Exhibit (h)(10)
FORM OF EXPENSE LIMITATION AGREEMENT
ING FUNDS TRUST
EXPENSE LIMITATION AGREEMENT, effective as of March 1, 2002 by and
between ING Investments, LLC (the "Investment Manager") and ING Funds Trust (the
"Trust," formerly Pilgrim Funds 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.
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; 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 dated October 30, 1998 and restated May 9, 2001
("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. 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 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 each 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 each 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 Amended and Restated
Multiple Class Plan Pursuant to Rule 18f-3 under the 1940 Act. A Fund 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 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 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 B hereto. 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 the Trust at least thirty (30) days prior to the end of the then-current term
for that Fund. In addition, this Agreement shall terminate upon termination of
the Management Agreement, or it may be terminated by the Trust, without payment
of any penalty, upon ninety (90) days' prior written notice to the Investment
Manager at its principal place of business.
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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 the Funds 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 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 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 FUNDS TRUST
ON BEHALF OF EACH OF ITS SERIES
By:
---------------------------------------------
Name: Xxxxxx X. Naka
Title: Senior Vice President
ING INVESTMENTS, LLC
By:
---------------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President
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SCHEDULE A
TO THE
EXPENSE LIMITATION AGREEMENT
BY AND BETWEEN
ING INVESTMENTS, LLC
AND
ING FUNDS TRUST
EFFECTIVE MARCH 1, 2002
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
------- ------- ------- -------
ING Internet Fund 1.90% 2.65% 2.65% N/A
ING European Equity Fund 1.90% 2.65% 2.65% N/A
ING Global Communications Fund 1.70% 2.45% 2.45% N/A
ING Global Technology Fund 1.95% 2.70% 2.70% 1.70%
ING National Tax-Exempt Bond Fund 1.15% 1.90% 1.90% N/A
ING Tax Efficient Equity Fund 1.45% 2.20% 2.20% N/A
ING High Yield Bond Fund 1.30% 2.05% 2.05% N/A
ING Intermediate Bond Fund 1.15% 1.90% 1.90% .90%
ING Classic Money Market Fund ___% ___% ___% ___%
------
HE
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SCHEDULE B
TO THE
EXPENSE LIMITATION AGREEMENT
BY AND BETWEEN
ING INVESTMENTS, LLC
AND
ING FUNDS TRUST
EFFECTIVE MARCH 1, 2002
The initial term of this Agreement with respect to each Fund is as follows:
NAME OF FUND EXPIRATION DATE OF INITIAL TERM
------------ -------------------------------
ING Internet Fund May 31, 2003*
ING European Equity Fund October 31, 2003*
ING Global Communications Fund October 31, 2003*
ING Global Technology Fund October 31, 2003*
ING National Tax-Exempt Bond Fund March 31, 2003*
ING Tax Efficient Equity Fund May 31, 2003*
ING High Yield Bond Fund March 31, 2003*
ING Intermediate Bond Fund March 31, 2003*
ING Classic Money Market Fund March 31, 2003*
---------------------
* The expiration of the initial term of this Expense Limitation Agreement
has been set to align with the respective fiscal year end date of each
of the Funds on this Schedule B.
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