Exhibit 2(k)(xv)
EXPENSE LIMITATION AGREEMENT
This EXPENSE LIMITATION AGREEMENT, effective as of March 1, 2001, is made
by and between ING Pilgrim Investments, LLC (the "Investment Manager") and
Pilgrim Senior Income Fund (the "Fund").
WHEREAS, the Fund is a Delaware business trust, and is registered under the
Investment Company Act of 1940, as amended (the "1940 Act"), as a closed-end
management investment company, and
WHEREAS, the Fund operates as a closed-end interval fund pursuant to Rule
23c-3 under the 1940 Act; and
WHEREAS, the Fund and the Investment Manager have entered into an
Investment Management Agreement dated December 15, 2000 ("Management
Agreement"), pursuant to which the Investment Manager provides investment
management services to the Fund for compensation based on the value of the
Managed Assets of the Fund (for purposes of the Management Agreement and this
Agreement, Managed Assets means the Fund's average daily gross asset value,
minus the sum of the Fund's accrued liabilities (other than liabilities for the
principal amount of any borrowings incurred, commercial paper or notes issued by
the Fund and the liquidation preference of any outstanding preferred shares));
and
WHEREAS, the Fund 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
would otherwise be subject;
NOW, THEREFORE, the parties hereto agree as follows:
1. EXPENSE LIMITATION.
1.1. APPLICABLE EXPENSE LIMIT. To the extent that the Fund Operating Expenses
(as defined below) incurred by a class of the Fund in any fiscal year exceed the
Maximum Operating Expense Limit, as defined in Section 1.2 below, such excess
amount (the "Excess Amount") shall be the liability of the Investment Manager.
Fund Operating Expenses means all of the expenses incurred by the Fund, but
excluding interest, taxes, brokerage commissions, leverage expenses (as defined
below), other investment-related costs (including without limitation legal fees
incurred for loan documentation and transfer in connection with the purchase and
sale of Fund assets), 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. For the purposes of this Agreement, leverage expenses shall mean fees,
costs and expenses incurred by the Fund's use of leverage (including, without
limitation, expenses incurred by the Fund in creating, establishing and
maintaining leverage through borrowings or the issuance of preferred shares).
1.2. MAXIMUM OPEN EXPENSE LIMIT. The Maximum Operating Expense Limit in any
fiscal year with respect to each class of the Fund shall be the amount specified
in Schedule A.
1.3. METHOD OF COMPUTATION. To determine the Investment Manager's obligation
with respect to the Excess Amount, each day the Maximum Operating Expense Limit
for each class of the Fund shall be calculated in accordance with Schedule A,
and the cumulative Fund Operating Expenses for the current fiscal year shall be
annualized. If the annualized cumulative Fund Operating Expenses for any day of
a class of a Fund exceed the Maximum Operating Expense Limit for that class as
of that day, the Fund shall record a receivable from the Investment Manager for
the difference. Not less frequently than quarterly, the above described
receivables shall be paid by the Investment Manager. The Fund may offset amounts
owed 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 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 EXPENSE REIMBURSEMENTS.
2.1. RECOUPMENT. If, on any day during which the Management Agreement is in
effect, the annualized cumulative Fund Operating Expenses of a class of a Fund
for that day are less than the Maximum Operating Expense Limit, the Investment
Manager shall be entitled to recoup from such class of the Fund the 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 cumulative Fund Operating
Expenses plus the amount recouped equals, for such day, the Maximum 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 Maximum Operating
Expense Limit.
3. Term and Termination of Agreement.
This Agreement shall have an initial term through February 28, 2002.
Thereafter, this Agreement shall automatically renew for one-year terms unless
the Investment Manager provides written notice of the termination of this
Agreement to the Fund 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.
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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
Fund to take any action contrary to the Fund's Agreement and Declaration of
Trust or Bylaws, or any applicable statutory or regulatory requirement to which
it is subject or by which it is bound, or to relieve or deprive the Fund's Board
of Trustees of its responsibility for and control of the conduct of the affairs
of the Fund.
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.
PILGRIM SENIOR INCOME FUND
By: /s/ Xxxxxx X. Xxxxxx
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Xxxxxx X. Xxxxxx
Senior Vice President
ING PILGRIM INVESTMENTS, LLC
By: /s/ Xxxxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx
Senior Vice President
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SCHEDULE A
OPERATING EXPENSE LIMITS
Maximum Operating Expense Limit
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Class A Class B Class C Class Q
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Pilgrim Senior Income Fund 0.90% of 0.90% of 0.90% of 0.90% of
Managed Managed Managed Managed
Assets plus Assets plus Assets plus Assets
0.45% of 1.20% of 0.95% of plus 0.45%
average average average of average
daily Net daily Net daily Net daily Net
Assets Assets* Assets Assets
* Pursuant to a separate agreement, ING Pilgrim Securities has waived the
0.25% service fee for the period March 1, 2001 through February 28, 2002.
Notwithstanding that waiver, such 0.25% service fee shall be treated as
though it were being paid by the Fund for the purposes of determining
whether the Class B Maximum Operating Expense Limit has been reached.
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