EXHIBIT 8(i)
XXXXXXX XXXXX PRINCIPAL PROTECTED TRUST
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, dated as of February 25, 2003, 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 Core
Principal Protected Fund (the "Fund").
WHEREAS, the Trust is a Delaware Statutory Trust registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
investment company; and
WHEREAS, the Adviser and the Trust have entered into a 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 Guarantee
Agreement, dated as of January 9, 2003 (the "Financial Guarantee Agreement"),
with Ambac Assurance Corporation (the "Insurer") pursuant to which the Insurer
will issue a Policy (as defined in the Financial Guarantee Agreement) to the
Trust on behalf of the shareholders of the Fund for compensation as described in
the Financial Guarantee Agreement; and
WHEREAS, the Adviser and the Trust have determined that, if (and only if)
the Fund's assets are required to be allocated to the Defeasance Portfolio (as
defined in the Financial Guarantee Agreement) pursuant to Article IV of the
Financial Guarantee 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. The parties hereby acknowledge that the
Management Agreement provides that the Adviser's management fee shall be reduced
to 0.25% per annum of the average daily net assets of the Fund in the event the
Fund's assets are required to be allocated to theDefeasance Portfolio pursuant
to Article IV of the Financial Guarantee Agreement (a "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
a class of shares of the Fund following a Permanent Defeasance Event, taking
into account the waiver referenced 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 (such as litigation and other expenses) not incurred in
the ordinary course of the Fund's business) (such non-excluded expenses, "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 based on a percentage of the average net assets of such
Class of Shares of the Fund.
1.4 METHOD OF COMPUTATION. To determine the Adviser's liability with
respect to the Excess Amount following a Permanent Defeasance Event, the Fund
Expenses for each Class of Shares shall be calculated and accrued daily. If such
Fund Expenses for any class of shares exceed the Expense Limit, the Adviser
shall first waive or reduce its management fee (in addition to the waiver
referenced in Section 1.1 above) by an amount sufficient to reduce the Fund
Expenses to an amount no higher than the Expense Limit for each Class of Shares
of the Fund. 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 reimburse
the Fund's expenses in 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 expenses reimbursed 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 Guarantee Agreement). Nevertheless, this Agreement will
automatically terminate upon the termination of the Financial Guarantee
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 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, the Financial Guarantee Agreement or the 1940 Act, shall
have the same meaning as and be resolved by reference to such Management
Agreement, the Financial Guarantee 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 ITS SERIES, THE FUND
By: ______________________________
Name:
FUND ASSET MANAGEMENT, L.P.
By: Princeton Services, Inc., its general partner
By: ______________________________
Name:
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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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