EX-23.(H)(3) 15 g05666aexv23wxhyx3y.txt EX-23.(H)(3) EXPENSE LIMITATION AGREEMENT 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. Gregory Reymann, II ------------------------------------ T. Gregory Reymann, II Vice President AEGON/TRANSAMERICA SERIES TRUST By: /s/ Glenn E. Brightman ------------------------------------ Glenn E. Brightman 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% J.P. Morgan Enhanced Index April 30, 2006 0.84% J.P. Morgan Mid Cap Value April 30, 2006 1.00% Janus Growth April 30, 2006 0.85% Jennison Growth April 30, 2006 0.94% MFS High Yield April 30, 2006 1.05% Marsico 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% T. Rowe Price Equity Income April 30, 2006 0.88% T. Rowe Price Growth Stock April 30, 2006 0.89% T. Rowe Price Small Cap April 30, 2006 1.00% Templeton 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% Van Kampen Active International Allocation April 30, 2006 0.94% Van Kampen Emerging Growth April 30, 2006 1.00% Van Kampen 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) J.P. Morgan Enhanced Index J.P. Morgan Mid Cap Value Janus Growth Jennison Growth MFS High Yield Marsico Growth Mercury Large Cap Value Munder Net50 PIMCO Total Return Salomon All Cap T. Rowe Price Equity Income T. Rowe Price Growth Stock T. Rowe Price Small Cap Templeton 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 Van Kampen Active International Allocation Van Kampen Emerging Growth Van Kampen Large Cap Core