Exhibit (h)(3): Expense Limitation Agreement
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EXPENSE LIMITATION AGREEMENT
BLUE RIDGE FUNDS TRUST
EXPENSE LIMITATION AGREEMENT, effective as of April 1, 1999 by and
between Colonial Asset Management, Inc. (the "Manager") and Blue Ridge Funds
Trust (the "Trust"), on behalf of each series of the Trust set forth in Schedule
A attached hereto (each a "Fund," and collectively, the "Funds").
WHEREAS, the Trust is a Delaware business trust organized under the
Declaration of Trust ("Declaration of Trust"), and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as an open-end
management company of the series type, and each Fund is a series of the Trust;
and
WHEREAS, the Trust and the Manager have entered into an Investment
Management Agreement dated April 1, 1999, as amended ("Management Agreement"),
pursuant to which the Manager provides investment management services to each
Fund listed in Schedule A, which may be amended from time to time, for
compensation based on the value of the average daily net assets of each such
Fund; and
WHEREAS, the Trust and the Manager have determined that it is
appropriate and in the best interests of each Fund and its shareholders to
maintain the expenses of each Fund, and, therefore, have entered into this
Expense Limitation Agreement, in order to maintain each Fund's expense ratios at
the levels specified Schedule A attached hereto; and
NOW THEREFORE, the parties hereto agree that the Expense Limitation
Agreement provides as follows:
1. Expense Limitation.
1.1. Applicable Expense Limit. To the extent that the aggregate expenses of
every character incurred by a Fund in any fiscal year, including but
not limited to investment management fees of the Manager (but
excluding interest, taxes, brokerage commissions, other expenditures
which are capitalized in accordance with generally accepted accounting
principles, other extraordinary expenses not incurred in the ordinary
course of such Fund's business, and amounts, if any, payable pursuant
to a plan adopted in accordance with Rule 12b-1 under the 1940 Act)
("Fund Operating Expenses"), exceed the Operating Expense Limit, as
defined in Section 1.2 below, such excess amount (the "Excess Amount")
shall be the liability of the Manager.
1.2. Operating Expense Limit. The maximum Operating Expense Limit in any
year with respect to each Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of
each Fund.
1.3. Method of Computation. To determine the Manager's liability with
respect to the Excess Amount, each month the Fund Operating Expenses
for each Fund shall be annualized as of the last day of the month. If
the annualized Fund Operating Expenses for any month of a Fund exceed
the Operating Expense Limit of such Fund, the Manager shall first
waive or reduce its investment management fee for such month by an
amount sufficient to reduce the annualized Fund Operating Expenses to
an amount no higher than the 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 appropriate Fund or Funds an amount that, together with the waived
or reduced investment management fee, is sufficient to pay such Excess
Amount.
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 Fund or Funds with respect to the previous fiscal year
shall equal the Excess Amount.
2. Reimbursement of Fee Waivers and Expense Reimbursements.
2.1. Reimbursement. If in any year during which the total assets of a Fund
are greater than $10 million and in which the Management Agreement is
still in effect, the estimated aggregate Fund Operating Expenses of
such Fund for the fiscal year are less than the Operating Expense
Limit for that year, subject to quarterly approval by the Trust's
Board of Trustees as provided in Section 2.2 below, the Manager shall
be entitled to reimbursement by such Fund, in whole or in part as
provided below, of the investment management fees waived or reduced
and other payments remitted by the Manager to such Fund pursuant to
Section 1 hereof. The total amount of reimbursement to which the
Manager may be entitled (the "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 Fund, pursuant to Section 1 hereof, during any of the
previous five (5) fiscal years, less any reimbursement previously paid
by such Fund 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.
2.2. Board Approval. No reimbursement shall be paid to the Manager with
respect to any Fund pursuant to this provision in any fiscal quarter,
unless the Trust's Board of Trustees has determined that the payment
of such reimbursement is in the best interests of such Fund and its
shareholders. The Trust's Board of Trustees shall determine quarterly
in advance whether any reimbursement may be paid to the Manager with
respect to any Fund in such quarter.
2.3. Method of Computation. To determine each Fund's payments, if any, to
reimburse the Manager for the Reimbursement Amount, each month the
Fund Operating Expenses of each Fund shall be annualized as of the
last day of the month. If the annualized Fund Operating Expenses of a
Fund for any month are less than the Operating Expense Limit of such
Fund, such Fund, only with the prior approval of the Trust's Board of
Trustees, shall pay to the Manager an amount sufficient to increase
the annualized Fund Operating Expenses of that Fund to an amount no
greater than the Operating Expense Limit of that Fund, provided that
such amount paid to the Manager will in no event exceed the total
Reimbursement Amount.
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 Fund Operating
Expenses of a Fund for the prior fiscal year (including any
reimbursement payments hereunder with respect to such fiscal year) do
not exceed the Operating Expense Limit.
3. Term and Termination of Agreement.
This Agreement with respect to the Funds shall continue in effect on April
1, 1999, and from year to year thereafter provided each such continuance is
specifically approved by a majority of the Trustees of the Trust who (i)
are not "interested persons" of the Trust 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"). Nevertheless, 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 Trust, such action shall
be authorized by resolution of a majority of the Non-Interested Trustees of
the Trust or by a vote of a majority of the outstanding voting securities
of the Trust.
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. Nothing herein contained shall be deemed to require
the Trust or the Funds 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 Funds.
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.
BLUE RIDGE FUNDS TRUST
ON BEHALF OF EACH OF ITS SERIES
By:
COLONIAL ASSET MANAGEMENT, INC.
By:
SCHEDULE A
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds of the Trust:
Maximum Operating
Name of Fund Expense Limit
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Blue Ridge Total Return Fund 1.45%
