Exhibit d.2
Form of Expense Limitation Agreement
FORM OF
EXPENSE LIMITATION AGREEMENT
This AGREEMENT, effective as of ________ ___, 2001 by and between ING
Pilgrim Investments, LLC (the "Investment Manager") and [Name of Entity] (the
"Trust"), on behalf of each series of the Trust set forth on Schedule A herto
(herein referred to as, the "Fund") as it may be amended from time to time.
WHEREAS, the Trust is a [corporate form], 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 have entered into an
Investment Management Agreement dated ________ ___, 2001 ("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,
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 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. The Fund may offset amounts owed to the Fund pursuant to this Agreement
against the advisory fee payable to the Investment Manager.
183480.4.03
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 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 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.
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 through [________ __, 200_].
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 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.
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 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.
-2-
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 and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
[Name of Entity]
By:
--------------------------------------------
Name:
Title:
ING PILGRIM INVESTMENTS, LLC
By:
--------------------------------------------
Name:
Title:
-3-
SCHEDULE A
OPERATING EXPENSE LIMITS
This Agreement relates to the following Funds:
Maximum Operating Expense Limit
Name of Fund (as a percentage of average net assets)
------------ ---------------------------------------
