OLD MUTUAL ADVISOR FUNDS
EXPENSE LIMITATION AGREEMENT
This EXPENSE LIMITATION AGREEMENT, effective as of _______, 2004, by
and between Old Mutual Advisor Funds (the "Trust"), on behalf of each portfolio
of the Trust set forth in Schedule A, Schedule C and Schedule I (each a
"Portfolio", and collectively, the "Portfolios"), and Old Mutual Capital, Inc.
(the "Adviser").
WHEREAS, the Trust is a Delaware statutory trust organized under an
Agreement and Declaration of Trust dated May 27, 2004 (the "Declaration of
Trust"), and is registered under the Investment Company Act of 1940, as amended
(the "1940 Act"), as an open-end management investment company of the series
type and each Portfolio is one of the series of the Trust; and
WHEREAS, the Trust currently maintains three (3) classes of shares for
each Portfolio, Class A, Class C and Institutional Class (each a "Class" and,
collectively, the "Classes"); and
WHEREAS, the Trust and the Adviser have entered into an Investment
Advisory Agreement (the "Advisory Agreement"), pursuant to which the Adviser
will render investment advisory services to each Portfolio for compensation
based on the value of the average daily net assets of each such Portfolio; and
WHEREAS, the Trust and the Adviser have determined that it is
appropriate and in the best interests of each Portfolio and its shareholders to
maintain certain expenses of each Class of each Portfolio at a level below the
level to which each such Class would normally be subject.
NOW, THEREFORE, intending to be legally bound, the parties hereto agree
as follows:
1. EXPENSE LIMITATION.
1.1 APPLICABLE EXPENSE LIMIT. To the extent that the aggregate expenses
incurred by each Class of a Portfolio in a fiscal year, including but not
limited to investment advisory fees of the Adviser and fees and expenses
incurred under the Trust's Distribution Plan (Class A Shares), Distribution Plan
(Class C shares), and Service Plan (Class A and Class C shares) (but excluding:
(i) interest, taxes, brokerage commissions, and other expenditures which are
capitalized in accordance with generally accepted accounting principles; and
(ii) other extraordinary expenses not incurred in the ordinary course of such
Portfolio's business) ("Class Expenses"), exceed the Expense Limit, as defined
in Section 1.2 below, such excess amount (the "Excess Amount") shall be the
liability of the Adviser.
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1.2 EXPENSE LIMIT. The Expense Limit for the Class A, Class C and
Institutional Class shares of a Portfolio shall be as set forth in Schedule A,
Schedule B and Schedule I, respectively, or such other rate as may be agreed to
in writing by the parties from time to time.
1.3 METHOD OF COMPUTATION. To determine the Adviser's liability with
respect to the Excess Amount, each month the Class Expenses for each Class of
each Portfolio shall be annualized as of the last day of the month. If the
annualized Class Expenses for any month of a Class of a Portfolio exceed the
Expense Limit of such Class, the Adviser shall first waive or reduce its
investment management fee for such month for the affected Portfolio or
Portfolios by an amount sufficient to reduce the annualized Class Expenses to an
amount no higher than the Expense Limit. If the amount of the waived or reduced
investment advisory fee for any such month is insufficient to pay the Excess
Amount, the Adviser may also remit to the appropriate Portfolio or Portfolios an
amount that, together with the waived or reduced advisory 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 advisory fees waived or
reduced and other payments remitted by the Adviser to the Portfolio or
Portfolios 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
Portfolio are greater than $75 million and in which the Advisory Agreement is
still in effect, the estimated Class Expenses of any Class of such Portfolio for
the fiscal year are less than the corresponding Expense Limit for that year,
subject to quarterly approval by the Trust's Board of Trustees as provided in
Section 2.2 below, the Adviser shall be entitled to reimbursement by such
Portfolio, in whole or in part as provided below, of the advisory fees waived or
reduced and other payments remitted by the Adviser to such Portfolio pursuant to
Section 1 hereof. The total amount of reimbursement to which the Adviser may be
entitled (the "Reimbursement 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) fiscal years, less any reimbursement
previously paid by such Portfolio to the Adviser, 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 Adviser
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 the Portfolio or Portfolios and their respective shareholders. The
Trust's Board of Trustees shall determine quarterly in advance whether any
reimbursement may be paid to the Adviser in such quarter.
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2.3 METHOD OF COMPUTATION. To determine each Portfolio's payments, if
any, to reimburse the Adviser for the Reimbursement Amount, each month the Class
Expenses of each Class of each Portfolio shall be annualized as of the last day
of the month. If the annualized Class Expenses of a Class of a Portfolio for any
month are less than the Expense Limit of such Class, such Portfolio, only with
the prior approval of the Board, shall pay to the Adviser an amount sufficient
to increase the annualized Class Expenses of that Class of a Portfolio to an
amount no greater than the Expense Limit of that Class of a Portfolio, provided
that such amount paid to the Adviser 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 Class Expenses of a Portfolio for the
prior fiscal year (including any reimbursement payments hereunder with respect
to such fiscal year) do not exceed the Expense Limit.
3. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from
the date of its execution and from year to year thereafter provided 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 as to any Class of
any one or all Portfolios 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 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. This Agreement shall be construed in accordance
with the laws of the State of Delaware without reference to conflicts of law
rules. Nothing herein contained shall be deemed to require the Trust or any
Portfolio 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, the Portfolios or the Classes.
4.3 DEFINITIONS. Any questions of interpretation of any term or
provision of this Agreement, including but not limited to the investment
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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, as of the day and year
first above written.
OLD MUTUAL ADVISOR FUNDS
on behalf of each of the
Portfolios listed on Schedule A, Schedule C
and Schedule I
By:
------------------------------------------------
OLD MUTUAL CAPITAL, INC.
By:
------------------------------------------------
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SCHEDULE A
DATED __________, 2004
TO
EXPENSE LIMITATION AGREEMENT
BETWEEN
OLD MUTUAL ADVISOR FUNDS
AND
OLD MUTUAL CAPITAL, INC.
DATED _______, 2004
(CLASS A SHARES)
Expense
Limit
This Agreement relates to the following Portfolios of the Trust:
OM Asset Allocation Conservative Portfolio 1.50%
OM Asset Allocation Balanced Portfolio 1.55%
OM Asset Allocation Moderate Portfolio 1.55%
OM Asset Allocation Growth Portfolio 1.60%
SCHEDULE C
DATED __________, 2004
TO
EXPENSE LIMITATION AGREEMENT
BETWEEN
OLD MUTUAL ADVISOR FUNDS
AND
OLD MUTUAL CAPITAL, INC.
DATED ________, 2004
(CLASS C SHARES)
Expense
Limit
This Agreement relates to the following Portfolios of the Trust:
OM Asset Allocation Conservative Portfolio 2.25%
OM Asset Allocation Balanced Portfolio 2.30%
OM Asset Allocation Moderate Portfolio 2.30%
OM Asset Allocation Growth Portfolio 2.35%
SCHEDULE I
DATED __________, 2004
TO
EXPENSE LIMITATION AGREEMENT
BETWEEN
OLD MUTUAL ADVISOR FUNDS
AND
OLD MUTUAL CAPITAL, INC.
DATED ________, 2004
(INSTITUTIONAL CLASS SHARES)
Expense
Limit
This Agreement relates to the following Portfolios of the Trust:
OM Asset Allocation Conservative Portfolio 1.25%
OM Asset Allocation Balanced Portfolio 1.30%
OM Asset Allocation Moderate Portfolio 1.30%
OM Asset Allocation Growth Portfolio 1.35%
