/12th of 1.60% of the net assets of the Fund as of such
month-end (prior to reduction for any Extraordinary Expenses), with any
positive remainder from such calculation being referred to as a "Month-End
Surplus Amount" and any negative remainder from such calculation being
referred to as a "Month-End Deficit Amount."
(b) In the event that, with respect to any month-end, there is a
Month-End Deficit Amount, promptly following such month-end, the Adviser
shall rebate and/or reimburse to the Fund a portion of its Investment
Management Fee payable as of such month-end, and/or pay to the Fund an
amount, equal to the excess, if any, of (x) such Month-End Deficit Amount,
less (y) the then Cumulative Surplus Amount (as defined below), if any.
(c) In the event that, with respect to any month-end, there is a
Month-End Surplus Amount, promptly following such month-end, the Fund (i)
shall pay to the Adviser an amount equal to such Month-End Surplus Amount,
but only up to an amount equal to the then Cumulative Deficit Amount (as
defined below), if any, and (ii) shall credit to the Adviser against any
future rebates and/or reimbursements otherwise payable by the Adviser under
this Agreement the amount, if any, by which such Month-End Surplus Amount
exceeds the Cumulative Deficit Amount.
The "Cumulative Surplus Amount," immediately prior to any
month-end, equals the excess, if any, of (A) the sum total of all of the
amounts that were previously paid by the Fund to the Adviser, or credited
to the Adviser, pursuant to Section (3)(c) of this Agreement as of such
time, less (B) the sum total of all of the amounts that were previously
reimbursed and/or rebated to the Fund by the Adviser pursuant to Section
3(b) of this Agreement as of such time. The "Cumulative Deficit Amount,"
immediately prior to any month-end, equals the excess, if any, of (A) the
sum total of all of the amounts that were previously reimbursed and/or
rebated to the Fund by the Adviser pursuant to Section 3(b) of this
Agreement as of such time, less (B) the sum total of all of the amounts
that were previously paid by the Fund to the Adviser pursuant to Section
(3)(c) of this Agreement as of such time.
4. The term "Extraordinary Expenses" shall mean all expenses incurred
by the Fund outside of the ordinary course of its business, including,
without limitation, costs incurred in connection with any claim,
litigation, arbitration, mediation, government investigation or dispute and
the amount of any judgment or settlement paid in connection therewith, or
the enforcement of the Fund's rights against any person or entity; costs
and expenses for indemnification or contribution payable by the Fund to any
person or entity (including, without limitation, pursuant to the
indemnification obligations contained in the Limited Liability Company
Agreement of the Fund, as amended from time to time; expenses of a
reorganization, restructuring or merger of the Fund; expenses of holding,
or soliciting proxies for, a meeting of members of the Fund; and the
expenses of engaging a new administrator, custodian, transfer agent or
escrow agent.
5. The Adviser may extend the duration of this Agreement for
additional periods, subject to such terms and conditions as may be agreed
to by the parties hereto.
6. This Agreement shall be construed in accordance with the laws of
the State of New York, without giving effect to the conflicts of laws
principles thereof, and the applicable provisions of Federal law. To the
extent that the applicable laws of the State of New York, or any of the
provisions herein, conflict with the applicable provisions of Federal law,
the latter shall control.
IN WITNESS WHEREOF, the parties hereto have executed and delivered
this Agreement.
XXXXXXX XXXXX HEDGE FUND PARTNERS
REGISTERED MASTER FUND, LLC
By:
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Name:
Title:
XXXXXXX SACHS HEDGE FUND STRATEGIES LLC
By:
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Name:
Title:
