Exhibit (h)(5)(K)
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT ("Agreement"), effective as of 1st day
of June, 2002, by and between LSA Variable Series Trust, a Delaware business
trust (the "Trust"), on behalf of the Mid Cap Value Fund (the "Fund"), and LSA
Asset Management LLC, a Delaware limited liability company (the "Manager").
W I T N E S S E T H:
WHEREAS, the Trust, on behalf of the Fund, and the Manager have
entered into a Management Agreement ("Management Agreement"), pursuant to which
the Manager renders investment management and administration services to the
Fund for compensation based on the value of the average daily net assets of the
Fund; and
WHEREAS, the Trust and the Manager have determined that it is
appropriate and in the best interests of the Fund and its shareholders to
maintain Fund expenses at a level below that to which the Fund would normally be
subject during the term of this Agreement.
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMIT.
1.1. LIMITATION. To the extent that the aggregate expense
of every character incurred by the Fund during the term of this
Agreement including, but not limited to, investment management and
administration fees of the Manager (but excluding interest, taxes,
brokerage commissions, and other expenditures which are capitalized
in accordance with generally accepted accounting principles, and
other extraordinary expenses not incurred in the ordinary course of
the Fund's business) ("Fund Operating Expenses"), exceeds the
"Expense Limit," which is 1.15% of the average daily net assets of
the Fund, such excess amount ("Excess Amount") shall be the liability
of the Manager.
1.2. METHOD OF COMPUTATION. To determine the Manager's
liability for the Excess Amount, the Fund Operating Expenses shall be
annualized monthly as of the last day of the month. If the annualized
Fund Operating Expenses for any month exceed 1/12th of the Expense
Limit, the Manager shall first waive or reduce its investment
management and administration fee for such month, as appropriate, to
the extent necessary to pay such Excess Amount. In the event the
Excess Amount exceeds the amount of the investment management and
administration fee for such month, the Manager, in addition to
waiving its entire investment management and administration fee for
such month, shall also remit to the Fund the difference between the
Excess Amount and the amount due as the investment management and
administration fee. Notwithstanding anything contained herein to the
contrary, if the Fund participates in one or more commission
recapture programs ("Recapture Programs"), the Excess Amount shall
be determined after the receipt by the Fund of any amount(s) received
through the Recapture Programs and the subsequent payment by the Fund
of custodian and transfer agent expenses in a like amount.
1.3. YEAR-END ADJUSTMENT. If necessary, on or before the
last day of the first month following the termination of this
Agreement, or as soon as practicable thereafter, an adjustment
payment shall be made by the appropriate party in order to ensure
that the actual Fund Operating Expenses for the period covered by
this Agreement (including any reimbursement payments made under
Section 2 of this Agreement) do not exceed the Expense Limit.
2. REIMBURSEMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1. REIMBURSEMENT. If, in any year in which the Management
Agreement remains in effect, estimated aggregate Fund Operating
Expenses for the fiscal year are less than the Expense Limit for that
year, the Manager shall be entitled to reimbursement by the
Portfolio, in whole or in part as provided below, of the investment
management and administration fees waived or reduced, and other
payments remitted by the Manager to the Fund pursuant to Section 1
hereof. The total amount of reimbursement to which the Manager may be
entitled ("Reimbursement Amount") shall equal, at any time, the sum
of all investment management and administration fees waived or
reduced by the Manager, and all other payments, if any, remitted by
the Manager to the Fund pursuant to Section 1 hereof, commencing with
the effective date of this Agreement and continuing through each of
the next three (3) fiscal years, less any reimbursement paid from
time to time by the Fund to the Manager pursuant to this Agreement
with respect to such waivers, reductions, and payments. The
Reimbursement Amount, and any portion thereof, shall not include any
additional charges or fees whatsoever including, but not limited to,
interest accruable on the Reimbursement Amount.
2.2. METHOD OF COMPUTATION. To determine the amount of the
Fund's payment, if any, to reimburse the Manager for the
Reimbursement Amount, each month Fund Operating Expenses shall be
annualized as of the last day of the month. If the annualized Fund
Operating Expenses for any month are less than the Expense Limit, the
Fund shall pay to the Manager an amount sufficient to increase the
annualized Fund Operating Expenses to an amount no greater than the
Expense Limit, provided that such amount paid to the Manager will in
no event exceed the Reimbursement Amount.
2.3. YEAR-END ADJUSTMENT. If necessary, on or before the
last day of the first month of each succeeding fiscal year, or as
soon as practicable thereafter, an adjustment payment shall be made
by the appropriate party in order to ensure that the actual Fund
Operating Expenses for the prior fiscal year (including any
reimbursement payments made hereunder with respect to such fiscal
year) do not exceed the Expense Limit.
3. TERMINATION OF AGREEMENT. This Agreement shall continue
in effect until the earlier of (a) the termination of the Management
Agreement; or (b) April 30, 2003.
2
4. MISCELLANEOUS.
4.1. NOTICES. Any notice under this Agreement shall be
given in writing, addressed and delivered, or mailed postpaid, (a) if
to the Manager, to LSA Asset Management LLC, 0000 Xxxxxxx Xxxx, Xxxxx
X0X, Xxxxxxxxxx, Xxxxxxxx, 00000; and (b) if to the Trust, at the
foregoing office of the Manager.
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.
4.3. INTERPRETATION. Nothing herein contained shall be
deemed to require the Trust to take any action contrary to its
Agreement and 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 Board of Trustees of
its responsibility for and control of the conduct of the affairs of
the Trust.
4.4. SURVIVAL OF COVENANTS. The covenants made herein by
the parties shall survive any termination of this Agreement.
4.5. DEFINITIONS. Any question of interpretation of any
term or provision of this Agreement including, but not limited to,
the investment management and administration 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, shall have the same meaning as and be
resolved by reference to such Agreement.
4.6. AMENDMENT. This Agreement may be amended or
modified only upon the written consent of the parties hereto.
4.7. GOVERNING LAW. Except insofar as the Investment
Company Act of 1940, as amended, or other federal laws and
regulations may be controlling, this Agreement shall be governed by,
and construed and enforced in accordance with, the laws of the State
of Delaware.
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.
LSA VARIABLE SERIES TRUST, ON BEHALF OF
THE MID CAP VALUE FUND
By: /s/ Xxxx X. Xxxxxx
------------------
Title: President
3
LSA ASSET MANAGEMENT LLC
By: /s/ Xxxxxxxx X. Xxxxxxx
-----------------------
Title: Chief Operations Officer
4
