FORM OF EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of June __, 2000 by and
between Xxxxxxxx-Xxxxxxxxx Capital Management ("Manager") and
Xxxxxxxx-Xxxxxxxxx Institutional Investors Fund, LLC ("Company"), on behalf
of the Xxxxxxxx-Xxxxxxxxx Emerging Countries Series ("Series").
WHEREAS, the Company is a Delaware limited liability company and the
Series is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as a diversified closed-end management investment company;
WHEREAS, the Company and the Manager have entered into an Investment
Management Agreement dated June __, 2000 ("Management Agreement"), pursuant
to which the Manager provides investment management services to the Series
for compensation based on the value of the average daily net assets of the
Series; and
WHEREAS, the Company and the Manager have determined that it is
appropriate and in the best interests of the Series and its shareholders or
members to maintain the expenses of the Series at a level below the level to
which the Series would normally be subject, in order to maintain the Series'
expense ratios at the Net Annual Operating Expense Limit (as hereinafter
defined).
NOW THEREFORE, the parties hereto agree as follows:
I.1. EXPENSE LIMITATION.
A.1.1. APPLICABLE EXPENSE LIMIT. To the extent that the aggregate
expenses of every character incurred by the Series in any fiscal year,
including but not limited to investment management fees of the Manager (but
excluding shareholder or member transaction expenses, interest, taxes,
brokerage commissions, other expenditures which are capitalized in accordance
with generally accepted accounting principles, the Series' proportionate
share of the expenses of the Mauritius Subsidiary of the Series and other
extraordinary expenses not incurred in the ordinary course of the Series'
business) ("Series Operating Expenses"), exceed the Net Annual Operating
Expense Limit, as defined in Section 1.2 below, such excess amount (the
"Excess Amount") shall be the liability of the Manager.
B.1.2. NET ANNUAL OPERATING EXPENSE LIMIT. The Net Annual
Operating Expense Limit shall be 1.25 percent of the average daily net assets
of the Series.
C.1.3. METHOD OF COMPUTATION. To determine the Manager's liability
with respect to the Excess Amount, each month the Series Operating Expenses
shall be annualized as of the last day of the month. If the annualized Series
Operating Expenses exceed the Net Annual Operating Expense Limit, the
Manager shall first waive or reduce its investment management fee for such
month by an amount sufficient to reduce the annualized Series Operating
Expenses to an amount no higher than the Net Annual 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 Manager may also
remit to the Series an amount that, together with the waived or reduced
investment management fee, is sufficient to pay such Excess Amount.
D.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
investment management fees waived or reduced and other payments remitted by
the Manager to the Series with respect to the previous fiscal year shall
equal the Excess Amount.
II.2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
A.2.1. REIMBURSEMENT. If in any year during which the Management
Agreement is still in effect, the estimated aggregate Series Operating
Expense for the fiscal year are less than the Net Annual Operating Expense
Limit for that year, subject to quarterly approval by the Company's Board of
Trustees as provided in Section 2.2 below, the Manager shall be entitled to
reimbursement by the Series, in whole or in part as provided below, of the
investment management fees waived or reduced and other payments remitted by
the Manager to the Series pursuant to Section 1 hereof. The total amount of
reimbursement to which the Manager may be entitled ("Reimbursement Amount")
shall equal, at any time, the sum of all investment management fees
previously waived or reduced by the Manager and all other payments remitted
by the Manager to the Series, pursuant to Section 1 hereof, during any of the
previous three (3) fiscal years, less any reimbursement previously paid by
the Series to the Manager, 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.
B.2.2. BOARD APPROVAL. No reimbursement shall be paid to the Manager
with respect to the Series pursuant to this provision in any fiscal quarter,
unless the Company's Board of Trustees has determined that the payment of
such reimbursement is in the best interests of the Series and its
shareholders or members. The Company's Board of Trustees shall determine
quarterly in advance whether any reimbursement may be paid to the Manager in
such quarter.
C.2.3. METHOD OF COMPUTATION. To determine the payments, if any, to
reimburse the Manager for the Reimbursement Amount, each month the Series
Operating Expenses shall be annualized as of the last day of the month. If
the annualized Series Operating Expenses for any month are less than the
Net Annual Operating Expense Limit, the Series, with the prior approval of
the Company's Board of Trustees, shall pay to the Manager an amount
sufficient to increase the annualized Series Operating Expenses to an amount
no greater than the Net Annual Operating Expense Limit, provided that such
amount paid to the Manager will in no event exceed the total Reimbursement
Amount.
D.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 Series Operating Expenses
for the prior fiscal year (including any reimbursement payments hereunder
with respect to such fiscal year) do not exceed the Net Annual Operating
Expense Limit.
III.3. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for two years from the date
first stated above and shall continue in effect thereafter from year to year
provided such continuance is specifically approved by a majority of the
Trustees of the Company who (i) are not "interested persons" of the Company
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 Trustees"). After the initial two-year period,
this Agreement may be terminated by either party hereto, without payment of
any penalty, upon ninety (90) days' prior written notice to the other party
at its principal place of business; provided that, in the case of termination
by the Company, such action shall be authorized by resolution of a majority
of the Non-
2
Interested Trustees of the Company or by a vote of a majority of the
outstanding voting securities of the Company.
IV.4. MISCELLANEOUS.
A.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.
B.4.2. INTERPRETATION. Nothing herein contained shall be deemed to
require the Company or the Series to take any action contrary to the
Company's First Amended and Restated Operating Agreement or any applicable
statutory or regulatory requirement to which it is subject or by which it is
bound, or to relieve or deprive the Company's Board of Trustees of its
responsibility for and control of the conduct of the affairs of the Company
or the Series.
C.4.3. DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement, including but not limited to the investment
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.
IN WITNESS WHEREOF, the parties have caused this Agreement to be
signed by their respective officers thereunto duly authorized and their
respective corporate seals to be hereunto affixed, as of the day and year
first above written.
XXXXXXXX-XXXXXXXXX INSTITUTIONAL INVESTORS FUND,
LLC, ON BEHALF OF XXXXXXXX-XXXXXXXXX EMERGING
COUNTRIES SERIES
By:
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E. Xxxxx Xxxxx, Jr.
Its Secretary
XXXXXXXX-XXXXXXXXX CAPITAL MANAGEMENT
By:
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E. Xxxxx Xxxxx, Jr.
Its General Counsel
