Exhibit 23(h)(3)
GARTMORE MUTUAL FUNDS II, INC.
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, dated as of August 15, 2003, by and among
Gartmore Mutual Fund Capital Trust (the "Adviser"),Gartmore Separate Accounts
LLC (the "Subadviser") and Gartmore Mutual Funds II, Inc. (previously known as
GAMNA Series Funds, Inc., the "Company"), on behalf of the Gartmore Focus Fund
(previously known as GAMNA Focus Fund, the "Portfolio").
WHEREAS, the Company is a Maryland corporation and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management investment company; and
WHEREAS, the Company and the Adviser have entered into an Investment
Advisory Agreement (the "Advisory Agreement"), pursuant to which the Adviser
will render investment advisory services to the Portfolio for compensation based
on the value of the average daily net assets of the Portfolio; and
WHEREAS, the Adviser and the Subadviser have entered into a Subadvisory
Agreement (the "Subadvisory Agreement"), pursuant to which the Subadviser will
render investment advisory services to the Portfolio for compensation based on
the value of the average daily net assets of the Portfolio; and
WHEREAS, the Company, the Adviser and Subadviser have determined that it is
appropriate and in the best interests of the Portfolio and its shareholders to
maintain certain expenses of the Portfolio at a level below the level to which
the Portfolio would normally be subject.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
incurred by the Portfolio ("Portfolio Operating Expenses") in any one year
period ending on June 30 (each, an "Applicable Year") exceed the Operating
Expense Limit, as defined in Section 1.2 below, such excess amount (the "Excess
Amount") shall be the liability of the Adviser. The first Applicable Year shall
be the year ended June 30, 2004.
1.2 OPERATING EXPENSE LIMIT. The Operating Expense Limit in any
Applicable Year shall be 1.90%, or such other rate as may be agreed to in
writing by the parties.
1.3 METHOD OF COMPUTATION. To determine the Adviser's liability with
respect to the Excess Amount, each month the Portfolio Operating Expenses for
the Portfolio shall be annualized for the Applicable Year as of the last day of
the month. If such annualized Portfolio Operating Expenses for any month of the
Portfolio exceed the Operating Expense Limit of the Portfolio, the Adviser shall
(i) waive or reduce its investment advisory management fee for such month and/or
(ii) remit to the Portfolio an amount that is sufficient to reduce the
annualized Portfolio Operating Expenses for the Applicable Year to an amount no
higher than the Operating Expense Limit. An amount under clause (i) above is
referred to herein as the "Waiver Amount" and an amount under clause (ii) above
is referred to herein as the "Reimbursement Amount." Notwithstanding the above,
during the first month that this Agreement is in effect, the Excess Amount owed
to the Portfolio by the Adviser shall be reduced by any amounts waived and/or
reimbursed to the Portfolio by the Subadviser pursuant to the Interim Expense
Limitation Agreement, dated May 12, 2003.
1.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each Applicable Year, an adjustment payment shall be made (the
"Year-End Adjustment") by the Adviser or the Portfolio, as appropriate, in order
that the amount of the advisory fees waived or reduced and other payments
remitted by the Adviser to the Portfolio with respect to the previous Applicable
Year shall equal the Excess Amount multiplied by a fraction, the numerator of
which is the number of days this agreement is in effect during the Applicable
Year and the denominator of which is 365 (the "Yearly Pro Rata Percentage").
1.5 SUBADVISER CONTRIBUTION. The Subadviser hereby agrees with the Adviser that
it shall be liable to the Adviser for 65% of the Excess Amount to be computed
and paid as set forth in this Section 1.5. If the Adviser waives or reduces its
investment advisory management fee with respect to all or a portion of the
Excess Amount pursuant to Section 1.3 of this Agreement, the Subadviser shall
waive or reduce the fee due to the Subadviser from the Adviser pursuant to the
Subadvisory Agreement for the same period by an amount equal to 65% of such
Waiver Amount. If the Adviser remits an additional amount to the Portfolio
pursuant to Section 1.3 of this Agreement, the Subadviser shall remit to the
Adviser an amount equal to 65% of such Reimbursement Amount. If the Adviser
receives a Year-End Adjustment from the Portfolio pursuant to Section 1.4 of
this Agreement, the Adviser shall remit 65% of such adjustment to the
Subadviser. If the Adviser pays a Year-End Adjustment to the Portfolio pursuant
to Section 1.4 of this Agreement, the Subadviser shall remit 65% of such
adjustment to the Adviser.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REIMBURSEMENT. If in any Applicable Year during which the Advisory
Agreement is still in effect, the estimated aggregate Portfolio Operating
Expenses of the Portfolio for the Applicable Year are less than the Operating
Expense Limit for that Applicable Year, subject to quarterly approval by the
Company's Board of Directors as provided in Section 2.2 below, the Adviser shall
be entitled to reimbursement by the Portfolio, in whole or in part as provided
below, of the advisory fees waived or reduced and other payments remitted by the
Adviser to the Portfolio pursuant to Section 1 hereof. The total amount of
reimbursement to which the Adviser may be entitled (the "Repayment Amount")
shall equal, at any time, the sum of all investment advisory fees previously
waived or reduced by the Adviser and all other payments remitted by the Adviser
to the Portfolio, pursuant to Section 1 hereof, during any of the previous two
(2) Applicable Years, less any reimbursement previously paid by the Portfolio to
the Adviser, pursuant to Section 2 hereof, with respect to such waivers,
reductions, and payments. The Repayment Amount shall not include any additional
charges or fees whatsoever, including, e.g., interest accruable on the Repayment
Amount. The Adviser shall upon receipt of any Repayment Amount from the
Portfolio pursuant to Section 2.3 or 2.4 hereof, remit to the Subadviser an
amount equal to 65% of any Repayment Amount.
2.2 BOARD APPROVAL. No reimbursement shall be paid to the Adviser
pursuant to Section 2 hereof unless the Company's Board of Directors has
determined that the payment of such reimbursement is in the best interests of
the Portfolio and its shareholders. The Company's Board of Directors shall
determine quarterly in advance whether any reimbursement may be paid to the
Adviser for the relevant succeeding quarterly period.
2.3 METHOD OF COMPUTATION. To determine the Portfolio's payments, if any,
to reimburse the Adviser for the Repayment Amount, each month the Portfolio
Operating Expenses of the Portfolio shall be annualized for the Applicable Year
as of the last day of the month. If such annualized Portfolio Operating Expenses
of the Portfolio for any month are less than the Operating Expense Limit of the
Portfolio, the Portfolio, only with the prior approval of the Board, shall pay
to the Adviser an amount sufficient to increase the annualized Portfolio
Operating Expenses of the Portfolio to an amount no greater than the Operating
Expense Limit of the Portfolio, provided that such amount paid to the Adviser
will in no event exceed the total Repayment Amount. In the event the Operating
Expense Limit for the Portfolio is increased subsequent to an Applicable Year in
which the Adviser becomes entitled to reimbursement hereunder for fees waived or
reduced or amounts otherwise remitted to the Portfolio, the amount available to
reimburse the Adviser in accordance with this Section 2.3 shall be calculated by
reference to the Operating Expense Limit for the Portfolio in effect at the time
the Adviser became entitled to receive such reimbursement, rather than the
subsequently increased Operating Expense Limit for the Portfolio.
2.4 YEAR-END ADJUSTMENT. If necessary, on or before the last day of the
first month of each Applicable Year, an adjustment payment shall be made by the
Adviser or the Portfolio, as appropriate, in order that the actual Portfolio
Operating Expenses of the Portfolio for the prior Applicable Year (including any
reimbursement payments hereunder with respect to such Applicable Year) do not
exceed the Operating Expense Limit. If the Adviser receives a Year-End
Adjustment the Portfolio pursuant to this Section 2.4, the Adviser shall remit
65% of such adjustment to the Subadviser. If the Adviser pays a Year-End
Adjustment to the Portfolio pursuant to this Section 2.4, the Subadviser shall
remit 65% of such adjustment to the Adviser.
3. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect until June 30, 2004 and from
year to year thereafter provided such continuance is specifically approved by a
majority of the Directors 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 Directors"). Nevertheless, this Agreement may be
terminated by either party hereto, without payment of any penalty, upon 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-Interested Directors of the
Company or by a vote of a majority of the outstanding voting securities of the
Company.
4. MISCELLANEOUS.
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.
4.2 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 Company or the Portfolio to take any action contrary to
the Company's Declaration 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 Company's Board of Directors of its responsibility for and control
of the conduct of the affairs of the Company or the Portfolio.
4.3 DEFINITIONS. Any questions of interpretation of any term or provision
of this Agreement, including but not limited to the investment advisory 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
Advisory Agreement or the 1940 Act, shall have the same meaning as and be
resolved by reference to such Advisory 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.
GARTMORE MUTUAL FUNDS II, INC.
ON BEHALF OF GARTMORE FOCUS FUND
By: ______________________________
Name: Xxxx X. Xxxxxx
Title: Chairman, President and CEO
GARTMORE MUTUAL FUND CAPITAL TRUST
By:______________________________
Name: Xxxxxx X. Xxxxxxx
Title: Senior Vice President and
Chief Administrative Officer
GARTMORE SEPARATE ACCOUNTS LLC
By:______________________________
Name: Xxxx X. Xxxxxx
Title: Managing Director and
Member of Board of Managers
