Exhibit (h)(16)
FORM OF EXPENSE LIMITATION AGREEMENT
ING MUTUAL FUNDS
THIS EXPENSE LIMITATION AGREEMENT, effective this 23rd day of September,
2002, by and between ING Investments, LLC (the "Investment Manager"), Clarion
CRA Securities, L.P. (the "Sub-Adviser") and ING Mutual Funds (the "Trust"), on
behalf of each series of the Trust set forth on Schedule A hereto (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 Delaware 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 an
Investment Management Agreement ("Management Agreement"), 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 Investment Manager and the Sub-Adviser have entered into a
Sub-Advisory Agreement dated September 23, 2002, pursuant to which the
Sub-Adviser provides investment advisory services to each Fund identified in
Schedule A (each a "Sub-Advised Fund") for compensation based on the value of
the average daily net assets of each such Sub-Advised Fund; and
WHEREAS, the Trust, the Investment Manager and the Sub-Adviser 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.
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 a 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 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 ("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 a Fund shall be the amount specified in
Schedule A based on a percentage of the average daily net assets of such class
of such 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 of such Fund, the Investment Manager shall remit to the
appropriate class of such 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 Class Plan Pursuant to
Rule 18f-3 under the 1940 Act. The Trust may offset amounts owed to such 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 is
in effect, the estimated annualized Fund Operating Expenses of a class of a 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 such 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 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.
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3. Allocation between Investment Manager and Sub-Adviser with Respect to
Sub-Advised Funds.
3.1. Allocation of Excess Amount. For so long as the fee payable to the
Sub-Adviser under the Sub-Advisory Agreement is equal to 50% of the advisory fee
payable to the Investment Manager by a Sub-Advised Fund, the Sub-Adviser shall
waive or reduce its sub-advisory fee and/or promptly remit to the Investment
Manager an amount that is sufficient to pay 50% of any Excess Amount paid to
that Sub-Advised Fund by the Investment Manager pursuant to Section 1 of this
Agreement. The Investment Manager may offset amounts owed to the Investment
Manager pursuant to this Section 3.1 against the sub-advisory fee paid to the
Sub-Adviser.
3.2. Allocation of Recoupments. The Investment Manager shall promptly
remit to the Sub-Adviser 50% of any amount recouped by the Investment Manager
from any Sub-Advised Fund pursuant to Section 2 of this Agreement.
3.3. Accounting. The Trust and the Investment Manager will provide to the
Sub-Adviser reasonable access to the books and records of each for purposes of
confirming the amounts contributed and recouped under this Agreement.
4. 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, 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 within
ninety (90) days of the end of the then-current term for that Fund; provided,
however, that the Sub-Adviser may terminate this Agreement with respect to any
Sub-Advised Fund by providing written notice to the Trust and the Investment
Manager of the termination of this Agreement with respect to such Sub-Advised
Fund at least thirty (30) days prior to the end of the then-current term. 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. The obligations of the Investment
Manager and the Sub-Adviser pursuant to Section 3 of this Agreement shall
terminate upon termination of the Sub-Advisory Agreement with respect to a Fund.
5. Miscellaneous.
5.1. 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.
5.2. 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 any applicable statutory or regulatory requirement to which it is
subject or by which it is bound, or to relieve or deprive the
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Trust's Board of Trustees of its responsibility for and control of the conduct
of the affairs of the Trust or the Funds.
5.3. 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.
5.4. 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 MUTUAL FUNDS
By:
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Name: Xxxxxx X. Naka
Title: Senior Vice President
ING INVESTMENTS, LLC
By:
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Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
CLARION CRA SECURITIES, L.P.
By:
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Name:
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Title:
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SCHEDULE A
TO THE
EXPENSE LIMITATION AGREEMENT
BY AND BETWEEN
ING MUTUAL FUNDS,
CLARION CRA SECURITIES, L.P.
AND
ING INVESTMENTS, LLC
EFFECTIVE: SEPTEMBER 23, 2002
EXPIRATION OF INITIAL TERM: OCTOBER 31, 2003
OPERATING EXPENSE LIMITS
This Agreement relates to the following Fund(s):
MAXIMUM OPERATING EXPENSE LIMIT
NAME OF FUND (AS A PERCENTAGE OF AVERAGE NET ASSETS)
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Class A Class B Class C Class Q
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ING Global Real Estate Fund 1.75 2.50 2.50 1.75
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