Exhibit (h)(4)
FORM OF
EXPENSE LIMITATION AGREEMENT
This EXPENSE LIMITATION AGREEMENT, effective as of May, 11, 2001, is made
by and among ING Pilgrim Investments, LLC (the "Investment Manager"); USLICO
Series Fund (the "Trust"), on behalf of the series of the Trust set forth in
Schedule A (collectively, the "Funds" and each, a "Fund"); and ReliaStar
Financial Corp. ("ReliaStar").
WHEREAS, the Trust is a Massachusetts business trust, 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 Trust and the Investment Manager have entered into an
Investment Management Agreement dated May 11, 2001 ("Management Agreement"),
pursuant to which the Investment Manager provides investment management services
to the Trust for compensation as agreed by the Trust and the Investment Manager,
and such compensation is based on the value of the Trust's average daily net
assets ("Management Fee"); and
WHEREAS, the Trust offers its shares as a funding vehicle for variable
life insurance policies ("Variable Policies") issued by insurance companies that
are wholly-owned subsidiaries of ReliaStar Financial Corp.; and
WHEREAS, prior to the time the proceeds of the Variable Policies were
invested in the Trust, they were managed in separate accounts of the sponsoring
insurance companies, and the terms of the Variable Policies specify an
investment advisory fee that is to be charged, which is an annual rate of 0.25%
of each Fund of the Trust ("Policy Limit");
WHEREAS, ReliaStar wishes to continue to honor the Policy Limit;
WHEREAS, the Trust and the Investment Manager have determined that it is
appropriate and in the best interests of each of the Funds and their
shareholders to maintain the ordinary operating expenses of each Fund at a level
below the level to which each Fund would otherwise be subject;
NOW, THEREFORE, the parties hereto agree as follows:
1. Expense Limitation.
1.1. Management Fee Limit. To the extent that in any fiscal year the Management
Fee of any Fund exceeds the Policy Limit, such excess amount shall be the
liability of ReliaStar and ReliaStar will pay to the Investment Manager, on a
monthly basis, such excess amount ("Difference").
1.2. Other Expenses Limit. To the extent that the Other Expenses incurred by a
Fund in any fiscal year exceed the Maximum Other Expenses Limit, as defined in
Section 1.3 below, such excess amount (the "Excess Amount") shall be the
liability of the Investment Manager. Other
Expenses means all of the expenses incurred by each Fund, but excluding
Management Fees, interest, taxes, brokerage commissions, other
investment-related costs (including without limitation legal fees incurred in
connection with the purchase and sale of Trust assets), extraordinary expenses
such as litigation, other expenses not incurred in the ordinary course of the
Trust's business, and expenses of any counsel or other persons or services
retained by the Trust's Trustees who are not "interested persons," as that term
is defined in the 1940 Act, of the Investment Manager.
1.3. Maximum Other Expenses Limit. The Maximum Other Expenses Limit in any
fiscal year with respect to each class of the Trust shall be the amount
specified in Schedule A.
1.4. Method of Computation. To determine:
1.4.1. ReliaStar's obligation with respect to the Difference, the amount
of the Management Fee and the Portfolio Limit shall be calculated
and annualized each day for each Fund, and the Difference for each
Fund will be a liability of ReliaStar to the Investment Manager.
1.4.2. the Investment Manager's obligation with respect to the Excess
Amount, the daily amount of the Maximum Operating Expenses Limit
for each Fund shall be calculated, and the cumulative Other
Expenses for the current fiscal year shall be annualized. If the
annualized cumulative Other Expenses for any day of a Fund exceeds
the Maximum Other Expenses Limit for that Fund as of that day, the
Fund shall record a receivable from the Investment Manager for the
difference. Not less frequently than quarterly, this receivable
shall be paid by the Investment Manager.
1.5. Year-End Adjustment for Excess Amount. 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 payments remitted by the
Investment Manager to each Fund with respect to the previous fiscal year shall
equal the Excess Amount.
2. Recoupment of Other Expense Reimbursements.
2.1. Recoupment. If, on any day during which the Management Agreement is in
effect, the annualized cumulative Other Expenses of a Fund for that day are less
than the Maximum Other Expenses Limit, the Investment Manager shall be entitled
to recoup from such Fund the payments remitted by the Investment Manager to such
Fund pursuant to Section 1 hereof (the "Recoupment Amount") during any of the
previous thirty-six (36) months, to the extent that such Fund's annualized
cumulative Other Expenses plus the amount recouped equals, for such day, the
Maximum Other Expenses Limit provided in Schedule A, provided that such amount
paid to the Investment Manager will in no event exceed the total Recoupment
Amount and will not include any amounts previously recouped.
2.2. Year-End Adjustment of Other Expenses. 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 Other Expenses of each Fund
for the prior fiscal year (including any
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recoupment payments hereunder with respect to such fiscal year) do not exceed
the Other Expenses Limit.
3. Term and Termination of Agreement.
This Agreement shall have an initial term through May 1, 2002. Thereafter,
this Agreement shall automatically renew for one-year terms unless the
Investment Manager provides written notice of the termination of this Agreement
to the Trust at least 30 days prior to the end of the then-current term. In
addition, this Agreement shall terminate upon termination of the Management
Agreement, or it may be terminated by the Trust, without payment of any penalty,
upon ninety (90) days' prior written notice to the Investment Manager at its
principal place of business.
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 to take any action contrary to the Trust's Agreement and Declaration of
Trust or Bylaws, 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.
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.
4.4. Amendments. This Agreement may be amended only by a written agreement
signed by each of the parties hereto.
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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.
USLICO SERIES FUND
By:
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Xxxxxx X. Naka, Senior Vice President
RELIASTAR FINANCIAL CORP.
By:
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ING PILGRIM INVESTMENTS, LLC
By:
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Xxxxxxx X. Xxxxxx, Senior Vice President
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SCHEDULE A
OPERATING EXPENSE LIMITS
Maximum Other Expenses Limit
(as a % of average daily net assets)
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Stock Portfolio 0.65%
Bond Portfolio 0.65%
Money Market Portfolio 0.65%
Asset Allocation Portfolio 0.65%
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