EXPENSE LIMITATION AGREEMENT
VONTOBEL FUNDS, INC.
This EXPENSE LIMITATIONAGREEMENT, effective as of ___________, 1999 is by
and between Vontobel USA, Inc. (the "Advisor") and Vontobel Funds, Inc. (the
"Fund"), on behalf of each series of the Fund set forth in Schedule A attached
to this Agreement (each a "Portfolio", and collectively, the "Portfolios").
WHEREAS the Fund is a corporation organized under the Maryland General
Corporations Law, and is registered under the Investment Company Act of 1940
(the "1940 Act") as an open-end management company of the series type (each
Portfolio being a series of the Fund); and
WHEREAS the Fund and the Advisor have entered into an Investment Advisory
Agreements, as amended ("Advisory Agreements"), pursuant to which the Advisor
provides investment advisory services to each Portfolio for compensation based
on the value of the average daily net assets of each Portfolio; and
WHEREAS the Fund and the Advisor have determined that it is appropriate and
in the best interests of each Portfolio and its shareholders to maintain the
expenses of each Portfolio at a level below the level to which a Portfolio might
otherwise be subject;
NOW, THEREFORE, the parties to this Agreement acknowledge and agree to the
following:
1. Expense Limitation
1.1 Operating Expense Limit. The maximum Operating Expense Limit in any
year with respect to each Portfolio is the amount specified in Schedule A, which
is based on a percentage of the average daily net assets of each Portfolio.
1.2 Applicable Expense Limit. To the extent that the aggregate expenses
incurred by a Portfolio in any fiscal year (referred to as "Portfolio Operating
Expenses") exceed the Operating Expense Limit, the excess amount ("Excess
Amount") will be the liability of the Advisor. Portfolio Operating Expenses may
include, but are not limited to, investment advisory fees of the Advisor.
Portfolio Operating expenses do not include interest, taxes, brokerage
commissions, other expenditures capitalized in accordance with generally
accepted accounting principles, and other extraordinary expenses not incurred in
the ordinary course of such Portfolio's business.
1.3 Method of Computation. To determine the Advisor's liability with
respect to the Excess Amount, each month the Portfolio Operating Expenses for
each Portfolio will be annualized as of the last day of the month. If the
annualized Portfolio Operating expenses of a Portfolio exceed the Operating
Expense Limit of the Portfolio for the month, the Advisor will remit to the
appropriate Portfolio an amount sufficient to reduce the annualized Portfolio
Operating Expenses Limit.
1.4 Year-End Adjustment. If necessary, on or before the last day of the
first month of each fiscal year, an annual adjustment
payment will be made by the appropriate party in order that the amount of the
investment advisory fees waived or reduced by the Advisor, as well as other
payments remitted by the Advisor to the Portfolio(s) with respect to adjustments
made to the Portfolio Operating Expenses for the previous fiscal year, shall
equal the Excess Amount for the entire fiscal year.
2. Reimbursement of Fee Waivers and Expense Reimbursements
2.1 Reimbursement. If during any quarter in which the Advisory Agreement is
still in effect, the estimated aggregate Portfolio Operating Expenses of a
Portfolio for the quarter are less than the Operating Expense Limit for that
quarter, the Advisor will be entitled to reimbursement of fees waived or
remitted by the Advisor to the Portfolio pursuant to Section 1 of this
Agreement. The total amount of reimbursement recoverable by the Advisor (the
"Reimbursement Amount") is the sum of all fees previously waived or remitted by
the Advisor to the Portfolio during any of the previous five (5) years, pursuant
to Section 1of this Agreement, less any reimbursement previously paid by a
Portfolio to the Advisor with respect to any waivers, reductions, and payments
made with respect to a Portfolio; provided, that the amount payable to the
Advisor pursuant to this Section 2.1 is limited to not more than the difference
between the Operating Expense Limit for the quarter and the actual Portfolio
Operating Expenses for that quarter. The Reimbursement Amount may not include
any additional charges or fees, such as interest accruable on the Reimbursement
Amount.
2.2 Board Approval. No Reimbursement Amount will be paid to the Advisor in
any fiscal quarter unless the Fund's Board of Directors has determined that a
reimbursement is in the best interest of the Portfolio and its shareholders. The
Fund's Board of Directors will determine quarterly in advance whether any
Reimbursement Amount may be paid to the Advisor during the quarter.
3. Term and Termination of Agreement.
This Agreement with respect to the Portfolios listed in Schedule A will
continue in effect until May 1, 2001, and from year to year thereafter provided
that each continuance is specifically approved by a majority of the Directors of
the Fund who (i) are not "interested persons" of the Fund 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 ("Independent Directors").
Nevertheless, this Agreement may be terminated by either party to the Agreement,
without payment of any penalty, upon ninety (90) days prior written notice to
the other party at its principal place of business. Action to terminate the
Agreement must be authorized by resolution of a majority of the Independent
Directors of the Fund or by a vote of a majority of the outstanding voting
securities of the Fund.
4. Miscellaneous.
4.1 Captions. The captions in this Agreement are included for convenience
of reference only and do not define or delineate any of the provisions of the
Agreement, or otherwise affect their construction or effect.
4.2 Interpretation. Nothing in this Agreement requires the Fund or the
Portfolio to take any action contrary to the Fund's Articles of Incorporation,
Bylaws, or any applicable statutory or regulatory requirement to which the Fund
or Portfolios are subject, nor does this Agreement relieve or deprive the Fund's
Board of Directors of its responsibility for and control of the conduct of the
affairs of the Fund or the Portfolios.
4.3 Definitions. Any questions of interpretation of any term or provision
of this Agreement has the same meaning and is to be resolved by reference to,
the 1940 Act and the Advisory Agreement between the parties.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed by
their respective duly authorized officers, and have caused their respective
corporate seals to be affixed to this Agreement as of the day and year first
above written.
VONTOBEL FUNDS, INC.
By: _____________________________
Xxxx Xxxxx, III
Chairman
VONTOBEL USA, INC.
By: ____________________________
Xxxxx Xxxxxxxx
President
