Exhibit (h)(10)
FORM OF EXPENSE LIMITATION AGREEMENT
ING EQUITY TRUST
EXPENSE LIMITATION AGREEMENT, effective as of _______, 2002 by and between
ING Pilgrim Investments, LLC (the "Investment Manager") and ING Equity Trust
(the "Trust"), on behalf of the series of the Trust set forth on Schedule A
hereto (herein referred to as the "Fund") as may be amended from time to time.
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 company; and
WHEREAS, the Trust and the Investment Manager desire that the provisions of
this Agreement do not adversely affect the 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 the Fund's ability to compute its
taxable income under Code Section 852, do not adversely affect the status of the
distributions the 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 Trust and the Investment Manager have entered into an
Investment Management Agreement dated September 1, 2000, as amended November 2,
2001, and as further amended on February 26, 2002 ("Management Agreement"),
pursuant to which the Investment Manager provides investment management 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 Investment Manager have determined that it is
appropriate and in the best interests of the Fund and its shareholders to
maintain the expenses of the Fund at a level below the level to which the Fund
may normally 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 incurred by a class of the Fund in any fiscal year, excluding
investment management fees payable to the Investment Manager, interest, taxes,
brokerage commissions, other investment-related costs, extraordinary expenses
such as litigation, other expenses not incurred in the ordinary course of the
Fund's business, and expenses of any counsel or other persons or services
retained by the Fund's Trustees who are not "interested persons," as that term
is defined in the 1940 Act, of the Investment Manager ("Fund Operating
Expenses"), exceed the Operating Expense Limit, as defined in Section 1.2 below,
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 class of the Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of such class
of the Fund.
1.3. METHOD OF COMPUTATION. To determine the Investment Manager's
obligation with respect to the Excess Amount, each day the Fund Operating
Expenses for each class of the Fund shall be annualized. If the annualized Fund
Operating Expenses for any day of a class of the Fund exceed the Operating
Expense Limit for that class of the Fund, the Investment Manager shall remit to
the appropriate class of the Fund an amount that, together with the waived or
reduced investment management fee, is sufficient to pay that day's Excess
Amount. Any such amounts remitted to the Fund shall be allocated among the
classes of the Fund in accordance with the terms of the Fund's Amended and
Restated Multiple Class Plan Pursuant to Rule 18f-3 under the 1940 Act. The Fund
may offset amounts owed to the Fund pursuant to this Agreement against the
advisory fee payable to the Investment Manager.
1.4. YEAR-END ADJUSTMENT. 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 the investment management fees
waived or reduced and other payments remitted by the Investment Manager to each
class of the Fund with respect to the previous fiscal year shall equal the
Excess Amount.
2. RECOUPMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1. RECOUPMENT. If on any day during which the Management Agreement is in
effect, the estimated annualized Fund Operating Expenses of a class of the Fund
for that day are less than the Operating Expense Limit, the Investment Manager
shall be entitled to recoup from such Fund the investment management fees waived
or reduced and other payments remitted by the Investment Manager to such class
of the Fund pursuant to Section 1 hereof (the "Recoupment Amount") during any of
the previous thirty-six (36) months, to the extent that such class' annualized
Operating Expenses plus the amount so recouped equals, for such day, the
Operating Expense 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. Any such amounts recouped
from a class of the Fund shall be recouped in accordance with the principles of
the Fund's Amended and Restated Multiple Class Plan Pursuant to Rule 18f-3 under
the 1940 Act.
2.2. YEAR-END ADJUSTMENT. 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 Fund Operating Expenses of each class
of the Fund for the prior fiscal year (including any recoupment payments
hereunder with respect to such fiscal year) do not exceed the Operating Expense
Limit.
3. TERM AND TERMINATION OF AGREEMENT.
This Agreement shall have an initial term with respect to the Fund ending
on the date indicated on Schedule B hereto. Thereafter, this Agreement shall
automatically renew for one-year terms unless the Investment Manager provides
written notice to the Fund of the termination of this Agreement at least 30 days
-2-
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 Fund, without payment of any penalty, upon ninety (90) days' prior
written notice to the Investment Manager at its principal place of business.
MISCELLANEOUS.
3.1. 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.
3.2. INTERPRETATION. Nothing herein contained shall be deemed to require
the Fund or Trust to take any action contrary to the Trust's Declaration of
Trust, 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 Fund.
3.3. 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
Investment Management Agreement or the 1940 Act, shall have the same meaning as
and be resolved by reference to such Investment Management Agreement or the 1940
Act.
3.4. 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.
ING EQUITY TRUST
By:
-----------------------------------------
Name: Xxxxxx X. Naka
Title: Senior Vice President
ING PILGRIM INVESTMENTS, LLC
By:
-----------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
-3-
SCHEDULE A
with respect to the
EXPENSE LIMITATION AGREEMENT
by and between
ING PILGRIM INVESTMENTS, LLC
and
ING EQUITY TRUST
OPERATING EXPENSE LIMITS
Effective as of February 26, 2002
This Agreement relates to the following Fund:
Maximum Operating Expense Limit
Name of Fund (as a percentage of average net assets)
------------ -------------------------------------------------
Class A Class B Class C Class Q
------- ------- ------- -------
ING Biotechnology Fund* 0.75% 1.50% 1.50% 0.75%
Approved by the Board of Trustees on February 26, 2002.
----------
* This Schedule A will be effective with respect to this Fund upon the
effective date of the initial Registration Statement with respect to the
Fund.
-4-
SCHEDULE B
with respect to the
EXPENSE LIMITATION AGREEMENT
by and between
ING PILGRIM INVESTMENTS, LLC
and
ING EQUITY TRUST
Effective as of February 26, 2002
The initial term of this Agreement with respect to each Fund is as follows:
Name of Fund Expiration Date of Initial Term
------------ -------------------------------
ING Biotechnology Fund May 31, 2003*
----------
* The expiration of the initial term of this Expense Limitation Agreement has
been set to align with the fiscal year end date of the Fund.
-5-
