Exhibit 2(g)(v)
APPENDIX 3
FORM OF SUB-ADVISORY AGREEMENT
FORM OF SUB-ADVISORY AGREEMENT
ING PRIME RATE TRUST
AGREEMENT made this ____ day of ________, 2003 between ING
Investments, LLC, a Delaware limited liability company (the "Manager"), and
ING Aeltus Investment Management, Inc., a Connecticut corporation (the
"Sub-Adviser").
WHEREAS, the ING Prime Rate Trust (the "Fund") is registered under
the Investment Company Act of 1940, as amended (the "1940 Act"), as an
[open-end/closed-end], management investment company; and
WHEREAS, the Fund is authorized to issue separate series, each series
having its own investment objective or objectives, policies, and limitations;
and
WHEREAS, the Fund may offer shares of additional series in the future;
and
WHEREAS, pursuant to an Investment Management Agreement, dated
September 1, 2000 (the "Management Agreement"), a copy of which has been
provided to the Sub-Adviser, the Fund has retained the Manager to render
advisory and management services with respect to certain of the Fund's series;
and
WHEREAS, pursuant to authority granted to the Manager in the Management
Agreement, the Manager wishes to retain the Sub-Adviser to furnish investment
advisory services to one or more of the series of the Fund, and the Sub-Adviser
is willing to furnish such services to the Fund and the Manager.
NOW, THEREFORE, in consideration of the premises and the promises and
mutual covenants herein contained, it is agreed between the Manager and the
Sub-Adviser as follows:
1. APPOINTMENT. The Manager hereby appoints the Sub-Adviser to act as
the investment adviser and manager to the series of the Fund set forth on
SCHEDULE A hereto (the "Series") for the periods and on the terms set forth in
this Agreement. The Sub-Adviser accepts such appointment and agrees to furnish
the services herein set forth for the compensation herein provided.
In the event the Fund designates one or more series (other than the
Series) with respect to which the Manager wishes to retain the Sub-Adviser to
render investment advisory services hereunder, it shall notify the Sub-Adviser
in writing. If the Sub-Adviser is willing to render such services, it shall
notify the Manager in writing, whereupon such series shall become a Series
hereunder, and be subject to this Agreement.
2. SUB-ADVISER DUTIES. Subject to the supervision of the Fund's Board
of [Directors/Trustees] and the Manager, the Sub-Adviser will provide a
continuous investment program for each Series' portfolio and determine in its
discretion the composition of the assets of each Series' portfolio, including
determination of the purchase, retention, or sale of the securities, cash, and
other investments contained in the portfolio. The Sub-Adviser will provide
investment research and conduct a continuous program of evaluation, investment,
sales, and reinvestment of each Series' assets by determining the securities and
other investments that shall be purchased, entered into, sold, closed, or
exchanged for the Series, when these transactions should be executed, and what
portion of the assets of the Series should be held in the various securities and
other investments in which it may invest. To the extent permitted by the
investment policies of each Series, the Sub-Adviser shall make decisions for the
Series as to foreign currency matters and make determinations as to and
execute and perform foreign currency exchange contracts on behalf of the Series.
The Sub-Adviser will provide the services under this Agreement in accordance
with each Series' investment objective or objectives, policies, and restrictions
as stated in the Fund's Registration Statement filed with the Securities and
Exchange Commission ("SEC"), as amended, copies of which shall be sent to the
Sub-Adviser by the Manager prior to the commencement of this Agreement and
promptly following any such amendment. The Sub-Adviser further agrees as
follows:
(a) The Sub-Adviser will conform with the 1940 Act and all rules and
regulations thereunder, all other applicable federal and state laws and
regulations, with any applicable procedures adopted by the Fund's Board of
[Directors/Trustees] of which the Sub-Adviser has been sent a copy, and the
provisions of the Registration Statement of the Fund filed under the Securities
Act of 1933 (the "1933 Act") and the 1940 Act, as supplemented or amended, of
which the Sub-Adviser has received a copy, and with the Manager's portfolio
manager operating policies and procedures as in effect on the date hereof, as
such policies and procedures may be revised or amended by the Manager and agreed
to by the Sub-Adviser. In carrying out its duties under the Sub-Adviser
Agreement, the Sub-Adviser will comply with the following policies and
procedures:
(i) The Sub-Adviser will manage each Series so that it meets the income
and asset diversification requirements of Section 851 of the Internal Revenue
Code.
(ii) The Sub-Adviser will assist in voting all proxies solicited by or
with respect to the issuers of securities which assets of the Series are
invested consistent with any procedures or guidelines approved by the Board of
[Directors/Trustees], and the Manager or the Sub-Adviser. If requested, the
Sub-Adviser will maintain appropriate records detailing its voting of proxies on
behalf of the Fund and will provide to the Fund at least quarterly a report
setting forth the proposals voted on and how the Series' shares were voted since
the prior report, including the name of the corresponding issuers.
(iii) In connection with the purchase and sale of securities for each
Series, the Sub-Adviser will arrange for the transmission to the custodian and
portfolio accounting agent for the Series on a daily basis, such confirmation,
trade tickets, and other documents and information, including, but not limited
to, Cusip, Cedel, or other numbers that identify securities to be purchased or
sold on behalf of the Series, as may be reasonably necessary to enable the
custodian and portfolio accounting agent to perform its administrative and
recordkeeping responsibilities with respect to the Series. With respect to
portfolio securities to be settled through the Depository Trust Company, the
Sub-Adviser will arrange for the prompt transmission of the confirmation of such
trades to the Fund's custodian and portfolio accounting agent.
(iv) The Sub-Adviser will assist the custodian and portfolio accounting
agent for the Fund in determining or confirming, consistent with the procedures
and policies stated in the Registration Statement for the Fund or adopted by the
Board of [Directors/Trustees], the value of any portfolio securities or other
assets of the Series for which the custodian and portfolio accounting agent
seeks assistance from or identifies for review by the Sub-Adviser. The parties
acknowledge that the Sub-Adviser is not a custodian of the Series' assets and
will not take possession or custody of such assets.
(v) The Sub-Adviser will provide the Manager, no later than the 10th
business day following the end of each Series' semi-annual period and fiscal
year, a letter to shareholders (to be subject to review and editing by the
Manager) containing a discussion of those factors referred to in Item 5(a) of
1940 Act Form N-1A in respect of both the prior semi-annual period, if
different, and the fiscal year to date.
(vi) The Sub-Adviser will complete and deliver to the Manager a written
compliance checklist in a form provided by the Manager for each month by the
10th business day of the following month.
2
(b) The Sub-Adviser will complete and deliver to the Manager by the
10th business day of each month a written report on each Series of the Fund that
contains the following information as of the immediately previous month's end:
(i) A performance comparison to the Series benchmark listed in the
prospectus as well as a comparison to other mutual funds as listed in the
rankings prepared by Lipper Analytical Services, Inc., Morningstar, Inc., or
similar independent services that monitor the performance of mutual funds or
with other appropriate indexes of investment securities;
(ii) Composition of the assets of each Series' portfolio and the impact
of key portfolio holdings and sector concentrations on the Series; and
(iii) Confirmation of the Fund's current investment objective and
Sub-Adviser's projected plan to realize the Fund's investment objectives.
(c) The Sub-Adviser will contact Morningstar to clarify any style box
conflicts with the Fund's style and the anticipated timeframe in which
Morningstar will remedy such conflicts, if any.
(d) The Sub-Adviser will make available to the Fund and the Manager,
promptly upon request, any of the Series' investment records and ledgers
maintained by the Sub-Adviser (which shall not include the records and ledgers
maintained by the custodian or portfolio accounting agent for the Fund) as are
necessary to assist the Fund and the Manager to comply with requirements of the
1940 Act and the Investment Advisers Act of 1940 (the "Advisers Act"), as well
as other applicable laws. The Sub-Adviser will furnish to regulatory authorities
having the requisite authority any information or reports in connection with
such services in respect to the Series which may be requested in order to
ascertain whether the operations of the Fund are being conducted in a manner
consistent with applicable laws and regulations.
(e) The Sub-Adviser will provide reports to the Fund's Board of
[Directors/Trustees] for consideration at meetings of the Board of
[Directors/Trustees] on the investment program for each Series and the issuers
and securities represented in each Series' portfolio, and will furnish the
Fund's Board of [Directors/Trustees] with respect to each Series such periodic
and special reports as the [Directors/Trustees] and the Manager may reasonably
request.
3. BROKER-DEALER SELECTION. The Sub-Adviser is authorized to make
decisions to buy and sell securities and other investments for each Series'
portfolio, broker-dealer selection and negotiation of brokerage commission rates
in effecting a security transaction. The Sub-Adviser's primary consideration in
effecting a security transaction will be to obtain the best execution for the
Series, taking into account the factors specified in the prospectus and/or
statement of additional information for the Fund, and determined in consultation
with the Manager, which include price (including the applicable brokerage
commission or dollar spread), the size of the order, the nature of the market
for the security, the timing of the transaction, the reputation, the experience
and financial stability of the broker-dealer involved, the quality of the
service, the difficulty of execution, and the execution capabilities and
operational facilities of the firm involved, and the firm's risk in positioning
a block of securities. Accordingly, the price to a Series in any transaction may
be less favorable than that available from another broker-dealer if the
difference is reasonably justified, in the judgment of the Sub-Adviser in the
exercise of its fiduciary obligations to the Fund, by other aspects of the
portfolio execution services offered. Subject to such policies as the Fund's
Board of [Directors/Trustees] or Manager may determine and consistent with
Section 28(e) of the Securities Exchange Act of 1934, the Sub-Adviser shall not
be deemed to have acted unlawfully or to have breached any duty created by this
Agreement or otherwise solely by reason of its having caused a Series to pay a
broker-dealer for effecting a portfolio investment transaction in excess of the
amount of commission another broker-dealer would have charged for effecting that
transaction, if the Sub-Adviser determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage and research
services provided by such broker-dealer, viewed in terms of
3
either that particular transaction or the Sub-Adviser's or the Manager's overall
responsibilities with respect to the Series and to their respective other
clients as to which they exercise investment discretion. The Sub-Adviser will
consult with the Manager to the end that portfolio transactions on behalf of a
Series are directed to broker-dealers on the basis of criteria reasonably
considered appropriate by the Manager. To the extent consistent with these
standards, the Sub-Adviser is further authorized to allocate the orders placed
by it on behalf of a Series to the Sub-Adviser if it is registered as a
broker-dealer with the SEC, to an affiliated broker-dealer, or to such brokers
and dealers who also provide research or statistical material, or other services
to the Series, the Sub-Adviser, or an affiliate of the Sub-Adviser. Such
allocation shall be in such amounts and proportions as the Sub-Adviser shall
determine consistent with the above standards, and the Sub-Adviser will report
on said allocation regularly to the Fund's Board of [Directors/Trustees]
indicating the broker-dealers to which such allocations have been made and the
basis therefore.
4. DISCLOSURE ABOUT SUB-ADVISER. The Sub-Adviser has reviewed the most
recent Post-Effective Amendment to the Registration Statement for the Fund filed
with the SEC that contains disclosure about the Sub-Adviser, and represents and
warrants that, with respect to the disclosure about the Sub-Adviser or
information relating, directly or indirectly, to the Sub-Adviser, such
Registration Statement contains, as of the date hereof, no untrue statement of
any material fact and does not omit any statement of a material fact which was
required to be stated therein or necessary to make the statements contained
therein, in light of the circumstances under which they were made, not
misleading. The Sub-Adviser further represents and warrants that it is a duly
registered investment adviser under the Advisers Act and will maintain such
registration so long as this Agreement remains in effect. The Sub-Adviser will
provide the Manager with a copy of the Sub-Adviser's Form ADV, Part II at the
time the Form ADV is filed with the SEC.
5. EXPENSES. During the term of this Agreement, the Sub-Adviser will
pay all expenses incurred by it and its staff and for their activities in
connection with its portfolio management duties under this Agreement. The
Manager or the Fund shall be responsible for all the expenses of the Fund's
operations.
6. COMPENSATION. For the services provided to each Series, the Manager
will pay the Sub-Adviser an annual fee equal to the amount specified for such
Series in SCHEDULE A hereto, payable monthly in arrears. The fee will be
appropriately prorated to reflect any portion of a calendar month that this
Agreement is not in effect among the parties. In accordance with the provisions
of the Management Agreement, the Manager is solely responsible for the payment
of fees to the Sub-Adviser, and the Sub-Adviser agrees to seek payment of its
fees solely from the Manager; provided, however, that if the Fund fails to pay
the Manager all or a portion of the management fee under said Management
Agreement when due, and the amount that was paid is insufficient to cover the
Sub-Adviser's fee under this Agreement for the period in question, then the
Sub-Adviser may enforce against the Fund any rights it may have as a third-party
beneficiary under the Management Agreement and the Manager will take all steps
appropriate under the circumstances to collect the amount due from the Fund.
7. MARKETING MATERIALS.
(a) During the term of this Agreement, the Sub-Adviser agrees to
furnish the Manager at its principal office for prior review and approval by the
Manager all written and/or printed materials, including but not limited to,
PowerPoint(R) or slide presentations, news releases, advertisements, brochures,
fact sheets and other promotional, informational or marketing materials (the
"Marketing Materials") for internal use or public dissemination, that are
produced or are for use or reference by the Sub-Adviser, its affiliates or other
designees, broker-dealers or the public in connection with the Series, and
Sub-Adviser shall not use any such materials if the Manager reasonably objects
in writing within five business days (or such other period as may be mutually
agreed) after receipt thereof. Marketing Materials may be furnished to the
Manager by first class or overnight mail, facsimile transmission equipment,
electronic delivery or hand delivery.
4
(b) During the term of this Agreement, the Manager agrees to furnish
the Sub-Adviser at its principal office all prospectuses, proxy statements,
reports to shareholders, or Marketing Materials prepared for distribution to
shareholders of each Series, or the public that refer to the Sub-Adviser in any
way, prior to the use thereof, and the Manager shall not use any such materials
if the Sub-Adviser reasonably objects in writing within five business days (or
such other period as may be mutually agreed) after receipt thereof. The
Sub-Adviser's right to object to such materials is limited to the portions of
such materials that expressly relate to the Sub-Adviser, its services and its
clients. The Manager agrees to use its reasonable best efforts to ensure that
materials prepared by its employees or agents or its affiliates that refer to
the Sub-Adviser or its clients in any way are consistent with those materials
previously approved by the Sub-Adviser as referenced in the first sentence of
this paragraph. Marketing Materials may be furnished to the Sub-Adviser by first
class or overnight mail, facsimile transmission equipment, electronic delivery
or hand delivery.
8. COMPLIANCE.
(a) The Sub-Adviser agrees to use reasonable compliance techniques as
the Manager or the Board of [Directors/Trustees] may adopt, including any
written compliance procedures.
(b) The Sub-Adviser agrees that it shall promptly notify the Manager
and the Fund (1) in the event that the SEC has censured the Sub-Adviser; placed
limitations upon its activities, functions or operations; suspended or revoked
its registration as an investment adviser; or has commenced proceedings or an
investigation that may result in any of these actions, or (2) upon having a
reasonable basis for believing that the Series has ceased to qualify or might
not qualify as a regulated investment company under Subchapter M of the Internal
Revenue Code. The Sub-Adviser further agrees to notify the Manager and the Fund
promptly of any material fact known to the Sub-Adviser respecting or relating to
the Sub-Adviser that is not contained in the Registration Statement or
prospectus for the Fund (which describes the Series), or any amendment or
supplement thereto, or if any statement contained therein that becomes untrue in
any material respect.
(c) The Manager agrees that it shall promptly notify the Sub-Adviser
(1) in the event that the SEC has censured the Manager or the Fund; placed
limitations upon either of their activities, functions, or operations; suspended
or revoked the Manager's registration as an investment adviser; or has commenced
proceedings or an investigation that may result in any of these actions, or (2)
upon having a reasonable basis for believing that the Series has ceased to
qualify or might not qualify as a regulated investment company under Subchapter
M of the Internal Revenue Code.
9. BOOKS AND RECORDS. The Sub-Adviser hereby agrees that all records
which it maintains for the Series are the property of the Fund and further
agrees to surrender promptly to the Fund any of such records upon the Fund's or
the Manager's request in compliance with the requirements of Rule 31a-3 under
the 1940 Act, although the Sub-Adviser may, at its own expense, make and retain
a copy of such records. The Sub-Adviser further agrees to preserve for the
periods prescribed by Rule 31a-2 under the 1940 Act the records required to be
maintained by Rule 31a-l under the 1940 Act.
10. COOPERATION; CONFIDENTIALITY. Each party to this Agreement agrees
to cooperate with the other party and with all appropriate governmental
authorities having the requisite jurisdiction (including, but not limited to,
the SEC) in connection with any investigation or inquiry relating to this
Agreement or the Fund. Subject to the foregoing, the Sub-Adviser shall treat as
confidential all information pertaining to the Fund and actions of the Fund, the
Manager and the Sub-Adviser, and the Manager shall treat as confidential and use
only in connection with the Series all information furnished to the Fund or the
Manager by the Sub-Adviser, in connection with its duties under the agreement
except that the aforesaid information need not be treated as confidential if
required to be disclosed under applicable law, if generally available to the
public through means other than by disclosure by the Sub-Adviser or the Manager,
or if available from a source other than the Manager, Sub-Adviser or this Fund.
5
11. REPRESENTATIONS RESPECTING SUB-ADVISER. The Manager agrees that
neither the Manager, nor affiliated persons of the Manager, shall give any
information or make any representations or statements in connection with the
sale of shares of the Series concerning the Sub-Adviser or the Series other than
the information or representations contained in the Registration Statement,
prospectus, or statement of additional information for the Fund's shares, as
they may be amended or supplemented from time to time, or in reports or proxy
statements for the Fund, or in sales literature or other promotional material
approved in advance by the Sub-Adviser, except with the prior permission of the
Sub-Adviser.
12. CONTROL. Notwithstanding any other provision of the Agreement, it
is understood and agreed that the Fund shall at all times retain the ultimate
responsibility for and control of all functions performed pursuant to this
Agreement and has reserved the right to reasonably direct any action hereunder
taken on its behalf by the Sub-Adviser.
13. LIABILITY. Except as may otherwise be required by the 1940 Act or
the rules thereunder or other applicable law, the Manager agrees that the
Sub-Adviser, any affiliated person of the Sub-Adviser, and each person, if any,
who, within the meaning of Section 15 of the 1933 Act controls the Sub-Adviser
(1) shall bear no responsibility and shall not be subject to any liability for
any act or omission respecting any series of the Fund that is not a Series
hereunder, and (2) shall not be liable for, or subject to any damages, expenses,
or losses in connection with, any act or omission connected with or arising out
of any services rendered under this Agreement, except by reason of willful
misfeasance, bad faith, or negligence in the performance of the Sub-Adviser's
duties, or by reason of reckless disregard of the Sub-Adviser's obligations and
duties under this Agreement.
14. INDEMNIFICATION.
(a) The Manager agrees to indemnify and hold harmless the Sub-Adviser,
any affiliated person of the Sub-Adviser, and each person, if any, who, within
the meaning of Section 15 of the 1933 Act controls ("controlling person") the
Sub-Adviser (all of such persons being referred to as "Sub-Adviser Indemnified
Persons") against any and all losses, claims, damages, liabilities, or
litigation (including legal and other expenses) to which a Sub-Adviser
Indemnified Person may become subject under the 1933 Act, the 1940 Act, the
Advisers Act, under any other statute, at common law or otherwise, arising out
of the Manager's responsibilities to the Fund which (1) may be based upon the
Manager's negligence, willful misfeasance, or bad faith in the performance of
its duties (which could include a negligent action or a negligent omission to
act), or by reason of the Manager's reckless disregard of its obligations and
duties under this Agreement, or (2) may be based upon any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement or prospectus covering shares of the Fund or any Series, or any
amendment thereof or any supplement thereto, or the omission or alleged omission
to state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, unless such statement or omission
was made in reliance upon information furnished to the Manager or the Fund or to
any affiliated person of the Manager by a Sub-Adviser Indemnified Person;
provided however, that in no case shall the indemnity in favor of the
Sub-Adviser Indemnified Person be deemed to protect such person against any
liability to which any such person would otherwise be subject by reason of
willful misfeasance, bad faith, or gross negligence in the performance of its
duties, or by reason of its reckless disregard of obligations and duties under
this Agreement.
(b) Notwithstanding Section 13 of this Agreement, the Sub-Adviser
agrees to indemnify and hold harmless the Manager, any affiliated person of the
Manager, and any controlling person of the Manager (all of such persons being
referred to as "Manager Indemnified Persons") against any and all losses,
claims, damages, liabilities, or litigation (including legal and other expenses)
to which a Manager Indemnified Person may become subject under the 1933 Act,
1940 Act, the Advisers Act, under any other statute, at common law or otherwise,
arising out of the Sub-Adviser's responsibilities as Sub-Adviser of the Series
which (1) may be based upon the Sub-Adviser's negligence, willful misfeasance,
or bad faith in the performance of its duties (which
6
could include a negligent action or a negligent omission to act), or by reason
of the Sub-Adviser's reckless disregard of its obligations and duties under this
Agreement, or (2) may be based upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement or
prospectus covering the shares of the Fund or any Series, or any amendment or
supplement thereto, or the omission or alleged omission to state therein a
material fact known or which should have been known to the Sub-Adviser and was
required to be stated therein or necessary to make the statements therein not
misleading, if such a statement or omission was made in reliance upon
information furnished to the Manager, the Fund, or any affiliated person of the
Manager or Fund by the Sub-Adviser or any affiliated person of the Sub-Adviser;
provided, however, that in no case shall the indemnity in favor of a Manager
Indemnified Person be deemed to protect such person against any liability to
which any such person would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence in the performance of its duties, or by
reason of its reckless disregard of its obligations and duties under this
Agreement.
(c) The Manager shall not be liable under Paragraph (a) of this Section
14 with respect to any claim made against a Sub-Adviser Indemnified Person
unless such Sub-Adviser Indemnified Person shall have notified the Manager in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Sub-Adviser Indemnified Person (or after such Sub-Adviser Indemnified Person
shall have received notice of such service on any designated agent), but failure
to notify the Manager of any such claim shall not relieve the Manager from any
liability which it may have to the Sub-Adviser Indemnified Person against whom
such action is brought except to the extent the Manager is prejudiced by the
failure or delay in giving such notice. In case any such action is brought
against the Sub-Adviser Indemnified Person, the Manager will be entitled to
participate, at its own expense, in the defense thereof or, after notice to the
Sub-Adviser Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Sub-Adviser Indemnified Person. If the Manager assumes the
defense of any such action and the selection of counsel by the Manager to
represent the Manager and the Sub-Adviser Indemnified Person would result in a
conflict of interests and therefore, would not, in the reasonable judgment of
the Sub-Adviser Indemnified Person, adequately represent the interests of the
Sub-Adviser Indemnified Person, the Manager will, at its own expense, assume the
defense with counsel to the Manager and, also at its own expense, with separate
counsel to the Sub-Adviser Indemnified Person, which counsel shall be
satisfactory to the Manager and to the Sub-Adviser Indemnified Person. The
Sub-Adviser Indemnified Person shall bear the fees and expenses of any
additional counsel retained by it, and the Manager shall not be liable to the
Sub-Adviser Indemnified Person under this Agreement for any legal or other
expenses subsequently incurred by the Sub-Adviser Indemnified Person
independently in connection with the defense thereof other than reasonable costs
of investigation. The Manager shall not have the right to compromise on or
settle the litigation without the prior written consent of the Sub-Adviser
Indemnified Person if the compromise or settlement results, or may result in a
finding of wrongdoing on the part of the Sub-Adviser Indemnified Person.
(d) The Sub-Adviser shall not be liable under Paragraph (b) of this
Section 14 with respect to any claim made against a Manager Indemnified Person
unless such Manager Indemnified Person shall have notified the Sub-Adviser in
writing within a reasonable time after the summons or other first legal process
giving information of the nature of the claim shall have been served upon such
Manager Indemnified Person (or after such Manager Indemnified Person shall have
received notice of such service on any designated agent), but failure to notify
the Sub-Adviser of any such claim shall not relieve the Sub-Adviser from any
liability which it may have to the Manager Indemnified Person against whom such
action is brought except to the extent the Sub-Adviser is prejudiced by the
failure or delay in giving such notice. In case any such action is brought
against the Manager Indemnified Person, the Sub-Adviser will be entitled to
participate, at its own expense, in the defense thereof or, after notice to the
Manager Indemnified Person, to assume the defense thereof, with counsel
satisfactory to the Manager Indemnified Person. If the Sub-Adviser assumes the
defense of any such action and the selection of counsel by the Sub-Adviser to
represent both the Sub-Adviser and the Manager Indemnified Person would result
in a conflict of interests and therefore, would not, in the reasonable judgment
of the Manager Indemnified Person, adequately represent the interests of the
Manager Indemnified Person, the Sub-
7
Adviser will, at its own expense, assume the defense with counsel to the
Sub-Adviser and, also at its own expense, with separate counsel to the Manager
Indemnified Person, which counsel shall be satisfactory to the Sub-Adviser and
to the Manager Indemnified Person. The Manager Indemnified Person shall bear the
fees and expenses of any additional counsel retained by it, and the Sub-Adviser
shall not be liable to the Manager Indemnified Person under this Agreement for
any legal or other expenses subsequently incurred by the Manager Indemnified
Person independently in connection with the defense thereof other than
reasonable costs of investigation. The Sub-Adviser shall not have the right to
compromise on or settle the litigation without the prior written consent of the
Manager Indemnified Person if the compromise or settlement results, or may
result in a finding of wrongdoing on the part of the Manager Indemnified Person.
15. DURATION AND TERMINATION.
(a) This Agreement shall become effective on the date first indicated
above, subject to the condition that the Fund's Board of [Directors/Trustees],
including a majority of those [Directors/Trustees] who are not interested
persons (as such term is defined in the 0000 Xxx) of the Manager or the
Sub-Adviser, and the shareholders of each Series, shall have approved this
Agreement. Unless terminated as provided herein, this Agreement shall remain in
full force and effect for two years from such date and continue on an annual
basis thereafter with respect to each Series covered by this Agreement; provided
that such annual continuance is specifically approved each year by (a) the Board
of [Directors/Trustees] of the Fund, or by the vote of a majority of the
outstanding voting securities (as defined in the 0000 Xxx) of each Series, and
(b) the vote of a majority of those [Directors/Trustees] who are not parties to
this Agreement or interested persons (as such term is defined in the 0000 Xxx)
of any such party to this Agreement cast in person at a meeting called for the
purpose of voting on such approval. However, any approval of this Agreement by
the holders of a majority of the outstanding shares (as defined in the 0000 Xxx)
of a Series shall be effective to continue this Agreement with respect to such
Series notwithstanding (i) that this Agreement has not been approved by the
holders of a majority of the outstanding shares of any other Series or (ii) that
this agreement has not been approved by the vote of a majority of the
outstanding shares of the Fund, unless such approval shall be required by any
other applicable law or otherwise. Notwithstanding the foregoing, this Agreement
may be terminated with respect to any Series covered by this Agreement: (a) by
the Manager at any time, upon sixty (60) days' written notice to the Sub-Adviser
and the Fund, (b) at any time without payment of any penalty by the Fund, by the
Fund's Board of [Directors/Trustees] or a majority of the outstanding voting
securities of each Series, upon sixty (60) days' written notice to the Manager
and the Sub-Adviser, or (c) by the Sub-Adviser upon three (3) months' written
notice unless the Fund or the Manager requests additional time to find a
replacement for the Sub-Adviser, in which case the Sub-Adviser shall allow the
additional time requested by the Fund or Manager not to exceed three (3)
additional months beyond the initial three-month notice period; provided,
however, that the Sub-Adviser may terminate this Agreement at any time without
penalty, effective upon written notice to the Manager and the Fund, in the event
either the Sub-Adviser (acting in good faith) or the Manager ceases to be
registered as an investment adviser under the Advisers Act or otherwise becomes
legally incapable of providing investment management services pursuant to its
respective contract with the Fund, or in the event the Manager becomes bankrupt
or otherwise incapable of carrying out its obligations under this Agreement, or
in the event that the Sub-Adviser does not receive compensation for its services
from the Manager or the Fund as required by the terms of this agreement.
In the event of termination for any reason, all records of each Series
for which the Agreement is terminated shall promptly be returned to the Manager
or the Fund, free from any claim or retention of rights in such record by the
Sub-Adviser, although the Sub-Adviser may, at its own expense, make and retain a
copy of such records. This Agreement shall automatically terminate in the event
of its assignment (as such term is described in the 1940 Act). In the event this
Agreement is terminated or is not approved in the manner described above, the
Sections or Paragraphs numbered 9, 10, 11, 12, 13, 14 and 17of this Agreement
shall remain in effect, as well as any applicable provision of this Section
numbered 15 and, to the extent that only
8
amounts are owed to the Sub-Adviser as compensation for services rendered while
the agreement was in effect, Section 6.
(b) NOTICES. Any notice must be in writing and shall be sufficiently
given (1) when delivered in person, (2) when dispatched by telegram or
electronic facsimile transfer (confirmed in writing by postage prepaid first
class air mail simultaneously dispatched), (3) when sent by internationally
recognized overnight courier service (with receipt confirmed by such overnight
courier service), or (4) when sent by registered or certified mail, to the other
party at the address of such party set forth below or at such other address as
such party may from time to time specify in writing to the other party.
If to the Fund:
ING Prime Rate Trust
0000 Xxxx Xxxxxxxxxx
Xxxxx Xxxx
Xxxxxxxxxx, XX 00000
If to the Sub-Adviser:
ING Aeltus Investment Management, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxxx, XX 00000-0000
Attention: Xxxxxxx Xxxxxxx
16. AMENDMENTS. No provision of this Agreement may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against which enforcement of the change, waiver, discharge or
termination is sought, and no amendment of this Agreement shall be effective
until approved as required by applicable law.
17. MISCELLANEOUS.
(a) This Agreement shall be governed by the laws of the State of
Arizona, provided that nothing herein shall be construed in a manner
inconsistent with the 1940 Act, the Advisers Act or rules or orders of the SEC
thereunder, and without regard for the conflicts of laws principle thereof. The
term "affiliate" or "affiliated person" as used in this Agreement shall mean
"affiliated person" as defined in Section 2(a)(3) of the 0000 Xxx.
(b) The Manager and the Sub-Adviser acknowledge that the Fund enjoys
the rights of a third-party beneficiary under this Agreement, and the Manager
acknowledges that the Sub-Adviser enjoys the rights of a third party beneficiary
under the Management Agreement.
(c) The captions of this Agreement are included for convenience only
and in no way define or limit any of the provisions hereof or otherwise affect
their construction or effect.
(d) To the extent permitted under Section 15 of this Agreement, this
Agreement may only be assigned, as defined in the Investment Company Act of
1940, by any party with the prior written consent of the other parties.
(e) If any provision of this Agreement shall be held or made invalid by
a court decision, statute, rule or otherwise, the remainder of this Agreement
shall not be affected thereby, and to this extent, the provisions of this
Agreement shall be deemed to be severable.
(f) Nothing herein shall be construed as constituting the Sub-Adviser
as an agent or co-partner of the Manager, or constituting the Manager as an
agent or co-partner of the Sub-Adviser.
9
(g) This agreement may be executed in counterparts.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.
ING Investments, LLC
By:
---------------------------
---------------------------
Title
AELTUS INVESTMENT MANAGEMENT, INC.
By:
---------------------------
---------------------------
Title
10
SCHEDULE A
WITH RESPECT TO THE
SUB-ADVISORY AGREEMENT
BETWEEN
ING INVESTMENTS, LLC
AND
AELTUS INVESTMENT MANAGEMENT, INC.
LAST CONTINUED/
---------------
ANNUAL SUB-ADVISER FEE APPROVED BY
(AS A PERCENTAGE OF AVERAGE DAILY -----------
SERIES NET ASSETS) BOARD REAPPROVAL DATE
------ ----- ---------------
ING Prime Rate Trust 0.4500% April 9, 2003 September 1, 2003
11
