Exhibit (h)(18)
EXPENSE LIMITATION AGREEMENT
ING EQUITY TRUST
THIS EXPENSE LIMITATION AGREEMENT, effective this 23rd day of
September, 2002, by and between ING Investments, LLC (the "Investment Manager")
and ING Equity Trust (the "Trust"), on behalf of each series of the Trust set
forth on Schedule A (each a "Fund," and collectively, the "Funds"), as such
schedule may be amended from time to time to add additional series.
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 of the series type; and each Fund is a series of the
Trust; and
WHEREAS, the Trust 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 Trust and the Investment Manager have entered into
Investment Management Agreements (each a "Management Agreement"), pursuant to
which the Investment Manager provides investment management services to the
Funds for compensation based on the value of the average daily net assets of
the Funds; and
WHEREAS, the Trust 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
Fund may normally be subject;
NOW THEREFORE, the parties hereto agree as follows:
1. Expense Limitation.
1.1. Applicable Expense Limit. Except as otherwise specified on
Schedule A hereto, to the extent that the ordinary operating expenses
incurred by a class of the Fund in any fiscal year, including but not limited to
investment management fees payable to the Investment Manager, but excluding
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 Trust'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 maximum Operating Expense Limit in
any fiscal year with respect to each class of each 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 a Fund shall be annualized. If the annualized Fund
Operating Expenses for any day of a class of a Fund exceed the Operating Expense
Limit for that class, 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 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 Trust may offset amounts owed to a 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 a 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
with respect to a Fund is in effect, the estimated annualized Fund Operating
Expenses of a class of such Fund for that day are less than the Operating
Expense Limit, the Investment Manager shall be entitled to recoup from such
class of the 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 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 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.
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 a 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 each Fund
ending on the date indicated on Schedule A hereto, as such schedule may be
amended from time to time. Thereafter,
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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 termination of this Agreement to a lead Independent Trustee
within ninety (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 Trust, without payment of any penalty, upon written notice to the
Investment Manager at its principal place of business within ninety (90) days of
the end of the then-current term for a Fund.
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 contained shall be deemed to
require a Fund or the Trust to take any action contrary to the Trust'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 Trust's Board of Trustees of its responsibility for and control of
the conduct of the affairs of the Trust 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 with respect to a Fund 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.
ING EQUITY TRUST
By: /s/ ▇▇▇▇▇▇ ▇. Naka
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Name: ▇▇▇▇▇▇ ▇. Naka
Title: Senior Vice President
ING INVESTMENTS, LLC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Executive Vice President
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SCHEDULE A
TO THE
EXPENSE LIMITATION AGREEMENT
BY AND BETWEEN
ING INVESTMENTS, LLC
AND
ING EQUITY TRUST
EFFECTIVE: SEPTEMBER 23, 2002
EXPIRATION OF INITIAL TERM: MAY 31, 2003
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds:
MAXIMUM OPERATING EXPENSE LIMIT
(AS A PERCENTAGE OF AVERAGE NET ASSETS)
NAME OF FUND CLASS A CLASS B CLASS C CLASS I CLASS Q CLASS T
------------ ------- ------- ------- ------- ------- -------
ING Convertible Fund 1.60 2.25 2.25 N/A 1.50 N/A
ING Equity and Bond Fund 1.60 2.25 2.25 N/A 1.50 2.00
ING Large Company Value Fund 2.75 3.50 3.50 N/A 2.75 N/A
ING LargeCap Growth Fund 1.60 2.25 2.25 N/A 1.50 N/A
ING MidCap Opportunities Fund 1.50 2.20 2.20 1.20 1.35 N/A
ING MidCap Value Fund 1.75 2.50 2.50 1.50 1.75 N/A
ING SmallCap Value Fund 1.75 2.50 2.50 1.50 1.75 N/A
ING Tax Efficient Equity Fund 1.45 2.20 2.20 N/A N/A N/A
/s/HE
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HE
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1 Maximum Operating Expense Limits shown for the Fund exclude investment
management fees payable to the Investment Manager.
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AMENDED AND RESTATED SCHEDULE A
TO THE
EXPENSE LIMITATION AGREEMENT
BY AND BETWEEN
ING INVESTMENTS, LLC
AND
ING EQUITY TRUST
EFFECTIVE: FEBRUARY 25, 2003
EXPIRATION OF INITIAL TERM: MAY 31, 2003*
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds:
MAXIMUM OPERATING EXPENSE LIMIT
NAME OF FUND (AS A PERCENTAGE OF AVERAGE NET ASSETS)
CLASS A CLASS B CLASS C CLASS I CLASS Q CLASS T
------- ------- ------- ------- ------- -------
ING Convertible Fund 1.60 2.25 2.25 N/A 1.50 N/A
ING Equity and Bond Fund 1.60 2.25 2.25 N/A 1.50 2.00
ING Large Company Value Fund 2.75 3.50 3.50 N/A 2.75 N/A
ING LargeCap Growth Fund 1.45 2.10 2.10 1.10 1.35 N/A
ING MidCap Opportunities Fund 1.50 2.20 2.20 1.20 1.35 N/A
ING MidCap Value Fund 1.75 2.50 2.50 1.50 1.75 N/A
ING SmallCap Value Fund 1.75 2.50 2.50 1.50 1.75 N/A
ING Tax Efficient Equity Fund 1.45 2.20 2.20 N/A N/A N/A
/s/HE
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* The initial term for ING MidCap Opportunities Fund expires January 1,2004.
RESTATED EXPENSE LIMITATION AGREEMENT
ING EQUITY TRUST
This RESTATED EXPENSE LIMITATION AGREEMENT (this "Agreement"),
effective this 1st day of August 2003, restates the Expense Limitation Agreement
dated September 23,2002 by and between ING Investments, LLC (the "Investment
Manager") and ING Equity Trust (the "Registrant"). If the Registrant is a series
fund investment company, then the Registrant is entering into this Agreement on
behalf of, and this Agreement shall apply to, each series of the 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
1
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.
2
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 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.
ING EQUITY TRUST ING INVESTMENTS, LLC
By: /s/ ▇▇▇▇▇▇ ▇. Naka By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------- ------------------------
Name: ▇▇▇▇▇▇ ▇. Naka Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Senior Vice President Title: Executive Vice President
3
SCHEDULE A
TO THE
RESTATED EXPENSE LIMITATION AGREEMENT
ING EQUITY TRUST
OPERATING EXPENSE LIMITS
MAXIMUM OPERATING EXPENSE LIMIT
NAME OF FUND (AS A PERCENTAGE OF AVERAGE NET ASSETS)
CLASS A CLASS B CLASS C CLASS I CLASS Q CLASS T
------- ------- ------- ------- ------- -------
ING Convertible Fund 1.60% 2.25% 2.25% N/A 1.50% N/A
Initial Term Expires May 31, 2004
ING Equity and Bond Fund 1.60% 2.25% 2.25% N/A 1.50% 2.00%
Initial Term Expires May 31, 2004
ING LargeCap Growth Fund 1.45% 2.10% 2.10% 1.10% 1.35% N/A
Initial Term Expires May 31, 2004
ING MidCap Opportunities Fund 1.50% 2.20% 2.20% 1.20% 1.35% N/A
Initial Term Expires May 31, 2004
ING MidCap Value Fund 1.75% 2.50% 2.50% 1.50% 1.75% N/A
Initial Term Expires May 31, 2004
ING SmallCap Value Fund 1.75% 2.50% 2.50% 1.50% 1.75% N/A
Initial Term Expires May 31, 2004
ING Tax Efficient Equity Fund 1.45% 2.20% 2.20% N/A N/A N/A
Initial Term Expires May 31, 2004
/s/HE
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AMENDED SCHEDULE A
TO THE
RESTATED EXPENSE LIMITATION AGREEMENT
ING EQUITY TRUST
OPERATING EXPENSE LIMITS
MAXIMUM OPERATING EXPENSE LIMIT
NAME OF FUND (AS A PERCENTAGE OF AVERAGE NET ASSETS)
CLASS A CLASS B CLASS C CLASS I CLASS Q
------- ------- ------- ------- -------
ING Convertible Fund 1.60% 2.25% 2.25% N/A 1.50%
Initial Term Expires May 31, 2004
ING Equity and Bond Fund 1.60% 2.25% 2.25% N/A 1.50%
Initial Term Expires May 31, 2004
ING LargeCap Growth Fund 1.45% 2.10% 2.10% 1.10% 1.35%
Initial Term Expires May 31, 2004
ING MidCap Opportunities Fund* 1.50% 2.20% 2.20% 1.20% 1.35%
Initial Term Expires January 1, 2004
ING MidCap Value Fund 1.75% 2.50% 2.50% 1.50% 1.75%
Initial Term Expires May 31, 2004
ING SmallCap Value Fund 1.75% 2.50% 2.50% 1.50% 1.75%
Initial Term Expires May 31, 2004
ING Tax Efficient Equity Fund 1.45% 2.20% 2.20% N/A N/A
Initial Term Expires May 31, 2004
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* Beginning January 1, 2004, the Expense Limits for ING MidCap Opportunities
Fund will be as follows:
CLASS A CLASS B CLASS C CLASS I CLASS Q
------- ------- ------- ------- -------
ING MidCap Opportunities Fund* 1.75% 2.45% 2.45% 1.45% 1.60%
Initial Term Expires May 31, 2004