EXPENSE LIMITATION AGREEMENT
PILGRIM TROIKA DIALOG RUSSIA FUND, INC.
EXPENSE LIMITATION AGREEMENT, effective as of July 26, 2000 by and between
Pilgrim Investments, Inc. (the "Investment Manager"), Troika Dialog Asset
Management (Cayman Islands), Ltd. (the "Sub-Adviser") and Pilgrim Troika Dialog
Russia Fund, Inc. (the "Company"), on behalf of each series of the Company set
forth in SCHEDULE A (each a "Fund," and collectively, the "Funds").
WHEREAS, the Company is a Maryland corporation, 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 Company;
and
WHEREAS, the Company and the Investment Manager have entered into an
Investment Management Agreement dated July 26, 2000 ("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-Adviser Agreement dated July 26, 2000 pursuant to which the Sub-Adviser
provides investment advisory services to each Fund identified in SCHEDULE B (the
"Sub-Advised Funds") for compensation based on the value of the average daily
net assets of each such Sub-Advised Fund; and
WHEREAS, the Company, 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 the Company's directors 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 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 of for that class of such 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 Company may offset amounts owed to the Funds 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 each 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 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 each 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. 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-Adviser Agreement is equal to fifty percent (50%) of
the advisory fee payable to the Investment Manager by a Sub-Advised Fund, the
Sub-Adviser shall waive or reduce its portfolio management fee and/or promptly
remit to the Investment Manager an amount that is sufficient to pay fifty
percent (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 portfolio management fee paid to the Sub-Adviser.
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3.2. ALLOCATION OF RECOUPMENTS. The Investment Manager shall promptly remit
to the Sub-Adviser fifty percent (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 Company 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 through July 26, 2002.
Thereafter, this Agreement shall automatically renew for one-year terms unless
the Investment Manager provides written notice to the Company of the termination
of this Agreement at least 30 days prior to the end of the then-current term;
PROVIDED, HOWEVER, that the Sub-Adviser may terminate this Agreement with
respect to any Sub-Advised Fund by providing written notice to the Company and
the Investment Manager of the termination of this Agreement with respect to such
Sub-Advised 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 Company, without payment of any
penalty, upon ninety (90) days' prior written notice to the Investment Manager
at its principal place of business. The obligations of the Investment Manager
and the Sub-Adviser pursuant to Section 3 of this Agreement shall terminate upon
termination of the Sub-Adviser Agreement.
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
the Company or the Funds to take any action contrary to the Company's Articles
of Incorporation 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 Company's Board of Directors of its responsibility for and control
of the conduct of the affairs of the Company 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.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first above
written.
PILGRIM TROIKA DIALOG RUSSIA FUND, INC.
/s/ Xxxxxxx X. Xxxxxx
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By: Xxxxxxx X. Xxxxxx,
Senior Vice President
PILGRIM INVESTMENTS, INC.
/s/ Xxxxx X. Xxxxxxxx
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By: Xxxxx X. Xxxxxxxx,
Senior Executive Vice President
TROIKA DIALOG ASSET MANAGEMENT
(CAYMAN ISLANDS), LTD.
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By:
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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)
------------ ---------------------------------------------
Class A Class B Class C Class Q
------- ------- ------- -------
Pilgrim Troika Dialog
Russia Fund, Inc. 3.35% 4.10% N/A N/A
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SCHEDULE B
SUB-ADVISED FUNDS
Pilgrim Troika Dialog Russia Fund, Inc.
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