Exhibit 8(h)(2)
XXXXXXX XXXXX PRINCIPAL PROTECTED TRUST
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, dated as of [________], 2002, by and between
Fund Asset Management, L.P. (the "Adviser") and Xxxxxxx Xxxxx Principal
Protected Trust (the "Trust") on behalf of its series, Xxxxxxx Xxxxx Basic Value
Principal Protected Fund (the "Fund").
WHEREAS, the Trust is a Delaware Business Trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company; and
WHEREAS, the Adviser and the Trust have entered into an Investment
Management Agreement (the "Management Agreement") pursuant to which the Adviser
will render investment advisory services to the Fund for compensation based on
the value of the average daily net asset of the Fund; and
WHEREAS, the Trust and the Adviser have entered into a Financial Warranty
Agreement, dated as of [________], 2002 (the "Financial Warranty Agreement"),
with Main Place Funding, LLC (the "Warranty Provider") pursuant to which the
Warranty Provider will provide a financial warranty to the Fund for compensation
as described in the Financial Warranty Agreement; and
WHEREAS, the Adviser and the Trust have determined that, if (and only if)
there shall occur a Permanent Defeasance Event (as defined in the Financial
Warranty Agreement), it is appropriate and in the best interests of the Fund and
its shareholders to maintain certain expenses of the Fund at a level below the
level to which the Fund would normally be subject.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1 WAIVER OF MANAGEMENT FEE. Following a Permanent Defeasance Event, the
Adviser shall waive a portion of its fee under the Management Agreement so that
the fee payable pursuant to the Management Agreement shall not exceed .25% of
average daily net assets of the Fund for any annual period following such
Permanent Defeasance Event.
1.2 APPLICABLE EXPENSE LIMIT. In addition to the waiver discussed in
Section 1.1 above, to the extent that the aggregate annual expenses incurred by
the Fund following a Permanent Defeasance Event, taking into account the waiver
discussed in Section 1.1 above (but excluding: (i) expenses, if any, paid
pursuant to Rule 00x-0 xxxxx xxx 0000 Xxx, (xx) interest, taxes, brokerage
commissions and other expenditures which are capitalized in accordance with
generally accepted accounting principles and (iii) other extraordinary expenses
not incurred in the ordinary course of the Fund's business) ("Fund Expenses"),
exceed the Expense Limit, as defined in Section 1.3 below, such excess amount
(the "Excess Amount") shall be the liability of the Adviser.
1.3 EXPENSE LIMIT. The Expense Limit for each class of shares of the Fund
for any annual period following a Permanent Defeasance Event shall be as set
forth in Schedule A.
1.4 METHOD OF COMPUTATION. To determine the Adviser's liability with
respect to the Excess Amount following a Permanent Defeasance Event, each month
the Fund Expenses shall be annualized as of the last day of the month. If such
annualized Fund Expenses for any month exceed the Expense Limit, the Adviser
shall first waive or reduce its management fee (in addition to the waiver
discussed in Section 1.1 above) for such month by an amount sufficient to reduce
the annualized Fund Expenses to an amount no higher than the Expense Limit. If
the amount of the waived or reduced management fee for any such month is
insufficient to pay the Excess Amount, the Adviser shall also remit to the Fund
an amount that, together with the waived or reduced management fee, is
sufficient to pay such Excess Amount.
1.5 YEAR-END ADJUSTMENT. If necessary, on or about the last day of any 12
month period following a Permanent Defeasance Event, an adjustment payment shall
be made by the appropriate party in order that the amount of the management fees
waived or reduced and other payments remitted by the Adviser to the Fund with
respect to the previous year shall equal the Excess Amount.
2. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect until the Termination Date (as
defined in the Financial Warranty Agreement). Nevertheless, this Agreement will
automatically terminate upon the termination of the Financial Warranty
Agreement.
3. MISCELLANEOUS.
3.1 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.
3.2 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 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 Fund.
3.3 DEFINITIONS. Any questions of interpretation of any term or provision
of this Agreement, including but not limited to the management 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
Management Agreement or the 1940 Act, shall have the same meaning as and be
resolved by reference to such Management Agreement or the 1940 Act.
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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.
XXXXXXX XXXXX PRINCIPAL PROTECTED TRUST,
ON BEHALF OF THE FUND
By:______________________________
FUND ASSET MANAGEMENT, L.P.
By: __________________________, its General Partner
By: __________________________
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SCHEDULE A
EXPENSE LIMITS
Class A Class B Class C Class D
------- ------- ------- -------
1.05% 1.05% 1.05% 1.05%
Note: All Expense Limits are exclusive of expenses, if any, paid pursuant to
Rule 12b-1 under the 1940 Act.
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