23(h)(3)
Expense Limitation Agreement
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, effective as of January 1, 2006, by and
between Transamerica Fund Advisors, Inc. (the "Investment Manager"), and
AEGON/Transamerica Series Trust (formerly, AEGON/Transamerica Series Fund, Inc.)
(the "Company"), on behalf of each series of the Company set forth in Schedule A
(each a "Fund," and collectively, the "Funds").
WHEREAS, the Company is a Delaware statutory 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 Company;
and
WHEREAS, the Company and the Investment Manager have entered into
investment advisory agreements on behalf of the Funds ("Management Agreements"),
pursuant to which the Investment Manager provides investment management services
to each Fund for compensation based on the value of the average daily net assets
of each such Fund; and
WHEREAS, the Company and the Investment 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 at a level below the level to which each such
Fund may normally be subject; and
WHEREAS, the Company and the Investment Manager wish to structure this
Expense Limitation Agreement in a manner consistent with the requirements of
Revenue Procedure 96-47, 1996-2 CB 338, and Revenue Procedure 99-40, I.R.B.
1999-46, 565 so as to avoid any possibility that any Fund is deemed to have paid
a preferential dividend, and in a manner consistent with the SEC's
interpretation of analogous requirements in Rule 18f-3(a) under the 1940 Act;
NOW, THEREFORE, the parties hereto agree as follows:
1. Expense Limitation.
1.1. Applicable Expense Limit. The Investment Manager agrees to reduce the
investment management fees payable to it pursuant to the Management Agreements
and make payments to the Funds to the extent necessary to limit the ordinary
operating expenses incurred by each Fund in any fiscal year, excluding interest,
taxes, 12b-1 fees, brokerage commissions, extraordinary expenses such as
litigation and other expenses not incurred in the ordinary course of such Fund's
business ("Fund Operating Expenses") to the Operating Expense Limit, as defined
in Section 1.2 below. For each Fund, any amount of Fund Operating Expenses above
the Operating Expense Limit (such excess amount, the "Excess Amount") shall be
the liability of the Investment Manager.
1.2. Operating Expense Limit. The Operating Expense Limit in any fiscal
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. Duration of Operating Expense Limit. The Operating Expense Limit with
respect to each Fund shall remain in effect until the date specified for that
Fund on Schedule A. The Investment Manager may extend, but may not during the
term of this Agreement shorten, the duration of the Operating Expense Limit for
any Fund by delivering a revised Schedule A to the Company reflecting such
extension. Such an extension must continue at the same (or lower) Operating
Expense Limit amount specified on Schedule A.
1.4. Method of Computation. This Expense Limitation Agreement shall in all
cases be interpreted in a manner consistent with the requirements of Revenue
Procedure 96-47, 1996-2 CB 338, and Revenue Procedure 99-40, I.R.B. 1999-46, 565
so as to avoid any possibility that any Fund is deemed to have paid a
preferential dividend. In the event of any conflict between any term of this
Expense Limitation Agreement and the previous sentence, the previous sentence
shall control.
Advisory fees and other expenses related to the management of the Company's
assets. Each Class of each Fund shall be allocated and shall pay an investment
management fee and other fees and expenses related to the management of the
Fund's assets (including custodial fees and tax return preparation fees) on the
basis of the net asset value of that Class in relation to the net asset value of
the Fund. The benefit of a waiver or reimbursement of any advisory fee and any
other fees and expenses related to the management of the Fund's assets
(including custodial fees and tax return preparation fees) shall be allocated to
all shares by net asset value, regardless of Class.
Other fees and expenses. Each Class of each Fund may be allocated and may
pay a different share of other fees and expenses, not including advisory or
custodial fees or other fees and expenses related to the management of the
Fund's assets, if these expenses are actually incurred in a different amount by
that Class, or if the Class receives services of a different kind or to a
different degree than other Classes.
Subject to the foregoing, to determine the Investment Manager's liability
with respect to the Excess Amount, each day the Fund Operating Expenses for each
Fund generally will be annualized as of that day. If the annualized Fund
Operating Expenses of a Fund as of that day exceed the Operating Expense Limit
of such Fund, the management fees payable to the Investment Manager that are
accrued that day generally will be waived in an amount sufficient to reduce the
Excess Amount so that the annualized Fund Operating Expenses as of that day
equal the Operating Expense Limit. If such waiver of management fees is not
sufficient to equal the Operating Expense Limit, the Fund will accrue a
receivable from the Investment Manager in an amount sufficient so that the
annualized Fund Operating Expenses equal to the Operating Expense Limit.
In case a Fund needs to accrue such receivables from the Investment Manager
during any month, the Fund will inform the Investment Manager about the Excess
Amount owed to the Fund for that month and the Investment Manager will remit to
the Fund promptly after the end of the month an amount that, together with
already waived management fees, is sufficient to pay that month's Excess Amount.
1.5. Periodic Adjustments. As necessary, daily, monthly and annual
adjustments, accruals or payments will be made by the appropriate party to
ensure that the amount of the management fees waived and payments remitted to a
Fund by the Investment Manager equal the Excess Amount for any Fund fiscal year
during the duration of this Agreement.
2. Reimbursement of Fee Waivers and Expense Reimbursements.
If on any day or month, the estimated annualized Fund Operating Expenses of
the funds listed in Schedule B as of that day or month are less than the
Operating Expense Limit as of that day or month, the Investment Manager shall be
entitled to reimbursement by such Fund of the investment management fees waived
or reduced and other payments remitted by the Investment Manager to such Fund
pursuant to Section I hereof during any of the previous thirty-six (36) months
beginning with the effective date of this Agreement (the "Reimbursement
Amount"), to the extent that the annualized Fund Operating Expenses plus the
amount so reimbursed equals, as of such day or month, the Operating Expense
Limit provided in Schedule A, provided that such amount paid to the Investment
Manager will in no event exceed the total Reimbursement Amount and will not
include any amounts previously reimbursed. The Reimbursement Amount may not
include any additional charge or fees, such as interest accruable on the
Reimbursement Amount. Amounts so reimbursed shall be allocated to the oldest
Reimbursement Amount during the previous thirty-six (36) months until fully
reimbursed, and thereafter, to the next oldest Reimbursement Amount, and so
forth. Periodic adjustments to the Reimbursement Amount and related
reimbursement may be made by the Fund, as necessary to ensure that the amount of
Fund Operating Expenses during any Fund fiscal year never exceed the Operating
Expense Limit during that fiscal year.
3. Term and Termination of Agreement.
Unless the Investment Manager has extended the duration of the Operating
Expense Limit with respect to a Fund pursuant to Section 1.3 of this Agreement,
this Agreement shall automatically renew effective April 30 of every year for
one-year terms until such time as the Investment Manager provides written notice
of non-renewal past the then-current term. In addition, this Agreement shall
terminate with respect to a Fund upon termination of the Investment Management
Agreement of that Fund.
4. Miscellaneous.
4.1. Multiple Class Plan. In case a Fund has multiple classes of shares,
any amount of fees or expenses waived, paid or reimbursed pursuant to the terms
of this Agreement shall be allocated among the classes of shares of the Fund in
accordance with the terms of the Fund's multiple class plan pursuant to Rule
18f-3 under the 1940 Act.
4.2. 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 Company or the Funds to take any action contrary to the Company'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 Company's Board of Trustees of its responsibility for and control of
the conduct of the affairs of the Company 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.
This Agreement supersedes all prior written agreements between the parties
relating to the subject matter hereof, and all such prior agreements are deemed
terminated upon the effectiveness of this Agreement.
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.
TRANSAMERICA FUND ADVISORS, INC.
By: /s/ T. Xxxxxxx Xxxxxxx, XX
------------------------------------
T. Xxxxxxx Xxxxxxx, XX
Vice President
AEGON/TRANSAMERICA SERIES TRUST
By: /s/ Xxxxx X. Xxxxxxxxx
------------------------------------
Xxxxx X. Xxxxxxxxx
Vice President and Principal
Financial Officer
SCHEDULE A
AEGON/TRANSAMERICA SERIES TRUST
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds of the Company:
MAXIMUM OPERATING
EXPENSE LIMIT
FUND NAME EFFECTIVE THROUGH EXPENSE LIMIT
--------- ----------------- -------------
AEGON Bond April 30, 2006 0.70%
American Century International April 30, 2006 1.125%
American Century Large Company Value April 30, 2006 1.35%
Asset Allocation - Conservative Portfolio April 30, 2006 0.25%
Asset Allocation - Growth Portfolio April 30, 2006 0.25%
Asset Allocation - Moderate Portfolio April 30, 2006 0.25%
Asset Allocation - Moderate Growth Portfolio April 30, 2006 0.25%
Capital Guardian Global April 30, 2006 1.32%
Capital Guardian U.S. Equity April 30, 2006 1.01%
Capital Guardian Value April 30, 2006 0.87%
Clarion Global Real Estate Securities April 30, 2006 1.00%
Federated Growth & Income April 30, 2006 1.00%
Great Companies - America(SM) April 30, 2006 0.97%
Great Companies - Technology(SM) April 30, 2006 0.98%
X.X. Xxxxxx Enhanced Index April 30, 2006 0.84%
X.X. Xxxxxx Mid Cap Value April 30, 2006 1.00%
Janus Growth April 30, 2006 0.85%
Xxxxxxxx Growth April 30, 2006 0.94%
MFS High Yield April 30, 2006 1.05%
Xxxxxxx Growth April 30, 2006 1.00%
Mercury Large Cap Value April 30, 2006 1.00%
Munder Net50 April 30, 2006 1.00%
PIMCO Total Return April 30, 2006 1.20%
Salomon All Cap April 30, 2006 0.90%
X. Xxxx Price Equity Income April 30, 2006 0.88%
X. Xxxx Price Growth Stock April 30, 2006 0.89%
X. Xxxx Price Small Cap April 30, 2006 1.00%
Xxxxxxxxx Great Companies Global April 30, 2006 1.00%
Third Avenue Value April 30, 2006 1.00%
Transamerica Balanced April 30, 2006 1.40%
Transamerica Convertible Securities April 30, 2006 1.25%
Transamerica Equity April 30, 2006 0.85%
Transamerica Equity II April 30, 2006 0.30%
Transamerica Growth Opportunities April 30, 2006 1.15%
Transamerica Money Market April 30, 2006 0.57%
Transamerica Small/Mid Cap Value April 30, 2006 0.89%
Transamerica U.S. Government Securities April 30, 2006 0.63%
Transamerica Value Balanced April 30, 2006 1.00%
Xxx Xxxxxx Active International Allocation April 30, 2006 0.94%
Xxx Xxxxxx Emerging Growth April 30, 2006 1.00%
Xxx Xxxxxx Large Cap Core April 30, 2006 0.84%
SCHEDULE B
AEGON/TRANSAMERICA SERIES TRUST
FUNDS SUBJECT TO EXPENSE REIMBURSEMENT
FUND NAME
AEGON Bond
American Century International
American Century Large Company Value
Asset Allocation - Conservative Portfolio
Asset Allocation - Growth Portfolio
Asset Allocation - Moderate Portfolio
Asset Allocation - Moderate Growth Portfolio
Capital Guardian Global
Capital Guardian U.S. Equity
Capital Guardian Value
Clarion Global Real Estate Securities
Federated Growth & Income
Great Companies - America(SM)
Great Companies - Technology(SM)
X.X. Xxxxxx Enhanced Index
X.X. Xxxxxx Mid Cap Value
Janus Growth
Xxxxxxxx Growth
MFS High Yield
Xxxxxxx Growth
Mercury Large Cap Value
Munder Net50
PIMCO Total Return
Salomon All Cap
X. Xxxx Price Equity Income
X. Xxxx Price Growth Stock
X. Xxxx Price Small Cap
Xxxxxxxxx Great Companies Global
Third Avenue Value
Transamerica Balanced
Transamerica Convertible Securities
Transamerica Equity
Transamerica Equity II
Transamerica Growth Opportunities
Transamerica Money Market
Transamerica Small/Mid Cap Value
Transamerica U.S. Government Securities
Transamerica Value Balanced
Xxx Xxxxxx Active International Allocation
Xxx Xxxxxx Emerging Growth
Xxx Xxxxxx Large Cap Core
