Exhibit 2.k.(v)
FUND EXPENSE AGREEMENT
FUND EXPENSE AGREEMENT, dated as of ___ __, 1997, between ▇▇▇▇▇▇▇,
▇▇▇▇▇ & Co. ("▇▇▇▇▇▇▇ Sachs") and The Bank of New York (the "Service Provider"),
in its capacities as custodian, paying agent and collateral agent for Reader's
Digest Automatic Common Exchange Security Trust (the "Trust").
WHEREAS the Trust is a trust formed under the laws of the State of New
York pursuant to a Trust Agreement, as amended and restated as of ___ __, 1997
(the "Trust Agreement"); and
WHEREAS, ▇▇▇▇▇▇▇ ▇▇▇▇▇, as sponsor under the Trust Agreement, desires
to make provisions for the payment of certain initial and on-going expenses of
the Trust;
NOW, THEREFORE, in consideration of the premises and the
mutual covenants contained in this Agreement, the parties agree as follows:
1. Definitions. (a) Capitalized terms used herein and not defined
herein shall have the meanings ascribed thereto in the Trust Agreement.
(b) The following terms shall have the following meanings:
"Additional Expense" means the Ordinary Expense the incurring of which
will require the Service Provider to provide the Additional Expense Notice
pursuant to Section 3(a) hereof and any Ordinary Expense incurred thereafter.
"Additional Expense Notice" means the notice required to be given by
the Service Provider to ▇▇▇▇▇▇▇ Sachs pursuant to Section 3(a)(i) hereof.
"First Time of Delivery" shall have the meaning ascribed thereto in the
Underwriting Agreement.
"Ordinary Expense" of the Trust means any expense of the Trust other
than any expense of the Trust arising under Section 6.6 of the Administration
Agreement, Section 15 of the Custodian Agreement, Section 5.4(b) of the Paying
Agent Agreement, or Section 7.6 of the Trust Agreement.
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"Up-front Fee Amount" means the amount set forth as such on Schedule I
hereto payable as a one-time payment to the Service Provider in respect of its
collective services as Administrator, Custodian, Paying Agent and Collateral
Agent for the entire term of the Trust.
"Up-front Expense Amount" means the amount set forth as such on
Schedule I hereto payable as a one-time payment to the Service Provider in
respect of Ordinary Expenses anticipated to be incurred by the Administrator on
behalf of the Trust, pursuant to the Administration Agreement, during the term
of the Trust.
2. Agreement to Pay Up-front Fees and Expenses. ▇▇▇▇▇▇▇ ▇▇▇▇▇ agrees to
pay to the Service Provider in Federal (same day) funds at the First Time of
Delivery the Up-front Fee Amount and the Up-front Expense Amount.
3. Agreement to Pay Additional Expenses. (a) Prior to incurring any
Ordinary Expense on behalf of the Trust that, together with all prior Ordinary
Expenses incurred by the Administrator on behalf of the Trust, would cause the
aggregate amount of Ordinary Expenses of the Trust to exceed the Up-front
Expense Amount, the Administrator shall provide to ▇▇▇▇▇▇▇ Sachs (i) prompt
written notice to the effect that the aggregate amount of Ordinary Expenses of
the Trust will exceed the Up-front Expense Amount, and (ii) an accounting, in
such detail as shall be reasonably acceptable to ▇▇▇▇▇▇▇ ▇▇▇▇▇, of all Ordinary
Expenses incurred on behalf of the Trust through the date of the Additional
Expense Notice.
(b) From and after the date of the Additional Expense Notice, the
Service Provider agrees that it will not, without the prior written consent of
▇▇▇▇▇▇▇ Sachs, incur on behalf of the Trust (i) any single expense in excess of
$_____ or (ii) in any calendar period, expenses aggregating in excess of $_____.
Subject to the foregoing, the Service Provider shall give notice to ▇▇▇▇▇▇▇
▇▇▇▇▇ in writing promptly following the incurring of any Additional Expense.
Such notice shall be accompanied by any demand, ▇▇▇▇, invoice or other similar
document in respect of such Additional Expense.
(c) Subject to the first sentence of paragraph (b) of this Section 3,
▇▇▇▇▇▇▇ ▇▇▇▇▇ agrees to pay to the Service Provider from time to time the amount
of any Additional Expense. Payment by ▇▇▇▇▇▇▇ Sachs of any Additional Expense
shall be made in New York Clearing House funds by the later of (i) five Business
Days after the receipt by ▇▇▇▇▇▇▇ ▇▇▇▇▇ from the Service Provider of notice
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of the incurring thereof or (ii) the due date for the payment of such Additional
Expense.
(d) ▇▇▇▇▇▇▇ Sachs may contest in good faith the reasonableness of any
Additional Expense and the parties shall attempt to resolve amicably the
disagreement; provided that if the parties cannot resolve the dispute by the due
date hereunder with respect to such Additional Expense, subject to the first
sentence of paragraph (b) of this Section 3, ▇▇▇▇▇▇▇ ▇▇▇▇▇ shall pay the amount
of such Additional Expense subject to later adjustment and credit if such
dispute is resolved in favor of ▇▇▇▇▇▇▇ Sachs.
4. Condition to Payment. ▇▇▇▇▇▇▇ ▇▇▇▇▇' obligations under paragraphs 2
and 3 hereof shall be subject to the condition that the Trust's Automatic Common
Exchange Securities shall have been issued and paid for at the First Time of
Delivery.
5. Trust Termination; Refund of Unused Expense Funds. If at the
termination of the Trust in accordance with Section 8.3 of the Trust Agreement
the aggregate amount of Ordinary Expenses incurred by the Service Provider on
behalf of the Trust through the date of termination shall be less than the
Up-front Expenses Amount, the Service Provider shall, promptly following the
date of such termination, pay to ▇▇▇▇▇▇▇ Sachs in New York Clearing House funds
the amount of such excess.
6. Termination of Administration Agreement. In the event of the
termination of the Administration Agreement in accordance with Section 4.1
thereof, the Service Provider shall promptly pay to ▇▇▇▇▇▇▇ ▇▇▇▇▇ the portion of
its Up- front Fee Amount ratable for the period from the date of the termination
of the Administration Agreement to the Exchange Date together with any
unexpended portion of the Up-front Expense Amount.
7. Statements and Reports. The Service Provider shall collect and
safekeep all demands, bills, invoices or other written communications received
from third parties in connection with any Ordinary Expenses and Additional
Expenses and shall prepare and maintain adequate books and records showing all
receipts and disbursements of funds in connection therewith. ▇▇▇▇▇▇▇ Sachs shall
have the right to inspect and to copy, at its expense, all such documents, books
and records at all reasonable times and from time to time during the term of
this Agreement.
8. Term of Contract. This Agreement shall continue in effect until the
termination of the Trust in accordance with Section 8.3 of the Trust Agreement.
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9. No Assignment. No party to this Agreement may assign its rights or
delegate its duties hereunder without the prior written consent of the other
party.
10. Amendments. The Service Provider agrees that it will not consent to
any amendment of the Administration Agreement, the Custodian Agreement, the
Paying Agent Agreement or the Collateral Agreement without the prior written
consent of ▇▇▇▇▇▇▇ ▇▇▇▇▇.
11. Entire Agreement. This Agreement contains the entire agreement
among the parties with respect to the matters contained herein and supersedes
all prior agreements or understandings. No amendment or modification of this
Agreement shall be valid unless the amendment or modification is in writing and
is signed by all the parties to this Agreement.
12. Notices. All notices, demands, reports, statements, approvals or
consents given by any party under this Agreement shall be in writing and shall
be delivered in person or by telecopy or other facsimile communication or sent
by first-class U.S. mail, registered or certified, postage prepaid, to the
appropriate party at its address on the signature pages hereof or at such other
address subsequently notified to the other parties hereto. Any party may change
its address for purposes hereof by delivering a written notice of the change to
the other parties. All notices given under this Agreement shall be deemed
received (a) in the case of hand delivery, on the day of delivery, (b) in the
case of telecopy or other facsimile communication, on the day of transmission,
and (c) in the case of mailing, on the third day after such notice was deposited
in the mail.
13. Binding Effect. This Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and permitted
assigns.
14. Governing Law. This Agreement shall be governed by and be construed
in accordance with the laws of the State of New York.
15. Counterparts. This Agreement may be signed in counterparts with all
of such counterparts constituting one and the same instrument.
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IN WITNESS WHEREOF, the parties have caused this Fund Expense Agreement
to be executed by their authorized representatives the date first above written.
▇▇▇▇▇▇▇, SACHS & CO.
By____________________________
Address:
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
THE BANK OF NEW YORK
By____________________________
Address:
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SCHEDULE I
Directors & Officers Insurance $
Fidelity Bond $
Tax on Directors & Officers
Insurance and Fidelity Bond $
Trustees Fees $
The Bank of New York
Acceptance Fee $
Annual Administrative Fee $
External Counsel Fees $
Accounting Fees $____________
Total $____________