EXHIBIT (h)(3)
RESTATED EXPENSE LIMITATION AGREEMENT
USLICO SERIES FUND
This RESTATED EXPENSE LIMITATION AGREEMENT (this "Agreement"),
effective this 1st day of August 2003, restates the Expense Limitation Agreement
dated May 11,2001 by and between ING Investments, LLC (the "Investment Manager")
and USLICO Series Fund (the "Registrant"). If Registrant is a series fund
investment company, then Registrant is entering into this Agreement on behalf
of, and this Agreement shall apply to, each series of Registrant set forth on
Schedule A hereto (each a "Fund," collectively the "Funds"), as such schedule
may be amended from time to time to add or delete series. If the Registrant is
not a series fund investment company, then this Agreement shall apply to the
Registrant, and the use of the terms "Fund" or "Funds" herein shall refer to the
Registrant.
WHEREAS, the Registrant is registered under the Investment Company Act
of 1940, as amended (the "1940 Act"), as an open-end management company; and
WHEREAS, the Registrant and the Investment Manager desire that the
provisions of this Agreement do not adversely affect a Fund's status as a
"regulated investment company" under Subchapter M of the Internal Revenue Code
of 1986, as amended (the "Code"), do not interfere with a Fund's ability to
compute its taxable income under Code Section 852, do not adversely affect the
status of the distributions a Fund makes as deductible dividends under Code
Section 562, and do comply with the requirements of Revenue Procedure 99-40 (or
any successor pronouncement of the Internal Revenue Service); and
WHEREAS, the Registrant and the Investment Manager have entered into an
investment management agreement (the "Management Agreement"), pursuant to which
the Investment Manager provides investment advisory services to each Fund; and
WHEREAS, the Registrant and the Investment Manager have determined that
it is appropriate and in the best interests of the Funds and their shareholders
to maintain the expenses of each Fund at a level below the level to which each
such Fund might otherwise be subject.
NOW, THEREFORE, the parties hereto agree as follows:
1. Expense Limitation.
1.1 Applicable Expense Limit. To the extent that the ordinary
operating expenses, including but not limited to investment advisory fees
payable to the Investment Manager, but excluding interest, taxes, other
investment-related costs, leverage expenses (as defined below), extraordinary
expenses such as litigation, other expenses not incurred in the ordinary course
of such Fund's business, and expenses of any counsel or other persons or
services retained by such Fund's trustees who are not "interested persons," as
that term is defined in the 1940 Act, of the Investment Manager (the "Fund
Operating Expenses"), incurred by a class of a Fund listed on SCHEDULE A in any
fiscal year exceed the Operating Expense Limit, as defined in Section 1.2 below,
for such class for such fiscal year, such excess amount (the "Excess Amount")
shall be the liability of the Investment Manager. For the purposes of this
Agreement, leverage expenses shall mean fees, costs and expenses incurred by a
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Fund's use of leverage (including, without limitation, expenses incurred by a
Fund in creating, establishing and maintaining leverage through borrowings or
the issuance of preferred shares).
1.2 Operating Expense Limit. The Operating Expense Limit in any
fiscal year with respect to each class of a Fund shall be the amount specified
in SCHEDULE A.
1.3 Daily Computation. The Investment Manager shall determine on
each business day whether the aggregate fiscal year to date Fund Operating
Expenses for any class of a Fund exceed the Operating Expense Limit, as such
Operating Expense Limit has been pro-rated to the date of such determination
(the "Pro-Rated Expense Cap"). If, on any business day, the aggregate fiscal
year to date Fund Operating Expenses for any class of a Fund do not equal the
Pro-Rated Expense Cap for that class, the amount of such difference shall be
netted against the previous day's accrued amount for Excess Amounts or
Recoupment Amounts (as defined below), and the difference shall be accrued for
that day as an Excess Amount or Recoupment Amount as applicable.
1.4 Payment. At the end of each month, the accruals made pursuant
to Section 1.3 above shall be netted, and the result shall be remitted by the
Investment Manager to the Fund if such netting results in an Excess Amount, and
it shall be remitted to the Investment Manager if such netting results in a
Recoupment Amount and the Investment Manager is entitled to a Recoupment Amount
pursuant to Section 2.1 below. Any such amounts remitted to a Fund, or repaid by
a Fund, shall be allocated among the classes of the Fund in accordance with the
terms of the Fund's Multiple Class Plan Pursuant to Rule 18f-3 under the 1940
Act. The Registrant may offset amounts owed to a Fund pursuant to this Agreement
against the Fund's advisory fee payable to the Investment Manager.
2. Right to Recoupment. If the Investment Manager has waived or reduced
any investment advisory fees, or made any payments pursuant to Section 1.4
above, relating to any of the 36 months immediately preceding any month end
calculation pursuant to Section 1.4 above, the Investment Manager shall be
entitled to recoup from a Fund any such investment advisory fees waived or
reduced and any such payments made (collectively, a "Recoupment Amount"), if (i)
on the date of any calculation under Section 1.3, the aggregate fiscal year to
date Fund Operating Expenses for any class of a Fund are less than that day's
Pro-Rated Expense Cap for that class, and (ii) such Recoupment Amounts have not
already been recouped. Any amounts recouped from a class of a Fund shall be
recouped in accordance with the principles of the Fund's Multiple Class Plan
Pursuant to Rule 18f-3 under the 1940 Act. Amounts recouped shall be allocated
to the oldest Recoupment Amounts during such 36-month period until fully
recouped, and thereafter to the next oldest Recoupment Amounts, and so forth.
3. Term and Termination. This Agreement shall have an initial term with
respect to each Fund ending on the date indicated on SCHEDULE A, as such
schedule may be amended from time to time. Thereafter, this Agreement shall
automatically renew for one-year terms with respect to a Fund unless the
Investment Manager provides written notice of the termination of this Agreement
to a lead Independent Trustee of the Registrant within 90 days of the end of the
then current term for that Fund. In addition, this Agreement shall terminate
with respect to a Fund upon termination of the Management Agreement with respect
to such Fund, or it may be terminated by the Registrant, without payment of any
penalty, upon written notice to the Investment Manager at its principal place of
business within 90 days of the end of the then current term for a Fund.
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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 shall be deemed to require the
Registrant or a Fund to take any action contrary to the Registrant's articles of
incorporation, declaration of trust, or similar governing document, an
applicable prospectus or statement of additional information, or any applicable
statutory or regulatory requirement, or to relieve or deprive the Registrant's
board of directors/trustees of its responsibility for and control of the conduct
of the affairs of the Registrant 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.
4.4 Amendments. This Agreement may be amended only by a written
agreement signed by each of the parties hereto.
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 ING INVESTMENTS, LLC
By: /s/ Xxxxxx X. Naka By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxx X. Naka Name: Xxxxxxx X. Xxxxxx
Senior Vice President Executive Vice President
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