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<SEC-DOCUMENT>0001047469-04-021913.txt : 20040628
<SEC-HEADER>0001047469-04-021913.hdr.sgml : 20040628
<ACCEPTANCE-DATETIME>20040628173126
ACCESSION NUMBER:		0001047469-04-021913
CONFORMED SUBMISSION TYPE:	POS 8C
PUBLIC DOCUMENT COUNT:		39
FILED AS OF DATE:		20040628

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ING PRIME RATE TRUST
		CENTRAL INDEX KEY:			0000826020
		IRS NUMBER:				956874587
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0228

	FILING VALUES:
		FORM TYPE:		POS 8C
		SEC ACT:		1933 Act
		SEC FILE NUMBER:	333-68239
		FILM NUMBER:		04886352

	BUSINESS ADDRESS:	
		STREET 1:		ING PRIME RATE TRUST
		STREET 2:		7337 E. DOUBLETREE RANCH ROAD
		CITY:			SCOTTSDALE
		STATE:			AZ
		ZIP:			85258
		BUSINESS PHONE:		4804773000

	MAIL ADDRESS:	
		STREET 1:		ING PRIME RATE TRUST
		STREET 2:		7337 E. DOUBLETREE RANCH ROAD
		CITY:			SCOTTSDALE
		STATE:			AZ
		ZIP:			85258

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PILGRIM AMERICA PRIME RATE TRUST
		DATE OF NAME CHANGE:	19960518

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PILGRIM PRIME RATE TRUST/
		DATE OF NAME CHANGE:	19960518

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PILGRIM PRIME RATE TRUST
		DATE OF NAME CHANGE:	19920703

FILER:

	COMPANY DATA:	
		COMPANY CONFORMED NAME:			ING PRIME RATE TRUST
		CENTRAL INDEX KEY:			0000826020
		IRS NUMBER:				956874587
		STATE OF INCORPORATION:			MA
		FISCAL YEAR END:			0228

	FILING VALUES:
		FORM TYPE:		POS 8C
		SEC ACT:		1940 Act
		SEC FILE NUMBER:	811-05410
		FILM NUMBER:		04886353

	BUSINESS ADDRESS:	
		STREET 1:		ING PRIME RATE TRUST
		STREET 2:		7337 E. DOUBLETREE RANCH ROAD
		CITY:			SCOTTSDALE
		STATE:			AZ
		ZIP:			85258
		BUSINESS PHONE:		4804773000

	MAIL ADDRESS:	
		STREET 1:		ING PRIME RATE TRUST
		STREET 2:		7337 E. DOUBLETREE RANCH ROAD
		CITY:			SCOTTSDALE
		STATE:			AZ
		ZIP:			85258

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PILGRIM AMERICA PRIME RATE TRUST
		DATE OF NAME CHANGE:	19960518

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PILGRIM PRIME RATE TRUST/
		DATE OF NAME CHANGE:	19960518

	FORMER COMPANY:	
		FORMER CONFORMED NAME:	PILGRIM PRIME RATE TRUST
		DATE OF NAME CHANGE:	19920703
</SEC-HEADER>
<DOCUMENT>
<TYPE>POS 8C
<SEQUENCE>1
<FILENAME>a2138029zpos8c.txt
<DESCRIPTION>POS 8C
<TEXT>
<Page>

           As filed with the Securities and Exchange Commission on June 28, 2004
                                               Securities Act File No. 333-68239
                                       Investment Company Act File No. 811-05410

================================================================================

                     U.S. SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   ----------

                                    FORM N-2

                        (CHECK APPROPRIATE BOX OR BOXES)

           Registration Statement Under The Securities Act Of 1933           /X/

                         Pre-Effective Amendment No.                         / /

                       Post-Effective Amendment No. 12                       /X/

                                     and/or

         Registration Statement Under The Investment Company Act Of 1940     /X/

                                Amendment No. 58                             /X/
                        (Check appropriate box or boxes)

                              ING PRIME RATE TRUST
                 (Exact Name of Registrant Specified in Charter)
                          7337 E. Doubletree Ranch Road
                              Scottsdale, AZ 85258
                    (Address of Principal Executive Offices)
       Registrant's Telephone Number, Including Area Code: (800) 992-0180

                Huey P. Falgout, Jr.                  With copies to:
                ING Investments, LLC              Jeffrey S. Puretz, Esq.
           7337 E. Doubletree Ranch Road                Dechert LLP
                Scottsdale, AZ 85258                 1775 I Street, NW
      (Name and Address of Agent for Service)      Washington, DC 20006

                                   ----------

APPROXIMATE DATE OF PROPOSED OFFERING:
As soon as practical after the effective date of this Registration Statement

If any securities being registered on this form will be offered on a delayed or
continuous basis in reliance on Rule 415 under the Securities Act of 1933, other
than securities offered in connection with a dividend reinvestment plan, check
the following box. /X/

It is proposed that this filing will become effective:

/X/  When declared effective pursuant to Section 8(c) of the Securities Act of
     1933.
<Page>

PROSPECTUS


JULY 1, 2004


5,000,000 COMMON SHARES

ING PRIME RATE TRUST

[GRAPHIC]

THIS PROSPECTUS SETS FORTH CONCISELY THE INFORMATION ABOUT THE ING PRIME RATE
TRUST (THE TRUST) THAT A PROSPECTIVE INVESTOR OUGHT TO KNOW BEFORE INVESTING.
YOU SHOULD READ IT CAREFULLY BEFORE YOU INVEST, AND KEEP IT FOR FUTURE
REFERENCE.


THE TRUST HAS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION (THE SEC) A
STATEMENT OF ADDITIONAL INFORMATION DATED JULY 1, 2004 (THE SAI) CONTAINING
ADDITIONAL INFORMATION ABOUT THE TRUST. THE SAI IS INCORPORATED BY REFERENCE IN
ITS ENTIRETY INTO THIS PROSPECTUS. YOU MAY OBTAIN A FREE COPY OF THE SAI BY
CONTACTING THE TRUST AT (800) 992-0180 OR BY WRITING TO THE TRUST AT 7337
E. DOUBLETREE RANCH ROAD, SCOTTSDALE, ARIZONA 85258. THE PROSPECTUS, SAI AND
OTHER INFORMATION ABOUT THE TRUST ARE AVAILABLE ON THE SEC'S WEBSITE
(http://www.sec.gov). THE TABLE OF CONTENTS FOR THE SAI APPEARS ON PAGE 30 OF
THIS PROSPECTUS.


COMMON SHARES OF THE TRUST TRADE ON THE NEW YORK STOCK EXCHANGE (THE NYSE) UNDER
THE SYMBOL PPR.


MARKET FLUCTUATIONS AND GENERAL ECONOMIC CONDITIONS CAN ADVERSELY AFFECT THE
TRUST. THERE IS NO GUARANTEE THAT THE TRUST WILL ACHIEVE ITS INVESTMENT
OBJECTIVE. INVESTMENT IN THE TRUST INVOLVES CERTAIN RISKS AND SPECIAL
CONSIDERATIONS, INCLUDING RISKS ASSOCIATED WITH THE TRUST'S USE OF LEVERAGE. SEE
"RISK FACTORS AND SPECIAL CONSIDERATIONS" BEGINNING ON PAGE 15 FOR A DISCUSSION
OF ANY FACTORS THAT MAKE INVESTMENT IN THE TRUST SPECULATIVE OR HIGH RISK.


NEITHER THE SEC NOR ANY STATE SECURITIES COMMISSION HAS APPROVED OR DISAPPROVED
THESE SECURITIES, OR DETERMINED THAT THIS PROSPECTUS IS TRUTHFUL OR COMPLETE.
ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL OFFENSE.

[ING FUNDS LOGO]]

<Page>

                                                                   WHAT'S INSIDE


<Table>
<S>                                                         <C>
Introduction to the Trust                                    1
Prospectus Synopsis                                          2
What You Pay To Invest -- Trust Expenses                     6
Financial Highlights                                         8
Trading and NAV Information                                 10
Investment Objective and Policies                           11
The Trust's Investments                                     13
Risk Factors and Special Considerations                     15
Transaction Policies                                        20
Plan of Distribution                                        21
Use of Proceeds                                             22
Dividends and Distributions                                 22
Investment Management and Other
   Service Providers                                        23
Description of the Trust                                    25
Description of Capital Structure                            27
Tax Matters                                                 28
More Information                                            29
Statement of Additional Information
   Table of Contents                                        30
</Table>


[GRAPHIC]       OBJECTIVE

[GRAPHIC]       INVESTMENT    This Prospectus describes the Trust's objective,
                STRATEGY      investment strategy and risks.

[GRAPHIC]       RISKS

                              You'll also find:

                              WHAT YOU PAY TO INVEST.

[GRAPHIC]       WHAT YOU      A list of the fees and expenses you pay -- both
                PAY TO        directly and indirectly -- when you invest in the
                INVEST        Trust.

<Page>

                      (THIS PAGE INTENTIONALLY LEFT BLANK)

<Page>

                                                       INTRODUCTION TO THE TRUST

THIS PROSPECTUS IS DESIGNED TO HELP YOU MAKE AN INFORMED DECISION ABOUT MAKING
AN INVESTMENT IN ING PRIME RATE TRUST. PLEASE READ IT CAREFULLY AND RETAIN IT
FOR FUTURE REFERENCE.

Who should invest in the Trust?

ING PRIME RATE TRUST MAY SUIT YOU IF YOU:

   - are seeking a high level of current income; and

   - are willing to accept the risks associated with an investment in a
     leveraged portfolio consisting primarily of senior loans that are typically
     below investment grade credit quality.

DESCRIPTION OF THE TRUST


   The Trust is a diversified, closed-end management investment company that
   seeks to provide investors with as high a level of current income as is
   consistent with the preservation of capital. The Trust seeks to achieve this
   objective by investing in a professionally managed portfolio comprised
   primarily of senior loans, an investment typically not available directly to
   individual investors.


   The Trust cannot guarantee that it will achieve its investment objective. In
   addition, since the senior loans in the Trust's portfolio typically are below
   investment grade credit quality and the portfolio is leveraged, the Trust has
   speculative characteristics.

   Common Shares of the Trust trade on the NYSE under the symbol PPR.


   The Trust's investment manager is ING Investments, LLC. The Trust's
   sub-adviser is ING Investment Management Co. (formerly known as Aeltus
   Investment Management, Inc.)


[SIDENOTE]

Risk is the potential that your investment will lose money or not earn as much
as you hope. All funds have varying degrees of risk, depending upon the
securities they invest in.


This Trust involves certain risks and special considerations, including risks
associated with investing in below investment grade assets and risks associated
with the Trust's use of borrowing and other leverage strategies. See "Risk
Factors and Special Considerations" beginning on page 15.


Please read this Prospectus carefully to be sure you understand the principal
risks and strategies associated with the Trust. You should consult the SAI for a
complete list of the risks and strategies.

[GRAPHIC]

If you have any questions about the Trust, please call your financial consultant
or us at (800) 992-0180.

[GRAPHIC]

                          If you have any questions, please call (800) 992-0180.

                                                     Introduction to the Trust 1
<Page>

PROSPECTUS SYNOPSIS


The following synopsis is qualified in its entirety by reference to the more
detailed information appearing elsewhere in this Prospectus.


DESCRIPTION OF THE TRUST

THE TRUST


The Trust is a diversified, closed-end management investment company registered
under the Investment Company Act of 1940, as amended (the 1940 Act). It was
organized as a Massachusetts business trust on December 2, 1987. As of June 15,
2004, the Trust's net asset value (NAV) per Common Share was $7.35.


NYSE LISTED


As of June 15, 2004, the Trust had 137,821,394 Common Shares outstanding, which
are traded on the NYSE under the symbol PPR. As of June 15, 2004, the last
reported sales price of a Common Share of the Trust was $7.90.


INVESTMENT OBJECTIVE

To provide investors with as high a level of current income as is consistent
with the preservation of capital. There is no assurance that the Trust will
achieve its investment objective.

INVESTMENT MANAGER/SUB-ADVISER


The Trust's investment manager is ING Investments, LLC (ING Investments or the
Investment Manager), an Arizona limited liability company. The Investment
Manager had assets under management of over $35.4 billion as of March 31, 2004.


The Investment Manager is an indirect wholly-owned subsidiary of ING Groep N.V.
(NYSE: ING) (ING Groep). ING Groep is a global financial institution active in
the fields of insurance, banking and asset management in more than 65 countries
with more than 100,000 employees.


The Investment Manager receives an annual fee, payable monthly, in an amount
equal to 0.80% of the Trust's average daily gross asset value, minus the sum of
the Trust's accrued and unpaid dividends on any outstanding preferred shares and
accrued liabilities (other than liabilities for the principal amount of any
borrowings incurred, commercial paper or notes issued by the Trust and the
liquidation preference of any outstanding preferred shares) (Managed Assets).
This definition includes the assets acquired through the Trust's use of
leverage.

Effective August 1, 2003, ING Investment Management Co. (INGIM or Sub-Adviser)
(formerly known as Aeltus Investment Management, Inc.) serves as Sub-Adviser to
the Trust. See "Investment Management and Other Service Providers --
Sub-Adviser" on page 23. INGIM is an affiliate of the Investment Manager.


DISTRIBUTIONS

Income dividends on Common Shares accrue and are declared and paid monthly.
Income dividends may be distributed in cash or reinvested in additional full and
fractional shares of the Trust through the Trust's Shareholder Investment
Program.

PRIMARY INVESTMENT STRATEGY

The Trust seeks to achieve its investment objective by investing under normal
circumstances at least 80% of its net assets, plus the amount of any borrowings
for investment purposes, in higher yielding, U.S. dollar denominated, floating
rate secured senior loans (Senior Loans). The Senior Loans are typically rated
below investment grade credit quality. The Trust makes its investments in Senior
Loans by purchasing a portion of the overall loan, I.E., the Trust becomes one
of a number of lenders participating in the loan. The Trust will provide
shareholders with at least 60 days' prior notice of any change in this
investment policy.

The Trust only invests in Senior Loans made to corporations or other business
entities organized under U.S. or Canadian law and which are domiciled in the
U.S., Canada or in U.S. territories or possessions. Senior Loans either hold the
most senior position in the capital structure of the borrower or hold an equal
ranking with other senior debt or have characteristics that the Investment
Manager believes justify treatment as senior debt.


2  PROSPECTUS SYNOPSIS
<Page>

                                                             PROSPECTUS SYNOPSIS

OTHER INVESTMENT STRATEGIES AND POLICIES


Assets not invested in Senior Loans may be invested in unsecured loans,
subordinated loans, short-term debt securities, and equities acquired in
connection with investments in loans. See "Investment Objective and Policies" on
page 11.


Loans in which the Trust invests typically have interest rates which reset at
least quarterly and may reset as frequently as daily. The maximum duration of an
interest rate reset on any loan in which the Trust may invest is one year. In
order to achieve overall reset balance, the Trust will ordinarily maintain a
dollar-weighted average time to next interest rate adjustment on its loans of 90
days or less.

Normally at least 80% of the Trust's portfolio will be invested in Senior Loans
with maturities of one to ten years. The maximum maturity on any loan in which
the Trust may invest is ten years.

To seek to increase the yield on the Common Shares, the Trust may engage in
lending its portfolio securities. Such lending will be fully secured by
investment grade collateral held by an independent agent.

The Trust may hold a portion of its assets in short-term interest bearing
instruments. Moreover, in periods when, in the opinion of the Investment Manager
or Sub-Adviser, a temporary defensive position is appropriate, up to 100% of the
Trust's assets may be held in cash or short-term interest bearing instruments.
The Trust may not achieve its investment objective when pursuing a temporary
defensive position.

The Trust may not invest in Senior Loans made to foreign borrowers other than
borrowers organized under Canadian law and which are domiciled in the U.S.,
Canada or in U.S. territories or possessions.

The Trust may engage in executing repurchase and reverse repurchase agreements.

LEVERAGE


To seek to increase the yield on the Common Shares, the Trust employs financial
leverage by borrowing money and issuing preferred shares. See "Risk Factors and
Special Considerations -- Leverage" on page 16.


BORROWINGS

Under the 1940 Act, the Trust may borrow up to an amount equal to 33 1/3% of its
total assets (including the proceeds of the borrowings) less all liabilities
other than borrowings. The Trust's obligations to holders of its debt are senior
to its ability to pay dividends on, or redeem or repurchase, Common Shares and
preferred shares, or to pay holders of Common Shares and preferred shares in the
event of liquidation.

PREFERRED SHARES

Under the 1940 Act, the Trust may issue preferred shares so long as immediately
after any issuance of preferred shares the value of the Trust's total assets
(less all Trust liabilities and indebtedness that is not senior indebtedness) is
at least twice the amount of the Trust's senior indebtedness plus the
involuntary liquidation preference of all outstanding shares.


The Trust is authorized to issue an unlimited number of shares of a class of
preferred stock in one or more series. In November 2000, the Trust issued 3,600
shares each of Series M, T, W, Th and F Auction Rate Cumulative Preferred
Shares, $0.01 par value, $25,000 liquidation preference per share, for a total
issuance of $450 million (the Preferred Shares). The Trust's obligations to
holders of the Preferred Shares are senior to its ability to pay dividends on,
or redeem or repurchase, Common Shares, or to pay holders of Common Shares in
the event of liquidation.

The 1940 Act also requires that the holders of the Preferred Shares, voting as a
separate class, have the right to:


   - elect at least two trustees at all times; and

   - elect a majority of the trustees at any time when dividends on any series
     of Preferred Shares are unpaid for two full years.

In each case, the holders of Common Shares voting separately as a class will
elect the remaining trustees.


                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                                           PROSPECTUS SYNOPSIS 3
<Page>

PROSPECTUS SYNOPSIS

DIVERSIFICATION

The Trust maintains a diversified investment portfolio, a strategy which seeks
to limit exposure to any one issuer or industry.

As a diversified investment company, the Trust may not make investments in any
one issuer (other than the U.S. government) if, immediately after such purchase
or acquisition, more than 5% of the value of the Trust's total assets would be
invested in such issuer, or the Trust would own more than 25% of any outstanding
issue. The Trust will consider a borrower on a loan, including a loan
participation, to be the issuer of that loan. This strategy is a fundamental
policy that may not be changed without shareholder approval. With respect to no
more than 25% of its total assets, the Trust may make investments that are not
subject to the foregoing restrictions.

In addition, a maximum of 25% of the Trust's total assets, measured at the time
of investment, may be invested in any one industry. This strategy is also a
fundamental policy that may not be changed without shareholder approval.

PLAN OF DISTRIBUTION


The Common Shares are offered by the Trust through the Trust's Shareholder
Investment Program. The Shareholder Investment Program allows participating
shareholders to reinvest all dividends in additional shares of the Trust, and
also allows participants to purchase additional Common Shares through optional
cash investments in amounts ranging from a minimum of $100 to a maximum of
$100,000 per month. The Trust reserves the right to reject any purchase order.
Please note that cash, travelers checks, third party checks, money orders and
checks drawn on non-US banks (even if payment may be effected through a US bank)
generally will not be accepted. Common Shares may be issued by the Trust under
the Shareholder Investment Program only if the Trust's Common Shares are trading
at a premium to net asset value (NAV). If the Trust's Common Shares are trading
at a discount to NAV, Common Shares purchased under the Shareholder Investment
Program will be purchased on the open market. See "Plan of Distribution" on page
21.


Shareholders may elect to participate in the Shareholder Investment Program by
telephoning the Trust or submitting a completed Participation Form to DST
Systems, Inc. (DST).


Common Shares also may be offered pursuant to privately negotiated transactions
between the Trust or ING Funds Distributor, LLC and individual investors. Common
Shares of the Trust issued in connection with privately negotiated transactions
will be issued at the greater of (i) NAV per Common Share of the Trust's Common
Shares or (ii) at a discount ranging from 0% to 5% of the average daily market
price of the Trust's Common Shares at the close of business on the two business
days preceding the date upon which Common Shares are sold pursuant to the
privately negotiated transaction. See "Plan of Distribution" on page 21.


ADMINISTRATOR

The Trust's administrator is ING Funds Services, LLC (the Administrator). The
Administrator is an affiliate of the Investment Manager. The Administrator
receives an annual fee, payable monthly, in a maximum amount equal to 0.25% of
the Trust's Managed ASSETS.

RISK FACTORS AND SPECIAL CONSIDERATIONS

CREDIT RISK ON LOANS

Loans in the Trust's portfolio will typically be below investment grade credit
quality. Investment in the Trust involves the risk that borrowers may default on
obligations to pay principal or interest when due, that lenders may have
difficulty liquidating the collateral securing the loans or enforcing their
rights under the terms of the loans, and that the Trust's investment objective
may not be realized.

4  PROSPECTUS SYNOPSIS
<Page>

PROSPECTUS SYNOPSIS

INTEREST RATE RISK

Changes in market interest rates will affect the yield on the Trust's Common
Shares. If market interest rates fall, the yield on the Trust's Common Shares
will also fall. In addition, changes in market interest rates may cause the
Trust's NAV to experience moderate volatility because of the lag between changes
in market rates and the resetting of the floating rates on assets in the Trust's
portfolio. To the extent that market interest rate changes are reflected as a
change in the market spreads for loans of the type and quality in which the
Trust invests, the value of the Trust's portfolio may decrease in response to an
increase in such spreads. Finally, substantial increases in interest rates may
cause an increase in loan defaults as borrowers may lack the resources to meet
higher debt service requirements.


DISCOUNT FROM NAV


As with any security, the market value of the Common Shares may increase or
decrease from the amount that you paid for the Common Shares.

The Trust's Common Shares may trade at a discount to NAV. This is a risk
separate and distinct from the risk that the Trust's NAV per Common Share may
decrease.

LEVERAGE


The Trust's use of leverage through borrowings and the issuance of preferred
shares can adversely affect the yield on the Trust's Common Shares. To the
extent that the Trust is unable to invest the proceeds from the use of leverage
in assets which pay interest at a rate which exceeds the rate paid on the
leverage, the yield on the Trust's Common Shares will decrease. In addition, in
the event of a general market decline in the value of assets such as those in
which the Trust invests, the effect of that decline will be magnified in the
Trust because of the additional assets purchased with the proceeds of the
leverage. As of June 15, 2004, the Trust had $444 million of borrowings
outstanding under two credit facilities totaling $525, and $450 million of
Preferred Shares.


LIMITED SECONDARY MARKET FOR LOANS

Because of the limited secondary market for loans, the Trust may be limited in
its ability to sell loans in its portfolio in a timely fashion and/or at a
favorable price.

DEMAND FOR LOANS

An increase in demand for loans may adversely affect the rate of interest
payable on new loans acquired by the Trust, and it may also increase the price
of loans in the secondary market.


IMPACT OF SHAREHOLDER INVESTMENT PROGRAM AND PRIVATELY NEGOTIATED TRANSACTIONS

The issuance of Common Shares through the Shareholder Investment Program and/or
through privately negotiated transactions may have an adverse effect on prices
in the secondary market for the Trust's Common Shares by increasing the number
of Common Shares available for sale. In addition, the Common Shares may be
issued at a discount to the market price for such Common Shares, which may put
downward pressure on the market price for Common Shares of the Trust.



                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                                           PROSPECTUS SYNOPSIS 5
<Page>

WHAT YOU PAY TO INVEST -- TRUST EXPENSES


The cost you pay to invest in the Trust includes the expenses incurred by the
Trust. In accordance with SEC requirements, the table below shows the expenses
of the Trust, including interest expense on borrowings, as a percentage of the
average net assets of the Trust, and not as a percentage of gross assets or
Managed Assets. By showing expenses as a percentage of net assets, expenses are
not expressed as a percentage of all of the assets that are invested for the
Trust. The Table below assumes that the Trust has issued $450 million of
Preferred Shares and has borrowed an amount equal to 25% of its Managed Assets.
For information about the Trust's expense ratios if the Trust had not borrowed
or issued Preferred Shares, see "Risk Factors and Special Considerations --
Annual Expenses Without Borrowings or Preferred Shares."



<Table>
<S>                                                                                 <C>
SHAREHOLDER TRANSACTION EXPENSES
Shareholder Investment Program Fees                                                 NONE
Privately Negotiated Transactions
   Commission (as a percentage of offering price)                                   NONE
ANNUAL EXPENSES (AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON SHARES)
Management and Administrative Fees(1)                                               2.05%
Interest Expense on Borrowed Funds                                                  0.89%
Other Operating Expenses(2)                                                         0.43%
Total Annual Expenses(3)                                                            3.37%
</Table>


(1)  Pursuant to the Investment Management Agreement with the Trust, ING
     Investments is paid a fee of 0.80% of the Trust's Managed Assets. Pursuant
     to its Administration Agreement with the Trust, ING Funds Services, LLC,
     the Trust's Administrator, is paid a fee of 0.25% of the Trust's Managed
     Assets. See "Investment Management and Other Service Providers -- The
     Administrator."
(2)  "Other Operating Expenses" are based on estimated amounts for the current
     fiscal year, which, in turn, are based on "other operating expenses" for
     the fiscal year ended February 29, 2004, and does not include the expenses
     of borrowing.

(3)  If the Total Annual Expenses of the Trust were expressed as a percentage of
     Managed Assets (assuming the same 25% borrowing), the Total Annual Expense
     ratio would be 1.73%.


6  WHAT YOU PAY TO INVEST -- TRUST EXPENSES
<Page>

WHAT YOU PAY TO INVEST -- TRUST EXPENSES

EXAMPLE


The following hypothetical example shows the amount of the expenses that an
investor in the Trust would bear on a $1,000 investment that is held for the
different time periods in the table. The example assumes that all dividends and
other distributions are reinvested at NAV and that the percentage amounts listed
under Total Annual Expenses above remain the same in the years shown. The tables
and the assumption in the hypothetical example of a 5% annual return are
required by regulation of the SEC applicable to all investment companies. The
assumed 5% annual return is not a prediction of, and does not represent, the
projected or actual performance of the Trust's Common Shares. For more complete
descriptions of certain of the Trust's costs and expenses, see "Investment
Management and Other Service Providers."

The following example applies to shares issued in connection with the Trust's
Shareholder Investment Program and shares issued in connection with privately
negotiated transactions. This example does not take into account whether such
shares are purchased at a discount or a premium to the Trust's net asset value.


<Table>
<Caption>
                                                                                 1 YEAR     3 YEARS    5 YEARS     10 YEARS
- ---------------------------------------------------------------------------------------------------------------------------
<S>                                                                              <C>        <C>        <C>         <C>
You would pay the following expenses on a $1,000 investment, assuming a 5%
annual return and where the Trust has borrowed in an amount equal to 25% of its
Managed Assets                                                                   $    34    $   106    $   183     $    395
You would pay the following expenses on a $1,000
investment, assuming a 5% annual return and where the
Trust has not borrowed                                                           $    20    $    62    $   106     $    230
</Table>


The purpose of the above table is to assist you in understanding the various
costs and expenses that an investor in the Trust will bear directly or
indirectly.

THE FOREGOING EXAMPLE SHOULD NOT BE CONSIDERED A REPRESENTATION OF FUTURE
EXPENSES, AND ACTUAL EXPENSES MAY BE GREATER OR LESS THAN THOSE SHOWN.


                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                      WHAT YOU PAY TO INVEST -- TRUST EXPENSES 7
<Page>

FINANCIAL HIGHLIGHTS

FINANCIAL HIGHLIGHTS TABLE


The table below sets forth selected financial information which has been derived
from the financial statements in the Trust's Annual Report dated as of February
29, 2004. The information in the table below has been audited by KPMG LLP,
independent registered public accounting firm. The auditors' report is
contained in the Trust's Annual Report dated as of February 29, 2004 which is
incorporated by reference into the SAI. A free copy of the Annual Report may
be obtained by calling (800) 992-0180.



<Table>
<Caption>
                                                                  YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
                                                            --------------------------------------------------
                                                                 2004              2003              2002
                                                            --------------    --------------    --------------
<S>                                                         <C>               <C>               <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year                          $         6.73    $         7.20    $         8.09
Net investment income                                                 0.46              0.50              0.74
Net realized and unrealized gain (loss) on investments                0.61             (0.47)            (0.89)
                                                            --------------    --------------    --------------
Increase (decrease) in net asset value from
  investment operations                                               1.07              0.03             (0.15)
Distributions to Common Shareholders from net
  investment income                                                  (0.42)            (0.45)            (0.63)
Distribution to Preferred Shareholders                               (0.04)            (0.05)            (0.11)
Reduction in net asset value from Preferred
  Shares offerings                                                      --                --                --
                                                            --------------    --------------    --------------
Net asset value, end of year                                $         7.34    $         6.73    $         7.20
                                                            ==============    ==============    ==============
Closing market price at end of year                         $         7.84    $         6.46    $         6.77
TOTAL INVESTMENT RETURN(1)
Total investment return at closing market price(2)                   28.77%             2.53%            (9.20)%
Total investment return at net asset value(3)                        15.72%             0.44%            (3.02)%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (000's)                              $    1,010,325    $      922,383    $      985,982
Preferred Shares Aggregate amount
  outstanding (000's)                                       $      450,000    $      450,000    $      450,000
Borrowings at end of year (000's)                           $      225,000    $      167,000    $      282,000
Liquidation and market value per share
  of Preferred Shares                                       $       25,000    $       25,000    $       25,000
Asset coverage per $1,000 of debt(6)                        $        2,500    $        2,500    $        2,350
Average borrowings (000's)                                  $      143,194    $      190,671    $      365,126
Ratios to average net assets including Preferred Shares(7)
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.45%             1.49%             1.57%
  Expenses                                                            1.65%             1.81%             2.54%
  Net investment income                                               4.57%             4.97%             6.83%
Ratios to average net assets plus borrowing
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.84%             1.82%             1.66%
  Expenses                                                            2.09%             2.23%             2.70%
  Net investment income                                               5.82%             6.10%             7.24%
Ratios to average net assets
  Expenses (before interest and other
   fees related to revolving credit facility)                         2.11%             2.19%             2.25%
  Expenses                                                            2.40%             2.68%             3.64%
  Net investment income                                               6.68%             7.33%             9.79%
  Portfolio turnover rate                                               87%               48%               53%
  Common shares outstanding at end of year (000's)                 137,638           136,973           136,973

<Caption>
                                                            YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
                                                            ---------------------------------------
                                                                 2001                    2000(4)
                                                            --------------           --------------
<S>                                                         <C>                      <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year                          $         8.95           $         9.24
Net investment income                                                 0.88                     0.79
Net realized and unrealized gain (loss) on investments               (0.78)                   (0.30)
                                                            --------------           --------------
Increase (decrease) in net asset value from
  investment operations                                               0.10                     0.49
Distributions to Common Shareholders from net
  investment income                                                  (0.86)                   (0.78)
Distribution to Preferred Shareholders                               (0.06)                      --
Reduction in net asset value from Preferred
  Shares offerings                                                   (0.04)                      --
                                                            --------------           --------------
Net asset value, end of year                                $         8.09           $         8.95
                                                            ==============           ==============
Closing market price at end of year                         $         8.12           $         8.25
TOTAL INVESTMENT RETURN(1)
Total investment return at closing market price(2)                    9.10%                   (5.88)%
Total investment return at net asset value(3)                         0.19%                    5.67%
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (000's)                              $    1,107,432           $    1,217,339
Preferred Shares Aggregate amount
  outstanding (000's)                                       $      450,000                       --
Borrowings at end of year (000's)                           $      510,000           $      484,000
Liquidation and market value per share
  of Preferred Shares                                       $       25,000                       --
Asset coverage per $1,000 of debt(6)                        $        2,150           $        3,520
Average borrowings (000's)                                  $      450,197           $      524,019
Ratios to average net assets including Preferred Shares(7)
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.62%                      --
  Expenses                                                            3.97%                      --
  Net investment income                                               9.28%                      --
Ratios to average net assets plus borrowing
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.31%                    1.00%(5)
  Expenses                                                            3.21%                    2.79%(5)
  Net investment income                                               7.50%                    6.12%
Ratios to average net assets
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.81%                    1.43%(5)
  Expenses                                                            4.45%                    4.00%(5)
  Net investment income                                              10.39%                    8.77%
  Portfolio turnover rate                                               46%                      71%
  Common shares outstanding at end of year (000's)                 136,847                  136,036
</Table>


8 FINANCIAL HIGHLIGHTS
<Page>

                                                            FINANCIAL HIGHLIGHTS


<Table>
<Caption>
                                                                   YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
                                                            -----------------------------------------------------
                                                                1999(4)              1998(4)           1997(4)
                                                            --------------       --------------    --------------
<S>                                                         <C>                  <C>               <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year                          $         9.34       $         9.45    $         9.61
Net investment income                                                 0.79                 0.87              0.82
Net realized and unrealized gain (loss) on investments               (0.10)               (0.13)            (0.02)
                                                            --------------       --------------    --------------
Increase (decrease) in net asset value from
  investment operations                                               0.69                 0.74              0.80
Distributions to Common Shareholders from net
  investment income                                                  (0.82)               (0.85)            (0.82)
Distribution to Preferred Shareholders                                0.03                   --                --
Reduction in net asset value from Preferred
  Shares offerings                                                      --                   --             (0.14)
                                                            --------------       --------------    --------------
Net asset value, end of year                                $         9.24       $         9.34    $         9.45
                                                            ==============       ==============    ==============
Closing market price at end of year                         $         9.56       $        10.31    $        10.00
TOTAL INVESTMENT RETURN(1)
Total investment return at closing market price(2)                    1.11%               12.70%            15.04%(8)
Total investment return at net asset value(3)                         7.86%                8.01%             8.06%(8)
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (000's)                              $    1,202,565       $    1,034,403    $    1,031,089
Preferred Shares Aggregate amount
  outstanding (000's)                                                   --                   --                --
Borrowings at end of year (000's)                           $      534,000                   --                --
Liquidation and market value per share
  of Preferred Shares                                                   --                   --                --
Asset coverage per $1,000 of debt(6)                        $        3,250                   --                --
Average borrowings (000's)                                  $      490,978       $      346,110    $      131,773
Ratios to average net assets including Preferred Shares(7)
  Expenses (before interest and other
   fees related to revolving credit facility)                           --                   --                --
  Expenses                                                              --                   --                --
  Net investment income                                                 --                   --                --
Ratios to average net assets plus borrowing
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.05%(5)             1.04%             1.13%
  Expenses                                                            2.86%(5)             2.65%             1.92%
  Net investment income                                               6.00%                6.91%             7.59%
Ratios to average net assets
  Expenses (before interest and other
   fees related to revolving credit facility)                         1.50%(5)             1.39%             1.29%
  Expenses                                                            4.10%(5)             3.54%             2.20%
  Net investment income                                               8.60%                9.23%             8.67%
  Portfolio turnover rate                                               68%                  90%               82%
  Common shares outstanding at end of year (000's)                 130,206              110,764           109,140

<Caption>
                                                            YEARS ENDED FEBRUARY 28 OR FEBRUARY 29,
                                                            ---------------------------------------
                                                                1996(9)                    1995
                                                            --------------           --------------
<S>                                                         <C>                      <C>
PER SHARE OPERATING PERFORMANCE
Net asset value, beginning of year                          $         9.66           $        10.02
Net investment income                                                 0.89                     0.74
Net realized and unrealized gain (loss) on investments               (0.08)                    0.07
                                                            --------------           --------------
Increase (decrease) in net asset value from
  investment operations                                               0.81                     0.81
Distributions to Common Shareholders from net
  investment income                                                  (0.86)                   (0.73)
Distribution to Preferred Shareholders                                  --                       --
Reduction in net asset value from Preferred
  Shares offerings                                                      --                    (0.44)
                                                            --------------           --------------
Net asset value, end of year                                $         9.61           $         9.66
                                                            ==============           ==============
Closing market price at end of year                         $         9.50           $         8.75
TOTAL INVESTMENT RETURN(1)
Total investment return at closing market price(2)                   19.19%                    3.27%(8)
Total investment return at net asset value(3)                         9.21%                    5.24%(8)
RATIOS/SUPPLEMENTAL DATA
Net assets end of year (000's)                              $      862,938           $      867,083
Preferred Shares Aggregate amount
  outstanding (000's)                                                   --                       --
Borrowings at end of year (000's)                                       --                       --
Liquidation and market value per share
  of Preferred Shares                                                   --                       --
Asset coverage per $1,000 of debt(6)                                    --                       --
Average borrowings (000's)                                              --                       --
Ratios to average net assets including Preferred Shares(7)
  Expenses (before interest and other
   fees related to revolving credit facility)                           --                       --
  Expenses                                                              --                       --
  Net investment income                                                 --                       --
Ratios to average net assets plus borrowing
  Expenses (before interest and other
   fees related to revolving credit facility)                           --                       --
  Expenses                                                              --                       --
  Net investment income                                                 --                       --
Ratios to average net assets
  Expenses (before interest and other
   fees related to revolving credit facility)                           --                       --
  Expenses                                                            1.23%                    1.30%
  Net investment income                                               9.23%                    7.59%
  Portfolio turnover rate                                               88%                     108%
  Common shares outstanding at end of year (000's)                  89,794                   89,794
</Table>


(1)  Total investment return calculations are attributable to common
     shareholders.
(2)  Total investment return measures the change in the market value of your
     investment assuming reinvestment of dividends and capital gain
     distributions, if any, in accordance with the provisions of the dividend
     reinvestment plan.
(3)  Total investment return at net asset value has been calculated assuming a
     purchase at net asset value at the beginning of each period and a sale at
     net asset value at the end of each period and assumes reinvestment of
     dividends and capital gain distributions in accordance with the provisions
     of the dividend reinvestment plan. This calculation differs from total
     investment return because it excludes the effects of changes in the market
     values of the Trust's shares.
(4)  The Investment Manager agreed to reduce its fee for a period of three years
     from the Expiration Date of the November 12, 1996 Rights Offering to 0.60%
     of the average daily net assets, plus the proceeds of any outstanding
     borrowings, over $1.15 billion.
(5)  Calculated on total expenses before impact of earnings credits.
(6)  Asset coverage represents the total assets available for settlement of
     Preferred Stockholder's interest and notes payables in relation to the
     Preferred Shareholder interest and notes payable balance outstanding. The
     Preferred Shares were first offered November 2, 2000.
(7)  Ratios do not reflect the effect of dividend payments to Preferred
     Shareholders; income ratios reflect income earned on assets attributable to
     preferred shares.

(8)  Calculation of total return excludes the effects of the per share dilution
     resulting from the rights offering as the total account value of a fully
     subscribed shareholder was minimally impacted.
(9)  Pilgrim Investments, Inc., the Trust's investment manager, acquired certain
     assets of Pilgrim Management Corporation, the Trust's former investment
     manager, in a transaction that closed on April 7, 1995.



                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                                          FINANCIAL HIGHLIGHTS 9
<Page>

TRADING AND NAV INFORMATION

The following table shows for the Trust's Common Shares for the periods
indicated: (1) the high and low closing prices as shown on the NYSE Composite
Transaction Tape; (2) the NAV per Common Share represented by each of the high
and low closing prices as shown on the NYSE Composite Transaction Tape; and (3)
the discount from or premium to NAV per Share (expressed as a percentage)
represented by these closing prices. The table also sets forth the aggregate
number of shares traded as shown on the NYSE Composite Transaction Tape during
the respective quarter.


<Table>
<Caption>
                                                                                        PREMIUM/(DISCOUNT)
                                             PRICE                    NAV                     TO NAV
                                     ----------------------  ----------------------  ------------------------     REPORTED
            CALENDAR QUARTER ENDED      HIGH        LOW         HIGH        LOW         HIGH          LOW       NYSE VOLUME
                                     ----------  ----------  ----------  ----------  ----------    ----------   -----------
            <S>                      <C>         <C>         <C>         <C>             <C>           <C>       <C>
            March 31, 2002           $    6.950  $    6.640  $     7.29  $     7.25       (4.66)%       (8.41)%  11,781,400
            June 30, 2002                 6.950       6.230        7.25        7.13       (4.14)       (12.62)   13,759,808
            September 30, 2002            6.290       5.610        7.07        6.96      (11.03)       (19.40)   16,512,192
            December 31, 2002             6.100       5.440        6.69        6.55       (8.82)       (16.95)   16,672,498
            March 31, 2003                6.690       6.130        6.74        6.69       (0.74)        (8.37)   16,702,202
            June 30, 2003                 7.240       6.690        6.98        6.74        3.72         (0.74)   19,962,000
            September 30, 2003            7.660       7.000        7.00        7.08        9.43         (1.13)   17,908,200
            December 31, 2003             8.020       7.250        7.27        7.13       10.32          1.68    15,522,226
            March 31, 2004                8.170       7.710        7.36        7.34       11.01          5.04    18,287,600
</Table>



On June 15, 2004, the last reported sale price of a Common Share of the Trust's
Common Shares on the NYSE was $7.90. The Trust's NAV on June 15, 2004 was $7.35.
See "Transaction Policies -- Net Asset Value." On June 15, 2004 the last
reported sale price of a share of the Trust's Common Shares on the NYSE ($7.90)
represented a 7.4% premium above NAV ($7.35) as of that date.


The Trust's Common Shares have traded in the market above, at, and below NAV
since March 9, 1992, when the Trust's Common Shares were listed on the NYSE. The
Trust cannot predict whether its Common Shares will trade in the future at a
premium or discount to NAV, and if so, the level of such premium or discount.
Shares of closed-end investment companies frequently trade at a discount from
NAV.

10 TRADING AND NAV INFORMATION
<Page>

                                               INVESTMENT OBJECTIVE AND POLICIES

INVESTMENT OBJECTIVE

The Trust's investment objective is to provide investors with as high a level of
current income as is consistent with the preservation of capital. The Trust
seeks to achieve this investment objective by investing in the types of assets
described below:

1. SENIOR LOANS. Under normal circumstances, at least 80% of the Trust's net
   assets, plus the amount of any borrowings for investment purposes, will be
   invested in higher yielding, U.S. dollar denominated, floating rate secured
   senior loans (Senior Loans). The Trust will provide shareholders with at
   least 60 days' prior notice of any change in this investment policy.

   The Trust only invests in Senior Loans made to corporations or other business
   entities organized under U.S. or Canadian law and which are domiciled in the
   U.S., Canada or in U.S. territories or possessions. These Senior Loans are
   typically below investment grade in quality. The Trust makes its investments
   in Senior Loans by purchasing a portion of the overall loan, I.E., the Trust
   becomes one of a number of lenders participating in the loan.

   Senior Loans either hold the most senior position in the capital structure of
   the borrower or hold an equal ranking with other senior debt or have
   characteristics that the Investment Manager or Sub-Adviser believes justify
   treatment as senior debt.

   The Trust does not invest in Senior Loans whose interest rates are tied to
   non-domestic interest rates other than the London Inter-Bank Offered Rate
   (LIBOR).

2. OTHER INVESTMENTS. Under normal circumstances the Trust may also invest up to
   20% of its total assets in the following types of investments (Other
   Investments):

   - unsecured loans

   - subordinated loans

   - short-term debt securities

   - equity securities incidental to investment in loans

3. CASH AND SHORT-TERM INSTRUMENTS. Under normal circumstances, the Trust may
   invest in cash and/or short-term instruments. During periods when, in the
   opinion of the Investment Manager or Sub-Adviser, a temporary defensive
   posture in the market is appropriate, the Trust may hold up to 100% of its
   assets in cash and/or short-term instruments.


FUNDAMENTAL DIVERSIFICATION POLICIES


1. INDUSTRY DIVERSIFICATION. The Trust may invest in any industry. The Trust may
   not invest more than 25% of its total assets in any single industry.

2. BORROWER DIVERSIFICATION. As a diversified investment company, the Trust may
   not make investments in any one issuer (other than the U.S. government) if,
   immediately after such purchase or acquisition, more than 5% of the value of
   the Trust's total assets would be invested in such issuer, or the Trust would
   own more than 25% of any outstanding issue. The Trust will consider the
   borrower on a loan, including a loan participation, to be the issuer of such
   loan. With respect to no more than 25% of its total assets, the Trust may
   make investments that are not subject to the foregoing restrictions.

These fundamental diversification policies may only be changed with approval by
a majority of all shareholders, including the vote of a majority of the holders
of Preferred Shares, and holders of any other preferred shares, voting
separately as a class.

INVESTMENT POLICIES

The Investment Manager and Sub-Adviser follow certain investment policies set by
the Trust's Board of Trustees. Some of those policies are set forth below.
Please refer to the SAI for additional information on these and other investment
policies.

1. PAYABLE IN U.S. DOLLARS. All investments purchased by the Trust must be
   denominated in U.S. dollars.

2. MATURITY. Normally at least 80% of the Trust's total assets will be invested
   in Senior Loans with maturities of one to ten years. The maximum maturity on
   any loan in which the Trust can invest is ten years.

3. INTEREST RATE RESETS. Normally, at least 80% of the Trust's total assets will
   be invested in assets with rates of interest which reset either daily,
   monthly, or quarterly. The maximum duration of an interest rate reset on any
   loan investment in which the Trust may invest is one year. In addition, the
   Trust will ordinarily maintain a dollar-weighted average time until the next
   interest rate adjustment on its loan investments of 90 days or less.

4. LIMITATIONS ON SUBORDINATED AND UNSECURED LOANS. The Trust may also invest up
   to 5% of its total assets, measured at the time of investment, in
   subordinated and unsecured loans. The Trust may acquire a subordinated loan
   only if, at the time of acquisition, it acquires or holds a Senior Loan from
   the same borrower. The Trust will acquire unsecured loans only where the
   Investment Manager or Sub-Adviser believes, at the time of acquisition, that
   the Trust would have the right to payment upon default that is not
   subordinate to any other creditor. The maximum of 5% of the Trust's assets
   invested in subordinated and unsecured loans will constitute part of the 20%
   of the Trust's assets that may be invested in "Other Investments" as
   described above, and will not count toward the 80% of the Trust's assets that
   are normally invested in Senior Loans.

5. INVESTMENT QUALITY; CREDIT ANALYSIS. Loans in which the Trust invests
   generally are rated below investment grade credit quality or are unrated. In
   acquiring a loan, the Investment Manager or Sub-Adviser will consider some or
   all of the following factors concerning the borrower: ability to service


                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                            INVESTMENT OBJECTIVE AND POLICIES 11
<Page>

INVESTMENT OBJECTIVE AND POLICIES

   debt from internally generated funds; adequacy of liquidity and working
   capital; appropriateness of capital structure; leverage consistent with
   industry norms; historical experience of achieving business and financial
   projections; the quality and experience of management; and adequacy of
   collateral coverage. The Investment Manager or Sub-Adviser performs its own
   independent credit analysis of each borrower. In so doing, the Investment
   Manager or Sub-Adviser may utilize information and credit analyses from
   agents that originate or administer loans, other lenders investing in a loan,
   and other sources. The Investment Manager or Sub-Adviser also may communicate
   directly with management of the borrowers. These analyses continue on a
   periodic basis for any Senior Loan held by the Trust. See "Risk Factors and
   Special Considerations -- Credit Risk on Senior Loans."

6. USE OF LEVERAGE. The Trust may borrow money and issue preferred shares to the
   fullest extent permitted by the 1940 Act. See "Policy on Borrowing" and
   "Policy on Issuance of Preferred Shares" below.

7. SHORT-TERM INSTRUMENTS. Short-term instruments in which the Trust invests may
   include (i) commercial paper rated A-1 by Standard and Poor's or P-1 by
   Moody's Investors Service, Inc., or of comparable quality as determined by
   the Investment Manager, (ii) certificates of deposit, banker's acceptances,
   and other bank deposits and obligations, and (iii) securities issued or
   guaranteed by the U.S. Government, its agencies or instrumentalities.

8. SECURITIES LENDING. The Trust also may lend portfolio securities on a
   short-term or long-term basis, an amount equal to up to 33 1/3% of its
   total assets.


POLICY ON BORROWING


Beginning in May of 1996, the Trust began a policy of borrowing for investment
purposes. The Trust seeks to use proceeds from borrowing to acquire loans and
other investments which pay interest at a rate higher than the rate the Trust
pays on borrowings. Accordingly, borrowing has the potential to increase the
Trust's total income available to holders of its Common Shares.

The Trust may issue notes, commercial paper, or other evidences of indebtedness
and may be required to secure repayment by mortgaging, pledging, or otherwise
granting a security interest in the Trust's assets. The terms of any such
borrowings are subject to the provisions of the 1940 Act, and also subject to
the more restrictive terms of the credit agreements relating to borrowings and
additional guidelines imposed by rating agencies which are more restrictive than
the provisions of the 1940 Act. The Trust is permitted to borrow an amount equal
to up to 331/3%, or such other percentage permitted by law, of its total assets
(including the amount borrowed) less all liabilities other than borrowings. See
"Risk Factors and Special Considerations -- Leverage" and "Risk Factors and
Special Considerations -- Restrictive Covenants and 1940 Act Restrictions."

POLICY ON ISSUANCE OF PREFERRED SHARES

The Trust has a policy of issuing preferred shares for investment purposes. The
Trust seeks to use the proceeds from preferred shares to acquire loans and other
investments which pay interest at a rate higher than the dividends payable on
preferred shares. The terms of the issuance of preferred shares are subject to
the 1940 Act and to additional guidelines imposed by rating agencies, which are
more restrictive than the provisions of the 1940 Act. Under the 1940 Act, the
Trust may issue preferred shares so long as immediately after any issuance of
preferred shares the value of the Trust's total assets (less all Trust
liabilities and indebtedness that is not senior indebtedness) is at least twice
the amount of the Trust's senior indebtedness plus the involuntary liquidation
preference of all outstanding shares. In November 2000, the Trust issued 18,000
Preferred Shares for a total of $450 million. See "Risk Factors and Special
Considerations -- Leverage."

12 INVESTMENT OBJECTIVE AND POLICIES
<Page>

                                                         THE TRUST'S INVESTMENTS

As stated above under Investment Objective and Policies, the Trust will invest
primarily in Senior Loans. This section contains a discussion of the
characteristics of Senior Loans, the manner in which those investments are made
and the market for Senior Loans.

SENIOR LOAN CHARACTERISTICS

Senior Loans are loans that are typically made to business borrowers to finance
leveraged buy-outs, recapitalizations, mergers, stock repurchases and internal
growth. Senior Loans generally hold the most senior position in the capital
structure of a borrower and are usually secured by liens on the assets of the
borrowers, including tangible assets such as cash, accounts receivable,
inventory, property, plant and equipment, common and/or preferred stock of
subsidiaries, and intangible assets including trademarks, copyrights, patent
rights and franchise value. The Trust may also receive guarantees as a form of
collateral.


By virtue of their senior position and collateral, Senior Loans typically
provide lenders with the first right to cash flows or proceeds from the sale of
a borrower's collateral if the borrower becomes insolvent (subject to the
limitations of bankruptcy law, which may provide higher priority to certain
claims such as, for example, employee salaries, employee pensions and taxes).
This means Senior Loans are generally repaid before unsecured bank loans,
corporate bonds, subordinated debt, trade creditors, and preferred or common
stockholders.


Senior Loans typically pay interest at least quarterly at rates which equal a
fixed percentage spread over a base rate such as LIBOR. For example, if LIBOR
were 2.00% and the borrower were paying a fixed spread of 3.00%, the total
interest rate paid by the borrower would be 5.00%. Base rates and, therefore,
the total rates paid on Senior Loans float, I.E., they change as market rates of
interest change.

Although a base rate such as LIBOR can change every day, loan agreements for
Senior Loans typically allow the borrower the ability to choose how often the
base rate for its loan will change. Such periods can range from one day to one
year, with most borrowers choosing monthly or quarterly reset periods. During
periods of rising interest rates, borrowers will tend to choose longer reset
periods, and during periods of declining interest rates, borrowers will tend to
choose shorter reset periods. The fixed spread over the base rate on a Senior
Loan typically does not change.

Senior Loans generally are arranged through private negotiations between a
borrower and several financial institutions represented by an agent who is
usually one of the originating lenders. In larger transactions, it is common to
have several agents; however, generally only one such agent has primary
responsibility for ongoing administration of a Senior Loan. Agents are typically
paid fees by the borrower for their services. The agent is primarily responsible
for negotiating the loan agreement which establishes the terms and conditions of
the Senior Loan and the rights of the borrower and the lenders. The agent also
is responsible for monitoring collateral and for exercising remedies available
to the lenders such as foreclosure upon collateral.

Loan agreements may provide for the termination of the agent's agency status in
the event that it fails to act as required under the relevant loan agreement,
becomes insolvent, enters FDIC receivership or, if not FDIC insured, enters into
bankruptcy. Should such an agent, lender or assignor with respect to an
assignment interpositioned between the Trust and the borrower become insolvent
or enter FDIC receivership or bankruptcy, any interest in the Senior Loan of
such person and any loan payment held by such person for the benefit of the
Trust should not be included in such person's or entity's bankruptcy estate. If,
however, any such amount were included in such person's or entity's bankruptcy
estate, the Trust would incur certain costs and delays in realizing payment or
could suffer a loss of principal or interest. In this event, the Trust could
experience a decrease in NAV.

The Trust acquires Senior Loans from lenders such as banks, insurance companies,
finance companies, other investment companies and private investment funds. The
Trust may also acquire Senior Loans from U.S. branches of foreign banks that are
regulated by the Federal Reserve System or appropriate state regulatory
authorities.

INVESTMENT BY THE TRUST

The Trust invests in Senior Loans primarily by purchasing an assignment of a
portion of a Senior Loan from a third party, either in connection with the
original loan transaction (I.E., in the primary market) or after the initial
loan transaction (I.E., in the secondary market). When the Trust purchases an
assignment in the primary market, it may share in a fee paid to the original
lender. When the Trust acquires a Senior Loan in the secondary market, it may
pay a fee to, or forego a portion of interest payments from, the lender making
the assignment. The Trust will act as lender, or purchase an assignment with
respect to a Senior Loan, only if the agent is determined by the Investment
Manager or Sub-Adviser to be creditworthy.

Except for rating agency guidelines imposed on the Trust's portfolio while it
has outstanding Preferred Shares, there is no minimum rating or other
independent evaluation of a borrower limiting the Trust's investments and most
Senior Loans that the Trust may acquire, if rated, will be rated below
investment grade credit quality. See "Risk Factors and Special Considerations --
Credit Risk on Senior Loans."

ASSIGNMENTS. When the Trust is a purchaser of an assignment, it succeeds to all
the rights and obligations under the loan agreement of the assigning lender and
becomes a lender under the loan agreement with the same rights and obligations
as the assigning lender. These rights include the ability to vote along with the
other lenders on such matters as enforcing the terms of the loan agreement,
E.G., declaring defaults, initiating collection action, etc. Taking such actions
usually requires at least a vote of the lenders holding a majority of the
investment in the loan, and may require a vote by lenders holding


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                                                      THE TRUST'S INVESTMENTS 13
<Page>

THE TRUST'S INVESTMENTS

two-thirds or more of the investment in the loan. Because the Trust typically
does not hold a majority of the investment in any loan, it will not be able by
itself to control decisions that require a vote by the lenders.

ACQUISITION COSTS. When the Trust acquires an interest in a Senior Loan in the
primary market, it typically acquires the loan at par less its portion of the
fee paid to all originating lenders. When the Trust acquires an interest in a
Senior Loan, in the secondary market, it may be at par, but typically the Trust
will do so at premium or discount to par.

SENIOR LOAN MARKET


Total U.S. domestic Senior Loan volume has increased dramatically over the last
10 years. This increase has helped improve the liquidity of Senior Loans.
However, this increase has also been accompanied by an increase in the number of
participants in the Senior Loan market. Currently, the Senior Loan market is
experiencing a narrowing of spreads over LIBOR and some relaxation in credit
standards due to an insufficient number of loans to satisfy the requirements of
all lenders. More loans may become available if the U.S. economy continues to
show signs of improvement.


14 THE TRUST'S INVESTMENTS
<Page>

                                         RISK FACTORS AND SPECIAL CONSIDERATIONS

RISK IS INHERENT IN ALL INVESTING. THE FOLLOWING DISCUSSION SUMMARIZES SOME OF
THE RISKS THAT YOU SHOULD CONSIDER BEFORE DECIDING WHETHER TO INVEST IN THE
TRUST. FOR ADDITIONAL INFORMATION ABOUT THE RISKS ASSOCIATED WITH INVESTING IN
THE TRUST, SEE "ADDITIONAL INFORMATION ABOUT INVESTMENTS AND INVESTMENT
TECHNIQUES" IN THE SAI.

CREDIT RISK ON SENIOR LOANS

The Trust's ability to pay dividends and repurchase its Common Shares is
dependent upon the performance of the assets in its portfolio. That performance,
in turn, is subject to a number of risks, chief among which is credit risk on
the underlying assets.


Credit risk is the risk of nonpayment of scheduled interest or principal
payments. In the event a borrower fails to pay scheduled interest or principal
payments on a Senior Loan held by the Trust, the Trust will experience a
reduction in its income and a decline in the market value of the Senior Loan,
which will likely reduce dividends and lead to a decline in the NAV of the
Trust's Common Shares. See "The Trust's Investments -- Investment by the Trust."

Senior Loans generally involve less risk than unsecured or subordinated debt and
equity instruments of the same issuer because the payment of principal and
interest on Senior Loans is a contractual obligation of the issuer that, in most
instances, takes precedence over the payment of dividends, or the return of
capital, to the issuer's shareholders and payments to bond holders. The Trust
generally invests in Senior Loans that are secured with specific collateral.
However, the value of the collateral may not equal the Trust's investment when
the loan is acquired or may decline below the principal amount of the Senior
Loan subsequent to the Trust's investment. Also, to the extent that collateral
consists of stock of the borrower or its subsidiaries or affiliates, the Trust
bears the risk that the stock may decline in value, be relatively illiquid, or
may lose all or substantially all of its value, causing the Senior Loan to be
undercollateralized. Therefore, the liquidation of the collateral underlying a
Senior Loan may not satisfy the issuer's obligation to the Trust in the event of
non-payment of scheduled interest or principal, and the collateral may not be
readily liquidated.


In the event of the bankruptcy of a borrower, the Trust could experience delays
and limitations on its ability to realize the benefits of the collateral
securing the Senior Loan. Among the credit risks involved in a bankruptcy are
assertions that the pledge of collateral to secure a loan constitutes a
fraudulent conveyance or preferential transfer that would have the effect of
nullifying or subordinating the Trust's rights to the collateral.

The Senior Loans in which the Trust invests are generally rated lower than
investment grade credit quality, I.E., rated lower than "Baa" by Moody's or
"BBB" by S&P, or have been issued by issuers who have issued other debt
securities which, if unrated, would be rated lower than investment grade credit
quality. Investment decisions will be based largely on the credit analysis
performed by the Investment Manager or Sub-Adviser, and not on rating agency
evaluation. This analysis may be difficult to perform. Information about a
Senior Loan and its issuer generally is not in the public domain. Moreover,
Senior Loans are not often rated by any nationally recognized rating service.
Many issuers have not issued securities to the public and are not subject to
reporting requirements under federal securities laws. Generally, however,
issuers are required to provide financial information to lenders and information
may be available from other Senior Loan participants or agents that originate or
administer Senior Loans.

INTEREST RATE RISK

During normal market conditions, changes in market interest rates will affect
the Trust in certain ways. The principal effect will be that the yield on the
Trust's Common Shares will tend to rise or fall as market interest rates rise
and fall. This is because almost all of the assets in which the Trust invests
pay interest at rates which float in response to changes in market rates.
However, because the interest rates on the Trust's assets reset over time, there
will be an imperfect correlation between changes in market rates and changes to
rates on the portfolio as a whole. This means that changes to the rate of
interest paid on the portfolio as a whole will tend to lag behind changes in
market rates.

Market interest rate changes may also cause the Trust's NAV to experience
moderate volatility. This is because the value of a loan asset in the Trust is
partially a function of whether it is paying what the market perceives to be a
market rate of interest for the particular loan, given its individual credit and
other characteristics. If market interest rates change, a loan's value could be
affected to the extent the interest rate paid on that loan does not reset at the
same time. As discussed above, the rates of interest paid on the loans in which
the Trust invests have a weighted average reset period that typically is less
than 90 days. Therefore, the impact of the lag between a change in market
interest rates and the change in the overall rate on the portfolio is expected
to be minimal.

To the extent that changes in market rates of interest are reflected not in a
change to a base rate such as LIBOR but in a change in the spread over the base
rate which is payable on loans of the type and quality in which the Trust
invests, the Trust's NAV could also be adversely affected. Again, this is
because the value of a loan asset in the Trust is partially a function of
whether it is paying what the market perceives to be a market rate of interest
for the particular loan, given its individual credit and other characteristics.
However, unlike changes in market rates of interest for which there is only a
temporary lag before the portfolio reflects those changes, changes in a loan's
value based on changes in the market spread on loans in the Trust's portfolio
may be of longer duration.


Finally, substantial increases in interest rates may cause an increase in loan
defaults as borrowers may lack the resources to meet higher debt service
requirements.



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                                      RISK FACTORS AND SPECIAL CONSIDERATIONS 15
<Page>

RISK FACTORS AND SPECIAL CONSIDERATIONS

CHANGES TO NAV

The NAV of the Trust is expected to change in response to a variety of factors,
primarily in response to changes in the creditworthiness of the borrowers on the
loans in which the Trust invests. See "Credit Risk on Senior Loans" above.
Changes in market interest rates may also have a moderate impact on the Trust's
NAV. See "Interest Rate Risk." Another factor which can affect the Trust's NAV
is changes in the pricing obtained for the Trust's assets. See "Transaction
Policies -- Valuation of the Trust's Assets."


DISCOUNT FROM NAV


The Trust's Common Shares have traded in the market above, at, and below NAV
since March 9, 1992, when the Trust's shares were listed on the NYSE. The
reasons for the Trust's Common Shares trading at a premium to or discount from
NAV are not known to the Trust, and the Trust cannot predict whether its Common
Shares will trade in the future at a premium to or discount from NAV, and if so,
the level of such premium or discount. Shares of closed-end investment companies
frequently trade at a discount from NAV. The possibility that Common Shares of
the Trust will trade at a discount from NAV is a risk separate and distinct from
the risk that the Trust's NAV may decrease.

LEVERAGE

The Trust may borrow an amount equal to up to 331/3% (or such other percentage
permitted by law) of its total assets (including the amount borrowed) less all
liabilities other than borrowings. Under the 1940 Act, the Trust may issue
preferred shares so long as immediately after any issuance of preferred shares
the value of the Trust's total assets (less all Trust liabilities and
indebtedness that is not senior indebtedness) is at least twice the amount of
the Trust's senior indebtedness plus the involuntary liquidation preference of
all outstanding shares. In November 2000, the Trust issued 18,000 Preferred
Shares for a total of $450 million. Borrowings and the issuance of preferred
shares are referred to in this Prospectus collectively as "leverage." The Trust
may use leverage for investment purposes, to finance the repurchase of its
Common Shares, and to meet other cash requirements. The use of leverage for
investment purposes increases both investment opportunity and investment risk.


Capital raised through leverage will be subject to interest and other costs, and
these costs could exceed the income earned by the Trust on the proceeds of such
leverage. There can be no assurance that the Trust's income from the proceeds of
leverage will exceed these costs. However, the Investment Manager or Sub-Adviser
seeks to use leverage for the purposes of making additional investments only if
they believe, at the time of using leverage, that the total return on the assets
purchased with such funds will exceed interest payments and other costs on the
leverage. In addition, the Investment Manager or Sub-Adviser intends to reduce
the risk that the costs of the use of leverage will exceed the total return on
investments purchased with the proceeds of leveraging by utilizing leverage
mechanisms whose interest rates float (or reset frequently). In the event of a
default on one or more loans or other interest-bearing instruments held by the
Trust, the use of leverage would increase the loss to the Trust and may increase
the effect on the Trust's NAV. The Trust's lenders and Preferred shareholders
have priority to the Trust's assets over the Trust's Common shareholders.

The Trust currently uses leverage by borrowing money on a floating rate basis
and by the issuance of Preferred Shares. The current rate on the borrowings (as
of June 15, 2004) is 1.56%. The current dividend rate on the Preferred Shares
(as of June 15, 2004) is 1.54%. To cover the annual interest and dividends on
the borrowings and the Preferred Shares for the current fiscal year (assuming
that the current interest and dividend rates remain in effect for the entire
fiscal year and assuming that the Trust borrows an amount equal to 25% of its
Managed Assets and the current Preferred Shares remain outstanding), the Trust
would need to earn 0.74% on its amount of Managed Assets as of June 15, 2004.


The Trust's leveraged capital structure creates special risks not associated
with unleveraged funds having similar investment objectives and policies. The
funds borrowed pursuant to the credit facilities or obtained through the
issuance of Preferred Shares, or any other preferred shares, constitute a
substantial lien and burden by reason of their prior claim against the income of
the Trust and against the net assets of the Trust in liquidation.

16 RISK FACTORS AND SPECIAL CONSIDERATIONS
<Page>

                                        RISK FACTORS AND SPECIAL CONSIDERATIONS


The Trust is not permitted to declare dividends or other distributions,
including dividends and distributions with respect to Common Shares or Preferred
Shares, or to purchase Common Shares or, Preferred Shares unless (i) at the time
thereof the Trust meets certain asset coverage requirements and (ii) there is no
event of default under any credit facility program that is continuing. See "Risk
Factors and Special Considerations -- Restrictive Covenants and 1940 Act
Restrictions" below. In the event of a default under a credit facility program,
the lenders have the right to cause a liquidation of the collateral (I.E., sell
Senior Loans and other assets of the Trust) and, if any such default is not
cured, the lenders may be able to control the liquidation as well.

In addition, the Trust is not permitted to pay dividends on or redeem Common
Shares unless all accrued dividends on the Preferred Shares and all accrued
interest on borrowings have been paid or set aside for payment.


Because the fee paid to the Investment Manager will be calculated on the basis
of Managed Assets, the fee will be higher when leverage is utilized, giving the
Investment Manager an incentive to utilize leverage.

The Trust is subject to certain restrictions imposed by lenders to the Trust and
by guidelines of one or more rating agencies which issue ratings for the
Preferred Shares issued by the Trust. These restrictions impose asset coverage,
fund composition requirements and limits on investment techniques, such as the
use of financial derivative products, that are more stringent than those imposed
on the Trust by the 1940 Act. These covenants or guidelines could impede the
Investment Manager or Sub-Adviser from fully managing the Trust's portfolio in
accordance with the Trust's investment objective and policies.

ANNUAL EXPENSES WITHOUT BORROWINGS OR PREFERRED SHARES


If the Trust were not to have borrowed or have Preferred Shares outstanding,
the remaining expenses, as a percentage of the net assets of the Trust, would
be as follows:


ANNUAL EXPENSES WITHOUT BORROWINGS OR PREFERRED SHARES
(AS A PERCENTAGE OF NET ASSETS ATTRIBUTABLE TO COMMON SHARES)


<Table>
<S>                                                       <C>
Management and Administrative Fees(1)                     1.05%
Other Operating Expenses(2)                               0.43%
Total Annual Expenses                                     1.48%
</Table>


(1) Pursuant to the Investment Management Agreement with the Trust, ING
    Investments is paid a fee of 0.80% of the Trust's Managed Assets. Pursuant
    to its Administration Agreement with the Trust, ING Funds Services, LLC, the
    Trust's Administrator, is paid a fee of 0.25% of the Trust's Managed Assets.
    See "Investment Management and Other Service Providers -- The
    Administrator."

(2) "Other Operating Expenses" are based on estimated amounts for the current
    fiscal year, which, in turn, are based on "other operating expenses" for the
    fiscal year ended February 29, 2004, and does not include the expenses of
    borrowing.

EFFECT OF LEVERAGE


The following table is designed to illustrate the effect on return to a holder
of the Trust's Common Shares of the leverage created by the Trust's use of
borrowing, using an assumed initial interest rate of 1.82%, assuming the Trust
has used leverage by borrowing an amount equal to 25% of the Trust's Managed
Assets and assuming hypothetical annual returns on the Trust's portfolio of
minus 10% to plus 10%. As can be seen, leverage generally increases the return
to shareholders when portfolio return is positive and decreases return when the
portfolio return is negative. Actual returns may be greater or less than those
appearing in the table.



<Table>
         <S>                                                  <C>         <C>         <C>        <C>      <C>
         Assumed Portfolio Return, net of expenses(1)            (10%)       (5%)         0%        5%       10%
         Corresponding Return to Common Shareholders(2)       (13.94%)    (7.27%)     (0.61%)    6.06%    12.73%
</Table>


(1) The Assumed Portfolio Return is required by regulation of the SEC and is not
    a prediction of, and does not represent, the projected or actual performance
    of the Trust.

(2) In order to compute the "Corresponding Return to Common Shareholders," the
    "Assumed Portfolio Return" is multiplied by the total value of the Trust's
    assets at the beginning of the Trust's fiscal year to obtain an assumed
    return to the Trust. From this amount, all interest accrued during the year
    is subtracted to determine the return available to shareholders. The return
    available to shareholders is then divided by the total value of the Trust's
    net assets attributable to Common Shares as of the beginning of the fiscal
    year to determine the "Corresponding Return to Common Shareholders."


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                                      RISK FACTORS AND SPECIAL CONSIDERATIONS 17
<Page>

RISK FACTORS AND SPECIAL CONSIDERATIONS


IMPACT OF SHAREHOLDER INVESTMENT PROGRAM AND PRIVATELY NEGOTIATED TRANSACTIONS

The issuance of Common Shares through the Trust's Shareholder Investment Program
may have an adverse effect on the secondary market for the Trust's Common
Shares. The increase in the number of the Trust's outstanding Common Shares
resulting from issuances pursuant to the Trust's Shareholder Investment Program
or pursuant to privately negotiated transactions, and the discount to the market
price at which such Common Shares may be issued, may put downward pressure on
the market price for Common Shares of the Trust. Common Shares will not be
issued pursuant to the Trust's Shareholder Investment Program at any time when
Common Shares are trading at a price lower than the Trust's NAV per Common
Share.


LIMITED SECONDARY MARKET FOR LOANS

Although the resale, or secondary, market for loans is growing, it is currently
limited. There is no organized exchange or board of trade on which loans are
traded. Instead, the secondary market for loans is an unregulated inter-dealer
or inter-bank re-sale market.


Loans usually trade in large denominations (typically in $1 million or larger)
and trades can be infrequent. The market has limited transparency so that
information about actual trades may be difficult to obtain. Accordingly, some or
many of the loans in which the Trust invests will be relatively illiquid.


In addition, loans in which the Trust invests may require the consent of the
borrower and/or the agent prior to sale or assignment. These consent
requirements can delay or impede the Trust's ability to sell loans and can
adversely affect the price that can be obtained. The Trust may have difficulty
disposing of loans if it needs cash to repay debt, to pay dividends, to pay
expenses or to take advantage of new investment opportunities. Although the
Trust has not conducted a tender offer since 1992, if it determines to again
conduct a tender offer, limitations of a secondary market may result in
difficulty raising cash to purchase tendered Common Shares.

These considerations may cause the Trust to sell securities at lower prices than
it would otherwise consider to meet cash needs or cause the Trust to maintain a
greater portion of its assets in cash equivalents than it would otherwise, which
could negatively impact performance. The Trust seeks to avoid the necessity of
selling assets to meet such needs by the use of borrowings.


The Trust values its assets daily. However, because the secondary market for
loans is limited, it may be difficult to value loans. Reliable market value
quotations may not be readily available for some loans and valuation of such
loans may require more research than for liquid securities. In addition,
elements of judgment may play a greater role in valuation of loans, than for
securities with a more developed secondary market, because there is less
reliable, objective market value data available. In addition, if the Trust
purchases a relatively large portion of a loan to generate extra income
sometimes paid to large lenders, the limitations of the secondary market may
inhibit the Trust from selling a portion of the loan and reducing its exposure
to a borrower when the Investment Manager or Sub-Adviser deems it advisable to
do so.


LENDING PORTFOLIO SECURITIES

To generate additional income, the Trust may lend portfolio securities in an
amount equal to up to 331/3% of total Trust assets to broker-dealers, major
banks, or other recognized domestic institutional borrowers of securities. As
with other extensions of credit, there are risks of delay in recovery or even
loss of rights in the collateral should the borrower default or fail
financially. The Trust intends to engage in lending portfolio securities only
when such lending is fully secured by investment grade collateral held by an
independent agent.

DEMAND FOR LOANS


Although the volume of loans has increased in recent years, demand for loans has
also grown. An increase in demand may benefit the Trust by providing increased
liquidity for loans and higher sales prices, but it may also adversely affect
the rate of interest payable on loans acquired by the Trust, the rights provided
to the Trust under the terms of a loan agreement, and increase the price of
loans that the Trust wishes to purchase in the secondary market.


UNSECURED LOANS AND SUBORDINATED LOANS

Subject to the 20% of the Trust's assets that may be invested in Other
Investments, the Trust may invest up to 5% of its total assets, measured at the
time of investment, in unsecured loans and in subordinated loans. Unsecured
loans and subordinated loans share the same credit risks as those discussed
above under "Credit Risk on Senior Loans" except that unsecured loans are not
secured by any collateral of the borrower and subordinated loans are not the
most senior debt in a borrower's capital structure. Unsecured loans do not enjoy
the security associated with collateralization and may pose a greater risk of
nonpayment of interest or loss of principal than do secured loans. The primary
additional risk in a subordinated loan is the potential loss in the event of
default by the issuer of the loan. Subordinated loans in an insolvency bear an
increased share, relative to senior secured lenders, of the ultimate risk that
the borrower's assets are insufficient to meet its obligations to its creditors.

SHORT-TERM DEBT SECURITIES

Subject to the 20% of the Trust's assets that may be invested in Other
Investments, the Trust may invest in short-term debt securities. Short-term debt
securities are subject to the risk of the issuer's inability to meet principal
and interest payments on the obligation and also may be subject to price
volatility due to such factors as interest rates, market perception of the
creditworthiness of the issuer and general market liquidity.

Because short-term debt securities pay interest at a fixed-rate, when interest
rates decline, the value of the Trust's short-term debt securities can be
expected to rise, and when interest rates rise, the value of those securities
can be expected to decline.

18 RISK FACTORS AND SPECIAL CONSIDERATIONS
<Page>

                                         RISK FACTORS AND SPECIAL CONSIDERATIONS

INVESTMENTS IN EQUITY SECURITIES INCIDENTAL TO INVESTMENT IN LOANS

Subject to the 20% of the Trust's assets that may be invested in Other
Investments, the Trust may acquire equity securities as an incident to the
purchase or ownership of a loan or in connection with a reorganization of a
borrower or its debt. Investments in equity securities incidental to investment
in loans entail certain risks in addition to those associated with investment in
loans. The value of these securities may be affected more rapidly, and to a
greater extent, by company-specific developments and general market conditions.
These risks may increase fluctuations in the Trust's NAV. The Trust may
frequently possess material non-public information about a borrower as a result
of its ownership of a loan of such borrower. Because of prohibitions on trading
in securities of issuers while in possession of such information the Trust might
be unable to enter into a transaction in a security of such a borrower when it
would otherwise be advantageous to do so.

BORROWINGS UNDER THE CREDIT FACILITY PROGRAM


In May 1996, the Trust began a policy of borrowing to acquire income-producing
investments which, by their terms, pay interest at a rate higher than the rate
the Trust pays on borrowings. Accordingly, borrowing has the potential to
increase the Trust's total income. The Trust currently is a party to two credit
facilities with financial institutions that permit the Trust to borrow up to an
aggregate of $525 million. Interest is payable on the credit facilities by the
Trust at a variable rate that is tied to either LIBOR, the federal funds rate,
or a commercial paper based rate and includes a facility fee on unused
commitments. As of June 15, 2004, the Trust had outstanding borrowings under the
credit facilities of approximately $444 million. Collectively, the lenders under
the credit facilities have a security interest in all assets of the Trust. Under
each of the credit facilities, the lenders have the right to liquidate Trust
assets in the event of default by the Trust under such credit facility, and the
Trust may be prohibited from paying dividends in the event of certain adverse
events or conditions respecting the Trust or Investment Manager or Sub-Adviser
until the credit facility is repaid in full or until the event or condition is
cured.


RANKING OF SENIOR INDEBTEDNESS


The rights of lenders to receive payments of interest on and repayments of
principal of any borrowings made by the Trust under the credit facility program
are senior to the rights of holders of Common Shares and, Preferred Shares with
respect to the payment of dividends or upon liquidation.


RESTRICTIVE COVENANTS AND 1940 ACT RESTRICTIONS

The credit agreements governing the credit facility program (the Credit
Agreements) include usual and customary covenants for their respective type of
transaction, including limits on the Trust's ability to (i) issue preferred
shares, (ii) incur liens or pledge portfolio securities, (iii) change its
investment objective or fundamental investment restrictions without the approval
of lenders, (iv) make changes in any of its business objectives, purposes or
operations that could result in a material adverse effect, (v) make any changes
in its capital structure, (vi) amend the Trust documents in a manner which could
adversely affect the rights, interests or obligations of any of the lenders,
(vii) engage in any business other than the businesses currently engaged in,
(viii) create, incur, assume or permit to exist certain debt except for certain
specified types of debt, and (ix) permit any of its ERISA affiliates to cause or
permit to occur an event that could result in the imposition of a lien under the
Internal Revenue Code or ERISA. In addition, the Credit Agreements do not permit
the Trust's asset coverage ratio (as defined in the credit agreements) to fall
below 300% at any time (the Credit Agreement Asset Coverage Test).


Under the requirements of the 1940 Act, the Trust must have asset coverage of at
least 300% immediately after any borrowing, including borrowing under the credit
facility program. For this purpose, asset coverage means the ratio which the
value of the total assets of the Trust, less liabilities and indebtedness not
represented by senior securities, bears to the aggregate amount of borrowings
represented by senior securities issued by the Trust. The Credit Agreements
limit the Trust's ability to pay dividends or make other distributions on the
Trust's Common Shares, or purchase or redeem Common Shares, unless the Trust
complies with the Credit Agreement Asset Coverage Test. In addition, the Credit
Agreements do not permit the Trust to declare dividends or other distributions
or purchase or redeem Common Shares or any preferred shares (i) at any time that
an event of default under a Credit Agreement has occurred and is continuing; or
(ii) if, after giving effect to such declaration, the Trust would not meet the
Credit Agreement Asset Coverage Test set forth in the Credit Agreements.



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                                      RISK FACTORS AND SPECIAL CONSIDERATIONS 19
<Page>

TRANSACTION POLICIES

NET ASSET VALUE


The NAV per common share of the Trust is determined each business day as of the
close of regular trading on the New York Stock Exchange (NYSE) (normally 4:00
p.m. Eastern time). The Trust is open for business every day the NYSE is open.
The NYSE is closed on all weekends and on all national holidays and Good Friday.
Trust shares will not be priced on those days. The NAV per Common Share is
determined by dividing the value of the Trust's loan assets plus all cash and
other assets (including interest accrued but not collected) less all liabilities
(including accrued expenses but excluding capital and less the liquidation
preference of any outstanding preferred shares) by the number of
Common Shares outstanding. The NAV per Common Share is made available for
publication.


VALUATION OF THE TRUST'S ASSETS

The assets in the Trust's portfolio are valued daily in accordance with the
Trust's Loan Valuation Procedures adopted by the Board of Trustees. A majority
of the Trust's assets are valued using quotations supplied by a third party loan
pricing service. However, the loans in which the Trust invests are not listed on
any securities exchange or board of trade. Some loans are traded by
institutional investors in an over-the-counter secondary market that has
developed in the past several years. This secondary market generally has fewer
trades and less liquidity than the secondary markets for other types of
securities. Some loans have few or no trades. Accordingly, determinations of the
value of loans may be based on infrequent and dated trades. Because there is
less reliable, objective market value data available, elements of judgment may
play a greater role in valuation of loans than for other types of securities.
For further information, see "Risk Factors and Special Considerations -- Limited
Secondary Market for Loans."

Loans are normally valued at the mean of the means of one or more bid and asked
quotations obtained from a pricing service or other sources believed to be
reliable. Loans for which reliable market value quotations are not readily
available from a pricing service may be valued with reference to another loan or
a group of loans for which reliable market value quotations are readily
available and whose characteristics are comparable to the loan being valued.
Under this approach, the comparable loan or loans serve as a proxy for changes
in value of the loan being valued. The Trust has engaged an independent pricing
service to provide quotations from dealers in loans and to calculate values
under this proxy procedure.

It is expected that most of the loans held by the Trust will be valued with
reference to quotations from the independent pricing service or with reference
to the proxy procedure described above. The Investment Manager or Sub-Adviser
may believe that the price for a loan derived from quotations or the proxy
procedure described above is not reliable or accurate. Among other reasons, this
may be the result of information about a particular loan or borrower known to
the Investment Manager or Sub-Adviser that they believe may not be known to the
pricing service or reflected in a price quote. In this event, the loan is valued
at fair value under procedures established by the Trust's Board of Trustees, and
in accordance with the provisions of the 1940 Act.

Under these procedures, fair value is determined by the Investment Manager or
Sub-Adviser and monitored by the Trust's Board of Trustees through its Valuation
and Proxy Voting Committee. In fair valuing a loan, consideration is given to
several factors, which may include, among others, the following:

   - the characteristics of and fundamental analytical data relating to the
     loan, including the cost, size, current interest rate, period until the
     next interest rate reset, maturity and base lending rate of the loan, the
     terms and conditions of the loan and any related agreements, and the
     position of the loan in the borrower's debt structure;

   - the nature, adequacy and value of the collateral, including the Trust's
     rights, remedies and interests with respect to the collateral;

   - the creditworthiness of the borrower and the cash flow coverage of
     outstanding principal and interest, based on an evaluation of its financial
     condition, financial statements and information about the borrower's
     business, cash flows, capital structure and future prospects;

   - information relating to the market for the loan, including price quotations
     for, and trading in, the loan and interests in similar loans and the market
     environment and investor attitudes towards the loan and interests in
     similar loans;

   - the reputation and financial condition of the agent of the loan and any
     intermediate participants in the loans;

   - the borrower's management; and

   - the general economic and market conditions affecting the fair value of the
     loan.


Securities for which the primary market is a national securities exchange are
stated at the last reported sale price on the day of valuation. Securities
reported by NASDAQ National Market System will be valued at the NASDAQ Official
Closing Price on the valuation day. Debt and equity securities traded in the
over-the-counter market and listed securities for which no sale was reported on
that date are valued at the mean between the last reported bid and asked price.
Valuation of short term cash equivalent investments is at amortized cost.
Securities maturing in 60 days or less are valued at amortized cost, which, when
combined with accrued interest, approximates market value.

ACCOUNT ACCESS


Unless your Common Shares are held through a third-party fiduciary or in an
omnibus registration at your bank or brokerage firm, you may be able to access
your account information over the internet at www.ingfunds.com, or via a touch
tone telephone by calling (800) 992-0180 and selecting Option 1. Should you wish
to speak with a Shareholder Services Representative, you may call the toll-free
number listed above and select Option 2.

20 TRANSACTION POLICIES
<Page>

                                                           TRANSACTION POLICIES


PRIVACY POLICY

The Trust has adopted a policy concerning investor privacy. To review the
privacy policy, contact a Shareholder Services Representative at (800) 992-0180
and select Option 1, obtain a policy over the internet at www.ingfunds.com or
see the privacy policy that accompanies this Prospectus.

HOUSEHOLDING

To reduce expenses, we may mail only one copy of the Trust's prospectus and each
annual and semi-annual report to those addresses shared by two or more accounts.
If you wish to receive individual copies of these documents, please call us at
(800) 992-0180 or your investment professional. We will begin sending you
individual copies 30 days after receiving your request.


                                                            PLAN OF DISTRIBUTION

SHAREHOLDER INVESTMENT PROGRAM

The following is a summary of the Shareholder Investment Program (Program).
Shareholders are advised to review a fuller explanation of the Program contained
in the Trust's SAI.

Common Shares are offered by the Trust through the Program. The Program allows
participating shareholders to reinvest all dividends (Dividends) in additional
Common Shares of the Trust, and also allows participants to purchase additional
Common Shares through optional cash investments in amounts ranging from a
minimum of $100 to a maximum of $100,000 per month.

The Trust reserves the right to reject any purchase order. Please note that
cash, travelers checks, third party checks, money orders and checks drawn on
non-US banks (even if payment may be effected through a US bank) generally will
not be accepted.


Common Shares will be issued by the Trust under the Program when the Trust's
Common Shares are trading at a premium to NAV. If the Trust's Common Shares are
trading at a discount to NAV, Common Shares issued under the Program will be
purchased on the open market. Common Shares issued under the Program directly
from the Trust will be acquired at the greater of (i) NAV at the close of
business on the day preceding the relevant investment date or (ii) the average
of the daily market price of the Common Shares during the pricing period minus a
discount of 5% for reinvested Dividends and 0% to 5%, for optional cash
investments. Common Shares issued under the Program when shares are trading at a
discount to NAV will be purchased in the market by DST Systems, Inc. (DST) at
market price. Shares issued by the Trust under the Program will be issued
without a fee or a commission.

Shareholders may elect to participate in the Program by telephoning the Trust or
submitting a completed Participation Form to DST, the Program administrator. DST
will credit to each participant's account funds it receives from: (a) Dividends
paid on Trust shares registered in the participant's name, and (b) optional cash
investments. DST will apply all Dividends and optional cash investments received
to purchase Common Shares as soon as practicable beginning on the relevant
investment date (as described below) and not later than six business days after
the relevant investment date, except when necessary to comply with applicable
provisions of the federal securities laws. For more information on the Trust's
distribution policy, see "Dividends and Distributions."

In order for participants to purchase shares through the Program in any month,
the Program administrator must receive from the participant any optional cash
investment by the relevant investment date. The relevant investment date will be
set in advance by the Trust, upon which optional cash investments are first
applied by DST to the purchase of Common Shares. Participants may obtain a
schedule of relevant dates, including investments dates, the dates by which
optional cash investment payments must be received and the dates in which shares
will be paid by calling ING's Shareholder Services Department at (800) 992-0180.


Participants will pay a pro rata share of brokerage commissions with respect to
DST's open market purchases in connection with the reinvestment of Dividends or
purchases made with optional cash investments.


The Program is intended for the benefit of investors in the Trust. The Trust
reserves the right to exclude from participation, at any time, (i) persons or
entities who attempt to circumvent the Program's standard $100,000 maximum by
accumulating accounts over which they have control or (ii) any other persons or
entities, as determined in the sole discretion of the Trust.

Currently, persons who are not shareholders of the Trust may not participate in
the Program. The Board of Trustees of the Trust may elect to change this policy
at a future date, and permit non-shareholders to participate in the Program.
Shareholders may request to receive their Dividends in cash at any time by
giving DST written notice or by contacting ING's Shareholder Services Department
at (800) 992-0180, and selecting Option 2. Shareholders may elect to close their
account at any time by giving DST written notice. When a participant closes
their account, the participant upon request will receive a certificate for full
Common Shares in the account. Fractional Common Shares will be held and
aggregated with other fractional Common Shares being liquidated by DST as agent
of the Program and paid for by check when actually sold.


The automatic reinvestment of Dividends does not affect the tax characterization
of the Dividends (I.E., capital gains and


                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                                         TRANSACTION POLICIES 21
<Page>

                                                           PLAN OF DISTRIBUTION

income are realized even though cash is not received). If shares are issued
pursuant to the Program's dividend reinvestment provisions or cash purchase
provisions at a discount from market price, participants may have income equal
to the discount.


Additional information about the Program may be obtained by contacting ING's
Shareholder Services Department at (800) 992-0180, and selecting Option 2.


PRIVATELY NEGOTIATED TRANSACTIONS

The Common Shares may also be offered pursuant to privately negotiated
transactions between the Trust or ING Funds Distributor, LLC and specific
investors. Generally, such investors will be sophisticated institutional
investors. The terms of such privately negotiated transactions will be subject
to the discretion of the management of the Trust. In determining whether to sell
Common Shares pursuant to a privately negotiated transaction, the Trust will
consider relevant factors including, but not limited to, the attractiveness of
obtaining additional funds through the sale of Common Shares, the purchase price
to apply to any such sale of Common Shares and the person seeking to purchase
the Common Shares.

Common Shares issued by the Trust in connection with privately negotiated
transactions will be issued at the greater of (i) NAV per Common Share of the
Trust's Common Shares or (ii) at a discount ranging from 0% to 5% of the average
of the daily market price of the Trust's Common Shares at the close of business
on the two business days preceding the date upon which Common Shares are sold
pursuant to the privately negotiated transaction. The discount to apply to such
privately negotiated transactions will be determined by the Trust with regard to
each specific transaction.

USE OF PROCEEDS

It is expected that 100% of the net proceeds of Common Shares issued pursuant to
the Shareholder Investment Program and privately negotiated transactions will be
invested in Senior Loans and other securities consistent with the Trust's
investment objective and policies. Pending investment in Senior Loans, the
proceeds will be used to pay down the Trust's outstanding borrowings under its
credit facilities. See "Investment Objective and Policies -- Policy on
Borrowing."


As of June 15, 2004, the Trust's outstanding borrowings under its credit
facilities was $444 million. By paying down the Trust's borrowings, the Trust
can avoid adverse impacts on yields pending investment of such proceeds in
Senior Loans. As investment opportunities are subsequently identified, it is
expected that the Trust will reborrow amounts previously repaid and invest such
amounts in additional Senior Loans.


DIVIDENDS AND DISTRIBUTIONS

DISTRIBUTION POLICY. Income dividends are declared and paid monthly. Income
dividends consist of interest accrued and amortization of fees earned less any
amortization of premiums paid and the estimated expenses of the Trust, including
fees payable to ING Investments. Income dividends are calculated monthly under
guidelines approved by the Trustees. Each dividend is payable to shareholders of
record on the 10th day of the following month (unless it is a holiday, in which
case the next business day is the record date). Accrued amounts of fees
received, including facility fees, will be taken in as income and passed on to
shareholders as part of dividend distributions. Any fees or commissions paid to
facilitate the sale of portfolio Senior Loans in connection with tender offers
or other portfolio transactions may reduce the dividend yield.

Capital gains, if any, are declared and paid annually. Because the Trust
currently has capital loss carry forwards, it is not anticipated that capital
gains distributions will be made for the foreseeable future.


DIVIDEND REINVESTMENT. Unless you instruct the Trust to pay you dividends in
cash, dividends and distributions paid by the Trust will be reinvested in
additional Common Shares of the Trust. You may request to receive dividends in
cash at any time by giving DST written notice or by contacting the ING's
Shareholder Services Department at (800) 992-0180, and selecting Option 2.


22 PLAN OF DISTRIBUTION
<Page>

                               INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS

INVESTMENT MANAGER

ING INVESTMENTS, LLC (the Investment Manager or ING Investments), an Arizona
limited liability company, serves as Investment Manager to the Trust and has
overall responsibility for the management of the Trust under the general
supervision of the Board of Trustees. Its principal business address is 7337
East Doubletree Ranch Road, Scottsdale, Arizona 85258.

The Trust and the Investment Manager have entered into an Investment Management
Agreement that requires ING Investments to provide all investment advisory and
portfolio management services for the Trust. The agreement with ING Investments
may be canceled by the Board of Trustees upon 60 days' written notice.


ING Investments is an indirect wholly-owned subsidiary of ING Groep N.V. (NYSE:
ING) (ING Groep). ING Groep is a global financial institution active in the
fields of insurance, banking and asset management in more than 65 countries with
more than 100,000 employees. The Investment Manager is registered as an
investment adviser with the SEC. ING Investments began investment management in
April, 1995, and serves as an investment adviser to registered investment
companies as well as structured finance vehicles. As of March 31, 2004, ING
Investments had assets under management of over $35.4 billion.


The Investment Manager bears its expenses of providing the services described
above. The Investment Manager currently receives from the Trust an annual fee,
paid monthly, of 0.80% of the Trust's Managed Assets.

SUB-ADVISER

ING Investments has engaged a Sub-Adviser to provide the day-to-day management
of the Trust's portfolio. The Sub-Adviser has, at least in part, been selected
primarily on the basis of its successful application of a consistent,
well-defined, long-term investment approach over a period of several market
cycles. ING Investments is responsible for monitoring the investment program and
performance of the Sub-Adviser. Under the terms of the sub-advisory agreement,
the agreement can be terminated by either ING Investments or the Board of
Trustees of the Trust. In the event the sub-advisory agreement is terminated,
the Sub-Adviser may be replaced subject to any regulatory requirements or ING
Investments may assume day-to-day investment management of the Trust.


ING INVESTMENT MANAGEMENT CO.

ING Investment Management Co. (Sub-Adviser or INGIM), formerly known as Aeltus
Investment Management, Inc., a Connecticut corporation serves as Sub-Adviser to
the Trust. Founded in 1972, INGIM is registered with the SEC as an investment
adviser. INGIM is an indirect wholly-owned subsidiary of ING Groep, N.V., and is
an affiliate of ING Investments. INGIM has acted as adviser or sub-adviser to
mutual funds since 1994 and has managed institutional accounts since 1972.

As of March 31, 2004, INGIM managed almost $53.48 billion in assets. Its
principal office is located at 10 State House Square, Hartford, Connecticut
06103-3602. For its services, INGIM is entitled to receive a sub-advisory fee of
0.36%, expressed as an annual rate based on the average daily Managed Assets of
the Trust. This sub-advisory fee is paid by ING Investments, not by the Trust.

PORTFOLIO MANAGEMENT. The Trust is managed by INGIM's Senior Debt Group. That
team is comprised of the following individuals:

DANIEL A. NORMAN. Mr. Norman is Senior Vice President and Senior Portfolio
Manager in the Senior Debt Group, and has served in that capacity since November
1999. Prior to that, Mr. Norman was Senior Vice President and Portfolio Manager
in the Senior Debt Group (since April 1995). Mr. Norman also serves as Senior
Vice President of the Trust, and he serves as Senior Vice President of ING
Senior Income Fund, another closed-end fund sub-advised by INGIM that invests
primarily in Senior Loans. Mr. Norman co-manages the Trust with Mr. Bakalar.

JEFFREY A. BAKALAR. Mr. Bakalar is Senior Vice President and Senior Portfolio
Manager in the Senior Debt Group, and has served in that capacity since November
1999. Prior to that, Mr. Bakalar was Senior Vice President and Portfolio Manager
in the Senior Debt Group (since January 1998). Before joining ING Groep N.V.,
Mr. Bakalar was Vice President of The First National Bank of Chicago (from 1994
to 1998). Mr. Bakalar also serves as Senior Vice President of the Trust and as
Senior Vice President of ING Senior Income Fund, another closed-end fund
sub-advised by INGIM that invests primarily in Senior Loans. Mr. Bakalar
co-manages the Trust with Mr. Norman.

CURTIS F. LEE. Mr. Lee is Senior Vice President and Chief Credit Officer in the
Senior Debt Group and has served in that capacity since August 1999. Prior to
joining the Investment Manager, Mr. Lee held a series of positions with Standard
Chartered Bank in the credit approval and problem loan management functions
(1992 - 1999). Mr. Lee also serves as Senior Vice President and Chief Credit
Officer of the Trust (since January 2001), and he serves as Senior Vice
President and Chief Credit Officer of ING Senior Income Fund, another closed-end
fund sub-advised by INGIM that invests primarily in Senior Loans.

ROBERT L. WILSON. Mr. Wilson is Senior Vice President in the Senior Debt Group
(since March 2003) and before that was Vice President in the Senior Debt Group
(since July 1998). Prior to joining ING Groep N.V., Mr. Wilson was Vice
President of Bank of Hawaii (from 1997 to 1998) and Vice President of Union Bank
of California (from 1994 to 1997).


MICHEL PRINCE. Mr. Prince is a Vice President in the Senior Debt Group (since
May 1998). Prior to joining the Investment Manager, Mr. Prince was Vice
President of Rabobank International, Chicago branch (from 1996 to 1998).

JASON T. GROOM. Mr. Groom is a Vice President in the Senior Debt Group (since
June 2000), and before that was an Assistant Vice President in the Senior Debt
Group (1998 to 2000). Prior to joining ING Groep N.V., Mr. Groom was an
Associate in the Corporate Finance Group of NationsBank (in 1998) and Assistant
Vice President, Corporate Finance Group, of The Industrial Bank of Japan Limited
(from 1995 to 1997).


                                                             [TELEPHONE GRAPHIC]
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                            INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS 23
<Page>

                              INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS

CHARLES E. LEMIEUX. Mr. LeMieux is a Vice President in the Senior Debt Group
(since June 2000), and before that was Assistant Vice President in the Senior
Debt Group (from 1998 to 2000). Prior to joining ING Groep N.V., Mr. LeMieux was
Assistant Treasurer, Cash Management, with Salt River Project (from 1993 to
1998).

MARK F. HAAK. Mr. Haak is a Vice President in the Senior Debt Group (since June
1999). Prior to joining ING Groep N.V., Mr. Haak was Assistant Vice President,
Corporate Banking with Norwest Bank (from 1997 to 1998) and Lead Financial
Analyst and Portfolio Manager for Bank One AZ, N.A. (from 1996 to 1997).


WILLIAM F. NUTTING, JR. Mr. Nutting is a Vice President in the Senior Debt Group
(since November 1999), and joined ING Funds Services, LLC, an affiliate of the
Investment Manager, in 1995 as an Operations Associate.


THEODORE M. HAAG. Mr. Haag is a Vice President in the Senior Debt Group (since
March 2001). Mr. Haag joined ING Groep N.V. in June 2000 as Vice President and
Senior Portfolio Manager, a position he continues to hold. From 1997 to 2000,
Mr. Haag served as Vice President and Portfolio Manager for Gen Re-New England
Asset Management. From 1995 to 1997, Mr. Haag was a Director of Fixed Income
Securities and Securities Policy Committee member for Providian Capital
Management. Prior to working at Providian, Mr. Haag was a high yield portfolio
manager at ICH Corporation.

RALPH E. BUCHER. Mr. Bucher is a Vice President in the Senior Debt Group (since
November 2001). Prior to joining ING Groep N.V., Mr. Bucher was the North
American Head of Special Assets for Standard Chartered Bank (from 1999 to 2001).
Mr. Bucher has also held other senior credit approval positions with Societe
Generale (from 1997 to 1999).

BRIAN S. HORTON. Mr. Horton is a Vice President in the Senior Debt Group (since
September 2001). Prior to joining ING Groep N.V., Mr. Horton was a Vice
President in the Corporate and Investment Banking Group at Bank of America
Securities LLC, where he worked in the Consumer and Retail Industry Group (from
1999 to 2001). Mr. Horton also served in various other corporate finance and
relationship management positions during his seven years at Bank of America,
including corporate finance specialist for the Southeast U.S. region (from 1997
- - 1999).


MOHAMED N. BASMA. Mr. Basma is a Vice President in the Senior Debt Group (since
March 2003), and before that was a Research Analyst for on the Senior Debt Group
(since January 2000). Prior to joining ING Groep N.V., Mr. Basma was a senior
auditor/consultant in the audit and business advisory group of Arthur Andersen,
LLP (from 1995 to 1997). Mr. Basma attended school for the years between his
employment at Arthur Andersen and the Investment Manager.


JAMES E. GRIMES. Mr. Grimes is a Vice President in the Senior Debt Group (since
2001), and before that was Manager of Structured Investments for the Investment
Manager (since 1999). Prior to joining ING Groep N.V., Mr. Grimes was Manager of
Finance and Strategic Planning for NationsBank Auto Leasing, Inc. (formerly
Oxford Resources Corp.) (from 1994 to 1998).


JEFFREY S. SCHULTZ. Mr. Schultz is an Analyst in the Senior Debt Group (since
March 2003), and before that was Treasury Operations Assistant (from 1998 to
2000) and Junior Research Analyst (from 2000 to 2003).


THE ADMINISTRATOR

The Administrator of the Trust is ING Funds Services, LLC (ING Funds Services).
Its principal business address is 7337 East Doubletree Ranch Road, Scottsdale,
Arizona 85258. The Administrator is a wholly-owned subsidiary of ING Groep and
the immediate parent company of the Investment Manager.

Under an Administration Agreement between ING Funds Services and the Trust, ING
Funds Services administers the Trust's corporate affairs subject to the
supervision of the Board of Trustees of the Trust. In that connection, ING Funds
Services monitors the provisions of the Senior Loan agreements and any
agreements with respect to interests in Senior Loans and is responsible for
recordkeeping with respect to the Senior Loans in the Trust's repurchase offers
portfolio. ING Funds Services also furnishes the Trust with office facilities
and furnishes executive personnel together with clerical and certain
recordkeeping and administrative services. These services include preparation of
annual and other reports to shareholders and to the SEC. ING Funds Services also
handles the filing of federal, state and local income tax returns not being
furnished by the Custodian or Transfer Agent (as defined below). The
Administration Agreement also requires ING Funds Services to assist in managing
and supervising all aspects of the general day-to-day business activities and
operations of the Trust, including custodial, transfer agency, dividend
disbursing, accounting, auditing, compliance and related services. ING Funds
Services provides the Trust with office space, equipment and personnel necessary
to administer the Trust. The Administrator has authorized all of its officers
and employees who have been elected as officers of the Trust to serve in such
capacities. All services furnished by the Administrator under the Administration
Agreement may be furnished by such officers or employees of the Administrator.

The Trust pays ING Funds Services an administration fee, computed daily and
payable monthly. The Administration Agreement states that ING Funds Services is
entitled to receive a fee at an annual rate of 0.25% of the Trust's Managed
Assets. The Administration Agreement may be canceled by the Board of Trustees
upon 60 days' written notice.

TRANSFER AGENT, DIVIDEND DISBURSING AGENT AND REGISTRAR

The transfer agent, dividend disbursing agent and registrar for the Common
Shares is DST Systems, Inc., whose principal business address is 816 Wyandotte,
Kansas City, Missouri 64105.

CUSTODIAN

The Trust's securities and cash are held and maintained under a Custody
Agreement with State Street Bank and Trust Company, whose principal place of
business is 801 Pennsylvania Avenue, Kansas City, Missouri 64105.


24 INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS
<Page>

                                                        DESCRIPTION OF THE TRUST


The Trust is an unincorporated business trust established under the laws of the
Commonwealth of Massachusetts by an Agreement and Declaration of Trust dated
December 2, 1987, as amended (Declaration of Trust). The Board of Trustees is
responsible for protecting the interests of shareholders. The Trustees are
experienced executives who oversee the Trust's activities, review contractual
arrangements with companies that provide services to the Trust and review the
Trust's performance.

The Declaration of Trust provides that the Trustees of the Trust may authorize
separate classes of shares of beneficial interest. The Trustees have authorized
an unlimited number of shares of beneficial interest, par value $0.01 per share,
all of which were initially classified as Common Shares. The Declaration of
Trust also authorizes the creation of an unlimited number of shares of
beneficial interest with preference rights, including preferred shares, having a
par value of $0.01 per share, in one or more series, with rights as determined
by the Board of Trustees, by action of the Board of Trustees without the
approval of the shareholders. The following table shows the number of (i) shares
authorized, (ii) shares held by the Trust for its own account and (iii) shares
outstanding, for each class of authorized securities of the Trust as of June 15,
2004.



<Table>
<Caption>
                                              NUMBER HELD BY
                                    NUMBER     TRUST FOR ITS     NUMBER
     TITLE OF CLASS               AUTHORIZED    OWN ACCOUNT    OUTSTANDING
     --------------               ----------    -----------    -----------
<S>                                <C>               <C>       <C>
Common Shares                      unlimited         0         137,821,394
Preferred Shares, Series M           3,600           0               3,600
Preferred Shares, Series T           3,600           0               3,600
Preferred Shares, Series W           3,600           0               3,600
Preferred Shares, Series Th          3,600           0               3,600
Preferred Shares, Series F           3,600           0               3,600
</Table>



The Common Shares outstanding are fully paid and nonassessable by the Trust.
Holders of Common Shares are entitled to share equally in dividends declared by
the Board of Trustees payable to holders of Common Shares and in the net assets
of the Trust available for distribution to holders of Common Shares after
payment of the preferential amounts payable to holders of any outstanding
Preferred Shares. Neither holders of Common Shares nor holders of Preferred
Shares have pre-emptive or conversion rights and Common Shares are not
redeemable. Upon liquidation of the Trust, after paying or adequately providing
for the payment of all liabilities of the Trust and the liquidation preference
with respect to any outstanding preferred shares, and upon receipt of such
releases, indemnities and refunding agreements as they deem necessary for their
protection, the Trustees may distribute the remaining assets of the Trust among
the holders of the Common Shares. Under the rules of the NYSE applicable to
listed companies, the Trust is required to hold an annual meeting of
shareholders in each year. If the Trust is converted to an open-end investment
company or if for any other reason Common Shares are no longer listed on the
NYSE (or any other national securities exchange the rules of which require
annual meetings of shareholders), the Trust does not intend to hold annual
meetings of shareholders.

The Trust is responsible for paying the following expenses, among others: the
fees payable to the Investment Manager; the fees payable to the Administrator;
the fees and certain expenses of the Trust's custodian and transfer agent,
including the cost of providing records to the Administrator in connection with
its obligation of maintaining required records of the Trust; the charges and
expenses of the Trust's legal counsel, legal counsel to the Trustees who are not
"interested persons" of the Trust, as defined in the 1940 Act and independent
accountants; commissions and any issue or transfer taxes chargeable to the Trust
in connection with its transactions; all taxes and corporate fees payable by the
Trust to governmental agencies; the fees of any trade association of which the
Trust is a member; the costs of share certificates representing Common Shares of
the Trust; organizational and offering expenses of the Trust and the fees and
expenses involved in registering and maintaining registration of the Trust and
its Common Shares with the SEC, including the preparation and printing of the
Trust's registration statement and prospectuses for such purposes; allocable
communications expenses with respect to investor services, and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
reports, proxy statements and prospectuses to shareholders; fees for independent
loan pricing services; the cost of insurance; and litigation and indemnification
expenses and extraordinary expenses not incurred in the ordinary course of the
Trust's business.


Under Massachusetts law, shareholders, including holders of Preferred Shares,
could under certain circumstances be held personally liable for the obligations
of the Trust. However, the Declaration of Trust disclaims shareholder liability
for acts or obligations of the Trust and requires that notice of such disclaimer
be given in each agreement, obligation or instrument entered into or executed by
the Trust or the Trustees. The Declaration of Trust provides for indemnification
out of Trust property for all loss and expense of any shareholder held
personally liable for the obligations of the Trust. Thus, the risk of a
shareholder incurring financial loss on account of shareholder liability is
limited to circumstances in which the Trust would be unable to meet its
obligations.

Holders of Common Shares are entitled to one vote for each share held and will
vote with the holders of any outstanding Preferred Shares or any other preferred
shares on each matter submitted to a vote of holders of Common Shares, except as
described under "Description of Capital Structure -- Preferred Shares."

Shareholders are entitled to one vote for each share held. The Common Shares,
Preferred Shares and any other preferred shares do not have cumulative voting
rights, which means that the holders of more than 50% of the shares of Common
Shares, Preferred Shares and any other preferred shares voting for the election
of Trustees can elect all of the Trustees standing for election by such holders,
and, in such event, the holders of the remaining shares of Common Shares,
Preferred


                                                             [TELEPHONE GRAPHIC]
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                                                     DESCRIPTION OF THE TRUST 25
<Page>

                                                       DESCRIPTION OF THE TRUST

Shares and any other preferred shares will not be able to elect any of such
Trustees.


So long as any Preferred Shares or any other preferred shares are outstanding,
holders of Common Shares will not be entitled to receive any dividends of or
other distributions from the Trust, unless at the time of such declaration, (1)
all accrued dividends on preferred shares or accrued interest on borrowings has
been paid and (2) the value of the Trust's total assets (determined after
deducting the amount of such dividend or other distribution), less all
liabilities and indebtedness of the Trust not represented by senior securities,
is at least 300% of the aggregate amount of such securities representing
indebtedness and at least 200% of the aggregate amount of securities
representing indebtedness plus the aggregate liquidation value of the
outstanding preferred shares (expected to equal the aggregate original purchase
price of the outstanding preferred shares plus redemption premium, if any,
together with any accrued and unpaid dividends thereon, whether or not earned or
declared and on a cumulative basis). In addition to the requirements of the 1940
Act, the Trust is required to comply with other asset coverage requirements as a
condition of the Trust obtaining a rating of the Preferred Shares from a rating
agency. These requirements include an asset coverage test more stringent than
under the 1940 Act.


The Trust will send unaudited reports at least semi-annually and audited
financial statements annually to all of its shareholders.

The Declaration of Trust further provides that obligations of the Trust are not
binding upon Trustees individually but only upon the property of the Trust and
that the Trustees will not be liable for errors of judgment or mistakes of fact
or law, but nothing in the Declaration of Trust protects a Trustee against any
liability to which he or she would otherwise be subject by reason of willful
misfeasance, bad faith, gross negligence or reckless disregard of the duties
involved in the conduct of his or her office.

CONVERSION TO OPEN-END FUND

The Trustees may at any time propose conversion of the Trust to an open-end
management investment company depending upon their judgment as to the
advisability of such action in light of circumstances then prevailing. In
considering whether to submit an open-ending proposal to shareholders, the
Trustees might consider, among other factors, the differences in operating
expenses between open-end and closed-end funds (due to the expenses of
continuously selling shares and of standing ready to effect redemptions), the
potentially adverse tax consequences to non-redeeming shareholders once a fund
is open-ended, and the impact of open-ending on portfolio management policies.
Such a conversion would require the approval of both a majority of the Trust's
outstanding Common Shares and preferred shares voting together as a single class
and a majority of the outstanding preferred shares voting as a separate class on
such conversion. Conversion of the Trust to an open-end investment company would
require the redemption of all outstanding preferred shares, including the
Preferred Shares, which would eliminate the leveraged capital structure of the
Trust with respect to the Common Shares. A delay in conversion could result
following shareholder approval due to the Trust's inability to redeem the
preferred shares. Shareholders of an open-end investment company may require the
company to redeem their shares at any time (except in certain circumstances as
authorized by or under the 1940 Act) at their next computed NAV less any
redemption charge as might be in effect at the time of redemption. If the Trust
is converted to an open-end management investment company, it could be required
to liquidate portfolio securities to meet requests for redemption, and its
shares would no longer be listed on the NYSE. If the Trust were to experience
significant redemptions as an open-end fund, the decrease in total assets could
result in a higher expense ratio and inefficiencies in portfolio management. In
this regard, the Trust could reserve the right to effect redemptions in-kind
with portfolio securities, which would subject redeeming shareholders to
transaction costs in liquidating those securities.

REPURCHASE OF COMMON SHARES

In recognition of the possibility that the Trust's Common Shares may trade at a
discount to their NAV, the Trust may from time to time take action to attempt to
reduce or eliminate a market value discount from NAV by repurchasing its Common
Shares in the open market or by tendering its Common Shares at NAV. So long as
any Preferred Shares are outstanding, the Trust may not purchase, redeem or
otherwise acquire any Common Shares unless (1) all accumulated dividends on the
Preferred Shares have been paid or set aside for payment through the date of
such purchase, redemption or other acquisition and (2) at the time of such
purchase, redemption or acquisition asset coverage requirements set forth in the
Declaration of Trust and the Trust's Certificate of Designation for Preferred
Shares are met. Repurchases of Common Shares may result in the Trust being
required to redeem preferred shares to satisfy asset coverage requirements.

FUNDAMENTAL AND NON-FUNDAMENTAL POLICIES OF THE TRUST

The investment objective of the Trust, certain policies of the Trust specified
herein as fundamental and the investment restrictions of the Trust described in
the SAI are fundamental policies of the Trust and may not be changed without a
Majority Vote of the shareholders of the Trust. The term Majority Vote means the
affirmative vote of (a) more than 50% of the outstanding shares of the Trust or
(b) 67% or more of the shares present at a meeting if more than 50% of the
outstanding shares of the Trust are represented at the meeting in person or by
proxy, whichever is less. All other policies of the Trust may be modified by
resolution of the Board of Trustees of the Trust.

26 DESCRIPTION OF THE TRUST
<Page>

                                                DESCRIPTION OF CAPITAL STRUCTURE

COMMON SHARES

The Trust's Declaration of Trust authorizes the issuance of an unlimited number
of Common Shares of beneficial interest, par value $.01 per share. All Common
Shares have equal rights to the payment of dividends and the distribution of
assets upon liquidation. Common Shares will, when issued, be fully paid and
non-assessable, and will have no pre-emptive or conversion rights or rights to
cumulative voting.

Whenever preferred shares are outstanding, holders of Common Shares will not be
entitled to receive any distributions from the Trust, unless at the time of such
declaration, (1) all accrued dividends on Preferred Shares or accrued interest
on borrowings have been paid and (2) the value of the Trust's total assets
(determined after deducting the amount of such dividend or other distribution),
less all liabilities and indebtedness of the Trust not represented by senior
securities, is at least 300% of the aggregate amount of such securities
representing indebtedness and at least 200% of the aggregate amount of
securities representing indebtedness plus the aggregate liquidation value of the
outstanding preferred shares. In addition to the requirements of the 1940 Act,
the Trust is required to comply with the other asset coverage requirements as a
condition of the Trust obtaining a rating of the preferred shares from a rating
agency. These requirements include asset coverage tests more stringent than
under the 1940 Act. See "Preferred Shares" below.

BORROWINGS

The Trust's Declaration of Trust authorizes the Trust, without the prior
approval of holders of Common Shares, to borrow money. In this connection, the
Trust may issue notes or other evidence of indebtedness (including bank
borrowings or commercial paper) and may secure any such borrowings by
mortgaging, pledging or otherwise granting a security interest in the Trust's
assets. See "Risk Factors and Special Consideration -- Leverage."

PREFERRED SHARES


Under the 1940 Act, the Trust is permitted to have outstanding more than one
series of preferred shares as long as no single series has priority over another
series nor holders of preferred shares have pre-emptive rights to purchase any
other preferred shares that might be issued.


The Trust's Declaration of Trust authorizes the issuance of a class of preferred
shares (which class may be divided into two or more series) as the Trustees may,
without shareholder approval, authorize. The preferred shares have such
preferences, voting powers, terms of redemption, if any, and special or relative
rights or privileges (including conversion rights, if any) as the Trustee may
determine and as are set forth in the Trust's Certificate of Designation
establishing the terms of the preferred shares. The number of shares of the
preferred class or series authorized is unlimited, and the shares authorized may
be represented in part by fractional shares. Under the Trust's Certificate of
Designation, the Trustees have authorized the creation of 18,000 Auction Rate
Cumulative Preferred Shares, having a par value of $0.01 per share, with a
liquidation preference of $25,000 per share, classified as Series M, T, W, Th
and F Auction Rate Cumulative Preferred Shares.

Any decision to offer preferred shares is subject to market conditions and to
the Board of Trustees' and the Investment Manager's continuing belief that
leveraging the Trust's capital structure through the issuance of preferred
shares is likely to achieve the benefits to the Common Shares described in this
Prospectus for long-term investors. The terms of the preferred shares will be
determined by the Board of Trustees in consultation with the Investment Manager
(subject to applicable law and the Trust's Declaration of Trust) if and when it
authorizes a preferred shares offering.

The Preferred Shares have complete priority over the Common Shares as to
distribution of assets. In the event of any voluntary or involuntary
liquidation, dissolution or winding up of the affairs of the Trust, holders of
preferred shares will be entitled to receive a preferential liquidating
distribution (expected to equal the original purchase price per share plus
accumulated and unpaid dividends thereon, whether or not earned or declared)
before any distribution of assets is made to holders of Common Shares.


                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                             DESCRIPTION OF CAPITAL STRUCTURE 27
<Page>

TAX MATTERS

The following information is meant as a general summary for U.S. shareholders.
Please see the SAI for additional information. Investors should rely on their
own tax adviser for advice about the particular federal, state and local tax
consequences to them of investing in the Trust.

The federal income tax treatment of the Trust's Preferred Shares is not entirely
clear, but the Trust believes, based on the advice of its counsel, that the
Preferred Shares will constitute stock of the Trust. It is possible, however,
that the IRS might take a contrary position, asserting, for example, that the
Preferred Shares constitute debt of the Trust. The discussion below assumes that
the Preferred Shares are stock.

The Trust will distribute all or substantially all of its net investment income
and net realized capital gains, if any, to its shareholders each year. Although
the Trust will not be taxed on amounts it distributes, most shareholders will be
taxed on amounts they receive. A particular distribution generally will be
taxable as either ordinary income or long-term capital gain. The Trust will
allocate a proportionate amount of each type of its income to the Common Shares
and to the Preferred Shares. It generally does not matter how long a shareholder
has held the Trust's Common Shares or Preferred Shares or whether the
shareholder elects to receive distributions in cash or reinvest them in
additional Trust's Common Shares or Preferred Shares. For example, if the Trust
designates a particular distribution as a long-term capital gains distribution,
it will be taxable to a shareholder at his or her long-term capital gains rate.
Dividends from the Trust are generally not eligible for the reduced rate of tax
that may apply to certain qualifying dividends on corporate stock.

Dividends declared by the Trust in October, November or December and paid during
the following January may be treated as having been received by shareholders in
the year the distributions were declared.

Each shareholder will receive an annual statement summarizing the shareholder's
dividend and capital gains distributions.

If a shareholder invests through a tax-deferred account, such as a retirement
plan, the shareholder generally will not have to pay tax on dividends until they
are distributed from the account. These accounts are subject to complex tax
rules, and shareholders should consult a tax adviser about investment through a
tax-deferred account.

There may be tax consequences to a shareholder if the shareholder sells the
Trust's Common Shares or Preferred Shares. A shareholder will generally have a
capital gain or loss, which will be long-term or short-term, generally depending
on how long the shareholder holds those Common Shares or Preferred Shares. If a
shareholder exchanges shares, the shareholder may be treated as if he or she
sold them. Shareholders are responsible for any tax liabilities generated by
their own transactions.

As with all investment companies, the Trust may be required to withhold U.S.
federal income tax at the rate of 28% of all taxable distributions payable to a
shareholder if the shareholder fails to provide the Trust with his or her
correct taxpayer identification number or to make required certifications, or if
the shareholder has been notified by the IRS that he or she is subject to backup
withholding. Backup withholding is not an additional tax; rather, it is a way in
which the IRS ensures it will collect taxes otherwise due. Any amounts withheld
may be credited against a shareholder's U.S. federal income tax liability.

28 TAX MATTERS
<Page>

                                                                MORE INFORMATION

DISTRIBUTION ARRANGEMENTS


Pursuant to the terms of a Distribution Agreement, ING Funds Distributor, LLC
will act as the Trust's distributor for privately negotiated transactions
under the Trust's Shareholder Investment Program and for The Distribution
Agreement provides that ING Fund's Distributor LLC does not receive
compensation or commissions from the Trust for such services. In addition, no
fees or commissions will be paid by the Trust or its shareholders in
connection with the reinvestment of dividends and capital gains
distributions. ING Funds Distributor, LLC's principal business address is
7337 E. Doubletree Ranch Road, Scottsdale, Arizona 85258. ING Funds
Distributor, LLC and ING Investments, LLC, the Trust's Investment Manager,
and INGIM, the Trust's Sub-Adviser, are indirect, wholly-owned subsidiaries
of ING Groep. See "Plans of Distribution" in the SAI.


The Trust bears the expenses of issuing the Common Shares. These expenses
include, but are not limited to, the expense of preparation and printing of the
prospectus and SAI, the expense of counsel and auditors, and others.

LEGAL MATTERS

The validity of the Common Shares offered hereby will be passed on for the Trust
by Dechert LLP, 1775 I Street, NW, Washington, DC, counsel to the Trust.

AUDITORS

KPMG LLP serves as independent registered public accounting firm for the Trust.
The auditors' address is 355 South Grand Avenue, Los Angeles, California 90071.

REGISTRATION STATEMENT


The Trust has filed with the SEC, Washington, DC, a Registration Statement under
the Securities Act, relating to the Common Shares offered hereby. For further
information with respect to the Trust and its Common Shares, reference is made
to such Registration Statement and the exhibits filed with it.



                                                             [TELEPHONE GRAPHIC]
                          If you have any questions, please call (800) 992-0180.

                                                             MORE INFORMATION 29
<Page>

STATEMENT OF ADDITIONAL INFORMATION

                                TABLE OF CONTENTS


<Table>
<Caption>
                                                                            PAGE
                                                                            ----
     <S>                                                                     <C>
     Change of Name                                                           2
     Investment Objective                                                     2
     Investment Restrictions                                                  2
     Additional Information About Investments and Investment Techniques       4
     Trustees and Officers                                                   12
     Compensation Table                                                      20
     Code of Ethics                                                          22
     Investment Management and Other Service Providers                       23
     Plans of Distribution                                                   28
     Portfolio Transactions                                                  30
     Net Asset Value                                                         31
     Federal Taxation                                                        32
     Advertising and Performance Data                                        36
     General Information                                                     37
     Financial Statements                                                    38
</Table>


30 STATEMENT OF ADDITIONAL INFORMATION
<Page>

                              ING PRIME RATE TRUST
                          7337 E. DOUBLETREE RANCH ROAD
                            SCOTTSDALE, ARIZONA 85258
                                 (800) 992-0180

                 5,000,000 COMMON SHARES OF BENEFICIAL INTEREST

                            TRUST ADVISORS AND AGENTS

     INVESTMENT MANAGER
     ING Investments, LLC
     7337 E. Doubletree Ranch Road
     Scottsdale, AZ 85258

     SUB-ADVISER
     ING Investment Management Co.
     10 State House Square
     Hartford, Connecticut 06103-3602

     ADMINISTRATOR
     ING Funds Services, LLC
     7337 E. Doubletree Ranch Road
     Scottsdale, AZ 85258

     CUSTODIAN
     State Street Bank and Trust Company
     801 Pennsylvania Avenue
     Kansas City, MO 64105

     INDEPENDENT AUDITORS
     KPMG LLP
     355 South Grand Avenue
     Los Angeles, California 90071

     DISTRIBUTOR
     ING Funds Distributor, LLC
     7337 E. Doubletree Ranch Road
     Scottsdale, AZ 85258

     TRANSFER AGENT
     DST Systems, Inc.
     816 Wyandotte
     Kansas City, MO 64105

     LEGAL COUNSEL
     Dechert LLP
     1775 I Street, NW
     Washington, DC 20006

     INSTITUTIONAL INVESTORS AND ANALYSTS
     Call ING Prime Rate Trust
     (800) 336-3436

THE TRUST HAS NOT AUTHORIZED ANY PERSON TO PROVIDE YOU WITH ANY INFORMATION OR
TO MAKE ANY REPRESENTATIONS OTHER THAN THOSE CONTAINED IN THIS PROSPECTUS IN
CONNECTION WITH THIS OFFER. YOU SHOULD RELY ONLY ON THE INFORMATION IN THIS
PROSPECTUS OR OTHER INFORMATION TO WHICH WE HAVE REFERRED YOU. THIS PROSPECTUS
IS NOT AN OFFER TO SELL OR THE SOLICITATION OF ANY OFFER TO BUY ANY SECURITY
OTHER THAN THE COMMON SHARES OFFERED BY THIS PROSPECTUS, NOR DOES IT CONSTITUTE
AN OFFER TO SELL OR A SOLICITATION OF ANY OFFER TO BUY THE COMMON SHARES BY
ANYONE IN ANY JURISDICTION IN WHICH SUCH OFFER OR SOLICITATION IS NOT
AUTHORIZED, OR IN WHICH THE PERSON MAKING SUCH OFFER OR SOLICITATION IS NOT
QUALIFIED TO DO SO, OR TO ANY PERSON TO WHOM IT IS UNLAWFUL TO MAKE SUCH AN
OFFER OR SOLICITATION. THE DELIVERY OF THIS PROSPECTUS OR ANY SALE MADE PURSUANT
TO THIS PROSPECTUS DOES NOT IMPLY THAT THE INFORMATION CONTAINED IN THIS
PROSPECTUS IS CORRECT AS OF ANY TIME AFTER THE DATE OF THIS PROSPECTUS. HOWEVER,
IF ANY MATERIAL CHANGE OCCURS WHILE THIS PROSPECTUS IS REQUIRED BY LAW TO BE
DELIVERED, THIS PROSPECTUS WILL BE AMENDED OR SUPPLEMENTED.

WHEN CONTACTING THE SEC, YOU WILL WANT TO REFER TO THE TRUST'S SEC FILE NUMBER.
THE FILE NUMBER IS AS FOLLOWS:
1940 Act File No. 811-5410

[ING FUNDS LOGO]

                                               PRPRO-PRT5M     (07/04-07/01/04)

<Page>

                              ING PRIME RATE TRUST

                         7337 East Doubletree Ranch Road
                            Scottsdale, Arizona 85258

                       STATEMENT OF ADDITIONAL INFORMATION

                                  JULY 1, 2004

     ING Prime Rate Trust ("Trust") is a diversified, closed-end management
investment company registered under the Investment Company Act of 1940, as
amended ("1940 Act"). The Trust's investment objective is to provide investors
with as high a level of current income as is consistent with the preservation of
capital. There is no assurance that the Trust will achieve its investment
objective. The Trust is managed by ING Investments, LLC ("ING Investments" or
"Investment Manager") and sub-advised by ING Investment Management Co. ("INGIM"
or "Sub-Adviser"), formerly known as Aeltus Investment Management, Inc.


     This Statement of Additional Information ("SAI") does not constitute a
prospectus, but should be read in conjunction with the Prospectus relating
thereto dated July 1, 2004. This SAI does not include all information that a
prospective investor should consider before purchasing Common Shares in this
offering, and investors should obtain and read the Prospectus prior to
purchasing such shares. In addition, the financial statements from the Trust's
Annual Report dated February 29, 2004, are incorporated herein by reference. A
copy of the Prospectus may be obtained without charge by calling the Investment
Manager at (800) 992-0180.


                                TABLE OF CONTENTS


<Table>
<Caption>
                                                                            PAGE
<S>                                                                           <C>
CHANGE OF NAME                                                                 2
INVESTMENT OBJECTIVE                                                           2
INVESTMENT RESTRICTIONS                                                        2
ADDITIONAL INFORMATION ABOUT INVESTMENTS AND INVESTMENT TECHNIQUES             4
TRUSTEES AND OFFICERS                                                         12
COMPENSATION TABLE                                                            20
CODE OF ETHICS                                                                22
INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS                             23
PLANS OF DISTRIBUTION                                                         28
PORTFOLIO TRANSACTIONS                                                        30
NET ASSET VALUE                                                               31
FEDERAL TAXATION                                                              32
ADVERTISING AND PERFORMANCE DATA                                              36
GENERAL INFORMATION                                                           37
FINANCIAL STATEMENTS                                                          38
</Table>


     The Prospectus and SAI omit certain information contained in the
registration statement filed with the Securities and Exchange Commission
("Commission" or "SEC"), Washington, DC. The registration statement may be
obtained from the Commission upon payment of the fee prescribed, or inspected at
the Commission's office for no charge. The registration statement is also
available on the Commission's website (www.sec.gov).

                                        1
<Page>

                                 CHANGE OF NAME

     The Trust changed its name from Pilgrim Prime Rate Trust to Pilgrim America
Prime Rate Trust in April 1996, and then changed its name back to Pilgrim Prime
Rate Trust on November 16, 1998. Effective March 1, 2002, the Trust changed its
name to ING Prime Rate Trust.

                              INVESTMENT OBJECTIVE

     The Trust's investment objective is to obtain as high a level of current
income as is consistent with the preservation of capital. The Trust seeks to
achieve its investment objective by investing under normal circumstances at
least 80% of its net assets, plus the amount of any borrowings for investment
purposes, in higher yielding, U.S. dollar denominated, floating rate secured
senior loans ("Senior Loans"). These Senior Loans are typically below investment
grade credit quality.

     The Trust only invests in Senior Loans made to corporations or other
business entities organized under U.S. or Canadian law and which are domiciled
in the U.S., Canada or in U.S. territories or possessions. The Trust can also
invest up to 20% of its total assets in other investments, including unsecured
loans, subordinated loans, short-term debt instruments, equity securities
acquired in connection with investments in loans and other instruments as
described under "Additional Information About Investments and Investment
Techniques." During periods when, in the opinion of the Trust's Investment
Manager or Sub-Adviser, a temporary defensive posture in the market is
appropriate, the Trust may hold up to 100% of its assets in cash and/or in
short-term debt instruments.

                             INVESTMENT RESTRICTIONS

     The Trust has adopted the following restrictions relating to its
investments and activities, which may not be changed without a Majority Vote, as
defined in the 1940 Act. The Trust may not:

     1.     Issue senior securities, except insofar as the Trust may be deemed
to have issued a senior security by reason of (i) entering into certain interest
rate hedging transactions, (ii) entering into reverse repurchase agreements, or
(iii) borrowing money in an amount not exceeding 33 1/3%, or such other
percentage permitted by law, of the Trust's total assets (including the borrowed
amount) less all liabilities other than borrowings, or (iv) issuing a class or
classes of preferred shares in an amount not exceeding 50%, or such other
percentage permitted by law, of the Trust's total assets less all liabilities
and indebtedness not represented by senior securities.

     2.     Invest more than 25% of its total assets in any industry.

     3.     Invest in marketable warrants other than those acquired in
conjunction with Senior Loans and such warrants will not constitute more than 5%
of its assets.

     4.     Make investments in any one issuer other than U.S. government
securities if, immediately after such purchase or acquisition, more than 5% of
the value of the Trust's total assets would be invested in such issuer, or the
Trust would own more than 25% of any outstanding issue, except that up to 25% of
the Trust's total assets may be invested without regard to the foregoing
restrictions. For the purpose of the foregoing restriction, the Trust will
consider the borrower of a Senior Loan to be the issuer of such Senior Loan. In
addition, with respect to a Senior Loan under which the Trust does not have
privity with the borrower or would not have a direct cause of action against the
borrower in the event of the failure of the borrower to pay scheduled principal
or interest, the Trust will also separately

                                        2
<Page>

meet the foregoing requirements and consider each interpositioned bank (a lender
from which the Trust acquires a Senior Loan) to be an issuer of the Senior Loan.

     5.     Act as an underwriter of securities, except to the extent that it
may be deemed to act as an underwriter in certain cases when disposing of its
portfolio investments or acting as an agent or one of a group of co-agents in
originating Senior Loans.

     6.     Purchase or sell equity securities (except that the Trust may,
incidental to the purchase or ownership of an interest in a Senior Loan, or as
part of a borrower reorganization, acquire, sell and exercise warrants and/or
acquire or sell other equity securities), real estate, real estate mortgage
loans, commodities, commodity futures contracts, or oil or gas exploration or
development programs; or sell short, purchase or sell straddles, spreads, or
combinations thereof, or write put or call options.

     7.     Make loans of money or property to any person, except that the Trust
(i) may make loans to corporations or other business entities, or enter into
leases or other arrangements that have the characteristics of a loan; (ii) may
lend portfolio instruments; and (iii) may acquire securities subject to
repurchase agreements.

     8.     Purchase shares of other investment companies, except in connection
with a merger, consolidation, acquisition or reorganization.

     9.     Make investments on margin or hypothecate, mortgage or pledge any of
its assets except for the purpose of securing borrowings as described above in
connection with the issuance of senior securities and then only in an amount up
to 33 1/3% (50% in the case of the issuance of a preferred class of shares), or
such other percentage permitted by law, of the value of the Trust's total assets
(including, with respect to borrowings, the amount borrowed) less all
liabilities other than borrowings (or, in the case of the issuance of senior
securities, less all liabilities and indebtedness not represented by senior
securities).

     If a percentage restriction is adhered to at the time of investment, a
later increase or decrease in percentage resulting from a change in value of the
Trust's investments or amount of total assets will not be considered a violation
of any of the foregoing restrictions.

     There is no limitation on the percentage of the Trust's total assets that
may be invested in instruments which are not readily marketable or subject to
restrictions on resale, and to the extent the Trust invests in such instruments,
the Trust's portfolio should be considered illiquid. The extent to which the
Trust invests in such instruments may affect its ability to realize the net
asset value ("NAV") of the Trust in the event of the voluntary or involuntary
liquidation of its assets.

     The Trust has also adopted a non-fundamental policy as required by Rule
35d-1 under the 1940 Act to invest, under normal circumstances, at least 80% of
its net assets, plus the amount of any borrowings for investment purposes, in
higher yielding, U.S. dollar denominated, floating rate secured senior loans.
The Trust has also adopted a policy to provide its shareholders with at least 60
days' prior notice of any change in such investment policy. If, subsequent to an
investment, the 80% requirement is no longer met, the Trust's future investments
will be made in a manner that will bring the Trust into compliance with this
policy.

                                        3
<Page>

       ADDITIONAL INFORMATION ABOUT INVESTMENTS AND INVESTMENT TECHNIQUES

     Some of the different types of securities in which the Trust may invest,
subject to its investment objective, policies and restrictions, are described in
the prospectus under "Investment Objective and Policies." Additional information
concerning certain of the Trust's investments and investment techniques is set
forth below.

EQUITY SECURITIES

     In connection with its purchase or holding of interests in Senior Loans,
the Trust may acquire (and subsequently sell) equity securities or exercise
warrants that it receives. The Trust will acquire such interests only as an
incident to the intended purchase or ownership of loans or in connection with a
reorganization of a borrower or its debt. The Trust normally will not hold more
than 20% of its total assets in equity securities. Equity securities will not be
treated as Senior Loans; therefore, an investment in such securities will not
count toward the 80% of the Trust's net assets, plus the amount of any
borrowings for investment purposes, that normally will be invested in Senior
Loans. Equity securities are subject to financial and market risks and can be
expected to fluctuate in value.

LEASE PARTICIPATIONS


     Senior Loans that the Trust may acquire include particpation interests in
lease fiancings (Lease Participations) where the collateral quality, credit
quality of the borrower and the likelihood of payback are believed by the
Investment Manager or Sub-Advisert to be the same as those applied to
conventional Senior Loans. A Lease Participation is also required to have a
floating interest rate that is indexed to a benchmark indicator of prevailing
interest rates, such as LIBOR or the Prime Rate.


     The credit quality standards and general requirements that the Trust
applies to Lease Participations including collateral quality, the credit quality
of the borrower and the likelihood of payback are substantially the same as
those applied to conventional Senior Loans. A Lease Participation is also
required to have a floating interest rate that is indexed to the federal funds
rate, London Inter-Bank Offered Rate ("LIBOR"), or Prime Rate in order to be
eligible for investment.

     The Office of the Comptroller of the Currency has established regulations
which set forth circumstances under which national banks may engage in lease
financings. Among other things, the regulation requires that a lease be a
net-full payout lease representing the noncancelable obligation of the lessee,
and that the bank make certain determinations with respect to any estimated
residual value of leased property relied upon by the bank to yield a full return
on the lease. The Trust may invest in lease financings only if the Lease
Participation meets these banking law requirements.

INTEREST RATES AND PORTFOLIO MATURITY

     Interest rates on loans in which the Trust invests adjust periodically. The
interest rates are adjusted based on a base rate plus a premium or spread over
the base rate. The base rate usually is LIBOR, the Federal Reserve federal funds
rate, the Prime Rate or other base lending rates used by commercial lenders.
LIBOR usually is an average of the interest rates quoted by several designated
banks as the rates at which they pay interest to major depositors in the London
interbank market on U.S. dollar denominated deposits. The Investment Manager and
Sub-Adviser believe that changes in short-term LIBOR rates are closely related
to changes in the Federal Reserve federal funds rate, although the two are not
technically linked. The Prime Rate quoted by a major U.S. bank is generally the
interest rate at which that bank is willing to lend U.S. dollars to its most
creditworthy borrowers, although it may not be the bank's lowest available rate.

                                        4
<Page>

     Loans in which the Trust invests typically have interest rates which reset
at least quarterly and may reset as frequently as daily. The maximum duration of
an interest rate reset on any loan in which the Trust can invest is one year.
The maximum maturity on any loan in which the Trust can invest is ten years. The
Trust's portfolio of loans will ordinarily have a dollar-weighted average time
until the next interest rate adjustment of 90 days or less, although the time
may exceed 90 days. The Trust may find it possible and appropriate to use
interest rate swaps and other investment practices to shorten the effective
interest rate adjustment period of loans. If the Trust does so, it will consider
the shortened period to be the adjustment period of the loan. As short-term
interest rates rise, interest payable to the Trust should increase. As
short-term interest rates decline, interest payable to the Trust should
decrease. The amount of time that will pass before the Trust experiences the
effects of changing short-term interest rates will depend on the dollar-weighted
average time until the next interest rate adjustment on the Trust's portfolio of
loans.

     Loans usually have mandatory and optional prepayment provisions. Because of
prepayments, the actual remaining maturity of a loan may be considerably less
than its stated maturity. If a loan is prepaid, the Trust will have to reinvest
the proceeds in other loans or securities which may have a lower fixed spread
over its base rate. In such a case, the amount of interest paid to the Trust
would likely decrease.

     In the event of a change in the benchmark interest rate on a loan, the rate
payable to lenders under the loan will, in turn, change at the next scheduled
reset date. If the benchmark rate goes up, the Trust as lender would earn
interest at a higher rate, but only on and after the reset date. If the
benchmark rate goes down, the Trust as lender would earn interest at a lower
rate, but only on and after the reset date.

     During normal market conditions, changes in market interest rates will
affect the Trust in certain ways. The principal effect will be that the yield on
the Trust's Common Shares will tend to rise or fall as market interest rates
rise and fall. This is because almost all of the assets in which the Trust
invests pay interest at rates which float in response to changes in market
rates. However, because the interest rates on the Trust's assets reset over
time, there will be an imperfect correlation between changes in market rates and
changes to rates on the portfolio as a whole. This means that changes to the
rate of interest paid on the portfolio as a whole will tend to lag behind
changes in market rates.

     Market interest rate changes may also cause the Trust's NAV to experience
moderate volatility. This is because the value of a loan asset in the Trust is
partially a function of whether it is paying what the market perceives to be a
market rate of interest for the particular loan, given its individual credit and
other characteristics. If market interest rates change, a loan's value could be
affected to the extent the interest rate paid on that loan does not reset at the
same time. As discussed above, the rates of interest paid on the loans in which
the Trust invests have a weighted average reset period that typically is less
than 90 days. Therefore, the impact of the lag between a change in market
interest rates and the change in the overall rate on the portfolio is expected
to be minimal.

     Finally, to the extent that changes in market rates of interest are
reflected not in a change to a base rate such as LIBOR but in a change in the
spread over the base rate which is payable on loans of the type and quality in
which the Trust invests, the Trust's NAV could be adversely affected. Again,
this is because the value of a loan asset in the Trust is partially a function
of whether it is paying what the market perceives to be a market rate of
interest for the particular loan, given its individual credit and other
characteristics. However, unlike changes in market rates of interest for which
there is only a temporary lag before the portfolio reflects those changes,
changes in a loan's value based on changes in the market spread on loans in the
Trust's portfolio may be of longer duration.

                                        5
<Page>

OTHER INVESTMENTS


     Assets not invested in Senior Loans will generally consist of other
instruments, including unsecured loans and subordinated loans up to a maximum of
5% of the Trust's total assets, short-term debt instruments with remaining
maturities of 120 days or less (which may have yields tied to the Prime Rate,
commercial paper rates, the federal funds rate or LIBOR) and equity securities
acquired in connection with investments in loans. Short-term debt instruments
may include (i) commercial paper rated A-1 by Standard & Poor's Ratings Services
or P-1 by Moody's Investors Service, Inc., or of comparable quality as
determined by the Investment Manager or Sub-Adviser, (ii) certificates of
deposit, bankers' acceptances, and other bank deposits and obligations, and
(iii) securities issued or guaranteed by the U.S. Government, its agencies or
instrumentalities. During periods when, in the judgment of the Investment
Manager or Sub-Adviser, a temporary defensive posture in the market is
appropriate, the Trust may hold up to 100% of its assets in cash and/or in
short-term debt instruments.

REPURCHASE AGREEMENTS

     The Trust has the ability, pursuant to its investment objective and
policies, to enter into repurchase agreements. A repurchase agreement is a
contract under which the Trust may sell and simultaneously obtain the commitment
of the purchaser to sell the security back to the Trust at an agreed upon price
on an agreed upon date. Repurchase agreements will be considered borrowings by
the Trust, and as such are subject to the restrictions on borrowing. Borrowings
by the Trust create an opportunity for greater total return, but at the same
time increase exposure to capital risk. The Trust will maintain in a segregated
account with its custodian cash or liquid high grade portfolio securities in an
amount sufficient to cover its obligations with respect to the repurchase
agreements. The Trust will receive payment for such securities only upon
physical delivery or evidence of book entry transfer by its custodian.
Regulations of the Commission require either that securities sold by the Trust
under a repurchase agreement be segregated pending repurchase or that the
proceeds be segregated on the Trust's books and records pending repurchase.
Repurchase agreements may involve certain risks in the event of default or
insolvency of the other party, including possible loss from delays or
restrictions upon the Trust's ability to dispose of the underlying securities.

REVERSE REPURCHASE AGREEMENTS

     The Trust has the ability, pursuant to its investment objective and
policies, to enter into repurchase agreements if the asset which is the subject
of the repurchase is a loan. Such agreements may be considered to be loans by
the Trust for purposes of the 1940 Act. Each reverse repurchase agreement must
be collateralized fully, in accordance with the provisions of Rule 5b-3 under
the 1940 Act, at all times. Pursuant to such reverse repurchase agreements, the
Trust acquires securities from financial institutions such as brokers, dealers
and banks, subject to the seller's agreement to repurchase and the Trust's
agreement to resell such securities at a mutually agreed upon date and price.
The term of such an agreement is generally quite short, possibly overnight or
for a few days, although it may extend over a number of months (up to one year)
from the date of delivery. The repurchase price generally equals the price paid
by the Trust plus interest negotiated on the basis of current short-term rates
(which may be more or less than the rate on the underlying portfolio security).
The securities underlying a reverse repurchase agreement will be marked to
market every business day so that the value of the collateral is at least equal
to the value of the loan, including the accrued interest thereon, and the
Investment Manager or Sub-Adviser will monitor the value of the collateral.
Securities subject to reverse repurchase agreements will be held by the
Custodian or in the Federal Reserve/Treasury Book-Entry System. If the seller
defaults

                                        6
<Page>

on its repurchase obligation, the Trust will suffer a loss to the extent that
the proceeds from a sale of the underlying securities is less than the
repurchase price under the agreement. Bankruptcy or insolvency of such a
defaulting seller may cause the Trust's rights with respect to such securities
to be delayed or limited. To mitigate this risk, the Trust only enters into
reverse repurchase agreements with highly rated, large financial institutions.
The Trust may only enter into reverse repurchase agreements that qualify for an
exclusion from any automatic stay of creditors' rights against the counterparty
under applicable insolvency law in the event of the counterparty's insolvency.


LENDING LOANS AND OTHER PORTFOLIO INSTRUMENTS


     To generate additional income, the Trust may lend its portfolio securities,
including interests in Senior Loans, in an amount equal to up to 33 1/3% of
theTrust's total assets to broker-dealers, major banks, or other recognized
domestic institutional borrowers of securities. No lending may be made to any
companies affiliated with the Investment Manager or Sub-Adviser. During the time
portfolio securities are on loan, the borrower pays the Trust any dividends or
interest paid on such securities, and the Trust may invest the cash collateral
and earn additional income, or it may receive an agreed-upon amount of interest
income from the borrower who has delivered equivalent collateral or a letter of
credit. As with other extensions of credit, there are risks of delay in recovery
or even loss of rights in the collateral should the borrower fail financially.


     The Trust may seek to increase its income by lending financial instruments
in its portfolio in accordance with present regulatory policies, including those
of the Board of Governors of the Federal Reserve System and the Commission. The
lending of financial instruments is a common practice in the securities
industry. The loans are required to be secured continuously by collateral,
consistent with the requirements of the 1940 Act discussed below, maintained on
a current basis at an amount at least equal to the market value of the portfolio
instruments loaned. The Trust has the right to call a loan and obtain the
portfolio instruments loaned at any time on such notice as specified in the
transaction documents. For the duration of the loan, the Trust will continue to
receive the equivalent of the interest paid by the issuer on the portfolio
instruments loaned and may also receive compensation for the loan of the
financial instrument. Any gain or loss in the market price of the instruments
loaned that may occur during the term of the loan will be for the account of the
Trust.

     The Trust may lend its portfolio instruments so long as the terms and the
structure of such loans are not inconsistent with the requirements of the 1940
Act, which currently require that (a) the borrower pledge and maintain with the
Trust collateral consisting of cash, a letter of credit issued by a domestic
U.S. bank, or securities issued or guaranteed by the U.S. government having a
value at all times not less than 100% of the value of the instruments loaned,
(b) the borrowers add to such collateral whenever the price of the instruments
loaned rises (I.E., the value of the loan is marked to market on a daily basis),
(c) the loan be made subject to termination by the Trust at any time, and (d)
the Trust receives reasonable interest on the loan (which may include the
Trust's investing any cash collateral in interest bearing short-term
investments), any distributions on the loaned instruments and increase in their
market value. The Trust may lend its portfolio instruments to member banks of
the Federal Reserve System, members of the New York Stock Exchange ("NYSE") or
other entities determined by the Investment Manager or Sub-Adviser to be
creditworthy. All relevant facts and circumstances, including the
creditworthiness of the qualified institution, will be monitored by the
Investment Manager or Sub-Adviser, and will be considered in making decisions
with respect to the lending of portfolio instruments.

     The Trust may pay reasonable negotiated fees in connection with loaned
instruments. In addition, voting rights may pass with loaned securities, but if
a material event were to occur affecting such a loan, the Trust will retain the
right to call the loan and vote the securities. If a default occurs by the other
party to such transaction, the Trust will have contractual remedies pursuant to
the agreements related to the

                                        7
<Page>

transaction, but such remedies may be subject to bankruptcy and insolvency laws
which could materially and adversely affect the Trust's rights as a creditor.
However, the loans will be made only to firms deemed by the Investment Manager
or Sub-Adviser to be of good financial standing and when, in the judgment of the
Investment Manager or Sub-Adviser, the consideration which can be earned
currently from loans of this type justifies the attendant risk.

INTEREST RATE HEDGING TRANSACTIONS


     The Trust has the ability, pursuant to its investment objectives and
policies, to engage in certain hedging transactions including interest rate
swaps and the purchase or sale of interest rate caps and floors. The Trust may
undertake these transactions primarily for the following reasons: to preserve a
return on or value of a particular investment or portion of the Trust's
portfolio, to protect against decreases in the anticipated rate of return on
floating or variable rate financial instruments which the Trust owns or
anticipates purchasing at a later date, or for other risk management strategies
such as managing the effective dollar-weighted average duration of the Trust's
portfolio. Market conditions will determine whether and in what circumstances
the Trust would employ any of the hedging techniques described below.

     Interest rate swaps involve the exchange by the Trust with another party of
their respective commitments to pay or receive interest, E.G., an exchange of an
obligation to make floating rate payments on a specified dollar amount, referred
to as the "notional" principal amount, for an obligation to make fixed rate
payments. For example, the Trust may seek to shorten the effective interest rate
redetermination period of a Senior Loan in its portfolio that has an interest
rate redetermination period of one year. The Trust could exchange its right to
receive fixed income payments for one year from a borrower for the right to
receive payments under an obligation that readjusts monthly. In such an event,
the Trust would consider the interest rate redetermination period of such Senior
Loan to be the shorter period.


     The purchase of an interest rate cap entitles the purchaser, to the extent
that a specified index exceeds a predetermined interest rate, to receive
payments of interest on a notional principal amount from the party selling such
interest rate cap. The purchase of an interest rate floor entitles the
purchaser, to the extent that a specified index falls below a predetermined
interest rate, to receive payments of interest on a notional principal amount
from the party selling such interest rate floor. The Trust will not enter into
swaps, caps or floors if, on a net basis, the aggregate notional principal
amount with respect to such agreements exceeds the net assets of the Trust or to
the extent the purchase of swaps, caps or floors would be inconsistent with the
Trust's other investment restrictions.


     The Trust will usually enter into interest rate swaps on a net basis, I.E.,
where the two parties make net payments with the Trust receiving or paying, as
the case may be, only the net amount of the two payments. The net amount of the
excess, if any, of the Trust's obligations over its entitlement with respect to
each interest rate swap will be accrued and an amount of cash or liquid
securities having an aggregate NAV at least equal to the accrued excess will be
maintained in a segregated account. If the Trust enters into a swap on other
than a net basis, the Trust will maintain in the segregated account the full
amount of the Trust's obligations under each such swap. The Trust may enter into
swaps, caps and floors with member banks of the Federal Reserve System, members
of the NYSE or other entities determined by ING Investments. If a default occurs
by the other party to such transaction, the Trust will have contractual remedies
pursuant to the agreements related to the transaction but such remedies may be
subject to bankruptcy and insolvency laws which could materially and adversely
affect the Trust's rights as a creditor. The Trust will not treat swaps covered
in accordance with applicable regulatory guidance as senior securities.


                                        8
<Page>

     The swap, cap and floor market has grown substantially in recent years with
a large number of banks and financial services firms acting both as principals
and as agents utilizing standardized swap documentation. As a result, this
market has become relatively liquid. There can be no assurance, however, that
the Trust will be able to enter into interest rate swaps or to purchase interest
rate caps or floors at prices or on terms the Investment Manager or Sub-Adviser
believes are advantageous to the Trust. In addition, although the terms of
interest rate swaps, caps and floors may provide for termination, there can be
no assurance that the Trust will be able to terminate an interest rate swap or
to sell or offset interest rate caps or floors that it has purchased.

     The successful utilization of hedging and risk management transactions
requires skills different from those needed in the selection of the Trust's
portfolio securities and depends on the Investment Manager's or Sub-Adviser's
ability to predict correctly the direction and degree of movements in interest
rates. Although the Trust believes that use of the hedging and risk management
techniques described above will benefit the Trust, if the Investment Manager's
or Sub-Adviser's judgment about the direction or extent of the movement in
interest rates is incorrect, the Trust's overall performance would be worse than
if it had not entered into any such transactions. The Trust will incur brokerage
and other costs in connection with its hedging transactions.


ORIGINATING SENIOR LOANS - RELIANCE ON AGENTS


     The Trust has the ability to act as an agent in originating and
administering a loan on behalf of all lenders or as one of a group of co-agents
in originating Senior Loans. However, the Trust has not acted as agent or
co-agent on any loans, and has no present intention of doing so in the future.
An agent for a loan is required to administer and manage the Senior Loan and to
service or monitor the collateral. The agent is also responsible for the
collection of principal and interest and fee payments from the borrower and the
apportionment of these payments to the credit of all lenders which are parties
to the loan agreement. The agent is charged with the responsibility of
monitoring compliance by the borrower with the restrictive covenants in the loan
agreement and of notifying the lenders of any adverse change in the borrower's
financial condition. In addition, the agent generally is responsible for
determining that the lenders have obtained a perfected security interest in the
collateral securing the Senior Loan.

     Lenders generally rely on the agent to collect their portion of the
payments on a Senior Loan and to use the appropriate creditor remedies against
the borrower. Typically under loan agreements, the agent is given broad
discretion in enforcing the loan agreement and is obligated to use the same care
it would use in the management of its own property. The borrower compensates the
agent for these services. Such compensation may include special fees paid on
structuring and funding the Senior Loan and other fees on a continuing basis.
The precise duties and rights of an agent are defined in the loan agreement.


     The agent may enforce compliance by the borrower with the terms of the loan
agreement. Agents also have voting and consent rights under the applicable loan
agreement. Action subject to agent vote or consent generally requires the vote
or consent of the holders of some specified percentage of the outstanding
principal amount of the Senior Loan, which percentage varies depending on the
relative loan agreement. Certain decisions, such as reducing the amount or
increasing the time for payment of interest on or repayment of principal of a
Senior Loan, or relating collateral therefor, frequently require the unanimous
vote or consent of all lenders affected.

     Pursuant to the terms of a loan agreement, the agent typically has sole
responsibility for servicing and administering a loan on behalf of the other
lenders. Each lender in a Senior Loan is generally

                                        9
<Page>

responsible for performing its own credit analysis and its own investigation of
the financial condition of the borrower. Generally, loan agreements will hold
the agent liable for any action taken or omitted that amounts to gross
negligence or willful misconduct. In the event of a borrower's default on a
loan, the loan agreements provide that the lenders do not have recourse against
the agent for its activities as agent. Instead, lenders will be required to look
to the borrower for recourse.

     In a typical interest in a Senior Loan, the agent administers the loan and
has the right to monitor the collateral. The agent is also required to segregate
the principal and interest payments received from the borrower and to hold these
payments for the benefit of the lenders. The Trust normally looks to the agent
to collect and distribute principal of and interest on a Senior Loan.
Furthermore, the Trust looks to the agent to use normal credit remedies, such as
to foreclose on collateral, monitor credit loan covenants, and notify the
lenders of any adverse changes in the borrower's financial condition or
declarations of insolvency. At times the Trust may also negotiate with the agent
regarding the agent's exercise of credit remedies under a Senior Loan. The agent
is compensated for these services by the borrower as set forth in the loan
agreement. Such compensation may take the form of a fee or other amount paid
upon the making of the Senior Loan and/or an ongoing fee or other amount.

     The loan agreements in connection with Senior Loans set forth the standard
of care to be exercised by the agents on behalf of the lenders and usually
provide for the termination of the agent's agency status in the event that it
fails to act properly, becomes insolvent, enters FDIC receivership, or if not
FDIC insured, enters into bankruptcy or if the agent resigns. In the event an
agent is unable to perform its obligations as agent, another lender would
generally serve in that capacity.


ADDITIONAL INFORMATION ON SENIOR LOANS


     Senior Loans are direct obligations of corporations or other business
entities and are arranged by banks or other commercial lending institutions and
made generally to finance internal growth, mergers, acquisitions, stock
repurchases, and leveraged buyouts. Senior Loans usually include restrictive
covenants which must be maintained by the borrower. Such covenants, in addition
to the timely payment of interest and principal, may include mandatory
prepayment provisions arising from free cash flow and restrictions on dividend
payments, and usually state that a borrower must maintain specific minimum
financial ratios as well as establishing limits on total debt. A breach of
covenant, which is not waived by the agent, is normally an event of
acceleration, I.E., the agent has the right to call the outstanding Senior Loan.
In addition, loan covenants may include mandatory prepayment provisions stemming
from free cash flow. Free cash flow is cash that is in excess of capital
expenditures plus debt service requirements of principal and interest. The free
cash flow shall be applied to prepay the Senior Loan in an order of maturity
described in the loan documents. Under certain interests in Senior Loans, the
Trust may have an obligation to make additional loans upon demand by the
borrower. The Trust intends to ensure its ability to satisfy such demands by
segregating sufficient assets in high quality short-term liquid investments or
by sufficiently maintaining unused borrowing capacity.

                                       10
<Page>

     Senior Loans, unlike certain bonds, usually do not have call protection.
This means that investments comprising the Trust's portfolio, while having a
stated one to ten-year term, may be prepaid, often without penalty. The Trust
generally holds Senior Loans to maturity unless it becomes necessary to sell
them to adjust the Trust's portfolio in accordance with the Investment Manager's
or Sub-Adviser's view of current or expected economic or specific industry or
borrower conditions.


     Senior Loans frequently require full or partial prepayment of a loan when
there are asset sales or a securities issuance. Prepayments on Senior Loans may
also be made by the borrower at its election. The rate of such prepayments may
be affected by, among other things, general business and economic conditions, as
well as the financial status of the borrower. Prepayment would cause the actual
duration of a Senior Loan to be shorter than its stated maturity. Prepayment may
be deferred by the Trust. This should, however, allow the Trust to reinvest in a
new loan and recognize as income any unamortized loan fees. In many cases this
will result in a new facility fee payable to the Trust.

     Because interest rates paid on these Senior Loans fluctuate periodically
with the market, it is expected that the prepayment and a subsequent purchase of
a new Senior Loan by the Trust will not have a material adverse impact on the
yield of the portfolio. See "Portfolio Transactions."


     Under a Senior Loan, the borrower generally must pledge as collateral
assets which may include one or more of the following: cash, accounts
receivable, inventory, property, plant and equipment, both common and preferred
stock in its subsidiaries, trademarks, copyrights, patent rights and franchise
value. The Trust may also receive guarantees as a form of collateral. In some
instances, a Senior Loan may be secured only by stock in a borrower or its
affiliates. There is no assurance, however, that the liquidation of the existing
collateral would satisfy the borrower's obligation in the event of nonpayment of
scheduled interest or principal, or that such collateral could be readily
liquidated.

     The Trust may be required to pay and receive various fees and commissions
in the process of purchasing, selling and holding Senior Loans. The fee
component may include any, or a combination of, the following elements:
arrangement fees, assignment fees, non-use fees, facility fees, letter of credit
fees and ticking fees. Arrangement fees are paid at the commencement of a loan
as compensation for the initiation of the transaction. A non-use fee is paid
based upon the amount committed but not used under the loan. Facility fees are
on-going annual fees paid in connection with a loan. Letter of credit fees are
paid if a loan involves a letter of credit. Ticking fees are paid from the
initial commitment indication until loan closing if for an extended period. The
amount of fees is negotiated at the time of transaction.


                                       11
<Page>

MANAGEMENT OF THE TRUST

     Set forth in the table below is information about each Trustee of the ING
Funds.


<Table>
<Caption>
                                                                                                                         NUMBER OF
                                                                                                                          FUNDS IN
                                                                                                                         PORTFOLIO
                                                  TERM OF OFFICE                                                          COMPLEX
                               POSITION(S) HELD   AND LENGTH OF            PRINCIPAL OCCUPATION(S) -                     OVERSEEN BY
   NAME, ADDRESS AND AGE          WITH TRUST      TIME SERVED(1)            DURING THE PAST 5 YEARS                       TRUSTEE**
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>               <C>                                                     <C>
INDEPENDENT TRUSTEES

PAUL S. DOHERTY                Trustee            November 1999 -   Mr. Doherty is President and Partner, Doherty,          117
7337 E. Doubletree Ranch Rd.                      Present           Wallace, Pillsbury and Murphy, P.C., Attorneys
Scottsdale, Arizona 85258                                           (1996 -Present).
Date of Birth: 04/28/1934

J. MICHAEL EARLEY              Trustee            February 2002 -   President and Chief Executive Officer, Bankers          117
7337 E. Doubletree Ranch Rd.                      Present           Trust Company, N.A. (1992 - Present).
Scottsdale, Arizona 85258
Date of Birth: 05/02/1945

R. BARBARA GITENSTEIN          Trustee            February 2002 -   President, College of New Jersey (1999 -                117
7337 E. Doubletree Ranch Rd.                      Present           Present).
Scottsdale, Arizona 85258
Date of Birth: 02/18/1948

WALTER H. MAY                  Trustee            November 1999-    Retired. Formerly, Trustee of each of the funds         117
7337 E. Doubletree Ranch Rd.                      Present           managed by Northstar Investment Management
Scottsdale, Arizona 85258                                           Corporation (1996 - 1999).
Date of Birth: 12/12/1936

JOCK PATTON                    Trustee            August 1995 -     Private Investor (June 1997 - Present). Formerly,       117
7337 E. Doubletree Ranch Rd.                      Present           Director and Chief Executive Officer, Rainbow
Scottsdale, Arizona 85258                                           Multimedia Group, Inc. (January 1999 - December
Date of Birth: 12/11/1945                                           2001).

DAVID W.C. PUTNAM              Trustee            November 1999-    President and Director, F.L. Putnam Securities          117
7337 E. Doubletree Ranch Rd.                      Present           Company, Inc. and its affiliates (1978 - present);
Scottsdale, Arizona 85258                                           President, Secretary and Trustee, The Principled
Date of Birth: 10/08/1939                                           Equity Market Fund (1996 - present).

<Caption>
   NAME, ADDRESS AND AGE        OTHER DIRECTORSHIPS HELD BY TRUSTEE
- --------------------------------------------------------------------
<S>                            <C>
INDEPENDENT TRUSTEES

PAUL S. DOHERTY                University of Massachusetts
7337 E. Doubletree Ranch Rd.   Foundation Board (April 2004 -
Scottsdale, Arizona 85258      present).
Date of Birth: 04/28/1934

J. MICHAEL EARLEY
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 05/02/1945

R. BARBARA GITENSTEIN          New Jersey Resources (September 2003
7337 E. Doubletree Ranch Rd.   - present).
Scottsdale, Arizona 85258
Date of Birth: 02/18/1948

WALTER H. MAY                  Trustee, BestPrep Charity (1991 -
7337 E. Doubletree Ranch Rd.   Present) - charitable organization.
Scottsdale, Arizona 85258
Date of Birth: 12/12/1936

JOCK PATTON                    Director, Hypercom, Inc. (January
7337 E. Doubletree Ranch Rd.   1999 - Present); JDA Software Group,
Scottsdale, Arizona 85258      Inc. (January 1999 - Present).
Date of Birth: 12/11/1945

DAVID W.C. PUTNAM              Anchor International Bond Trust
7337 E. Doubletree Ranch Rd.   (December 2000 - Present); F.L.
Scottsdale, Arizona 85258      Putnam Foundation (December 2000 -
Date of Birth: 10/08/1939      Present); Progressive Capital
                               Accumulation Trust (August 1998 -
                               Present); Principled Equity Market
                               Fund (November 1996 - Present),
                               Mercy Endowment Foundation (1995 -
                               Present); Asian American Bank and
                               Trust Company (June 1992 - Present);
                               Notre Dame Health Care Center (1991
                               - Present) F.L. Putnam Securities
</Table>


                                       12
<Page>


<Table>
<Caption>
                                                                                                                         NUMBER OF
                                                                                                                          FUNDS IN
                                                                                                                         PORTFOLIO
                                                  TERM OF OFFICE                                                          COMPLEX
                               POSITION(S) HELD   AND LENGTH OF            PRINCIPAL OCCUPATION(S) -                     OVERSEEN BY
   NAME, ADDRESS AND AGE          WITH TRUST      TIME SERVED(1)            DURING THE PAST 5 YEARS                       TRUSTEE**
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>               <C>                                                     <C>
BLAINE E. RIEKE                Trustee            February 2001 -   General Partner, Huntington Partners (January           117
7337 E. Doubletree Ranch Rd.                      Present           1997 - Present).  Chairman of the Board and
Scottsdale, Arizona 85258                                           Trustee of each of the funds managed by ING
Date of Birth: 09/10/1933                                           Investment Management Co. LLC (November 1998 -
                                                                    February 2001).

ROGER B. VINCENT               Trustee            February 2002 -   President, Springwell Corporation (1989 -               117
7337 E. Doubletree Ranch Rd.                      Present           Present). Formerly, Director, Tatham Offshore,
Scottsdale, Arizona 85258                                           Inc. (1996 - 2000).
Date of Birth: 08/26/1945

RICHARD A. WEDEMEYER           Trustee            February 2001 -   Retired. Formerly, Vice President - Finance             117
7337 E. Doubletree Ranch Rd.                      Present           and Administration, Channel Corporation (1996
Scottsdale, Arizona 85258                                           -2002). Formerly, Trustee, First Choice Funds
Date of Birth: 03/23/1936                                           (1997 - 2001); and of each of the funds managed
                                                                    by ING Investment Management Co. LLC (1998 -
                                                                    2001).

TRUSTEES WHO ARE "INTERESTED PERSONS"

THOMAS J. MCINERNEY(2)         Trustee            February 2001 -   Chief Executive Officer, ING U.S. Financial             171
7337 E. Doubletree Ranch Rd.                      Present           Services (September 2001 - Present); Member,
Scottsdale, Arizona 85258                                           ING Americas Executive Committee (2001 -
Date of Birth: 05/05/1956                                           Present); President, Chief Executive Officer
                                                                    and Director of Northern Life Insurance Company
                                                                    (March 2001 - October 2002), ING Aeltus Holding
                                                                    Company, Inc. (2000 - Present), ING Retail
                                                                    Holding Company (1998 - Present), ING Life
                                                                    Insurance and Annuity Company (September 1997 -
                                                                    November 2002) and ING Retirement Holdings,
                                                                    Inc. (1997 - Present).  Formerly, General
                                                                    Manager and Chief Executive Officer, ING
                                                                    Worksite Division (December 2000 - October
                                                                    2001), President, ING-SCI, Inc. (August 1997 -
                                                                    December 2000); President, Aetna Financial
                                                                    Services (August 1997 - December 2000).

JOHN G. TURNER(3)              Chairman and       September 2000-   Chairman, Hillcrest Capital Partners (May               117
7337 E. Doubletree Ranch Rd.   Trustee            Present           2002-Present); Vice Chairman of ING Americas
Scottsdale, Arizona 85258                                           (2000 - 2002); Chairman and Chief Executive
                                                                    Officer of

<Caption>
   NAME, ADDRESS AND AGE        OTHER DIRECTORSHIPS HELD BY TRUSTEE
- --------------------------------------------------------------------
<S>                            <C>
                               Company, Inc. (June 1978 - Present);
                               and an Honorary Trustee, Mercy
                               Hospital (1973 - Present).

BLAINE E. RIEKE                Trustee, Morgan Chase Trust Co.
7337 E. Doubletree Ranch Rd.   (January 1998 - Present);  Director,
Scottsdale, Arizona 85258      Members Trust Co. (November 2003 -
Date of Birth: 09/10/1933      Present).

ROGER B. VINCENT               Director, AmeriGas Propane, Inc.
7337 E. Doubletree Ranch Rd.   (1998 - Present).
Scottsdale, Arizona 85258
Date of Birth: 08/26/1945

RICHARD A. WEDEMEYER           Trustee, Touchstone Consulting Group
7337 E. Doubletree Ranch Rd.   (1997 - Present);  Jim Henson Legacy
Scottsdale, Arizona 85258      (1994 - Present).
Date of Birth: 03/23/1936

TRUSTEES WHO ARE "INTERESTED PERSONS"

THOMAS J. MCINERNEY(2)         Trustee, Equitable Life Insurance
7337 E. Doubletree Ranch Rd.   Co., Golden American Life Insurance
Scottsdale, Arizona 85258      Co., Life Insurance Company of
Date of Birth: 05/05/1956      Georgia, Midwestern United Life
                               Insurance Co., ReliaStar Life
                               Insurance Co., Security Life of
                               Denver, Security Connecticut Life
                               Insurance Co., Southland Life
                               Insurance Co., USG Annuity and Life
                               Company, and United Life and Annuity
                               Insurance Co. Inc (March 2001 -
                               Present); Member of the Board,
                               Bushnell Performing Arts Center; St.
                               Francis Hospital; National
                               Conference for Community Justice;
                               and Metro Atlanta Chamber of
                               Commerce.

JOHN G. TURNER(3)              Director, Hormel Foods Corporation
7337 E. Doubletree Ranch Rd.   (March 2000 - Present); Shopko
Scottsdale, Arizona 85258      Stores, Inc. (August 1999 -
                               Present); and M.A.
</Table>


                                       13
<Page>


<Table>
<Caption>
                                                                                                                         NUMBER OF
                                                                                                                          FUNDS IN
                                                                                                                            FUND
                                                  TERM OF OFFICE                                                          COMPLEX
                               POSITION(S) HELD   AND LENGTH OF            PRINCIPAL OCCUPATION(S) -                     OVERSEEN BY
   NAME, ADDRESS AND AGE          WITH TRUST      TIME SERVED(1)            DURING THE PAST 5 YEARS                       TRUSTEE**
- ------------------------------------------------------------------------------------------------------------------------------------
<S>                            <C>                <C>               <C>                                                     <C>
Date of Birth: 10/03/1939                                           ReliaStar Financial Corp. and ReliaStar Life
                                                                    Insurance Company (1993 - 2001); Chairman of
                                                                    ReliaStar Life Insurance Company of New York
                                                                    (1995 - 2001); Chairman of Northern Life
                                                                    Insurance Company (1992 - 2001); Chairman and
                                                                    Trustee of the Northstar affiliated
                                                                    investment companies (1993 - 2001); and
                                                                    Director, Northstar Investment Management
                                                                    Corporation and its affiliates (1993 - 1999).

<Caption>
   NAME, ADDRESS AND AGE        OTHER DIRECTORSHIPS HELD BY TRUSTEE
- --------------------------------------------------------------------
<S>                            <C>
Date of Birth: 10/03/1939      Mortenson Company (March 2002 -
                               Present); Conseco, Inc. (September
                               2003- Present).
</Table>


(1)  Trustees serve until their successors are duly elected and qualified,
     subject to the Board's retirement policy which states that each duly
     elected or appointed Trustee who is not an "interested person" of the
     Trust, as defined in the 1940 Act ("Independent Trustees"), shall retire
     from service as a Trustee at the first regularly scheduled quarterly
     meeting of the Board that is held after the Trustee reaches the age of 70.
     A unanimous vote of the Board may extend the retirement date of a Trustee
     for up to one year. An extension may be permitted if the retirement would
     trigger a requirement to hold a meeting of shareholders of the Trust under
     applicable law, whether for purposes of appointing a successor to the
     Trustee or if otherwise necessary under applicable law, in which the
     extension would apply until such time as the shareholder meeting can be
     held or is no longer needed.

(2)  Mr. McInerney is an "interested person," as defined by the 1940 Act,
     because of his affiliation with ING Groep N.V., the parent corporation of
     the investment adviser, ING Investments and the Distributor, ING Funds
     Distributor, LLC.

(3)  Mr. Turner is an "interested person," as defined by the 1940 Act, because
     of his affiliation with ING Groep N.V., the parent corporation of the
     investment adviser, ING Investments and the Distributor, ING Funds
     Distributor, LLC.


**   For the purposes of this table, "Fund Complex" means the following
     investment companies: ING Equity Trust; ING Funds Trust; ING Investment
     Funds, Inc.; ING Investors Trust; ING Mayflower Trust; ING Mutual Funds;
     ING Prime Rate Trust; ING Senior Income Fund; ING Variable Insurance Trust;
     ING Variable Products Trust; ING Emerging Markets Fund, Inc.; ING VP
     Natural Resources Trust; USLICO Series Fund, ING Partners, Inc.; ING VP
     Balanced Portfolio, Inc.; ING Strategic Allocation Portfolio, Inc.; ING Get
     Funds; ING VP Bond Portfolio; ING VP Money Market Portfolio; ING Variable
     Funds, Inc.; ING Variable Portfolios, Inc.; and ING Series Fund, Inc.


                                       14
<Page>

OFFICERS

     Information about the ING Funds' officers are set forth in the table below:


<Table>
<Caption>
NAME, ADDRESS AND AGE                POSITIONS HELD WITH THE TRUST     TERM OF OFFICE AND LENGTH OF TIME SERVED (1)(2)
- ----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                               <C>
JAMES M. HENNESSY                    President and Chief Executive     February 2001 - Present
7337 E. Doubletree Ranch Rd.         Officer
Scottsdale, Arizona 85258
Date of Birth: 04/09/1949            Chief Operating Officer           July 2000 - Present

STANLEY D. VYNER                     Executive Vice President          August 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 05/14/1950

MICHAEL J. ROLAND                    Executive Vice President and      February 2002 - Present
7337 E. Doubletree Ranch Rd.         Assistant Secretary
Scottsdale, Arizona 85258
Date of Birth: 05/30/1958            Principal Financial Officer       August 1998 - Present

ROBERT S. NAKA                       Senior Vice President             November 1999 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258            Assistant Secretary               July 1996 - Present
Date of Birth: 06/17/1963

DANIEL A. NORMAN                     Senior Vice President             April 1995 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258            Treasurer                         June 1997 - Present
Date of Birth: 12/29/1957

JEFFREY A. BAKALAR                   Senior Vice President             November 1999 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 12/15/1959

<Caption>
NAME, ADDRESS AND AGE                PRINCIPAL OCCUPATION(S) DURING THE LAST FIVE YEARS (3)
- ------------------------------------------------------------------------------------------------------
<S>                                  <C>
JAMES M. HENNESSY                    President and Chief Executive Officer, ING Investments, LLC(2)
7337 E. Doubletree Ranch Rd.         (December 2001 - Present).  Formerly, Senior Executive Vice
Scottsdale, Arizona 85258            President and Chief Operating Officer, ING Investments, LLC(2)
Date of Birth: 04/09/1949            (April 1995 - December 2000); and Executive Vice President, ING
                                     Investments, LLC(2) (May 1998 - June 2000).

STANLEY D. VYNER                     Executive Vice President, ING Investments, LLC(2) (July 2000 -
7337 E. Doubletree Ranch Rd.         Present) and Chief Investment Risk Officer (June 2003 -
Scottsdale, Arizona 85258            Present).  Formerly, Chief Investment Officer of the
Date of Birth: 05/14/1950            International Portfolios, ING Investments, LLC(2) (July 1996 -
                                     June 2003); and President and Chief Executive Officer, ING
                                     Investments, LLC(2) (August 1996 - August 2000).

MICHAEL J. ROLAND                    Executive Vice President, Chief Financial Officer and
7337 E. Doubletree Ranch Rd.         Treasurer, ING Investments, LLC(2) (December 2001 - Present).
Scottsdale, Arizona 85258            Formerly, Senior Vice President, ING Investments, LLC(2) (June
Date of Birth: 05/30/1958            1998 - December 2001).

ROBERT S. NAKA                       Senior Vice President and Assistant Secretary, ING Funds
7337 E. Doubletree Ranch Rd.         Services, LLC(3) (October 2001 - Present).  Formerly, Senior
Scottsdale, Arizona 85258            Vice President and Assistant Secretary, ING Funds Services,
Date of Birth: 06/17/1963            LLC(3) (February 1997 - August 1999).

DANIEL A. NORMAN                     Senior Vice President (April 1995 - Present) and Senior
7337 E. Doubletree Ranch Rd.         Investment Manager in the Senior Floating Rate Loan Group
Scottsdale, Arizona 85258            (November 1999 - Present), ING Investment Management Co.
Date of Birth: 12/29/1957            Formerly, Portfolio Manager in the Senior Floating Rate Loan
                                     Group (April 1995 - November 1999).

JEFFREY A. BAKALAR                   Senior Vice President (January 1998 - Present) and Senior
7337 E. Doubletree Ranch Rd.         Investment Manager in the Senior Floating Rate Loan Group
Scottsdale, Arizona 85258            (November 1999 - Present), ING Investment Management Co.
Date of Birth: 12/15/1959            Formerly, Portfolio Manager in the Senior Floating Rate Loan
                                     Group (January 1998 - November 1999).
</Table>


                                       15
<Page>


<Table>
<Caption>
NAME, ADDRESS AND AGE                POSITIONS HELD WITH THE TRUST     TERM OF OFFICE AND LENGTH OF TIME SERVED (1)(2)
- ----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                               <C>
ELLIOT ROSEN                         Senior Vice President             May 2002 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 05/07/53

WILLIAM H. RIVOIR                    Senior Vice President and         February 2001 - Present
7337 E. Doubletree Ranch Rd.         Assistant Secretary
Scottsdale, Arizona 85258
Date of Birth: 01/19/1951

CURTIS F. LEE                        Senior Vice President and         February 2001 - Present
7337 E. Doubletree Ranch Rd.         Chief Credit Officer
Scottsdale, Arizona 85258
Date of Birth: 06/05/1954

KIMBERLY A. ANDERSON                 Senior Vice President             November 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 07/25/1964

ROBYN L. ICHILOV                     Vice President                    November 1997 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 09/25/1967

J. DAVID GREENWALD                   Vice President                    August 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
Date of Birth: 09/24/1957

LAUREN D. BENSINGER                  Vice President                    August 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 02/06/1954

TODD MODIC                           Vice President                    August 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 11/03/1967

<Caption>
NAME, ADDRESS AND AGE                PRINCIPAL OCCUPATION(S) DURING THE LAST FIVE YEARS (3)
- ------------------------------------------------------------------------------------------------------
<S>                                  <C>
ELLIOT ROSEN                         Senior Vice President in the Senior Floating Rate Loan Group of
7337 E. Doubletree Ranch Rd.         ING Investment Management Co. (February 1999 - Present).
Scottsdale, Arizona 85258
Date of Birth: 05/07/53

WILLIAM H. RIVOIR                    Vice President, ING Investment Management Co. (January 2004 -
7337 E. Doubletree Ranch Rd.         Present). Formerly, Counsel, ING USFS Law Department (January
Scottsdale, Arizona 85258            2003 - December 2003); and Senior Vice President, ING
Date of Birth: 01/19/1951            Investments, LLC(2) (June 1998 - December 2002).

CURTIS F. LEE                        Senior Vice President and Chief Credit Officer in the Senior
7337 E. Doubletree Ranch Rd.         Floating Rate Loan Group of ING Investment Management Co.
Scottsdale, Arizona 85258            (August 1999 - Present). Formerly, held a series of positions
Date of Birth: 06/05/1954            with Standard Chartered Bank in the credit approval and problem
                                     loan management functions (1992 - 1999).

KIMBERLY A. ANDERSON                 Senior Vice President, ING Investments, LLC(2) (October 2003 -
7337 E. Doubletree Ranch Rd.         Present). Formerly, Vice President and Assistant Secretary, ING
Scottsdale, Arizona 85258            Investments, LLC(2) (October 2001 - October 2003); Assistant
Date of Birth: 07/25/1964            Vice President, ING Funds Services, LLC(3) (November 1999 -
                                     January 2001); and has held various other positions with ING
                                     Funds Services, LLC(3) for more than the last five years.

ROBYN L. ICHILOV                     Vice President, ING Funds Services, LLC(3) (October 2001 -
7337 E. Doubletree Ranch Rd.         Present) and ING Investments, LLC(2) (August 1997 - Present).
Scottsdale, Arizona 85258
Date of Birth: 09/25/1967

J. DAVID GREENWALD                   Vice President of Mutual Fund Compliance, ING Funds Services,
7337 E. Doubletree Ranch Rd.         LLC(3) (May 2003 - Present).  Formerly, Assistant Treasurer and
Scottsdale, AZ 85258                 Director of Mutual Fund Compliance and Operations of American
Date of Birth: 09/24/1957            Skandia, a Prudential Financial Company (October 1996 - May
                                     2003).

LAUREN D. BENSINGER                  Vice President and Chief Compliance Officer, ING Funds
7337 E. Doubletree Ranch Rd.         Distributor, LLC(4) (July 1995 - Present); and Vice President
Scottsdale, Arizona 85258            (February 1996 - Present) and Chief Compliance Officer (October
Date of Birth: 02/06/1954            2001 - Present), ING Investments, LLC(2).

TODD MODIC                           Vice President of Financial Reporting - Fund Accounting of ING
7337 E. Doubletree Ranch Rd.         Fund Services, LLC(3) (September 2002 - Present).  Formerly,
Scottsdale, Arizona 85258            Director of Financial Reporting, ING Investments, LLC(2) (March
Date of Birth: 11/03/1967            2001 - September 2002); Director of Financial Reporting, Axient
                                     Communications, Inc. (May 2000 - January 2001); and Director of
                                     Finance, Rural/Metro Corporation (March 1995 - May 2000).
</Table>


                                       16
<Page>


<Table>
<Caption>
NAME, ADDRESS AND AGE                POSITIONS HELD WITH THE TRUST     TERM OF OFFICE AND LENGTH OF TIME SERVED (1)(2)
- ----------------------------------------------------------------------------------------------------------------------
<S>                                  <C>                               <C>
SUSAN P. KINENS                      Assistant Vice President and      February 2003 - Present
7337 E. Doubletree Ranch Rd.         Assistant Secretary
Scottsdale, Arizona 85258
Date of Birth: 12/31/1976

MARIA M. ANDERSON                    Assistant Vice President          August 2001 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, Arizona 85258
Date of Birth: 05/29/1958

HUEY P. FALGOUT, JR.                 Secretary                         August 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
Date of Birth: 11/15/1963

THERESA K. KELETY                    Assistant Secretary               August 2003 - Present
7337 E. Doubletree Ranch Rd.
Scottsdale, AZ 85258
Date of Birth: 02/28/1963

<Caption>
NAME, ADDRESS AND AGE                PRINCIPAL OCCUPATION(S) DURING THE LAST FIVE YEARS (3)
- ------------------------------------------------------------------------------------------------------
<S>                                  <C>
SUSAN P.  KINENS                     Assistant Vice President and Assistant Secretary, ING Funds
7337 E. Doubletree Ranch Rd.         Services, LLC(3) (December 2002 - Present); and has held
Scottsdale, Arizona 85258            various other positions with ING Funds Services, LLC(3) for
Date of Birth:  12/31/1976           more than the last five years.

MARIA M. ANDERSON                    Assistant Vice President, ING Funds Services, LLC(3) (October
7337 E. Doubletree Ranch Rd.         2001 - Present).  Formerly, Manager of Fund Accounting and Fund
Scottsdale, Arizona 85258            Compliance, ING Investments, LLC(2) (September 1999 - November
Date of Birth:  05/29/1958           2001); and Section Manager of Fund Accounting, Stein Roe Mutual
                                     Funds (July 1998 - August 1999).

HUEY P. FALGOUT, JR.                 Chief Counsel, ING U.S. Financial Services  (September 2003 -
7337 E. Doubletree Ranch Rd.         Present).  Formerly, Counsel, ING U.S. Financial Services
Scottsdale, AZ  85258                (November 2002 - September 2003); and Associate General Counsel
Date of Birth:  11/15/1963           of AIG American General (January 1999 - November 2002).

THERESA K. KELETY                    Counsel, ING U.S. Financial Services (April 2003 - Present).
7337 E. Doubletree Ranch Rd.         Formerly, Senior Associate with Shearman & Sterling (February
Scottsdale, AZ  85258                2000 - April 2003); and Associate with Sutherland Asbill &
Date of Birth:  02/28/1963           Brennan (1996 - February 2000).
</Table>



(1)  The officers hold office until the next annual meeting of the Trustees and
until their successors shall have been elected and qualified.
(2)  ING Investments, LLC was previously named ING Pilgrim Investments, LLC. ING
Pilgrim Investments, LLC is the sucessor in interest to ING Pilgirm Investments,
Inc., which was previously known as Pilgrim Investments, Inc. and before that
was known as Pilgrim America Investments, Inc.
(3)  ING Funds Services, LLC was previously named ING Pilgrim Group, LLC. ING
Pilgrim Group, LLC is the sucessor in interest to ING Pilgirm Group, Inc., which
was previously known as Pilgrim Group, Inc. and before that was known as Pilgrim
America Group, Inc.
(4)  ING Funds Distributor, LLC is the sucessor in interest to ING Funds
Distributor, Inc., which was previously known as ING Pilgrim Securities, Inc.,
and before that was known as Pilgrim Securities, Inc., and before that was known
as Pilgrim America Securities, Inc.

                                       17
<Page>

     The Trust currently has an Executive Committee, Audit Committee, Valuation
and Proxy Voting Committee (formerly Valuation Committee), Nominating Committee,
an Investment Review Committee and Compliance and Coordination Committee. The
Audit, Valuation and Proxy Voting, Nominating and Compliance and Coordination
Committees consist entirely of Independent Trustees.


     COMMITTEES


     The Board of Trustees has an Executive Committee whose function is to act
on behalf of the full Board of Trustees between regularly scheduled meetings
when necessary. The Committee currently consists of two Independent Trustees and
two Trustees who are interested persons as defined in the 1940 Act: Messrs.
Turner, McInerney, May and Patton. Mr. Turner serves as Chairman of the
Committee. The Executive Committee held two (2) meetings during the fiscal year
ended February 29, 2004.

     The Board of Trustees has an Audit Committee whose function is to meet with
the independent auditors of the Trust to review the scope of the Trust's audit,
its financial statements and interim accounting controls, and to meet with
management concerning these matters, among other things. The Audit Committee
currently consists of four Independent Trustees: Messrs. Earley, Rieke, Vincent
and Putnam. Mr. Earley serves as Chairman of the Committee. The Audit Committee
held four (4) meetings during the fiscal year ended February 29, 2004.

     The Board of Trustees has formed a Valuation and Proxy Voting Committee
(formerly the Valuation Committee) whose functions include, among others,
reviewing the determination of the value of securities held by the Trust for
which market value quotations are not readily available and, beginning in July
2003, overseeing management's administration of proxy voting. The Committee
currently consists of five Independent Trustees: Dr. Gitenstein and Messrs. May,
Patton, Doherty and Wedemeyer. Mr. Patton serves as Chairman of the Committee.
The Valuation and Proxy Voting Committee held four (4) meetings during the
fiscal year ended February 29, 2004.

     The Board of Trustees has established a Nominating Committee for the
purpose of considering and presenting to the Board of Trustees candidates it
proposes for nomination to fill Independent Trustee vacancies on the Board of
Trustees. The Nominating Committee currently consists of four Independent
Trustees: Dr. Gitenstein and Messrs. Doherty, May, and Wedemeyer. Mr. May serves
as Chairman of the Committee. The Committee does not currently have a charter
nor does it have a policy regarding whether it will consider nominees
recommended by shareholders. However, the Board of Trustees expects to have the
Committee consider these matters fully during the upcoming year with a view
towards adopting and publishing a charter and policies regarding shareholder
recommendations for Trustee nominees. As part of its consideration, the
Committee will also consider minimum qualifications for Trustee positions as
well as a process for the Trust to identify and evaluate potential nominees. The
Nominating Committee did not hold a meeting during the fiscal year ended
February 29, 2004.

     The Board of Trustees has established an Investment Review Committee that
will monitor the investment performance of the Trust and make recommendations to
the Board of Trustees with respect to the Trust. The Committee currently
consists of five Independent Trustees and one Trustee who is an interested
person as defined in the 1940 Act: Dr. Gitenstein and Messrs. Doherty, Patton,
May, McInerney and Wedemeyer. Mr. Wedemeyer serves as Chairman of the Committee.
The Investment Review Committee held four (4) meetings during the fiscal year
ended February 29, 2004.

                                       18
<Page>

     The Board of Trustees has established a Compliance and Coordination
Committee for the purpose of facilitating information flow among Board members
and with management between Board meetings, developing agendas for executive
sessions of independent Board members, evaluating potential improvements in the
allocation of work load among the Board members and Board committees, and
evaluating other opportunities to enhance the efficient operations of the Board.
The Compliance and Coordination Committee currently consists of five Independent
Trustees: Messrs. Earley, May, Patton, Vincent and Wedemeyer. The Compliance and
Coordination Committee held one (1) meeting during the fiscal year ended
February 29, 2004.


TRUSTEE OWNERSHIP OF SECURITIES

SHARE OWNERSHIP POLICY


   In order to further align the interests of the Independent Trustees with
shareholders, the Board of Trustees has adopted a policy to own, beneficially,
shares of one or more ING Funds at all times ("Policy"). For this purpose,
beneficial ownership of Fund shares includes ownership of a variable annuity
contract or a variable life insurance policy whose proceeds are invested in a
Fund.

   Under this Policy, the initial value of investments in the ING Funds that are
beneficially owned by a Trustee must equal at least $50,000. Existing Trustees
have a reasonable amount of time from the date of adoption of this Policy in
order to satisfy the foregoing requirements. A new Trustee must satisfy the
foregoing requirements within a reasonable amount of time of becoming a Trustee.
A decline in the value of any Fund investments will not cause a Trustee to have
to make any additional investments under this Policy.


Set forth below is the dollar range of equity securities owned by each Trustee.


<Table>
<Caption>
                                                                                AGGREGATE DOLLAR RANGE OF EQUITY
                                              DOLLAR RANGE OF EQUITY         SECURITIES IN ALL REGISTERED INVESTMENT
                                          SECURITIES IN THE TRUST AS OF         COMPANIES OVERSEEN BY TRUSTEE IN
            NAME OF TRUSTEE                     DECEMBER 31, 2003                FAMILY OF INVESTMENT COMPANIES
- --------------------------------------------------------------------------------------------------------------------
<S>                                              <C>                                   <C>
INDEPENDENT TRUSTEES

Paul S. Doherty                                         None                             Over $100,000

J. Michael Earley                                       None                           $10,001 - $50,000

R. Barbara Gitenstein                                   None                           $10,001 - $50,000

Walter H. May                                           None                             Over $100,000

Jock Patton                                      $10,001 - $50,000                       Over $100,000

David W. C. Putnam                                 Over $100,000                         Over $100,000

Blaine E. Rieke                                         None                           $50,001 - 100,000

Roger B. Vincent                                        None                             Over $100,000

Richard A. Wedemeyer                                    None                           $10,001 - $50,000

TRUSTEES WHO ARE INTERESTED PERSONS

Thomas J. McInerney                                     None                           $50,001 - 100,000

John G. Turner                                     Over $100,000                         Over $100,000
</Table>


INDEPENDENT TRUSTEE OWNERSHIP OF SECURITIES

                                       19
<Page>

     Set forth in the table below is information regarding each Independent
Trustee's (and his or her immediate family members') share ownership in
securities of the Trust's investment adviser or principal underwriter, and the
ownership of securities in an entity controlling, controlled by or under common
control with the investment adviser or principal underwriter of the Trust (not
including registered investment companies) as of December 31, 2003.

<Table>
<Caption>
                             NAME OF OWNERS
                            AND RELATIONSHIP                                             VALUE OF      PERCENTAGE OF
   NAME OF TRUSTEE             TO TRUSTEE          COMPANY         TITLE OF CLASS       SECURITIES         CLASS
- ---------------------------------------------------------------------------------------------------------------------
<S>                                <C>               <C>                <C>               <C>               <C>
Paul S. Doherty                    N/A               N/A                N/A               $   0             N/A

J. Michael Earley                  N/A               N/A                N/A               $   0             N/A

R. Barbara Gitenstein              N/A               N/A                N/A               $   0             N/A

Walter H. May                      N/A               N/A                N/A               $   0             N/A

Jock Patton                        N/A               N/A                N/A               $   0             N/A

David W. C. Putnam                 N/A               N/A                N/A               $   0             N/A

Blaine E. Rieke                    N/A               N/A                N/A               $   0             N/A

Roger B. Vincent                   N/A               N/A                N/A               $   0             N/A

Richard A. Wedemeyer               N/A               N/A                N/A               $   0             N/A
</Table>

COMPENSATION OF TRUSTEES

     The Trust pays each Trustee who is not an interested person a pro rata
share, as described below of: (i) an annual retainer of $40,000 (Messrs. Patton
and May, as lead trustees, receive an annual retainer of $55,000); (ii) $7,000
for each in person meeting of the Board; (iii) $2,000 per attendance of any
committee meeting; (iv) $1,000 for meeting attendance as a chairperson; (v)
$2,000 per telephonic meeting; and (vi) out-of-pocket expenses. The pro rata
share paid by the Trust is based on the average net assets as a percentage of
the average net assets of all the funds managed by the Investment Manager or its
affiliates for which the Trustees serve in common as Directors/Trustees.

     The following table has been provided to the Trust by ING Investments and
sets forth information regarding the compensation paid to the Trustees for the
Trust's fiscal year ended February 29, 2004 for service on the Boards of the ING
Funds complex. Officers of the Trust and Trustees who are interested persons of
the Trust do not receive any compensation from the Trust or any funds managed by
the Investment Manager or its affiliates.

                               COMPENSATION TABLE


<Table>
<Caption>
                                                       PENSION OR                                TOTAL
                                                       RETIREMENT                            COMPENSATION
                                                        BENEFITS          ESTIMATED         FROM TRUST AND
                                      AGGREGATE        ACCRUED AS          ANNUAL            FUND COMPLEX
                                    COMPENSATION      PART OF TRUST     BENEFITS UPON           PAID TO
     NAME OF TRUSTEE                 FROM TRUST         EXPENSES        RETIREMENT(4)         TRUSTEES(5)
- -----------------------------------------------------------------------------------------------------------
<S>                                 <C>                     <C>              <C>            <C>
Paul S. Doherty                     $      5,982            N/A              N/A            $       104,000

J. Michael Earley                   $      6,098            N/A              N/A            $       106,000

R. Barbara Gitenstein               $      5,524            N/A              N/A            $        97,000

R. Glenn Hilliard(1)                $          0            N/A              N/A            $             0

Walter H. May                       $      7,114            N/A              N/A            $       123,000
</Table>


                                       20
<Page>


<Table>
<Caption>
                                                       PENSION OR                                TOTAL
                                                       RETIREMENT                            COMPENSATION
                                                        BENEFITS          ESTIMATED         FROM TRUST AND
                                      AGGREGATE        ACCRUED AS          ANNUAL            FUND COMPLEX
                                    COMPENSATION      PART OF TRUST     BENEFITS UPON           PAID TO
     NAME OF TRUSTEE                 FROM TRUST         EXPENSES        RETIREMENT(4)         TRUSTEES(5)
- -----------------------------------------------------------------------------------------------------------
<S>                                 <C>                     <C>              <C>            <C>
Thomas J. McInerney(2)              $          0            N/A              N/A            $             0

Jock Patton                         $      7,513            N/A              N/A            $       129,000

David W.C. Putnam                   $      5,216            N/A              N/A            $        92,000

Blaine E. Rieke                     $      5,751            N/A              N/A            $       100,000

John G. Turner(3)                   $          0            N/A              N/A            $             0

Roger B. Vincent(6)                 $      6,836            N/A              N/A            $       118,000

Richard A. Wedemeyer(6)             $      6,836            N/A              N/A            $       118,000
</Table>



(1)  An interested person, as defined in the 1940 Act, because of his
     relationship with ING Groep N.V., the parent company of the Investment
     Manager, ING Investments, LLC and the Distributor, ING Funds Distributor
     LLC. Mr. Hilliard resigned as of April 30, 2003.


(2)  An interested person, as defined in the 1940 Act, because of his
     affiliation with ING Groep N.V. the parent company of the Investment
     Manager, ING Investments, LLC and the Distributor, ING Funds Distributor
     LLC.

(3)  An interested person, as defined in the 1940 Act, because of his former
     affiliation with ING Americas, an affiliate of ING Investments, LLC.

(4)  The ING Funds have adopted a retirement policy under which a
     director/trustee who has served as an Independent Director/Trustee for five
     years or more will be paid by the ING Funds at the time of his or her
     retirement an amount equal to twice the compensation normally paid to the
     Independent Director/Trustee for one year of service.


(5)  Represents compensation from 117 funds.


(6)  Mr. Wedemeyer and Mr. Vincent were paid $10,000 each in recognition of an
     extensive time commitment to format a methodolgy for presenting valuation
     information to the Board.

                                       21
<Page>


     As of June 15, 2004, the Trustees and Officers of the Trust as a group
owned beneficially less than 1% of the Trust's Common Shares.

     As of June 15 , 2004, the Trustees and Officers of the Trust as a group
owned beneficially less than 1% of the Trust's Preferred Shares.

     As of June 15, 2004, no person to the knowledge of the Trust, owned
beneficially or of record more than 5% of the outstanding Common Shares or
Preferred Shares of the Trust except as set forth below:



<Table>
<Caption>
                                                              CLASS AND TYPE OF     PERCENTAGE   PERCENTAGE
NAME OF FUND           NAME AND ADDRESS                       OWNERSHIP             OF CLASS     OF FUND
- -----------------------------------------------------------------------------------------------------------
<S>                    <C>                                    <C>                     <C>         <C>
ING Prime Rate Trust   Pilgrim Prime Rate Trust               Beneficial Owner         6.22%       6.22%
                       Structured Equity Shelf Holding A/C
                       Attn Dan Ryan
                       7337 E. Doubletree Ranch Road
                       Scottsdale, AZ 85258-2160

ING Prime Rate Trust   CEDE & CO                              Beneficial Owner        78.68%      78.68%
                       PO Box 20
                       Bowling Green Station
                       New York, NY 10274-0020
</Table>


                                 CODE OF ETHICS

     The Trust's Distributor, ING Funds Distributor, LLC ("Distributor"), the
Investment Manager and the Trust have adopted a Code of Ethics governing
personal trading activities of all Trustees and the officers of the Trust and
the Distributor and persons who, in connection with their regular functions,
play a role in the recommendation of any purchase or sale of a security by the
Trust or obtain information pertaining to such purchase or sale. The Code of
Ethics is intended to prohibit fraud against the Trust that may arise from
personal trading of securities that may be purchased or held by the Trust or of
Trust shares. Personal trading is permitted by such persons subject to certain
restrictions; however such persons are generally required to pre-clear all
security transactions with the Trust's Compliance Officer or her designee and to
report all transactions on a regular basis. The Sub-Adviser has adopted its own
Codes of Ethics to govern the personal trading activities of its personnel.

     The Code of Ethics can be reviewed and copied at the SEC's Public Reference
Room located at 450 Fifth Street, NW, Washington, DC 20549. Information on the
operation of the Public Reference Room may be obtained by calling the SEC at
(202) 942-8090. The Code of Ethics is available on the SEC's website
(http://www.sec.gov) and copies may also be obtained at prescribed rates by
electronic request at publicinfo@sec.gov, or by writing the SEC's Public
Reference Section at the address listed above.

                                       22
<Page>

                             PROXY VOTING PROCEDURES


     The Board of Trustees for the Trust has adopted proxy voting procedures and
guidelines to govern the voting of proxies relating to the Trust's portfolio
securities. The procedures and guidelines delegate to the Investment Manager the
authority to vote proxies relating to portfolio securities, and provide a method
for responding to potential conflicts of interest. In delegating voting
authority to the Investment Manager, the Board of Trustees has also approved the
Investment Manager's proxy voting procedures which require the Investment
Manager to vote proxies in accordance with the Trust's proxy voting procedures
and guidelines. An independent proxy voting service has been retained to assist
in the voting of Trust proxies through the provision of vote analysis,
implementation and recordkeeping and disclosure services. A copy of the proxy
voting procedures and guidelines of the Trust, including the procedures of the
Investment Manager, is attached hereto as Appendix A. Beginning on or about
August 31, 2004, and no later than August 31st annually thereafter, information
regarding how the Trust votes proxies relating to portfolio securities for the
one year period ending June 30th will be made available through the ING Funds'
website (www.ingfunds.com) or by accessing the SEC's EDGAR database(
www.sec.gov).


                INVESTMENT MANAGEMENT AND OTHER SERVICE PROVIDERS

THE INVESTMENT MANAGER


     The investment adviser for the ING Funds is ING Investments, LLC
("Investment Manager" or "ING Investments"), which is registered as an
investment adviser with the SEC and serves as an investment adviser to
registered investment companies (or series thereof), as well as structured
finance vehicles. The Investment Manager, subject to the authority of the Board
of Trustees, has the overall responsibility for the management of the Trust's
portfolio subject to delegation of certain responsibilities to ING Investment
Management Co. (the "Sub-Adviser" or "INGIM") (formerly known as Aeltus
Investment Management, Inc.). The Investment Manager and the Sub-Adviser are
direct, wholly owned subsidiaries of ING Groep N.V. (NYSE: ING) ("ING Groep
N.V.") and are affiliates of each other. ING Groep N.V. is a global financial
institution active in the fields of insurance, banking, and asset management in
more than 65 countries, with more than 100,000 employees.


     On February 26, 2001, the name of the Investment Manager changed from ING
Pilgrim Investments, Inc. to ING Pilgrim Investments, LLC. On March 1, 2002, the
name of the Investment Manager was changed from ING Pilgrim Investments, LLC to
ING Investments, LLC.


     The Investment Manager pays all of its expenses from the performance of its
obligations under the Investment Management Agreement, including executive
salaries and expenses of the officers of the Trust who are employees of the
Investment Manager. Other expenses incurred in the operation of the Trust are
borne by the Trust, including, without limitation, expenses incurred in
connection with the sale, issuance, registration and transfer of its Common
Shares; fees of its Custodian, Transfer and Shareholder Servicing; salaries of
officers and fees and expenses of Trustees or members of any advisory board or
committee of the Trust who are not members of, affiliated with or interested
persons of the Investment Manager; the cost of preparing and printing reports,
proxy statements and prospectuses of the Trust or other communications for
distribution to its shareholders; legal, auditing and accounting fees; the fees
of any trade association of which the Trust is a member; fees and expenses of
registering and maintaining registration of its Common Shares for sale under
federal and applicable state securities laws; fees for

                                       23
<Page>

independent loan pricing services; and all other charges and costs of its
operation plus any extraordinary or non-recurring expenses.


     After an initial term, the Investment Management Agreement continues from
year to year if specifically approved at least annually by the Trustees or the
Shareholders. In either event, the Investment Management Agreement must also be
approved by vote of a majority of the Trustees who are not parties to the
Investment Management Agreement or interested persons of any party, cast in
person at a meeting called for that purpose.


     In connection with their deliberations relating to the Trust's current
Investment Management Agreement, the Board of Trustees, including a majority of
the Independent Trustees, considered information that had been provided by the
Investment Manager throughout the year at regular Board meetings, as well as
information specifically furnished for a Board meeting held annually to
specifically consider such renewal, and considered several factors they
believed, in light of the legal advice furnished to them by their independent
legal counsel and their own business judgment, to be relevant. Foremost among
them was the performance of the Trust. In their approval of the arrangement, the
Board considered several factors, including but not limited to, the following:
(1) the continued belief that the Trust is well-managed by the Investment
Manager; (2) the fact that the Trust has consistently earned income in
furtherance of its investment objective; and (3) the positive performance of the
Investment Manager in the areas of leverage, administration, credit analysis and
fair valuation with respect to the Trust and its portfolio assets. In addition,
the Board considered: (1) the performance of the Trust compared to those of a
peer group of closed-end loan participation funds; (2) the nature and quality of
the services provided by the Investment Manager to the Trust including the
Investment Manager's experience in managing a similar fund and the nature and
depth of the services it provides to that fund and the Trust; (3) the fairness
of the compensation under the Investment Management Agreement in light of the
services provided to the Trust; (4) the profitability to the Investment Manager
from the Investment Management Agreement; (5) the personnel, including the
portfolio managers, operations, financial condition, and investment management
capabilities, methodologies and resources of the Investment Manager, as well as
its efforts in recent years to build its investment management capabilities and
administrative infrastructure; (6) the expenses borne by shareholders of the
Trust and a comparison of the Trust's fees and expenses to those of a peer group
of funds; (7) the Investment Manager's compliance capabilities and efforts on
behalf of the Trust; (8) the complexity of the instruments in which the Trust
invests and the investment research associated with those instruments performed
by the Investment Manager and the Investment Manager's proven expertise in
managing the types of investments in which the Trust invests; and (9) the
substantial time and resources devoted to the valuation process by the
Investment Manager. The Board of Trustees also considered the total services
provided by ING Funds Services, LLC, the Trust's administrator, as well as the
fees it receives for such services.

     In considering the Investment Management Agreement, the Board of Trustees,
including the Independent Trustees, did not identify any single factor as
all-important or controlling. However, the Independent Trustees indicated that,
generally, they initially scrutinized the performance of the Trust, including
performance in relation to a peer group of funds, and the fees paid by the
Trust. The Board of Trustees concluded that the fees to be paid to the
Investment Manager are reasonable in relation to the services to be rendered,
and that the anticipated expenses to be borne by the shareholders were
reasonable. The Board of Trustees further determined that the contractual
arrangements offer an appropriate means for the Trust to obtain high quality
portfolio management services in furtherance of the Trust's objectives, and to
obtain other appropriate services for the Trust.


                                       24
<Page>

     In reviewing the terms of the Investment Management Agreement and in
discussions with the Investment Manager concerning such Investment Management
Agreement, the Independent Trustees were represented by independent legal
counsel. Based upon its review, the Board of Trustees has determined that the
Investment Management Agreement is in the best interests of the Trust and its
shareholders, and that the Investment Management fees are fair and reasonable.
Accordingly, after consideration of the factors described above, and such other
factors and information it considered relevant, the Board of Trustees of the
Trust, including the unanimous vote of the Independent Trustees, approved the
Investment Management Agreement.

     The Investment Management Agreement is terminable without penalty with not
less than 60 days' notice by the Board of Trustees or by a vote of the holders
of a majority of the Trust's outstanding shares voting as a single class, or
upon not less than 60 days' notice by the Investment Manager. The Investment
Management Agreement will terminate automatically in the event of its
"assignment" (as defined in the 1940 Act).


     For the fiscal years ended February 29, 2004, February 28, 2003, and
February 28, 2002 the Investment Manager was paid $12,492,726, $12,698,403, and
$14,838,307 respectively, for services rendered to the Trust.


     The use of the name ING in the Trust's name is pursuant to the Investment
Management Agreement between the Trust and the Investment Manager, and in the
event that the Agreement is terminated, the Trust has agreed to amend its
Agreement and Declaration of Trust to remove the reference to ING.




SUB-ADVISER


     The Investment Management Agreement for the Trust provides that the
Investment Manager, with the approval of the Board of Trustees, may select and
employ an investment adviser to serve as a Sub-Adviser to the Trust, shall
monitor the Sub-Adviser's investment programs and results, and coordinate the
investment activities of the Sub-Adviser to ensure compliance with regulatory
restrictions. The Investment Manager pays all of its expenses arising from the
performance of its obligations under the Investment Management Agreement,
including all fees payable to the Sub-Adviser, and executive salaries and
expenses of the officers of the Trust who are employees of the Investment
Manager. The Sub-Adviser pays all of its expenses arising from the performance
of its obligations under the sub-advisory agreement.

     On August 1, 2003, ING underwent an internal reorganization plan that among
other things, integrated its portfolio management professionals across the U.S.
under a common management structure known as ING Investment Management Americas,
which includes ING Investment Management Co. ("INGIM" or "Sub-Adviser"). One of
the primary purposes of the integration plan was to use the resources of several
ING Groep N.V. companies to promote consistently high levels of performance in
terms of investment standards, research, policies and procedures from the
portfolio management functions related to the Trust. As a result of this
integration plan the operational and supervisory functions were separated from
the portfolio management functions related to the Trust, with the former
continuing to be provided by the Investment Manager and the latter provided by
INGIM. The portfolio management personnel currently employed by ING Investments
became employees of INGIM, which assumed primary responsibility for all
portfolio management issues, including the purchase, retention, or sale of
portfolio securities.

                                       25
<Page>

     INGIM serves as sub-adviser to the Trust pursuant to a sub-advisory
agreement ("Sub-Advisory Agreement") between the Investment Manager and INGIM.
The Sub-Advisory Agreement requires INGIM to provide, subject to the supervision
of the Board of Trustees and the Investment Manager, a continuous investment
program for the Trust and to determine the composition of the assets of the
Trust, including determination of the purchase, retention or sale of the
securities, cash and other investments for the Trust, in accordance with the
Trust's investment objectives, policies and restrictions and applicable laws and
regulations. The Sub-Advisory Agreement also requires INGIM to use reasonable
compliance techniques as the Sub-Adviser or the Board of Trustees may reasonably
adopt, including any written compliance procedures.

     In determining whether or not it was appropriate to approve the
Sub-Advisory Agreement through September 1, 2005 and to recommend approval to
shareholders, the Board, including a majority of the Independent Trustees,
considered several factors. Foremost among them was the fact that the new
arrangement will not affect the fees charged to the Trust, nor the provision of
portfolio management services to the Trust. In their approval of the
arrangement, the Board of Trustees considered several factors, including, but
not limited to, the following: (1) the centralization of asset managers will
allow ING to access and leverage the capabilities of its portfolio management
personnel among all subsidiaries; (2) the reorganization will facilitate more
effective use of research and trading facilities and capabilities for greater
efficiency; (3) the consolidation of portfolio management within one entity will
permit certain future changes in portfolio managers without the potential
expense of shareholder proxy solicitations; and (4) the reorganization can help
INGIM to build a larger, more coherent management structure and to retain and
attract highly qualified portfolio managers. The Board of Trustees noted that
INGIM had taken steps to ameliorate any disadvantages, which might result from
the reorganization. In addition, the Board of Trustees considered: (1) the
current portfolio managers will remain and continue to provide services under
the direction of the Sub-Adviser; (2) that the nature and quality of the
services to be provided by the Sub-Adviser, including the Sub-Adviser's
extensive investment management experience and the quality of services provided
to the other mutual funds advised by the Sub-Adviser; (3) the fairness of the
compensation under the Sub-Advisory Agreement in light of the services to be
provided; (4) the personnel, operations, financial condition, and investment
management capabilities and methodologies of INGIM after the reorganization; (5)
the expectation of management that the reorganization will enable the
Sub-Adviser to attract additional highly qualified personnel and to leverage its
portfolio management resources and trading and research capabilities; and (6)
compensation and the fact that the cost of the Sub-Adviser will be paid by the
Investment Manager and not directly by the Trust. The Board of Trustees also
reviewed information provided by the Sub-Adviser relating to their compliance
systems, disaster recovery plans and personal trading policies and internal
monitoring procedures. In the context of reviewing the Sub-Advisory Agreement
with the Sub-Adviser, the Board of Trustees met with senior management and
reviewed absolute and relative performance of the Trust. The Board of Trustees
also considered the compensation structure within the Sub-Adviser and its
ability to attract and retain high quality investment professionals. The Board
of Trustees also considered the advisory fee to be retained by the Investment
Manager for its oversight and monitoring services that will be provided to the
Trust. After considering the Investment Manager's recommendation and these other
factors, the Board of Trustees concluded that engaging INGIM as Sub-Adviser
would be in the best interests of the Trust and its shareholders.


     The Sub-Advisory Agreement may be terminated at any time by the Trust by a
vote of the majority of the Board of Trustees or by a vote of a majority of the
outstanding securities. The Sub-Advisory Agreement also may be terminated by:
(i) the Investment Manager at any time, upon sixty (60) days' written notice to
the Trust and the Sub-Adviser; (ii) at any time, without payment of any penalty
by the Trust, by the Trust's Board of Trustees or a majority of the outstanding
voting securities of the Trust upon sixty (60) days' written notice to the
Investment Manager and the Sub-Adviser; or (iii) by the Sub-Adviser upon three
(3) months' written notice unless the Trust or the Investment Manager requests
additional time to find a replacement for the Sub-Adviser, in which case, the
Sub-Adviser shall allow the

                                       26
<Page>

additional time, requested by the Trust or the Investment Manager, not to exceed
three (3) additional months beyond the initial three (3) month notice period;
provided, however, that the Sub-Adviser may terminate the Sub-Advisory Agreement
at any time without penalty, effective upon written notice to the Investment
Manager and the Trust, in the event either the Sub-Adviser (acting in good
faith) or the Investment Manager ceases to be registered as an investment
adviser under the Investment Advisers Act of 1940, as amended or otherwise
becomes legally incapable of providing investment management services pursuant
to its respective contract with the Trust, or in the event the Investment
Manager becomes bankrupt or otherwise incapable of carrying out its obligations
under the Sub-Advisory Agreement, or in the event that the Sub-Adviser does not
receive compensation for its services from the Investment Manager or the Trust
as required by the terms of the Sub-Advisory Agreement. Otherwise, the
Sub-Advisory Agreement will remain in effect for two years and will, thereafter,
continue in effect from year to year, subject to the annual appoval of the Board
of Trustees, on behalf of the Trust, or the vote of a majority of the
outstanding voting securities, and the vote, cast in person at a meetnig duly
called and held, of a majority of the Trustees, on behalf of the Trust, who are
not parties to the Sub-Advisory Agreement or interested persons (as defined in
the 1940 Act) of any such party. The Sub-Advisory Agreement will terminate
automatically in the event of an assignment (as defined in the 1940 Act).

     In this capacity, the Sub-Adviser, subject to the supervision and control
of ING Investments and the Trustees of the Trust, will manage the Trust's
portfolio investments, consistently with its investment objective, and execute
any of the Trust's investment policies that it deems appropriate to utilize from
time to time.


     For the 7 months ended February 29, 2004, ING Investments paid INGIM, in
its capacity as Sub-Adviser, $3,093,114 in sub-advisory fees.


THE ADMINISTRATOR

     The Administrator of the Trust is ING Funds Services, LLC ("Administrator"
or "ING Funds Services") which is an affiliate of the Investment Manager. In
connection with its administration of the corporate affairs of the Trust, the
Administrator bears the following expenses: the salaries and expenses of all
personnel of the Trust and the Administrator except for the fees and expenses of
Trustees not affiliated with the Administrator or the Investment Manager; costs
to prepare information; determination of daily NAV by the recordkeeping and
accounting agent; expenses to maintain certain of the Trust's books and records
that are not maintained by the Investment Manager, the custodian, or transfer
agent; costs incurred to assist in the preparation of financial information for
the Trust's income tax returns, proxy statements, quarterly, semi-annual, and
annual shareholder reports; costs of providing shareholder services in
connection with any tender offers or to shareholders proposing to transfer their
shares to a third party; providing shareholder services in connection with the
dividend reinvestment plan; and all expenses incurred by the Administrator or by
the Trust in connection with administering the ordinary course of the Trust's
business other than those assumed by the Trust, as described below.

     Except as indicated immediately above and under "The Investment Manager,"
the Trust is responsible for the payment of its expenses including: the fees
payable to the Investment Manager; the fees payable to the Administrator; the
fees and certain expenses of the Trust's custodian and transfer agent, including
the cost of providing records to the Administrator in connection with its
obligation of maintaining required records of the Trust; the charges and
expenses of the Trust's legal counsel, legal counsel to the Trustees who are not
"interested persons" as defined in the 1940 Act and independent accountants;
commissions and any issue or transfer taxes chargeable to the Trust in
connection with its

                                       27
<Page>

transactions; all taxes and corporate fees payable by the Trust to governmental
agencies; the fees of any trade association of which the Trust is a member; the
costs of share certificates representing Common Shares of the Trust;
organizational and offering expenses of the Trust and the fees and expenses
involved in registering and maintaining registration of the Trust and its Common
Shares with the Commission, including the preparation and printing of the
Trust's registration statement and prospectuses for such purposes; allocable
communications expenses with respect to investor services, and all expenses of
shareholders' and Trustees' meetings and of preparing, printing and mailing
reports, proxy statements and prospectuses to shareholders; the cost of
insurance; and litigation and indemnification expenses and extraordinary
expenses not incurred in the ordinary course of the Trust's business.

     For its services, the Administrator is entitled to receive from the Trust a
fee at an annual rate of 0.25% of the Fund's average daily net assets plus the
proceeds of any outstanding borrowings.


     Administrative fees paid by the Trust for the fiscal years ended February
29, 2004, February 28, 2003, and February 28, 2002 and the Administrator was
paid $3,903,976, $3,968,231, and $4,637,682, respectively, for services rendered
to the Trust.

                              PLANS OF DISTRIBUTION

THE DISTRIBUTOR

     Pursuant to an Amended and Restated Distribution Agreement (the
"Distribution Agreement"), ING Funds Distributor, LLC, an affiliate of the
Investment Manager and the Administrator, is the principal underwriter and
distributor for the shares of the Trust and acts as agent of the Trust in the
continuous offering of its shares. The Distributor bears all of its expenses of
providing services pursuant to the Distribution Agreement. The Trust pays the
cost for the prospectus and shareholder reports to be set in type and printed
for existing shareholders, and the Trust pays for the printing and distribution
of copies thereof used in connection with the offering of shares to prospective
investors. The Trust also pays for supplementary sales literature and
advertising costs.

     The Distribution Agreement continues in effect from year to year so long as
such continuance is approved at least annually by a vote of the Board of the
Trust, including the Trustees who are not interested persons of the Trust and
who have no direct or indirect financial interest in the Distribution Agreement.
The Distribution Agreement automatically terminates in the event of its
assignment and may be terminated at any time without penalty by the Trust or by
the Distributor upon 60 days' written notice. Termination by the Trust may be by
vote of a majority of the Board, and a majority of the Trustees who are not
interested persons of the Trust and who have no direct or indirect financial
interest in the Distribution Agreement, or a majority of the outstanding voting
securities of the Trust, as defined under the 1940 Act.

     The Common Shares will only be sold on such days as shall be agreed to by
the Trust and ING Funds Distributor. The Common Shares will be sold at market
prices, which shall be determined with reference to trades on the NYSE, subject
to a minimum price to be established each day by the Trust. The mininum price on
any day will not be less than the current NAV per Common Share. The Trust and
ING Funds Distributor will suspend the sale of Common Shares if the per share
price of the Common Shares is less than the minimum price.

                                       28
<Page>

     Settlements of sales of Common Shares will occur on the third business day
following the date on which any such sales are made. Unless otherwise indicated
in a further prospectus supplement, ING Funds Distributor as underwriter will
act as underwriter on a reasonable efforts basis.

     In connection with the sale of the Common Shares on behalf of the Trust,
ING Funds Distributor may be deemed to be an underwriter within the meaning of
the 1940 Act. As described below, ING Funds Distributor also serves as
distributor for the Trust in connection with the sale of Common Shares of the
Trust pursuant to privately negotiated transactions and pursuant to optional
cash investments. In addition, ING Funds Distributor provides administrative
services in connection with a separate at-the-market offering of Common Shares
of the Trust. The offering of Common Shares pursuant to the Distribution
Agreement will terminate upon the earlier of (i) the sale of all Common Shares
subject thereto or (ii) termination of the Distribution Agreement.

SHAREHOLDER INVESTMENT PROGRAM

     The Trust maintains a Shareholder Investment Program ("Program"), which
allows participating shareholders to reinvest all dividends and capital gain
distributions ("Dividends") in additional Common Shares of the Trust. The
Program also allows participants to purchase additional Common Shares through
optional cash investments in amounts ranging from a minimum of $100 to a maximum
of $100,000 per month. Common Shares may be issued by the Trust under the
Program only if the Trust's Common Shares are trading at a premium to NAV. If
the Trust's Common Shares are trading at a discount to NAV, Common Shares
purchased under the Program will be purchased on the open market.

     If the Market Price (the volume-weighted average sales price, per share, as
reported on the New York Stock Exchange Composite Transaction Tape as shown
daily on Bloomberg's AQR screen) plus estimated commissions for Common Shares of
the Trust is less than the NAV on the Valuation Date (defined below), DST will
purchase Common Shares on the open market through a bank or securities broker as
provided herein. Open market purchases may be effected on any securities
exchange on which Common Shares of the Trust trade or in the over-the-counter
market. If the Market Price, plus estimated commissions, exceeds the NAV before
DST has completed its purchases, DST will use reasonable efforts to cease
purchasing Common Shares, and the Trust shall issue the remaining Common Shares.
If the Market Price, plus estimated commissions, is equal to or exceeds the NAV
on the Valuation Date, the Trust will issue the Common Shares to be acquired by
the Program. The Valuation Date is a date preceding the DRIP Investment Date and
OCI Investment Date, on which it is determined, based on the Market Price and
NAV of Common Shares of the Trust, whether DST will purchase Common Shares on
the open market or the Trust will issue the Common Shares for the Program. The
Trust may, without prior notice to participants, determine that it will not
issue new Common Shares for purchase pursuant to the Program, even when the
Market Price plus estimated commissions equals or exceeds NAV, in which case DST
will purchase Common Shares on the open market.

     Common Shares issued by the Trust under the Program will be issued without
incurring a fee. Common Shares purchased for the Program directly from the Trust
in connection with the reinvestment of Dividends will be acquired on the DRIP
Investment Date at the greater of (i) NAV at the close of business on the
Valuation Date or (ii) the average of the daily Market Price of the shares
during the DRIP Pricing Period, minus a discount of 5%. The DRIP Pricing Period
for a dividend reinvestment is the Valuation Date and the prior Trading Day. A
Trading Day means any day on which trades of the Common Shares of the Trust are
reported on the NYSE.

     Common Shares purchased directly from the Trust pursuant to optional cash
investments will be acquired on an OCI Investment Date at the greater of (i) NAV
at the close of business on the Valuation Date or (ii) the average of the daily
Market Price of the shares during the OCI Pricing Period minus a discount,
determined at the sole discretion of the Trust and announced in advance, ranging
from 0% to 5%. The OCI Pricing Period for an OCI Investment Date means the
period beginning four Trading Days

                                       29
<Page>

prior to the Valuation Date through and including the Valuation Date. The
discount for optional cash investments is set by the Trust and may be changed or
eliminated by the Trust without prior notice to participants at any time. The
discount for optional cash investments is determined on the last business day of
each month. In all instances, however, the discount on Common Shares issued
directly by the Trust shall not exceed 5% of the market price, and Common Shares
may not be issued at a price less than NAV without prior specific approval of
shareholders or of the Commission. Optional cash investments received by DST no
later than 4:00 p.m. Eastern time on the OCI payment Due Date to be invested on
the relevant OCI Investment Date.

     Subject to the availability of Common Shares registered for issuance under
the Program, there is no total maximum number of Common Shares that can be
issued pursuant to the Program.

     See "Federal Taxation - Distributions" for a discussion of the federal
income tax ramifications of obtaining Common Shares under the Program.

PRIVATELY NEGOTIATED TRANSACTIONS

     The Common Shares may also be offered pursuant to privately negotiated
transactions between the Trust and specific investors. The terms of such
privately negotiated transactions will be subject to the discretion of the
management of the Trust. In determining whether to sell Common Shares pursuant
to a privately negotiated transaction, the Trust will consider relevant factors
including, but not limited to, the attractiveness of obtaining additional funds
through the sale of Common Shares, the purchase price to apply to any such sale
of Common Shares and the person seeking to purchase the Common Shares.

     Common Shares issued by the Trust in connection with privately negotiated
transactions will be issued at the greater of (1) NAV per Common Share of the
Trust's Common Shares or (ii) at a discount ranging from 0% to 5% of the average
of the daily market price of the Trust's Common Shares at the close of business
on the two business days preceding the date upon which Common Shares are sold
pursuant to the privately negotiated transaction. The discount to apply to such
privately negotiated transactions will be determined by the Trust with regard to
each specific transaction.


                             PORTFOLIO TRANSACTIONS


     The Trust will generally have at least 80% of its net assets, plus the
amount of any borrowings for investment purposes, invested in Senior Loans. The
remaining assets of the Trust will generally consist of short-term debt
instruments with remaining maturities of 120 days or less, longer-term debt
securities, certain other instruments such as subordinated or unsecured loans up
to a maximum of 5% of the Trust's net assets, interest rate swaps, caps and
floors, repurchase agreements, reverse repurchase agreements and equity
securities acquired in connection with investments in loans. The Trust will
acquire Senior Loans from and sell Senior Loans to banks, insurance companies,
finance companies, and other investment companies and private investment funds.
The Trust may also purchase Senior Loans from and sell Senior Loans to U.S.
branches of foreign banks which are regulated by the Federal Reserve System or
appropriate state regulatory authorities. The Trust's interest in a particular
Senior Loan will terminate when the Trust receives full payment on the loan or
sells a Senior Loan in the secondary market. Costs associated with purchasing or
selling investments in the secondary market include commissions paid to brokers
and processing fees paid to agents. These costs are allocated between the
purchaser and seller as agreed between the parties.


     Purchases and sales of short-term debt and other financial instruments for
the Trust's portfolio usually are principal transactions, and normally the Trust
will deal directly with the underwriters or dealers who make a market in the
securities involved unless better prices and execution are available

                                       30
<Page>

elsewhere. Such market makers usually act as principals for their own account.
On occasion, securities may be purchased directly from the issuer. Short-term
debt instruments are generally traded on a net basis and do not normally involve
either brokerage commissions or transfer taxes. The cost of portfolio securities
transactions of the Trust that are not transactions with principals will consist
primarily of brokerage commissions or dealer or underwriter spreads between the
bid and asked price, although purchases from underwriters may involve a
commission or concession paid by the issuer.


     In placing portfolio transactions, the Investment Manager or Sub-Adviser
will use commercially reasonable efforts to choose a broker capable of providing
the brokerage services necessary to obtain the most favorable price and
execution available. The full range and quality of brokerage services available
will be considered in making these determinations, such as the size of the
order, the difficulty of execution, the operational facilities of the firm
involved, the firm's risk in positioning a block of securities and other
factors. While the Investment Manager or Sub-Adviser seeks to obtain the most
favorable net results in effecting transactions in the Trust's portfolio
securities, brokers or dealers who provide research services may receive orders
for transactions by the Trust. Such research services ordinarily consist of
assessments and analyses of the business or prospects of a company, industry, or
economic sector. The Investment Manager is authorized to pay spreads or
commissions to brokers or dealers furnishing such services which are in excess
of spreads or commissions that other brokers or dealers not providing such
research may charge for the same transaction, even if the specific services were
not imputed to the Trust and were useful to the Investment Manager in advising
other clients. Information so received will be in addition to, and not in lieu
of, the services required to be performed by the Investment Manager under the
Investment ManagementAgreement between the Investment Manager and the Trust. The
expenses of the Investment Manager will not necessarily be reduced as a result
of the receipt of such supplemental information. The Investment Manager or
Sub-Adviser may use any research services obtained in providing investment
advice to its other investment advisory accounts. Conversely, such information
obtained by the placement of business for the Investment Manager or Sub-Adviser
or other entities advised by the Investment Manager or Sub-Adviser will be
considered by and may be useful to the Investment Manager or Sub-Adviser in
carrying out its obligations to the Trust. As permitted by Section 28(e) of the
Securities Exchange Act of 1934, as amended ("1934 Act") the Investment Manager
may cause the Trust to pay a broker-dealer which provides brokerage and research
services (as defined in the 1934 Act) to the Investment Manager or Sub-Adviser
an amount of disclosed commissions for effecting a securities transaction for
the Trust in excess of the commission which another broker-dealer would have
charged for effecting the transaction.


     The Trust does not intend to effect any brokerage transaction in its
portfolio securities with any broker-dealer affiliated directly or indirectly
with the Investment Manager or Sub-Adviser, except for any sales of portfolio
securities pursuant to a tender offer, in which event the Investment Manager or
Sub-Adviser will offset against the management fee a part of any tender fees
which legally may be received by such affiliated broker-dealer. To the extent
certain services which the Trust is obligated to pay for under the Investment
Management Agreement are performed by the Investment Manager, the Trust will
reimburse the Investment Manager for the costs of personnel involved in placing
orders for the execution of portfolio transactions.


     In connection with its purchase or holding interests in Senior Loans, the
Trust may acquire (and subsequently sell) equity securities or warrants it
recevies. Brokerage commissions paid by the Trust during the fiscal years ended
February 29, 2004, February 28, 2003 and February 29, 2002, were $28,130, $0 and
$0, respectively.

     None of the total commissions paid during the fiscal years ended
February 29, 2004, February 28, 2003 and February 29, 2002, were paid by the
Trust to firms which provided research, statistical or other services to the
Investment Manager.


                                       31
<Page>

PORTFOLIO TURNOVER RATE


     The annual rate of the Trust's total portfolio turnover for the years ended
February 29, 2004, February 28, 2003, and February 28, 2002 was 87%, 48%, and
53% respectively. The annual turnover rate of the Trust is generally expected to
be between 50% and 100%, although as part of its investment policies, the Trust
places no restrictions on portfolio turnover and the Trust may sell any
portfolio security without regard to the period of time it has been held. The
annual turnover rate of the Trust also includes Senior Loans on which the Trust
has received full or partial payment. The Investment Manager believes that full
and partial payments on loans generally comprise approximately 25% to 75% of the
Trust's total portfolio turnover each year.


                                 NET ASSET VALUE


     The NAV per Common Share of the Trust is determined once daily at the close
of regular trading on the NYSE (usually 4:00 p.m. Eastern time) on each day the
NYSE is open. As of the date of this SAI, the NYSE is closed on the following
holidays: New Year's Day, Martin Luther King, Jr. Day, Presidents' Day, Good
Friday, Memorial Day, Independence Day, Labor Day, Thanksgiving Day, and
Christmas Day. The NAV per Common Share is determined by dividing the value of
the Trust's loan assets plus all cash and other assets (including interest
accrued but not collected) less all liabilities (including accrued expenses but
excluding capital and surplus) by the number of Common Shares outstanding. The
NAV per Common Share is made available for publication.


                                FEDERAL TAXATION

     The following is only a summary of certain U.S. federal income tax
considerations generally affecting the Trust and its shareholders. No attempt is
made to present a detailed explanation of the tax treatment of the Trust or its
shareholders, and the following discussion is not intended as a substitute for
careful tax planning. Shareholders should consult with their own tax advisers
regarding the specific federal, state, local, foreign and other tax consequences
of investing in the Trust.

QUALIFICATION AS A REGULATED INVESTMENT COMPANY


     The Trust will elect each year to be taxed as a regulated investment
company ("RIC") under Subchapter M of the Internal Revenue Code ("Code"). As a
RIC, the Trust generally will not be subject to federal income tax on the
portion of its investment company taxable income (I.E., taxable interest,
dividends and other taxable ordinary income, net of expenses, and net short-term
capital gains in excess of long-term capital losses) and net capital gain (I.E.,
the excess of net long-term capital gains over the sum of net short-term capital
losses and capital loss carryovers from prior years) that it distributes to
shareholders, provided that it distributes at least 90% of its investment
company taxable income for the taxable year ("Distribution Requirement"), and
satisfies certain other requirements of the Code that are described below.

     In addition to satisfying the Distribution Requirement and an asset
diversification requirement discussed below, a RIC must derive at least 90% of
its gross income for each taxable year from dividends, interest, certain
payments with respect to securities loans, gains from the sale or other
disposition of stock or securities or foreign currencies and other income
(including, but not limited to, gains from options, futures or forward
contracts) derived with respect to its business of investing in such stock,
securities or currencies.

     In addition to satisfying the requirements described above, the Trust must
satisfy an asset diversification test in order to qualify as a RIC. Under this
test, at the close of each quarter of the Trust's taxable year, at least 50% of
the value of the Trust's assets must consist of cash and cash items (including

                                       32
<Page>

receivables), U.S. government securities, securities of other regulated
investment companies, and securities of other issuers (as to which the Trust has
not invested more than 5% of the value of the Trust's total assets in securities
of any such issuer and as to which the Trust does not hold more than 10% of the
outstanding voting securities of any such issuer), and no more than 25% of the
value of its total assets may be invested in the securities of any one issuer
(other than U.S. government securities and securities of other regulated
investment companies), or in two or more issuers which the Trust controls and
which are engaged in the same or similar trades or businesses.


     In general, gain or loss recognized by the Trust on the disposition of an
asset will be a capital gain or loss. However, gain recognized on the
disposition of a debt obligation purchased by the Trust at a market discount
(generally at a price less than its principal amount) other than at the original
issue will be treated as ordinary income to the extent of the portion of the
market discount which accrued during the period of time the Trust held the debt
obligation.


     In general, investments by the Trust in zero coupon or other original issue
discount securities will result in income to the Trust equal to a portion of the
excess of the face value of the securities over their issue price ("original
issue discount") each year that the Trust holds the securities, even though the
Trust receives no cash interest payments. This income is included in determining
the amount of income which the Trust must distribute to maintain its status as a
RIC and to avoid federal income and excise taxes.

     If for any taxable year the Trust does not qualify as a RIC, all of its
taxable income (including its net capital gain) will be subject to tax at
regular corporate rates without any deduction for distributions to shareholders,
and such distributions will be taxable as ordinary dividends to the extent of
the Trust's current and accumulated earnings and profits. Such distributions
generally would be eligible for the dividends-received deduction in the case of
corporate shareholders.

     If the Fund fails to qualify as a RIC in any year, it must pay out its
earnings and profits accumulated in that year in order to qualify again as a
RIC. Moreover, if the Fund failed to qualify as a RIC for a period greater than
one taxable year, the Fund may be required to recognize any net built-in gains
with respect to certain of its assets (the excess of the aggregate gains,
including items of income, over aggregate losses that would have been realized
if the Fund had been liquidated) in order to qualify as a RIC in a subsequent
year.


EXCISE TAX ON REGULATED INVESTMENT COMPANIES


     A 4% non-deductible excise tax is imposed on a RIC that fails to distribute
in each calendar year an amount equal to the sum of (1) 98% of its ordinary
taxable income for the calendar year, (2) 98% of its capital gain net income
(I.E., capital gains in excess of capital losses) for the one-year period ended
on October 31 of such calendar year, and (3) any ordinary taxable income and
capital gain net income for previous years that was not distributed or taxed to
the RIC during those years. A distribution will be treated as paid on December
31 of the current calendar year if it is declared by the Trust in October,
November or December with a record date in such a month and paid by the Trust
during January of the following calendar year. Such distributions will be taxed
to shareholders in the calendar year in which the distributions are declared,
rather than the calendar year in which the distributions are received.


     The Trust intends to make sufficient distributions or deemed distributions
(discussed below) of its ordinary taxable income and capital gain net income to
avoid liability for the excise tax.

                                       33
<Page>

HEDGING TRANSACTIONS


     The Trust has the ability, pursuant to its investment objectives and
policies, to hedge its investments in a variety of transactions, including
interest rate swaps and the purchase or sale of interest rate caps and floors.
The treatment of these transactions for federal income tax purposes may in some
instances be unclear, and the RIC qualification requirements may limit the
extent to which the Trust can engage in hedging transactions.


     Under certain circumstances, the Trust may recognize gain from a
constructive sale of an appreciated financial position. If the Trust enters into
certain transactions in property while holding substantially identical property,
the Trust would be treated as if it had sold and immediately repurchased the
property and would be taxed on any gain (but not loss) from the constructive
sale. The character of gain from a constructive sale would depend upon the
Trust's holding period in the property. Loss from a constructive sale would be
recognized when the property was subsequently disposed of, and its character
would depend on the Trust's holding period and the application of various loss
deferral provisions in the Code. Constructive sale treatment does not apply to
transactions closed in the 90-day period ending with the 30th day after the
close of the taxable year, if certain conditions are met.

DISTRIBUTIONS

     The Trust anticipates distributing all or substantially all of its
investment company taxable income for the taxable year. Such distributions will
be taxable to shareholders as ordinary income. If a portion of the Trust's
income consists of dividends paid by U.S. corporations, a portion of the
dividends paid by the Trust may be eligible for the corporate dividends received
deduction.

     The Trust may either retain or distribute to shareholders its net capital
gain for each taxable year. The Trust currently intends to distribute any such
amounts. If net capital gain is distributed and designated as a capital gain
dividend, it will generally be taxable to shareholders at a maximum federal tax
rate of 15%. Distributions are subject to these capital gains rates regardless
of the length of time the shareholder has held his shares. Conversely, if the
Trust elects to retain its net capital gain, the Trust will be taxed thereon
(except to the extent of any available capital loss carryovers) at the
applicable corporate tax rate. In such event, it is expected that the Trust also
will elect to treat such gain as having been distributed to shareholders. As a
result, each shareholder will be required to report his pro rata share of such
gain on his tax return as long-term capital gain, will be entitled to claim a
tax credit for his pro rata share of tax paid by the Trust on the gain, and will
increase the tax basis for his shares by an amount equal to the deemed
distribution less the tax credit.

     Recently enacted tax legislation generally provides for a maximum tax rate
for individual taxpayers of 15% on long-term capital gains from sales on or
after May 6, 2003 and on certain qualifying dividend income. The rate reductions
do not apply to corporate taxpayers. The Trust will be able to separately
designate distributions of any qualifying long-term capital gains or qualifying
dividends earned by the Trust that would be eligible for the lower maximum rate,
although it does not expect to distribute a material amount of qualifying
dividends. A shareholder would also have to qualify a 60-day holding period with
respect to any distributions of qualifying dividend in order to obtain the
benefit of the lower rate. Distributions from funds, such as the Trust,
investing in debt instruments will not generally qualify for the lower rate.

     Distributions by the Trust in excess of the Trust's earnings and profits
will be treated as a return of capital to the extent of (and in reduction of)
the shareholder's tax basis in his shares; any such return of capital
distributions in excess of the shareholder's tax basis will be treated as gain
from the sale of his shares, as discussed below.

                                       34
<Page>

     Distributions by the Trust will be treated in the manner described above
regardless of whether such distributions are paid in cash or reinvested in
additional shares of the Trust. If the NAV at the time a shareholder purchases
shares of the Trust reflects undistributed income or gain, distributions of such
amounts will be taxable to the shareholder in the manner described above, even
though such distributions economically constitute a return of capital to the
shareholder.

     The Trust will be required in certain cases to withhold and remit to the
U.S. Treasury 28% of all dividends and redemption proceeds payable to any
shareholder (1) who fails to provide the Trust with a certified, correct
identification number or other required certifications, or (2) if the Internal
Revenue Service notifies the Trust that the shareholder is subject to backup
withholding. Corporate shareholders and other shareholders specified in the Code
are exempt from such backup withholding. Backup withholding is not an additional
tax. Any amounts withheld may be credited against the shareholder's U.S. federal
income tax liability if the appropriate information is provided to the IRS.

SALE OF COMMON SHARES

     A shareholder will recognize gain or loss on the sale or exchange of shares
of the Trust in an amount generally equal to the difference between the proceeds
of the sale and the shareholder's adjusted tax basis in the shares. In general,
any such gain or loss will be considered capital gain or loss if the shares are
held as capital assets, and gain or loss will be long-term or short-term,
depending upon the shareholder's holding period for the shares. However, any
capital loss arising from the sale of shares held for six months or less will be
treated as a long-term capital loss to the extent of any long-term capital gains
distributed (or deemed distributed) with respect to such shares. Also, any loss
realized on a sale or exchange of shares will be disallowed to the extent the
shares disposed of are replaced (including shares acquired through the
Shareholder Investment Program within a period of 61 days beginning 30 days
before and ending 30 days after the shares are disposed of. In such case, the
tax basis of the acquired shares will be adjusted to reflect the disallowed
loss.

FOREIGN SHAREHOLDERS

     U.S. taxation of a shareholder who, as to the United States, is a
nonresident alien individual, foreign trust or estate, foreign corporation, or
foreign partnership ("foreign shareholder") depends, in part, on whether the
shareholder's income from the Trust is effectively connected with a U.S. trade
or business carried on by such shareholder.

     If the income from the Trust is not effectively connected with a U.S. trade
or business carried on by a foreign shareholder, distributions of investment
company taxable income will be subject to U.S. withholding tax at the rate of
30% (or lower treaty rate). Such a foreign shareholder would generally be exempt
from U.S. federal income tax on gains realized on the sale or exchange of shares
of the Trust, capital gain dividends, and amounts retained by the Trust that are
designated as undistributed capital gains.

     If the income from the Trust is effectively connected with a U.S. trade or
business carried on by a foreign shareholder, then distributions of investment
company taxable income, capital gain dividends, amounts retained by the Trust
that are designated as undistributed capital gains and any gains realized upon
the sale or exchange of shares of the Trust will be subject to U.S. federal
income tax at the rates applicable to U.S. citizens or domestic corporations.
Such shareholders that are classified as corporations for U.S. tax purposes also
may be subject to a branch profits tax.

     In the case of foreign noncorporate shareholders, the Trust may be required
to withhold U.S. federal income tax at a rate of 30% on distributions that are
otherwise exempt from withholding tax (or

                                       35
<Page>

taxable at a reduced treaty rate) unless such shareholders furnish the Trust
with proper notification of their foreign status. See "Distributions."

     The tax consequences to a foreign shareholder entitled to claim the
benefits of an applicable tax treaty may be different from those described
herein. Foreign shareholders are urged to consult their own tax advisers with
respect to the particular tax consequences to them of an investment in the
Trust, including the applicability of foreign taxes.

EFFECT OF FUTURE LEGISLATION; OTHER TAX CONSIDERATIONS

     The foregoing general discussion of U.S. federal income tax consequences is
based on the Code and the Treasury Regulations issued thereunder as in effect on
the date of this SAI. Future legislative or administrative changes or court
decisions may significantly change the conclusions expressed herein, and any
such changes or decisions may have a retroactive effect with respect to the
transactions contemplated herein.

     Income received by the Trust from foreign sources may be subject to
withholding and other taxes imposed by such foreign jurisdictions, absent treaty
relief. Distributions to shareholders also may be subject to state, local and
foreign taxes, depending upon each shareholder's particular situation.
Shareholders are urged to consult their tax advisers as to the particular
consequences to them of an investment in the Trust.

                        ADVERTISING AND PERFORMANCE DATA

ADVERTISING

     From time to time, advertisements and other sales materials for the Trust
may include information concerning the historical performance of the Trust. Any
such information may include trading volume of the Trust's Common Shares, the
number of Senior Loan investments, annual total return, aggregate total return,
distribution rate, average compounded distribution rates and yields of the Trust
for specified periods of time, and diversification statistics. Such information
may also include rankings, ratings and other information from independent
organizations such as Lipper Analytical Services, Inc. ("Lipper"), Morningstar,
Value Line, Inc., CDA Technology, Inc., Standard & Poor's, Portfolio Management
Data (a division of Standard & Poor's), Moody's, Bloomberg or other industry
publications. These rankings will typically compare the Trust to all closed-end
Funds, to other Senior Loan funds, and/or also to taxable closed-end fixed
income funds. Any such use of rankings and ratings in advertisements and sales
literature will conform with the guidelines of the NASD approved by the
Commission. Ranking comparisons and ratings should not be considered
representative of the Trust's relative performance for any future period.

     Reports and promotional literature may also contain the following
information: (i) number of shareholders; (ii) average account size; (iii)
identification of street and registered account holdings; (iv) lists or
statistics of certain of the Trust's holdings including, but not limited to,
portfolio composition, sector weightings, portfolio turnover rates, number of
holdings, average market capitalization and modern portfolio theory statistics
alone or in comparison with itself (over time) and with its peers and industry
group; (v) public information about the assets class; and (vi) discussions
concerning coverage of the Trust by analysts.

     In addition, reports and promotional literature may contain information
concerning the Investment Manager, the Sub-Adviser, ING Groep, the Portfolio
Managers, the Administrator or affiliates of the Trust including (i) performance
rankings of other funds managed by the Investment Manager or

                                       36
<Page>

Sub-Adviser, or the individuals employed by the Investment Manager or
Sub-Adviser who exercise responsibility for the day-to-day management of the
Trust, including rankings and ratings of investment companies published by
Lipper, Morningstar, Inc., Value Line, Inc., CDA Technologies, Inc., or other
rating services, companies, publications or other persons who rank or rate
investment companies or other investment products on overall performance or
other criteria; (ii) lists of clients, the number of clients, or assets under
management; (iii) information regarding the acquisition of the ING Funds by ING
Capital; (iv) the past performance of ING Capital and ING Funds Services; (v)
the past performance of other funds managed by the Investment Manager or
Sub-Adviser; (vi) quotes from a portfolio manager of the Trust or industry
specialists; and (vii) information regarding rights offerings conducted by
closed-end funds managed by the Investment Manager or Sub-Adviser.

     The Trust may compare the frequency of its reset period to the frequency
which LIBOR changes. Further, the Trust may compare its yield to (i) LIBOR, (ii)
the federal funds rate, (iii) the Prime Rate, quoted daily in the Wall Street
Journal as the base rate on corporate loans at large U.S. money center
commercial banks, (iv) the average yield reported by the Bank Rate Monitor
National Index for money market deposit accounts offered by the 100 leading
banks and thrift institutions in the ten largest standard metropolitan
statistical areas, (v) yield data published by Lipper, Bloomberg or other
industry sources, or (vi) the yield on an investment in 90-day Treasury bills on
a rolling basis, assuming quarterly compounding. Further, the Trust may compare
such other yield data described above to each other. The Trust may also compare
its total return, NAV stability and yield to fixed income investments. As with
yield and total return calculations, yield comparisons should not be considered
representative of the Trust's yield or relative performance for any future
period.

     The Trust may provide information designed to help individuals understand
their investment goals and explore various financial strategies. Such
information may include information about current economic, market and political
conditions; materials that describe general principles of investing, such as
asset allocation, diversification, risk tolerance, and goal setting; worksheets
used to project savings needs based on assumed rates of inflation and
hypothetical rates of return; and action plans offering investment alternatives.
Materials may also include discussion of other investment companies in the ING
Funds, products and services, and descriptions of the benefits of working with
investment professionals in selecting investments.

PERFORMANCE DATA

     The Trust may quote annual total return and aggregate total return
performance data. Total return quotations for the specified periods will be
computed by finding the rate of return (based on net investment income and any
capital gains or losses on portfolio investments over such periods) that would
equate the initial amount invested to the value of such investment at the end of
the period. On occasion, the Trust may quote total return calculations published
by Lipper, a widely recognized independent publication that monitors the
performance of both open-end and closed-end investment companies.


     The Trust's distribution rate is calculated on a monthly basis by
annualizing the dividend declared in the month and dividing the resulting
annualized dividend amount by the Trust's corresponding month-end NAV (in the
case of NAV) or the last reported market price (in the case of Market). The
distribution rate is based solely on the actual dividends and distributions,
which are made at the discretion of management. The distribution rate may or may
not include all investment income, and ordinarily will not include capital gains
or losses, if any.


     Total return and distribution rate and compounded distribution rate figures
utilized by the Trust are based on historical performance and are not intended
to indicate future performance. Distribution rate, compounded distribution rate
and NAV per share can be expected to fluctuate over time. Total

                                       37
<Page>

return will vary depending on market conditions, the Senior Loans, and other
securities comprising the Trust's portfolio, the Trust's operating expenses and
the amount of net realized and unrealized capital gains or losses during the
period.

                               GENERAL INFORMATION

CUSTODIAN

     State Street Bank and Trust Company, 801 Pennsylvania Avenue, Kansas City,
Missouri 64105 has been retained to act as the custodian for the Trust. State
Street Bank and Trust Company does not have any part in determining the
investment policies of the Trust or in determining which portfolio securities
are to be purchased or sold by the Trust or in the declaration of dividends and
distributions.

LEGAL COUNSEL

     Legal matters for the Trust are passed upon by Dechert LLP, 1775 I Street,
NW, Washington, DC 20006.

INDEPENDENT AUDITORS


     KPMG LLP, 355 South Grand Avenue, Los Angeles, California 90071, currently
serves as the independent registered public accounting firm and has been
selected as independent auditors for the Trust for the fiscal year ending
February 28, 2005.


                              FINANCIAL STATEMENTS


     The Financial Statements and the independent auditors' reports thereon,
appearing in the Trust's Annual Report for the period ending February 29, 2004
are incorporated by reference in this SAI. The Trust's Annual and Semi-Annual
Reports are available at 7337 East Doubletree Ranch Road, Scottsdale, Arizona
85258, upon request and without charge by calling (800) 992-0180.


                                       38
<Page>

                                   APPENDIX A

                                       39
<Page>

                                    ING FUNDS


                     PROXY VOTING PROCEDURES AND GUIDELINES
                          Effective as of July 10, 2003
                As amended August 21, 2003 and November 11, 2003


I.      INTRODUCTION

The following are the Proxy Voting Procedures and Guidelines (the "Procedures
and Guidelines") of the ING Funds set forth on Exhibit 1 attached hereto and
each portfolio or series thereof (each a "Fund" and collectively, the "Funds").
The purpose of these Procedures and Guidelines is to set forth the process by
which each Fund will vote proxies related to the assets in its investment
portfolio (the "portfolio securities"). The Procedures and Guidelines have been
approved by each of the Funds' Board of Trustees/Directors(1) (each a "Board"
and collectively, the "Boards"), including a majority of the independent
Trustees/Directors(2) of the Board. These Procedures and Guidelines may be
amended only by the Board. The Board shall review these Procedures and
Guidelines at its discretion, and make any revisions thereto as deemed
appropriate by the Board.

II.     VALUATION AND PROXY VOTING COMMITTEE

The Boards hereby delegate to the Valuation and Proxy Voting Committee of each
Board (each a "Committee" and collectively, the "Committees") the authority and
responsibility to oversee the implementation of these Procedures and Guidelines,
and where applicable, to make determinations on behalf of the Board with respect
to the voting of proxies on behalf of each Fund. Furthermore, the Boards hereby
delegate to each Committee the authority to review and approve material changes
to proxy voting procedures of any Fund's investment adviser (the "Adviser"). The
Proxy Voting Procedures of the Adviser are attached hereto as Exhibit 2. Any
determination regarding the voting of proxies of each Fund that is made by a
Committee, or any member thereof, as permitted herein, shall be deemed to be a
good faith determination regarding the voting of proxies by the full Board. Each
Committee may rely on the Adviser through the Agent, Proxy Coordinator and/or
Proxy Group (as such terms are defined below and in the Adviser's proxy voting
procedures) to deal in the first instance with the application of these
Procedures and Guidelines. Each Committee shall conduct itself in accordance
with its charter.

III.    DELEGATION OF VOTING RESPONSIBILITY

- ----------
(1)  Reference in these Procedures to one or more Funds shall, as applicable,
     mean those Funds that are under the jurisdiction of the particular Board or
     Valuation and Proxy Voting Committee at issue. No provision in these
     Procedures is intended to impose any duty upon the particular Board or
     Valuation and Proxy Voting Committee with respect to any other Fund.

(2)  The independent Trustees/Directors are those Board members who are not
     "interested persons" within the meaning of Section 2(a)(19) the Investment
     Company Act of 1940.

                                       40
<Page>

The Board hereby delegates to the Adviser to each Fund the authority and
responsibility to vote all proxies with respect to all portfolio securities of
each Fund in accordance with then current proxy voting procedures and guidelines
that have been approved by the Board. The Board may revoke such delegation with
respect to any proxy or proposal, and assume the responsibility of voting any
Fund proxy or proxies, as it deems appropriate. Non-material amendments to the
Procedures and Guidelines may be approved for immediate implementation by the
President or Chief Financial Officer of a Fund, subject to ratification at the
next regularly scheduled meeting of the Valuation and Proxy Voting Committee.

When a Fund participates in the lending of its securities and the securities are
on loan at record date, proxies related to such securities will not be forwarded
to the Adviser by the Fund's custodian and therefore will not be voted.

When a Fund is a feeder in a master/feeder structure, proxies for the portfolio
securities of the master fund will be voted pursuant to the master fund's proxy
voting policies and procedures.

IV.     APPROVAL AND REVIEW OF PROCEDURES

Each Fund's Adviser has adopted proxy voting procedures in connection with the
voting of portfolio securities for the Funds as attached hereto in Exhibit 2.
The Board hereby approves such procedures. All material changes to such
procedures must be approved by the Board or the Valuation and Proxy Voting
Committee prior to implementation; however, the President or Chief Financial
Officer of a Fund may make such non-material changes as they deem appropriate,
subject to ratification by the Board or the Valuation and Proxy Voting Committee
at its next regularly scheduled meeting.

V.      VOTING PROCEDURES AND GUIDELINES

THE GUIDELINES WHICH ARE SET FORTH IN EXHIBIT 3 HERETO SPECIFY THE MANNER IN
WHICH THE FUNDS GENERALLY WILL VOTE WITH RESPECT TO THE PROPOSALS DISCUSSED
THEREIN.

          A. Routine Matters

     The Agent shall be instructed to submit a vote in accordance with the
     Guidelines where such Guidelines provide a clear "For", "Against" or
     "Abstain" on a proposal. However, the Agent shall be directed to refer
     proxy proposals to the Proxy Coordinator for instructions as if it were a
     matter requiring case-by-case consideration under circumstances where the
     application of the Guidelines is unclear, they appear to involve unusual or
     controversial issues, or an Investment Professional recommends a vote
     contrary to the Guidelines.

          B. Matters Requiring Case-by-Case Consideration

     The Agent shall be directed to refer proxy proposals accompanied by its
     written analysis and voting recommendation to the Proxy Coordinator where
     the Guidelines have noted a "case-by-case" consideration.

     Upon receipt of a referral from the Agent, the Proxy Coordinator may
     solicit additional research from the Agent, Investment Professional(s), as
     well as from any other source or service.

                                       41
<Page>

     The Proxy Coordinator will forward the Agent's analysis and recommendation
     and/or any research obtained from the Investment Professional(s), the Agent
     or any other source to the Proxy Group. The Proxy Group may consult with
     the Agent and/or Investment Professional(s), as it deems necessary.

  1.    Votes in Accordance with Agent Recommendation

          In the event the Proxy Group recommends a vote in accordance with the
          Agent's recommendation, the Proxy Group will instruct the Agent,
          through the Proxy Coordinator, to vote in accordance with the Agent's
          recommendation.

  2.    Non-Votes

          The Proxy Group may recommend that a Fund refrain from voting under
          the following circumstances: (1) if the economic effect on
          shareholders' interests or the value of the portfolio holding is
          indeterminable or insignificant or (2) if the cost of voting a proxy
          outweighs the benefits, E.G., certain international proxies. In such
          instances, the Proxy Group may instruct the Agent, through the Proxy
          Coordinator, not to vote such proxy.

  3.    Votes Contrary to Procedures and Guidelines, or Agent Recommendation,
        where applicable, or where No Recommendation is provided by Agent.

          If the Proxy Group recommends that a Fund vote contrary to the
          Procedures and Guidelines, or the recommendation of the Agent, where
          applicable, or if the Agent has made no recommendation and the
          Procedures and Guidelines are silent, the Proxy Coordinator will then
          request that each member of the Proxy Group and each Investment
          Professional participating in the voting process provide a Conflicts
          Report (as such term is defined for purposes of the Adviser's proxy
          voting procedures).

          If Counsel determines that a conflict of interest appears to exist
          with respect to any member of the Proxy Group or the relevant
          Investment Professional(s), the Proxy Coordinator will then call a
          meeting of the Valuation and Proxy Voting Committee and forward to
          such committee all information relevant to their review, including the
          following materials or a summary thereof: the applicable Procedures
          and Guidelines, the recommendation of the Agent where applicable, the
          recommendation of the Investment Professional(s), where applicable,
          any resources used by the Proxy Group in arriving at its
          recommendation, the Conflicts Report and any other written materials
          establishing whether a conflict of interest exists, and findings of
          Counsel (as such term is defined for purposes of the Adviser's proxy
          voting procedures).

          If Counsel determines that there does not appear to be a conflict of
          interest with respect to any member of the Proxy Group or the relevant
          Investment Professional(s), the Proxy Coordinator will instruct the
          Agent to vote the proxy as recommended by the Proxy Group.

  4.    Referrals to a Fund's Valuation and Proxy Voting Committee

          A Fund's Valuation and Proxy Voting Committee may consider all
          recommendations, analysis, research and Conflicts Reports provided to
          it by the Agent, Proxy Group and/or Investment Professional(s), and
          any other written materials used to establish whether a conflict of
          interest exists, in determining how to vote the proxies referred to
          the Committee.

                                       42
<Page>

          The Committee will instruct the Agent through the Proxy Coordinator
          how to vote such referred proposals.

          The Proxy Coordinator will maintain a record of all proxy questions
          that have been referred to a Fund's Valuation and Proxy Voting
          Committee, all applicable recommendations, analysis, research and
          Conflicts Reports.

VI.     CONFLICTS OF INTEREST

In all cases in which a vote has not been clearly determined in advance by the
Procedures and Guidelines or for which the Proxy Group recommends a vote
contrary to the Procedures and Guidelines, or contrary to the recommendation of
the Agent, or where the Procedures and Guidelines are silent and the Agent has
made no recommendation, and Counsel has determined that a conflict of interest
appears to exist with respect to any member of the Proxy Group or any Investment
Professional participating in the voting process, the proposal shall be referred
to the Fund's Valuation and Proxy Voting Committee for determination so that the
Adviser shall have no opportunity to vote a Fund's proxy in a situation in which
it may be deemed to have a conflict of interest.

VII.    REPORTING AND RECORD RETENTION

Beginning in August 2004, on an annual basis, each Fund will post its proxy
voting record or a link thereto for the prior one-year period ending on June
30th on the ING Funds website. The proxy voting record posted for any Fund that
is a feeder in a master/feeder structure will be that of the master fund. The
proxy voting record for each Fund will also be available in the EDGAR database
on the SEC's website.

                                       43
<Page>

                                    EXHIBIT 1
                                     TO THE
                                    ING FUNDS
                             PROXY VOTING PROCEDURES

                                ING EQUITY TRUST
                                 ING FUNDS TRUST
                           ING INVESTMENT FUNDS, INC.
                               ING INVESTORS TRUST
                               ING MAYFLOWER TRUST
                                ING MUTUAL FUNDS
                              ING PRIME RATE TRUST
                             ING SENIOR INCOME FUND
                          ING VARIABLE INSURANCE TRUST
                           ING VARIABLE PRODUCTS TRUST
                       ING VP EMERGING MARKETS FUND, INC.
                         ING VP NATURAL RESOURCES TRUST
                               USLICO SERIES FUND


Effective as of July 10, 2003

                                       44
<Page>

                                    EXHIBIT 2
                                     TO THE
                                    ING FUNDS
                             PROXY VOTING PROCEDURES

                              ING INVESTMENTS, LLC,
                             DIRECTED SERVICES, INC.
                                       AND
                     ING LIFE INSURANCE AND ANNUITY COMPANY


                             PROXY VOTING PROCEDURES

                    Effective as of July 10, 2003, as amended



I.      INTRODUCTION

        ING Investments, LLC, Directed Services, Inc. and ING Life Insurance and
Annuity Company (each an "Adviser" and collectively, the "Advisers") are the
investment advisers for the registered investment companies and each series or
portfolio thereof (each a "Fund" and collectively, the "Funds") comprising the
ING family of funds. As such, the Advisers have been delegated the authority to
vote proxies with respect to securities for the Funds over which they have
day-to-day portfolio management responsibility.

        The Advisers will abide by the proxy voting guidelines adopted by a
Fund's respective Board of Directors or Trustees (each a "Board" and
collectively, the "Boards") with regard to the voting of proxies unless
otherwise provided in the proxy voting procedures adopted by a Fund's Board.

        In voting proxies, the Advisers are guided by general fiduciary
principles. Each must act prudently, solely in the interest of the beneficial
owners of the Funds it manages. The Advisers will not subordinate the interest
of beneficial owners to unrelated objectives. Each Adviser will vote proxies in
the manner that it believes will do the most to maximize shareholder value.

        The following are the Proxy Voting Procedures of ING Investments, LLC,
Directed Services, Inc. and ING Life Insurance and Annuity Company with respect
to the voting of proxies on behalf of their client Funds as approved by the
respective Board of each Fund.

        Unless otherwise noted, proxies will be voted in all instances.

II.     ROLES AND RESPONSIBILITIES

        A.   Proxy Coordinator

The Proxy Coordinator identified in Appendix 1 will assist in the coordination
of the voting of each Fund's proxies in accordance with the ING Funds Proxy
Voting Procedures and Guidelines ("Procedures

                                       45
<Page>

and Guidelines"). The Proxy Coordinator is authorized to direct the Agent to
vote a Fund's proxy in accordance with the Procedures and Guidelines unless the
Proxy Coordinator receives a recommendation from an Investment Professional (as
described below) to vote contrary to the Procedures and Guidelines. In such
event, the Proxy Coordinator will call a meeting of the Proxy Group.

        B.   Agent

             An independent proxy voting service (the "Agent"), as approved by
        the Board of each Fund, shall be engaged to assist in the voting of Fund
        proxies through the provision of vote analysis, implementation,
        recordkeeping and disclosure services. The Agent is responsible for
        coordinating with the Funds' custodians to ensure that all proxy
        materials received by the custodians relating to the portfolio
        securities are processed in a timely fashion. To the extent applicable,
        the Agent is required to vote and/or refer all proxies in accordance
        with these Procedures. The Agent will retain a record of all proxy votes
        handled by the Agent. Such record must reflect all the information
        required to be disclosed in a Fund's Form N-PX pursuant to Rule 30b1-4
        under the Investment Company Act. In addition, the Agent is responsible
        for maintaining copies of all proxy statements received by issuers and
        to promptly provide such materials to the Adviser upon request.

             The Agent shall be instructed to vote all proxies in accordance
        with the ING Funds' Guidelines, except as otherwise instructed through
        the Proxy Coordinator by the Adviser's Proxy Group, or a Fund's
        Valuation and Proxy Voting Committee.

             The Agent shall be instructed to obtain all proxies from the Funds'
        custodians and to review each proxy proposal against the Guidelines. The
        Agent also shall be requested to call the Proxy Coordinator's attention
        to specific proxy proposals that although governed by the Guidelines
        appear to involve unusual or controversial issues.

        C.   Proxy Group

             The Adviser shall establish a Proxy Group (the "Proxy Group") which
        shall assist in the review of the Agent's recommendations when a proxy
        voting issue is referred to the Group through the Proxy Coordinator. The
        members of the Proxy Group, which may include employees of the Advisers'
        affiliates, are identified in Appendix 1, as may be amended from time at
        the Advisers' discretion.

             A minimum of four (4) members of the Proxy Group (or three (3) if
        one member of the quorum is either the Fund's Chief Investment Risk
        Officer or Chief Financial Officer) shall constitute a quorum for
        purposes of taking action at any meeting of the Group. The vote of a
        simple majority of the members present and voting shall determine any
        matter submitted to a vote. The Proxy Group may meet in person or by
        telephone. The Proxy Group also may take action via electronic mail in
        lieu of a meeting, provided that each Group member has received a copy
        of any relevant electronic mail transmissions circulated by each other
        participating Group member prior to voting and provided that the Proxy
        Coordinator follows the directions of a majority of a quorum (as defined
        above) responding via electronic mail. For all votes taken in person or
        by telephone or teleconference, the vote shall be taken outside the
        presence of any person other than the members of the Proxy Group.

             A meeting of the Proxy Group will be held whenever the Proxy
        Coordinator receives a recommendation from an Investment Professional to
        vote a Fund's proxy contrary to the

                                       46
<Page>

        Procedures and Guidelines, or the recommendation of the Agent, where
        applicable, or if the Agent has made no recommendation with respect to a
        vote on a proposal.

             For each proposal referred to the Proxy Group, it will review (1)
        the Procedures and Guidelines, (2) the recommendation of the Agent, if
        any, (3) the recommendation of the Investment Professional(s) and (4)
        any other resources that the Proxy Group deems appropriate to aid in a
        determination of a recommendation.

             If the Proxy Group recommends that a Fund vote in accordance with
        the Procedures and Guidelines, or the recommendation of the Agent, where
        applicable, it shall instruct the Proxy Coordinator to so advise the
        Agent.

             If the Proxy Group recommends that a Fund vote contrary to the
        Procedures and Guidelines, or the recommendation of the Agent, where
        applicable, it shall follow the procedures for such voting as
        established by a Fund's Board.

        D.   Investment Professionals

             The Funds' Advisers, sub-advisers and/or portfolio managers
        (referred to herein as "Investment Professionals") may be asked to
        submit a recommendation to the Proxy Group regarding the voting of
        proxies related to the portfolio securities over which they have
        day-to-day portfolio management responsibility. The Investment
        Professionals may accompany their recommendation with any other research
        materials that they deem appropriate.

III.    VOTING PROCEDURES

          A. In all cases, the Adviser shall follow the voting procedures as set
             forth in the Procedures and Guidelines of the Fund on whose behalf
             the Adviser is exercising delegated authority to vote.

          B. Routine Matters

             The Agent shall be instructed to submit a vote in accordance with
        the Guidelines where such Guidelines provide a clear "For", "Against" or
        "Abstain" on a proposal. However, the Agent shall be directed to refer
        proxy proposals to the Proxy Coordinator for instructions as if it were
        a matter requiring case-by-case consideration under circumstances where
        the application of the Guidelines is unclear.

          C. Matters Requiring Case-by-Case Consideration

        The Agent shall be directed to refer proxy proposals accompanied by its
        written analysis and voting recommendation to the Proxy Coordinator
        where the Guidelines have noted a "case-by-case" consideration.

        Upon receipt of a referral from the Agent, the Proxy Coordinator may
        solicit additional research from the Agent, Investment Professional(s),
        as well as from any other source or service.

        The Proxy Coordinator will forward the Agent's analysis and
        recommendation and/or any research obtained from the Investment
        Professional(s), the Agent or any other source to the Proxy Group. The
        Proxy Group may consult with the Agent and/or Investment
        Professional(s), as it deems necessary.

                                       47
<Page>

        1.   Votes in Accordance with Agent Recommendation

             In the event the Proxy Group recommends a vote in accordance with
             the Agent's recommendation, the Proxy Group will instruct the
             Agent, through the Proxy Coordinator, to vote in accordance with
             the Agent's recommendation.

        2.   Non-Votes

             The Proxy Group may recommend that a Fund refrain from voting under
             the following circumstances: (1) if the economic effect on
             shareholders' interests or the value of the portfolio holding is
             indeterminable or insignificant or (2) if the cost of voting a
             proxy outweighs the benefits, E.G., certain international proxies.
             In such instances, the Proxy Group may instruct the Agent, through
             the Proxy Coordinator, not to vote such proxy.

        3.   Votes Contrary to Procedures and Guidelines, or Agent
             Recommendation, where applicable, or Where No Recommendation is
             Provided by Agent.

             If the Proxy Group recommends that a Fund vote contrary to the
             Procedures and Guidelines, or the recommendation of the Agent,
             where applicable, or if the Agent has made no recommendation and
             the Procedures and Guidelines are silent, the Proxy Coordinator
             will then implement the procedures for handling such votes as
             adopted by the Fund's Board.

        4.   The Proxy Coordinator will maintain a record of all proxy questions
             that have been referred to a Fund's Valuation and Proxy Voting
             Committee, all applicable recommendations, analysis, research and
             Conflicts Reports.

IV.     CONFLICTS OF INTEREST

In connection with their participation in the voting process for portfolio
securities, each member of the Proxy Group and each Investment Professional
participating in the voting process must act solely in the best interests of the
beneficial owners of the applicable Fund. The members of the Proxy Group may not
subordinate the interests of the Fund's beneficial owners to unrelated
objectives.

For all matters for which the Proxy Group recommends a vote contrary to
Procedures and Guidelines, or the recommendation of the Agent, where applicable,
or where the Agent has made no recommendation and the Procedures and Guidelines
are silent, the Proxy Coordinator will implement the procedures for handling
such votes as adopted by the Fund's Board, including completion of such
Conflicts Reports as may be required under the Fund's procedures. Completed
Conflicts Reports shall be provided to the Proxy Coordinator within two (2)
business days. Such Conflicts Report should describe any known conflicts of
either a business or personal nature, and set forth any contacts with respect to
the referral item with non-investment personnel in its organization or with
outside parties (except for routine communications from proxy solicitors). The
Conflicts Report should also include written confirmation that any
recommendation from an Investment Professional provided under circumstances
where a conflict of interest exists was made solely on the investment merits and
without regard to any other consideration.

The Proxy Coordinator shall forward all Conflicts Reports to a member of the
mutual funds practice group of ING US Legal Services ("Counsel") for review.
Counsel shall review each report and provide the Proxy Coordinator with a brief
statement regarding whether or not a material conflict of interest is

                                       48
<Page>

present. Matters as to which a conflict of interest is deemed to be present
shall be handled as provided in the Fund's Procedures and Guidelines.

V.      REPORTING AND RECORD RETENTION

The Adviser shall maintain the records required by Rule 204-2(c)(2), as may be
amended from time to time, including the following: (1) A copy of each proxy
statement received regarding a Fund's portfolio securities. Such proxy
statements received from issuers are available either in the SEC's EDGAR
database or are kept by the Agent and are available upon request. (2) A record
of each vote cast on behalf of a Fund. (3) A copy of any document created by the
Adviser that was material to making a decision how to vote a proxy, or that
memorializes the basis for that decision. (4) A copy of written requests for
Fund proxy voting information and any written response thereto or to any oral
request for information on how the Adviser voted proxies on behalf of a Fund.
All proxy voting materials and supporting documentation will be retained for a
minimum of six (6) years.

                                       49
<Page>

                                   APPENDIX 1
                                     TO THE
                        ADVISERS' PROXY VOTING PROCEDURES

Proxy Group for registered investment company clients of ING Investments, LLC,
Directed Services, Inc. and ING Life Insurance and Annuity Company:


<Table>
<Caption>
           NAME                                        TITLE OR AFFILIATION
<S>                             <C>
Stanley D. Vyner                Chief Investment Risk Officer and Executive Vice President of ING
                                Investments, LLC

Karla J. Bos                    Acting Proxy Coordinator

Maria Anderson                  Assistant Vice President - Manager Fund Compliance of ING Funds Services,
                                LLC

Michael J. Roland               Executive Vice President and Chief Financial Officer of ING Investments, LLC

Todd Modic                      Vice President of Financial Reporting- Fund Accounting of ING Fund
                                Services, LLC

Theresa K. Kelety, Esq.         Counsel, ING Americas US Legal Services
</Table>




Effective as of April 21, 2004


                                       50
<Page>

                                FORM OF EXHIBIT 3
                                     TO THE
                        ING FUNDS PROXY VOTING PROCEDURES


                    PROXY VOTING GUIDELINES OF THE ING FUNDS
                          Effective as of July 10, 2003
                As amended August 21, 2003 and November 11, 2003


I.   INTRODUCTION

The following is a statement of the proxy voting Guidelines that have been
adopted by the respective Boards of Directors or Trustees of each Fund.

Proxies must be voted in the best interest of the Fund. The Guidelines summarize
the Funds' positions on various issues of concern to investors, and give a
general indication of how Fund portfolio securities will be voted on proposals
dealing with particular issues. The Guidelines are not exhaustive and do not
include all potential voting issues.

The Advisers, in exercising their delegated authority, will abide by the
Guidelines as outlined below with regard to the voting of proxies except as
otherwise provided in the Procedures. In voting proxies, the Advisers are guided
by general fiduciary principles. Each must act prudently, solely in the interest
of the beneficial owners of the Funds it manages. The Advisers will not
subordinate the interest of beneficial owners to unrelated objectives. Each
Adviser will vote proxies in the manner that it believes will do the most to
maximize shareholder value.

     a.   GUIDELINES

          The following Guidelines are grouped according to the types of
          proposals generally presented to shareholders of U.S. issuers: Board
          of Directors, Proxy Contests, Auditors, Proxy Contest Defenses, Tender
          Offer Defenses, Miscellaneous Governance Provisions, Capital
          Structure, Executive and Director Compensation, State of
          Incorporation, Mergers and Corporate Restructurings, Mutual Fund
          Proxies and Social and Environmental Issues. An additional section
          addresses proposals most frequently found in Global Proxies.

          In all cases where "case-by-case" consideration is noted, it shall be
          the policy of the Funds to vote in accordance with the recommendation
          provided by the Funds' Agent, Institutional Shareholder Services, Inc.
          Such policy may be overridden in any case pursuant to the procedures
          outlined herein.

THE BOARD OF DIRECTORS
Voting on Director Nominees in Uncontested Elections. Votes on director nominees
should be made on a CASE-BY-CASE basis.

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<Page>

SEPARATING CHAIRMAN AND CEO
Vote on a CASE-BY-CASE basis shareholder proposals requiring that the positions
of chairman and CEO be held separately.

PROPOSALS SEEKING A MAJORITY OF INDEPENDENT DIRECTORS

Evaluate on a CASE-BY-CASE basis shareholder proposals asking that a majority of
directors be independent. Vote FOR shareholder proposals asking that board
audit, compensation, and/or nominating committees be composed exclusively of
independent directors.

STOCK OWNERSHIP REQUIREMENTS

Generally, vote AGAINST shareholder proposals requiring directors to own a
minimum amount of company stock in order to qualify as a director or to remain
on the board.

TERM OF OFFICE

Generally, vote AGAINST shareholder proposals to limit the tenure of outside
directors.

AGE LIMITS

Generally, vote AGAINST shareholder proposals to impose a mandatory retirement
age for outside directors.

DIRECTOR AND OFFICER INDEMNIFICATION AND LIABILITY PROTECTION

Proposals on director and officer indemnification and liability protection
should be evaluated on a CASE-BY-CASE basis, using Delaware law as the standard.
Vote AGAINST proposals to limit or eliminate entirely directors' and officers'
liability for monetary damages for violating the duty of care. Vote AGAINST
indemnification proposals that would expand coverage beyond just legal expenses
to acts, such as negligence, that are more serious violations of fiduciary
obligation than mere carelessness. Vote FOR only those proposals providing such
expanded coverage in cases when a director's or officer's legal defense was
unsuccessful if:

     (1)  The director was found to have acted in good faith and in a manner
          that he reasonably believed was in the best interests of the company,
          and
     (2)  Only if the director's legal expenses would be covered.

PROXY CONTESTS
Voting for Director Nominees in Contested Elections. Votes in a contested
election of directors must be evaluated on a CASE-BY-CASE basis.

REIMBURSE PROXY SOLICITATION EXPENSES
Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis.

AUDITORS
RATIFYING AUDITORS
Generally, vote FOR proposals to ratify auditors.

                                       52
<Page>

Non-Audit Services

Consider on a CASE-BY-CASE basis proposals to approve auditors when total
non-audit fees exceed the total of audit fees, audit-related fees and
permissible tax fees.

AUDITOR INDEPENDENCE
Generally, vote AGAINST shareholder proposals asking companies to prohibit their
auditors from engaging in non-audit services (or capping the level of non-audit
services).

AUDIT FIRM ROTATION (SHAREHOLDER PROPOSALS):
Generally, vote AGAINST shareholder proposals asking for mandatory audit firm
rotation.

PROXY CONTEST DEFENSES
Board Structure: Staggered vs. Annual Elections

Generally, vote AGAINST proposals to classify the board.
Generally, vote FOR proposals to repeal classified boards and to elect all
directors annually.

SHAREHOLDER ABILITY TO REMOVE DIRECTORS

Generally, vote AGAINST proposals that provide that directors may be removed
only for cause.
Generally, vote FOR proposals to restore shareholder ability to remove directors
with or without cause.
Generally, vote AGAINST proposals that provide that only continuing directors
may elect replacements to fill board vacancies.
Generally, vote FOR proposals that permit shareholders to elect directors to
fill board vacancies.

CUMULATIVE VOTING

Generally, vote AGAINST proposals to eliminate cumulative voting.
Vote proposals to restore or permit cumulative voting on a CASE-BY-CASE basis
relative to the company's other governance provisions.

SHAREHOLDER ABILITY TO CALL SPECIAL MEETINGS

Generally, vote AGAINST proposals to restrict or prohibit shareholder ability to
call special meetings.
Generally, vote FOR proposals that remove restrictions on the right of
shareholders to act independently of management.

SHAREHOLDER ABILITY TO ACT BY WRITTEN CONSENT
Generally, vote AGAINST proposals to restrict or prohibit shareholder ability to
take action by written consent.
Generally, vote FOR proposals to allow or make easier shareholder action by
written consent.

SHAREHOLDER ABILITY TO ALTER THE SIZE OF THE BOARD

Review on a CASE-BY-CASE basis proposals that seek to fix the size of the board.
Review on a CASE-BY-CASE basis proposals that give management the ability to
alter the size of the board without shareholder approval.

                                       53
<Page>

TENDER OFFER DEFENSES
Poison Pills

Generally, vote FOR shareholder proposals that ask a company to submit its
poison pill for shareholder ratification.
Review on a CASE-BY-CASE basis shareholder proposals to redeem a company's
poison pill.
Review on a CASE-BY-CASE basis management proposals to ratify a poison pill.

FAIR PRICE PROVISIONS
Vote proposals to adopt fair price provisions on a CASE-BY-CASE basis.
Generally, vote AGAINST fair price provisions with shareholder vote requirements
greater than a majority of disinterested shares.

GREENMAIL

Generally, vote FOR proposals to adopt antigreenmail charter of bylaw amendments
or otherwise restrict a company's ability to make greenmail payments.
Review on a CASE-BY-CASE basis antigreenmail proposals when they are bundled
with other charter or bylaw amendments.

PALE GREENMAIL

Review on a CASE-BY-CASE basis restructuring plans that involve the payment of
pale greenmail.

UNEQUAL VOTING RIGHTS

Generally, vote AGAINST dual-class exchange offers.
Generally, vote AGAINST dual-class recapitalizations.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO AMEND THE CHARTER OR BYLAWS

Generally, vote AGAINST management proposals to require a supermajority
shareholder vote to approve charter and bylaw amendments.
Generally, vote FOR shareholder proposals to lower supermajority shareholder
vote requirements for charter and bylaw amendments.

SUPERMAJORITY SHAREHOLDER VOTE REQUIREMENT TO APPROVE MERGERS
Generally, vote AGAINST management proposals to require a supermajority
shareholder vote to approve mergers and other significant business combinations.
Generally, vote FOR shareholder proposals to lower supermajority shareholder
vote requirements for mergers and other significant business combinations.

WHITE SQUIRE PLACEMENTS

Generally, vote FOR shareholder proposals to require approval of blank check
preferred stock issues for other than general corporate purposes.

                                       54
<Page>

MISCELLANEOUS GOVERNANCE PROVISIONS
CONFIDENTIAL VOTING
Generally, vote FOR shareholder proposals that request companies to adopt
confidential voting, use independent tabulators, and use independent inspectors
of election as long as the proposals include clauses for proxy contests as
follows:
     -    In the case of a contested election, management should be permitted to
          request that the dissident group honor its confidential voting policy.
     -    If the dissidents agree, the policy remains in place.
     -    If the dissidents do not agree, the confidential voting policy is
          waived.
          Generally, vote FOR management proposals to adopt confidential voting.

EQUAL ACCESS

Generally, vote FOR shareholder proposals that would allow significant company
shareholders (defined as those holding more than $5 million in securities of the
company in question) equal access to management's proxy material in order to
evaluate and propose voting recommendations on proxy proposals and director
nominees, and in order to nominate their own candidates to the board.

BUNDLED PROPOSALS

Review on a CASE-BY-CASE basis bundled or "conditioned" proxy proposals.

SHAREHOLDER ADVISORY COMMITTEES

Review on a CASE-BY-CASE basis proposals to establish a shareholder advisory
committee.

CAPITAL STRUCTURE
Common Stock Authorization

Review proposals to increase the number of shares of common stock authorized for
issue on a CASE-BY-CASE basis.
Generally, vote AGAINST proposals to increase the number of authorized shares of
the class of stock that has superior voting rights in companies that have
dual-class capitalization structures.

STOCK DISTRIBUTIONS: SPLITS AND DIVIDENDS

Generally, vote FOR management proposals to increase common share authorization
for a stock split, provided that the increase in authorized shares would not
result in an excessive number of shares available for issuance given a company's
industry and performance in terms of shareholder returns.

REVERSE STOCK SPLITS

Consider on a CASE-BY-CASE basis management proposals to implement a reverse
stock split.

PREFERRED STOCK
Generally, vote AGAINST proposals authorizing the creation of new classes of
preferred stock with unspecified voting, conversion, dividend distribution, and
other rights ("blank check" preferred stock). Generally, vote FOR proposals to
create blank check preferred stock in cases when the company expressly states
that the stock will not be used as a takeover defense.

                                       55
<Page>

Generally, vote FOR proposals to authorize preferred stock in cases where the
company specifies the voting, dividend, conversion, and other rights of such
stock and the terms of the preferred stock appear reasonable.
Vote CASE-BY-CASE on proposals to increase the number of blank check preferred
shares after analyzing the number of preferred shares available for issue given
a company's industry and performance in terms of shareholder returns.

SHAREHOLDER PROPOSALS REGARDING BLANK CHECK PREFERRED STOCK

Generally, vote FOR shareholder proposals to have blank check preferred stock
placements, other than those shares issued for the purpose of raising capital or
making acquisitions in the normal course of business, submitted for shareholder
ratification.

ADJUSTMENTS TO PAR VALUE OF COMMON STOCK

Generally, vote FOR management proposals to reduce the par value of common
stock.

PREEMPTIVE RIGHTS

Review on a CASE-BY-CASE basis shareholder proposals that seek preemptive
rights. In evaluating proposals on preemptive rights, consider the size of a
company and the characteristics of its shareholder base.

DEBT RESTRUCTURINGS

Review on a CASE-BY-CASE basis proposals to increase common and/or preferred
shares and to issue shares as part of a debt restructuring plan.

SHARE REPURCHASE PROGRAMS
Generally, vote FOR management proposals to institute open-market share
repurchase plans in which all shareholders may participate on equal terms.

TRACKING STOCK

Votes on the creation of tracking stock are determined on a CASE-BY-CASE basis.

EXECUTIVE AND DIRECTOR COMPENSATION
Votes with respect to compensation plans should be determined on a CASE-BY-CASE
basis.

MANAGEMENT PROPOSALS SEEKING APPROVAL TO REPRICE OPTIONS

Generally, vote AGAINST management proposals seeking approval to reprice
options.

DIRECTOR COMPENSATION
Votes on stock-based plans for directors are made on a CASE-BY-CASE basis.

EMPLOYEE STOCK PURCHASE PLANS

Votes on employee stock purchase plans should be made on a CASE-BY-CASE basis.

                                       56
<Page>

OBRA-RELATED COMPENSATION PROPOSALS:

     AMENDMENTS THAT PLACE A CAP ON ANNUAL GRANTS OR AMEND ADMINISTRATIVE
     FEATURES
     Generally, vote FOR plans that simply amend shareholder-approved plans to
     include administrative features or place a cap on the annual grants any one
     participant may receive to comply with the provisions of Section 162(m) of
     OBRA.

     AMENDMENTS TO ADD PERFORMANCE-BASED GOALS
     Generally, vote FOR amendments to add performance goals to existing
     compensation plans to comply with the provisions of Section 162(m) of OBRA.

     AMENDMENTS TO INCREASE SHARES AND RETAIN TAX DEDUCTIONS UNDER OBRA
     Votes on amendments to existing plans to increase shares reserved and to
     qualify the plan for favorable tax treatment under the provisions of
     Section 162(m) should be evaluated on a CASE-BY-CASE basis.

     APPROVAL OF CASH OR CASH-AND-STOCK BONUS PLANS
     Generally, vote FOR cash or cash-and-stock bonus plans to exempt the
     compensation from taxes under the provisions of Section 162(m) of OBRA.

SHAREHOLDER PROPOSALS TO LIMIT EXECUTIVE AND DIRECTOR PAY
Generally, vote FOR shareholder proposals that seek additional disclosure of
executive and director pay information.
Review on a CASE-BY-CASE basis all other shareholder proposals that seek to
limit executive and director pay.

GOLDEN AND TIN PARACHUTES
Generally, vote FOR shareholder proposals to have golden and tin parachutes
submitted for shareholder ratification.
Review on a CASE-BY-CASE basis all proposals to ratify or cancel golden or tin
parachutes.

EMPLOYEE STOCK OWNERSHIP PLANS (ESOPs)
Generally, vote FOR proposals that request shareholder approval in order to
implement an ESOP or to increase authorized shares for existing ESOPs, except in
cases when the number of shares allocated to the ESOP is "excessive" (i.e.,
generally greater than five percent of outstanding shares).

401(k) EMPLOYEE BENEFIT PLANS
Generally, vote FOR proposals to implement a 401(k) savings plan for employees.

EXPENSING OF STOCK OPTIONS
Consider shareholder proposals to expense stock options on a CASE-BY-CASE basis.

STATE OF INCORPORATION
VOTING ON STATE TAKEOVER STATUTES
Review on a CASE-BY-CASE basis proposals to opt in or out of state takeover
statutes (including control share acquisition statutes, control share cash-out
statutes, freezeout provisions, fair price provisions, stakeholder laws, poison
pill endorsements, severance pay and labor contract provisions, antigreenmail
provisions, and disgorgement provisions).

                                       57
<Page>

VOTING ON REINCORPORATION PROPOSALS
Proposals to change a company's state of incorporation should be examined on a
CASE-BY-CASE basis.

MERGERS AND CORPORATE RESTRUCTURINGS
MERGERS AND ACQUISITIONS
Votes on mergers and acquisitions should be considered on a CASE-BY-CASE basis.

CORPORATE RESTRUCTURING
Votes on corporate restructuring proposals, including minority squeezeouts,
leveraged buyouts, spinoffs, liquidations, and asset sales should be considered
on a CASE-BY-CASE basis.

SPINOFFS
Votes on spinoffs should be considered on a CASE-BY-CASE basis.

ASSET SALES
Votes on asset sales should be made on a CASE-BY-CASE basis.

LIQUIDATIONS
Votes on liquidations should be made on a CASE-BY-CASE basis.

ADJOURNMENT
Generally, vote FOR proposals to adjourn a meeting to provide additional time
for vote solicitation when the primary proposal is also voted FOR.

APPRAISAL RIGHTS
Generally, vote FOR proposals to restore, or provide shareholders with, rights
of appraisal.

CHANGING CORPORATE NAME
Generally, vote FOR changing the corporate name.

MUTUAL FUND PROXIES
ELECTION OF DIRECTORS
Vote the election of directors on a CASE-BY-CASE basis.

CONVERTING CLOSED-END FUND TO OPEN-END FUND
Vote conversion proposals on a CASE-BY-CASE basis.

PROXY CONTESTS
Vote proxy contests on a CASE-BY-CASE basis.

INVESTMENT ADVISORY AGREEMENTS
Vote the investment advisory agreements on a CASE-BY-CASE basis.

APPROVING NEW CLASSES OR SERIES OF SHARES
Generally, vote FOR the establishment of new classes or series of shares.

PREFERRED STOCK PROPOSALS
Vote the authorization for or increase in preferred shares on a CASE-BY-CASE
basis.

                                       58
<Page>

1940 ACT POLICIES
Vote these proposals on a CASE-BY-CASE basis.

CHANGING A FUNDAMENTAL RESTRICTION TO A NONFUNDAMENTAL RESTRICTION
Vote these proposals on a CASE-BY-CASE basis.

CHANGE FUNDAMENTAL INVESTMENT OBJECTIVE TO NONFUNDAMENTAL
Generally, vote AGAINST proposals to change a fund's fundamental investment
objective to nonfundamental.

NAME RULE PROPOSALS
Vote these proposals on a CASE-BY-CASE basis.

DISPOSITION OF ASSETS/TERMINATION/LIQUIDATION
Vote these proposals on a CASE-BY-CASE basis.

CHANGES TO THE CHARTER DOCUMENT
Vote changes to the charter document on a CASE-BY-CASE basis.

CHANGING THE DOMICILE OF A FUND
Vote reincorporations on a CASE-BY-CASE basis.

CHANGE IN FUND'S SUBCLASSIFICATION
Vote these proposals on a CASE-BY-CASE basis.

AUTHORIZING THE BOARD TO HIRE AND TERMINATE SUBADVISORS WITHOUT SHAREHOLDER
APPROVAL
Generally, vote FOR these proposals.

DISTRIBUTION AGREEMENTS
Vote these proposals on a CASE-BY-CASE basis.

MASTER-FEEDER STRUCTURE
Generally, vote FOR the establishment of a master-feeder structure.

CHANGES TO THE CHARTER DOCUMENT
Vote changes to the charter document on a CASE-BY-CASE basis.

MERGERS
Vote merger proposals on a CASE-BY-CASE basis.

ESTABLISH DIRECTOR OWNERSHIP REQUIREMENT
Generally, vote AGAINST shareholder proposals for the establishment of a
director ownership requirement.

REIMBURSE SHAREHOLDER FOR EXPENSES INCURRED
Voting to reimburse proxy solicitation expenses should be analyzed on a
CASE-BY-CASE basis.

TERMINATE THE INVESTMENT ADVISOR
Vote to terminate the investment advisor on a CASE-BY-CASE basis.

                                       59
<Page>

SOCIAL AND ENVIRONMENTAL ISSUES
These issues cover a wide range of topics, including consumer and public safety,
environment and energy, general corporate issues, labor standards and human
rights, military business, and workplace diversity.

In general, vote CASE-BY-CASE. While a wide variety of factors goes into each
analysis, the overall principal guiding all vote recommendations focuses on how
the proposal will enhance the economic value of the company.

GLOBAL PROXIES

While a number of the foregoing Guidelines may be applied to both U.S. and
global proxies, the following provide for the differing regulatory and legal
requirements, market practices and political and economic systems existing in
various global markets.

ROUTINE MANAGEMENT PROPOSALS

Generally, vote FOR the following and other similar routine management
proposals:
     -    the opening of the shareholder meeting
     -    that the meeting has been convened under local regulatory requirements
     -    the presence of quorum
     -    the agenda for the shareholder meeting
     -    the election of the chair of the meeting
     -    the appointment of shareholders to co-sign the minutes of the meeting
     -    regulatory filings (E.G., to effect approved share issuances)
     -    the designation of inspector or shareholder representative(s) of
          minutes of meeting
     -    the designation of two shareholders to approve and sign minutes of
          meeting
     -    the allowance of questions
     -    the publication of minutes
     -    the closing of the shareholder meeting

DISCHARGE OF MANAGEMENT/SUPERVISORY BOARD MEMBERS

Generally, vote FOR management proposals seeking the discharge of management and
supervisory board members, unless there is concern about the past actions of the
company's auditors or directors or legal action is being taken against the board
by other shareholders.

DIRECTOR REMUNERATION

Consider director compensation plans on a CASE-BY-CASE basis. Generally, vote
FOR proposals to approve the remuneration of directors as long as the amount is
not excessive and there is no evidence of abuse.

APPROVAL OF FINANCIAL STATEMENTS AND DIRECTOR AND AUDITOR REPORTS

Generally, vote FOR management proposals seeking approval of financial accounts
and reports, unless there is concern about the company's financial accounts and
reporting.

REMUNERATION OF AUDITORS

Generally, vote FOR proposals to authorize the board to determine the
remuneration of auditors, unless there is evidence of excessive compensation
relative to the size and nature of the company.

                                       60
<Page>

INDEMNIFICATION OF AUDITORS

Generally, vote AGAINST proposals to indemnify auditors.

ALLOCATION OF INCOME AND DIVIDENDS

Generally, vote FOR management proposals concerning allocation of income and the
distribution of dividends, unless the amount of the distribution is consistently
and unusually small or large.

STOCK (SCRIP) DIVIDEND ALTERNATIVES

Generally, vote FOR most stock (scrip) dividend proposals, but vote AGAINST
proposals that do not allow for a cash option unless management demonstrates
that the cash option is harmful to shareholder value.

DEBT ISSUANCE REQUESTS

When evaluating a debt issuance request, the issuing company's present financial
situation is examined. The main factor for analysis is the company's current
debt-to-equity ratio, or gearing level. A high gearing level may incline markets
and financial analysts to downgrade the company's bond rating, increasing its
investment risk factor in the process. A gearing level up to 100 percent is
considered acceptable.

Generally, vote FOR debt issuances for companies when the gearing level is
between zero and 100 percent. Review on a CASE-BY-CASE basis proposals where the
issuance of debt will result in the gearing level being greater than 100
percent, comparing any such proposed debt issuance to industry and market
standards.

FINANCING PLANS

Generally, vote FOR the adoption of financing plans if they are in the best
economic interests of shareholders.

RELATED PARTY TRANSACTIONS
Consider related party transactions on a CASE-BY-CASE basis. Generally, vote FOR
approval of such transactions unless the agreement requests a strategic move
outside the company's charter or contains unfavorable terms.

CAPITALIZATION OF RESERVES

Generally, vote FOR proposals to capitalize the company's reserves for bonus
issues of shares or to increase the par value of shares.

ARTICLE AMENDMENTS

Review on a CASE-BY-CASE basis all proposals seeking amendments to the articles
of association.

Generally, vote FOR an article amendment if:
     -    it is editorial in nature;
     -    shareholder rights are protected;

                                       61
<Page>

     -    there is negligible or positive impact on shareholder value;
     -    management provides adequate reasons for the amendments; and
     -    the company is required to do so by law (if applicable).

                                       62
<Page>

                                     PART C
                                OTHER INFORMATION
                              ING PRIME RATE TRUST

                            (5,000,000 COMMON SHARES)

ITEM 24.       FINANCIAL STATEMENTS AND EXHIBITS

      1.       Financial Statements

               Contained in Part A:

               Financial Highlights for the years ended February 29, 2004,
               February 28, 2003, 2002 and 2001; February 29, 2000.

               Financial Statements are incorporated in Part B by reference to
               Registrant's February 29, 2004 Annual Report (audited).

      2.       Exhibits

               (a)      (i)      Agreement and Declaration of Trust(1)

                        (ii)     Amendment to the Agreement and Declaration of
                                 Trust dated March 26, 1996 and effective April
                                 12, 1996(1)

                        (iii)    Amendment to the Agreement and Declaration of
                                 Trust dated October 23, 1998 and effective
                                 November 16, 1998(7)

                        (iv)     Amendment to the Agreement and Declaration of
                                 Trust dated October 20, 2000 and effective
                                 October 20, 2000(10)

                        (v)      Amendment to the Agreement and Declaration of
                                 Trust dated February 20, 2002 and effective
                                 March 1, 2002(11)

               (b)      (i)      By-Laws(2)

                        (ii)     Amendment to By-Laws(2)

                        (iii)    Amendment to By-Laws(9)

                        (iv)     Amendment to By-Laws(10)

               (c)      Not Applicable

               (d)      (i)      Certificate of Designation for Preferred
                                 Shares(10)

<Page>

                        (ii)     Form of Share Certificate

               (e)      Shareholder Investment Program is filed herewith.

               (f)      Not Applicable

               (g)      (i)      Investment Management Agreement between ING
                                 Investment Management, LLC and ING Prime Rate
                                 Trust(10)

                                 1.    Amended Schedule of Approvals with
                                       respect to the Investment Management
                                       Agreement between ING Investments, LLC
                                       and ING Prime Rate Trust is filed
                                       herewith.

                        (ii)     Sub-Advisory Agreement between ING Investments,
                                 LLC and Aeltus Investment Management, Inc.(12)

                                 1.    First Amendment, effective as of
                                       September 1, 2003 to Sub-Advisory
                                       Agreement between ING Investments, LLC
                                       and Aeltus Investment Management, Inc. is
                                       filed herewith.

               (h)      (i)      Form of Amended and Restated Distribution
                                 Agreement, dated June 15, 2004, by and between
                                 ING Prime Rate Trust and ING Funds Distributor,
                                 LLC is filed herewith.

                        (ii)     Underwriting Agreement for the Preferred
                                 Shares, dated November 13, 2000 is filed
                                 herewith.

                                 1.    Underwriting Agreement for the Preferred
                                       Shares, dated October 30, 2000 is filed
                                       herewith.

                        (iii)    Form of Dealer Agreement(8)


               (i)      Not Applicable

               (j)      (i)      Custodian and Investment Accounting Agreement
                                 between Registrant and State Street Bank and
                                 Trust Company, effective November 1, 2001 is
                                 filed herewith.

                                 1.    First Amendment to the Custodian and
                                       Investment Accounting Agreement dated
                                       March 1, 2002 is filed herewith.

                                      C - 2
<Page>

                                 2.    Amended and Restated Exhibit A with
                                       respect to the Custodian and Investment
                                       Accounting Agreement, effective November
                                       22, 2002 is filed herewith.

                        (ii)     Fee Allocation Agreement, dated August 21, 2003
                                 is filed herewith.

                                 1.    Amended Schedule A to the Fee Allocation
                                       Agreement is filed herewith.

                        (iii)    Proxy Agent Fee Allocation Agreement, dated
                                 August 21, 2003 is filed herewith.

                                 1.    Amended Schedule A to the Proxy Agent Fee
                                       Allocation Agreement is filed herewith.

                        (iv)     Allocation Agreement Fidelity Bond, made May
                                 24, 2002 is filed herewith.

                                 1.    Amended Schedule A to the Allocation
                                       Agreement is filed herewith.

                        (v)      Allocation Agreement Directors & Officers, made
                                 May 24, 2002 is filed herewith.

                                 1.    Amended Schedule A to the Allocation
                                       Agreement Directors & Officers is filed
                                       herewith.

                        (vi)     Agency Agreement, made November 30, 2000 by and
                                 between Registrant and DST Systems, Inc.

                                 1.    Amended and Restated Exhibit A with
                                       respect to the Agency Agreement between
                                       The Funds and DST Systems, Inc., dated
                                       February 25, 2004.

               (k)      (i)      Amended and Restated Administration Agreement,
                                 amended and restated on April 27, 2000 is filed
                                 herewith.

                        (ii)     Amendment to the Amended and Restated
                                 Administration Agreement(11)

                        (iii)    Revolving Credit and Security Agreement between
                                 ING Prime Rate Trust and Citibank, dated as of
                                 July 16, 2003 is filed herewith.

                                 1.    Amendment No. 1 to the Revolving Credit
                                       and Security

                                      C - 3
<Page>

                                       Agreement, dated February 3, 2004 is
                                       filed herewith.

                        (iv)     Second Amended and Restated Credit Agreement
                                 with Bank of America, dated as of September 2,
                                 1998, is filed herewith.

                        (v)      Auction Agency Agreement, dated as of November
                                 16, 2000, between Registrant and Bankers Trust
                                 Co. is filed herewith.

                                 1.    Auction Agency Agreement, dated as of
                                       November 2, 2000, between Registrant and
                                       Bankers Trust Co is filed herewith.

                        (vi)     Broker-Dealer Agreement, dated as of November
                                 16, 2000 (UBS) is filed herewith.

                                 1.    Broker-Dealer Agreement, dated as of
                                       November 16, 2000 Salomon Smith Barney)
                                       is filed herewith.
                                 2.    Broker-Dealer Agreement, dated as of
                                       November 16, 2000 (Lehman Brothers) is
                                       filed herewith.
                                 3.    Broker-Dealer Agreement, dated as of
                                       November 16, 2000 (Gruntal & Co.) is
                                       filed herewith.
                                 4.    Broker-Dealer Agreement, dated as of
                                       November 2, 2000 (PaineWebber) is filed
                                       herewith.
                                 5.    Broker-Dealer Agreement, dated as of
                                       November 2, 2000 (Gruntal & Co.) is filed
                                       herewith.
                                 6.    Broker-Dealer Agreement, dated as of
                                       November 2, 2000 Salomon Smith Barney) is
                                       filed herewith.
                                 7.    Broker-Dealer Agreement, dated as of
                                       October 31, 2000 (Lehman Brothers) is
                                       filed herewith.

                        (vii)    DTC Letter of Representations as to Preferred
                                 Shares, dated November 15, 2000 is filed
                                 herewith.

                                 1.    DTC Letter of Representation as to
                                       Preferred Shares, dated November 1, 2000
                                       is filed herewith.


               (l)      Opinion of Dechert Price & Rhoads(7)

               (m)      Not Applicable

               (n)      (i)  Consent of Dechert LLP is filed herewith.

                        (ii) Consent of KPMG LLP is filed herewith.

               (o)      Not Applicable

                                      C - 4
<Page>

               (p)      Certificate of Initial Capital(4)

               (q)      Not Applicable

               (r)      (i)  ING Funds Code of Ethics, effective June 1, 2004 is
                             filed herewith.

                        (ii) Aeltus Investment Management, Inc. Code of Ethics.
                             (12)

- ----------
(1)  Incorporated herein by reference to Amendment No. 20 to Registrant's
     Registration Statement under the Investment Company Act of 1940 (the "1940
     Act") on Form N-2 (File No. 811-5410), filed on September 16, 1996.

(2)  Incorporated herein by reference to Amendment No. 24 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on November 7, 1997.

(3)  Incorporated herein by reference to Amendment No. 22 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on June 23, 1997.

(4)  Incorporated herein by reference to Pre-Effective Amendment No. 1 to
     Registrant's initial registration statement on form N-2 (File No.
     33-18886), filed on January 22, 1988.

(5)  Incorporated herein by reference to Amendment No. 27 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on May 15, 1998.

(6)  Incorporated herein by reference to Amendment No. 28 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on August 19, 1998.

(7)  Incorporated herein by reference to Amendment No. 29 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on December 2, 1998.

(8)  Incorporated herein by reference to Amendment No. 30 to Registrant's
     Registration Statement under the 1940 Act Form N-2 (File No. 811-5410),
     filed on March 3, 1999.

(9)  Incorporated herein by reference to Amendment No. 33 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on May 9, 2000.

(10) Incorporated herein by reference to Amendment No. 38 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on October 23, 2000.

(11) Incorporated herein by reference to Amendment No. 46 to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on April 30, 2002.

                                      C - 5
<Page>

(12) Incorporated herein by reference to Amendment No. [ ] to Registrant's
     Registration Statement under the 1940 Act on Form N-2 (File No. 811-5410),
     filed on June 26, 2003.

ITEM 25.       MARKETING AGREEMENTS

        Not Applicable.

ITEM 26.       OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION

        The following table sets forth expenses incurred or estimated to be
incurred in connection with the offering described in the Registration
Statement.

<Table>
 <S>                                                              <C>
 Registration Fees                                                $         0

 Trustee Fees                                                     $         0

 Rating Agency Fees                                               $         0

 Printing Expenses                                                $    32,500

 Legal Fees                                                       $    30,000

 Accounting Fees and Expenses                                     $     5,500

 Miscellaneous Expenses                                           $         0

      Total                                                       $    68,000
</Table>

ITEM 27.       PERSONS CONTROLLED BY OR UNDER COMMON CONTROL

        Not Applicable.

ITEM 28.       NUMBER OF HOLDERS OF SECURITIES

<Table>
<Caption>
        (1)    TITLE OF CLASS                               (2) NUMBER OF RECORD HOLDERS
               --------------                                   ------------------------
        <S>                                                 <C>
        Common Shares of beneficial interest,               7,424 as of June 18, 2004
        par value $0.01 per share.

        Auction Rate Cumulative Preferred
        Shares of beneficial interest, par
        value $0.01 per share:
                              Series M                      3,600 as of June 18, 2004
                              Series T                      3,600 as of June 18, 2004
                              Series W                      3,600 as of June 18, 2004
                              Series Th                     3,600 as of June 18, 2004
                              Series F                      3,600 as of June 18, 2004
</Table>

                                      C - 6
<Page>

ITEM 29.       INDEMNIFICATION

        Registrant's Agreement and Declaration of Trust generally provides that
the Trust shall indemnify each of its Trustees and officers (including persons
who serve at the Trust's request as directors, officers or trustees of another
organization in which the Trust has any interest as a shareholder, creditor or
otherwise) ("Covered Persons") against all liabilities and expenses, including
amounts paid in satisfaction of judgments, in compromise or as fines and
penalties, and counsel fees reasonably incurred in connection with the defense
or disposition of any action, suit or other proceeding, whether civil or
criminal, by reason of being or having been such a Covered Person except with
respect to any matter as to which such Covered Person shall have been finally
adjudicated (a) not to have acted in good faith in the reasonable belief that
such Covered Person's action was in the best interest of the Trust or (b) to be
liable to the Trust or its shareholders by reason of willful misfeasance, bad
faith, gross negligence or reckless disregard of duties involved in the conduct
of such Covered Person's office.

        Insofar as indemnification for liabilities arising under the Securities
Act may be permitted to Trustees, officers and controlling persons of the
Registrant pursuant to the foregoing provisions, or otherwise, the Registrant
has been advised that in the opinion of the Commission, such indemnification is
against public policy as expressed in the Securities Act and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment of the Registrant of expenses incurred or
paid by a Trustee, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
Trustee, officer or controlling person in connection with the securities being
registered, the Registrant will submit, unless in the opinion of its counsel the
matter has been settled by controlling precedent, to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act and will be governed by the final
adjudication of such issue.

ITEM 30.       BUSINESS AND OTHER CONNECTIONS OF INVESTMENT ADVISER

        Information as to the Trustees and officers of the Adviser, together
with information as to any other business, profession, vocation or employment of
a substantial nature engaged in by the directors and officers of the Adviser in
the last two years, is included in its application for registration as an
investment adviser on Form ADV (File No. 801-48282) filed under the Investment
Advisers Act of 1940, as amended ("Advisers Act"), and is incorporated herein by
reference thereto.

        Information as to the directors and officers of the sub-adviser,
together with information as to any other business, profession, vocation or
employment of a substantial nature engaged in by the directors and officers
of the sub-adviser in the last two years, is included in its application for
registration as an investment adviser on Form ADV for ING Investment
Management Co. (File No. 801-9046) filed under the Investment Advisers Act of
1940, as amended, and is incorporated by reference thereto.

ITEM 31.       LOCATION OF ACCOUNTS AND RECORDS

        The amounts and records of the Registrant will be maintained at its
office at 7337 E. Doubletree Ranch Road, Scottsdale, Arizona 85258, at the
office of its sub-adviser, ING Investment Management Co., 10 State House
Square, Hartford, Connecticut 06103-3602 and at the office of its custodian,
State Street Bank & Trust - Kansas City, 801 Pennsylvania, Kansas City,
Missouri 64105.

                                      C - 7
<Page>

ITEM 32.       MANAGEMENT SERVICES

        Not Applicable.

ITEM 33.       UNDERTAKINGS

        1.     The Registrant undertakes to suspend the Offer until the
prospectus is amended if (1) subsequent to the effective date of this
registration statement, the net asset value declines more than ten percent from
its net asset value as of the effective date of this registration statement or
(2) the net asset value increases to an amount greater than the net proceeds as
stated in the prospectus included in this registration statement.

        2.     Not Applicable.

        3.     Not Applicable.

        4.     Not Applicable.

        5.     a.    The Registrant undertakes that for the purpose of
        determining any liability under the 1933 Act, the information omitted
        from the form of prospectus filed as part of this Registration Statement
        in reliance upon Rule 430A and contained in a form of prospectus filed
        by the Registrant under Rule 497(h) under the 1933 Act [17 CFR
        230.497(h)] shall be deemed to be part of this Registration Statement as
        of the time it was declared effective; and

               b.    that for the purpose of determining any liability under the
        1933 Act, each post-effective amendment that contains a form of
        prospectus shall be deemed to be a new registration statement relating
        to the securities offered therein, and the offering of the securities at
        that time shall be deemed to be the initial bona fide offering thereof.

        6.     The Registrant undertakes to send by first class mail or other
means designed to ensure equally prompt delivery, within two business days of
receipt of a written or oral request, any Statement of Additional Information.

                                      C - 8
<Page>

                                   SIGNATURES

        Pursuant to the requirements of the Securities Act of 1933, as amended
(the "1933 Act"), and the Investment Company Act of 1940, as amended, the
Registrant has duly caused this Registration Statement to be signed on its
behalf by the undersigned, thereto duly authorized, in the City of Scottsdale in
the State of Arizona this 28th day of June, 2004.

                                  ING PRIME RATE TRUST

                                  By:  /s/ Michael J. Roland
                                       ---------------------
                                       Michael J. Roland
                                       Executive Vice President, Chief Financial
                                       Officer and Assistant Secretary

Pursuant to the requirements of the Securities Act of 1933, this Registration
Statement has been signed below by the following persons in the capacities and
on the date indicated:

<Table>
<Caption>
              SIGNATURE                    TITLE                                      DATE
              ---------                    -----                                      ----
         <S>                               <C>                                    <C>
                                           Trustee and Chairman                   June 28, 2004
- --------------------------------------
            John G. Turner*


                                           President and Chief                    June 28, 2004
                                           Executive Officer
- --------------------------------------
          James M. Hennessy*

                                           Executive Vice President,
                                           Chief Financial Officer
                                           and Assistant Secretary
         /s/ Michael J. Roland                                                    June 28, 2004
- --------------------------------------
           Michael J. Roland


                                           Trustee                                June 28, 2004
- --------------------------------------
           Paul S. Doherty*


                                           Trustee                                June 28, 2004
- --------------------------------------
          J. Michael Earley*


                                           Trustee                                June 28, 2004
- --------------------------------------
        R. Barbara Gitenstein*
</Table>

<Page>

<Table>
         <S>                               <C>                                    <C>
                                           Trustee                                June 28, 2004
- --------------------------------------
          Walter H. May, Jr.*


                                           Trustee                                June 28, 2004
- --------------------------------------
         Thomas J. McInerney*


                                           Trustee                                June 28, 2004
- --------------------------------------
             Jock Patton*


                                           Trustee                                June 28, 2004
- --------------------------------------
          David W.C. Putnam*


                                           Trustee                                June 28, 2004
- --------------------------------------
           Blaine E. Rieke*


                                           Trustee                                June 28, 2004
- --------------------------------------
           Roger B. Vincent*


                                           Trustee                                June 28, 2004
- --------------------------------------
         Richard A. Wedemeyer*
</Table>

*By: /s/ Michael J. Roland
     ---------------------
     Michael J. Roland
     Attorney-in-Fact**

- ----------
** Powers of Attorney for each Trustee and James M. Hennessy were previously
filed as attachments to Amendment No. 56 to the Registrant's Registration
Statement under the 1940 Act on Form N-2 (File No. 811-05410) on April 30, 2004,
and incorporated herein by reference.

<Page>

                                  EXHIBIT INDEX

                              ING PRIME RATE TRUST
                            (5,000,000 COMMON SHARES)

<Table>
<Caption>
EXHIBIT
NUMBER      EXHIBIT NAME
- -------     ------------
<S>         <C>
(e)         Shareholder Reinvestment Program.

(g)(i)(1)   Amended Schedule of Approvals with respect to the Investment
            Management Agreement between ING Investments, LLC and ING Prime Rate
            Trust.

(g)(ii)(1)  First Amendment, effective as of September 1, 2003, to Sub-Advisory
            Agreement between ING Investments, LLC and Aeltus Investment
            Management, Inc. with regards to ING Prime Rate Trust.

(h)(i)      Form of Amended and Restated Distribution Agreement between ING
            Prime Rate Trust (formerly Pilgrim Prime Rate Trust) and ING
            Funds Distributor, Inc. (formerly Pilgrim Securities, Inc.)
            dated June 15, 2004.

(h)(ii)     Underwriting Agreement for the Preferred Shares, dated November 13,
            2000.

(h)(ii)(1)  Underwriting Agreement for the Preferred Shares, dated October 30,
            2000.

(j)(i)      Custodian and Investment Accounting Agreement between Registrant and
            State Street Bank and Trust Company, effective November 1, 2001.

(j)(i)(1)   First Amendment to the Custodian and Investment Accounting Agreement
            dated March 1, 2002.

(j)(i)(2)   Amended and Restated Exhibit A with respect to the Custodian and
            Investment Accounting Agreement, effective November 22, 2002.

(j)(ii)     Fee Allocation Agreement, dated August 21, 2003.

(j)(ii)(1)  Amended Schedule A to the Fee Allocation Agreement.

(j)(iii)    Proxy Agent Fee Allocation Agreement, dated August 21, 2003.

(j)(iii)(1) Amended Schedule A to the Proxy Agent Fee Allocation Agreement.

(j)(iv)     Allocation Agreement Fidelity Bond, made May 24, 2002.

(j)(iv)(1)  Amended Schedule A to the Allocation Agreement.

(j)(v)      Allocation Agreement Directors & Officers, made May 24, 2002.

(j)(v)(1)   Amended Schedule A to the Allocation Agreement Directors & Officers.

(j)(vi)     Agency Agreement, made November 30, 2000 by and between Registrant
            and DST Systems, Inc.

(j)(vi)(1)  Amended and Restated Exhibit A with respect to the Agency Agreement
            between The Funds and DST Systems, Inc., dated February 25, 2004.

(k)(i)      Amended and Restated Administration Agreement, amended and restated
            on April 27, 2000.

(k)(iii)    Revolving Credit and Security Agreement between ING Prime Rate Trust
            and Citibank, dated as of July 16, 2003.

(k)(iii)(1) Amendment No. 1 to the Revolving Credit and Security Agreement,
            dated February 3, 2004.

(k)(iv)     Second Amended and Restated Credit Agreement with Bank of America,
            dated as of September 2, 1998.
</Table>

<Page>

<Table>
<S>         <C>
(k)(v)      Auction Agency Agreement, dated as of November 16, 2000, by and
            between Registrant and Bankers Trust Co.

(k)(v)(1)   Auction Agency Agreement, dated as of November 2, 2000, by and
            between Registrant and Bankers Trust Co.

(k)(vi)     Broker-Dealer Agreement, dated as of November 16, 2000 (UBS).

(k)(vi)(1)  Broker-Dealer Agreement, dated as of November 16, 2000 (Salomon
            Smith Barney).

(k)(vi)(2)  Broker-Dealer Agreement, dated as of November 16, 2000 (Lehman
            Brothers).

(k)(vi)(3)  Broker-Dealer Agreement, dated as of November 16, 2000 (Gruntal &
            Co.).

(k)(vi)(4)  Broker-Dealer Agreement, dated as of November 2, 2000 (PaineWebber).

(k)(vi)(5)  Broker-Dealer Agreement, dated as of November 2, 2000 (Gruntal &
            Co.).

(k)(vi)(6)  Broker-Dealer Agreement, dated as of November 2, 2000 (Salomon Smith
            Barney).

(k)(vi)(7)  Broker-Dealer Agreement, dated as of October 31, 2000 (Lehman
            Brothers).

(k)(vii)    DTC Letter of Representations as to Preferred Shares, dated November
            15, 2000.

(k)(vii)(1) DTC Letter of Representation as to Preferred Shares, dated November
            1, 2000.

(n)(i)      Consent of Dechert LLP.

(n)(ii)     Consent of KPMG LLP.

(r)(i)      ING Funds Code of Ethics, effective June 1, 2004.
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(E)
<SEQUENCE>2
<FILENAME>a2138029zex-99_e.txt
<DESCRIPTION>EX-99.(E)
<TEXT>
<Page>

                                                                  Exhibit 99.(E)

                              ING PRIME RATE TRUST
                        SHAREHOLDER REINVESTMENT PROGRAM

PURPOSE

     The purpose of the ING Prime Rate Trust Shareholder Reinvestment Program
(the "Program") is to provide shareholders of ING Prime Rate Trust (the "Trust")
with a convenient and economical way to purchase common shares of the Trust
("Shares") and to reinvest their cash dividends from the Trust in additional
Shares.

ADMINISTRATION

     The Program is administered by DST Systems, Inc. (the "Administrator"),
which also serves as the Trust's transfer agent and dividend disbursing agent.
As Administrator, DST Systems, Inc. acts as agent for Program participants,
purchases and holds Shares acquired under the Program, keeps records, sends
confirmations of account activity to participants, and performs other duties
related to the Program as provided herein.

IMPORTANT CONTACTS

     ADMINISTRATOR:                       TRUST:
     DST Systems, Inc.                    Shareholder Services Department
     Post Office Box 219368               Telephone: (800) 992-0180
     Kansas City, MO 64141
     Telephone: (800) XXXXXXX

DEFINITIONS

     In addition to terms otherwise defined herein, the following terms, when
written with capitalized initial letters, will have the following meanings when
used in this Program.

     "ADMINISTRATOR" means the entity that administers the Program, currently
     DST Systems, Inc.

     "BENEFICIAL OWNER" means a shareholder that beneficially owns Shares that
     are registered in a name other than such shareholder's name (for example,
     where Shares are held in the name of a broker, bank or other nominee).

     "BROKER AND NOMINEE FORM DUE DATE" means the date upon which a Broker and
     Nominee Form is due for a Beneficial Owner making an optional cash
     investment to participate in the next OCI Investment Date. The Broker and
     Nominee Form Due Date is two business days preceding the relevant OCI
     Pricing Period.

                                        1
<Page>

     "DIVIDEND" means dividends and capital gain distributions, if any.

     "DIVIDEND RECORD DATE" means a date established by the Trust upon which the
     Shareholders of Record on that day will be entitled to receive the next
     Dividend.

     "DIVIDEND REINVESTMENT DATE" means the date upon which Dividends paid to
     participants in the Program are invested in additional Shares. Dividend
     Reinvestment Dates will be set by the Trust in advance. Participants can
     obtain a schedule of upcoming Dividend Reinvestment Dates by calling the
     Trust.

     "DRIP" means Dividend Reinvestment.

     "DRIP PRICING PERIOD" means the period encompassing the Valuation Date and
     the prior trading day.

     "MARKET PRICE" means the volume-weighted average sales price, per Share, as
     reported on the New York Stock Exchange Composite Transaction Tape as shown
     for any day on Bloomberg screen AQR.

     "OCI" means optional cash investment.

     "OCI INVESTMENT DATE" means the date upon which optional cash investments
     received on or before the relevant OCI Payment Due Date are first applied
     by the Administrator to the purchase of Shares. OCI Investment Dates will
     be set by the Trust in advance. Please refer to ATTACHMENT A for a schedule
     of upcoming OCI Investment Dates.

     "OCI PAYMENT DUE DATE" means the date upon which payment of any optional
     cash investment by a shareholder is due (by 4:00 pm Eastern time on such
     date) to be eligible for investment on the next OCI Investment Date. The
     OCI Payment Due Date is two business days preceding the relevant OCI
     Pricing Period.

     "OCI PRICING PERIOD" means a period of five business days, beginning four
     Trading Days prior to the Valuation Date through and including the
     Valuation Date.

     "OPEN MARKET" means transactions occurring on the New York Stock Exchange,
     any other exchange or over-the-counter.

     "SHAREHOLDER OF RECORD" means a shareholder that owns Shares in his or her
     own name.

     "TRADING DAY" means a day on which trades of the Shares are reported on the
     New York Stock Exchange.

     "VALUATION DATE" means the date upon which it is determined, based upon the
     Market Price and the net asset value of Shares on such date, whether the
     Administrator will

                                        2
<Page>

     purchase Shares on the Open Market or the Trust will issue the Shares for
     the Program. Please refer to ATTACHMENT A for a schedule of upcoming
     Valuation Dates.

PARTICIPATION

     Participation in the Program is open to any shareholder of the Trust. By
electing to participate in the Program, a participant appoints the Administrator
as his/her agent and directs the Trust to pay to the Administrator all of the
participant's cash Dividends, and directs the Administrator to purchase
additional Shares of the Trust with such Dividends.

SHAREHOLDERS OF RECORD

     A Shareholder of Record may participate directly in the Program by either
telephoning the Trust at (800) 992-0180 or delivering a completed Shareholder
Investment Program Participation Form to the Administrator. A Participation Form
will be furnished at any time upon request to the Trust.

BENEFICIAL OWNERS

     A Beneficial Owner may participate in the Program by either (i) becoming a
Shareholder of Record by having ten or more shares registered into such
shareholder's own name, or (ii) coordinating such Beneficial Owner's
participation with a broker, bank or other nominee who is the record holder to
participate on such shareholder's behalf.

     A Beneficial Owner must contact their broker, bank or other nominee and
complete any required documentation. The broker, bank or other nominee will
coordinate participation with its securities depository, which will provide the
Administrator with the information necessary to allow the Beneficial Owner to
participate in the Program. See the section titled "Broker and Nominee Form" for
a discussion of the requirements for optional cash investments of a Beneficial
Owner.

     Requests to participate in the Program will be processed as promptly as
practicable.

     The Program is intended for the benefit of investors in the Trust and not
for persons or entities who accumulate accounts under the Program over which
they have control for the purpose of exceeding the $100,000 per month optional
cash investment maximum or who engage in transactions that cause or are designed
to cause aberrations in the price or trading volume of the Shares.
Notwithstanding anything in the Program to the contrary, the Trust reserves the
right to exclude from participation in the Program, at any time, (i) persons or
entities who the Trust concludes are attempting to circumvent the Program's
$100,000 per month optional cash investment maximum by accumulating accounts
over which they have control, or (ii) any other persons or entities, as
determined in the sole discretion of the Trust.

REINVESTMENT OF DIVIDENDS

                                        3
<Page>

     Dividends paid to participants in the Program will be reinvested in
additional Shares on each relevant Dividend Reinvestment Date and will be
credited to shareholder accounts as of that date. For a discussion of the source
and price of shares purchased pursuant to the reinvestment of Dividends, see the
section titled "Source and Price of Shares for DRIP and OCI."

     TO BE EFFECTIVE WITH RESPECT TO A PARTICULAR DIVIDEND, THE ADMINISTRATOR
MUST RECEIVE TELEPHONE INSTRUCTIONS OR A PARTICIPATION FORM AT LEAST THREE
BUSINESS DAYS BEFORE THE DIVIDEND RECORD DATE. Dividends will continue to be
reinvested until the participant provides new telephone or written instructions
to the Administrator or the Program is terminated.

OPTIONAL CASH INVESTMENTS

     Participants may make optional cash investments in amounts not exceeding
$100,000 per month by personal check, wire investment, or an On-Demand
Electronic Deduction from your bank account. Beneficial Owners wanting to
participate in optional cash investments must instruct their broker, bank or
other nominee to complete a Broker and Nominee Form and transmit the optional
cash payment to the Administrator. See explanation of "Broker and Nominee Form"
below. Optional cash investments must be at least $100 for any single investment
and may not exceed $100,000 per month. (For the purposes of these limitations,
all Program accounts under the common control or management of a participant may
be aggregated, at the Trust's sole discretion.) There is no obligation to make
an optional cash investment at any time, and the amount of such investments may
vary from time to time. For a discussion of the source and price of shares
purchased pursuant to optional cash investments, see the section titled "Source
and Price of Shares for DRIP and OCI."

     OPTIONAL CASH INVESTMENTS NOT EXCEEDING $100,000 MUST BE RECEIVED BY THE
ADMINISTRATOR NO LATER THAN 4:00 P.M. EASTERN TIME ON THE OCI PAYMENT DUE DATE.
The Trust may delay the mailing of stock certificates purchased by check until
such check has cleared (or been paid by) the bank on which the check was
written. This process may take up to 15 days or more. All optional cash
investments are subject to collection by the Administrator for full face value
in U.S. funds.

     The Administrator will apply the optional cash investment from a
participant to the purchase of Shares for the account of the participant on the
related OCI Investment Date or Waiver Investment Date (see the sections titled
"Source and Price of Shares for DRIP and OCI").

     Upon a participant's written request received by the Administrator no later
than two business days prior to the OCI Pricing Period, an optional cash
investment not already invested under the Program will be canceled or refunded
to the participant, as appropriate. However, in such event, no refund of a check
will be made until the funds have cleared. Accordingly, such refunds may be
delayed by up to three weeks.

     NO INTEREST WILL BE PAID ON AMOUNTS HELD BY THE ADMINISTRATOR PENDING
INVESTMENT OR TO BE REFUNDED TO THE

                                        4
<Page>

PARTICIPANT.

BROKER AND NOMINEE FORM

     The Broker and Nominee Form provides the only means by which a broker, bank
or other nominee holding shares of a Beneficial Owner in the name of a major
securities depository may invest optional cash investments within the minimum
and maximum investment limitations established for the Program (see "Optional
Cash Investments" below) on behalf of such Beneficial Owner or interested
investor. A Broker and Nominee Form must be delivered to the Administrator each
time such broker, bank or other nominee transmits optional cash investments.
Broker and Nominee Forms will be furnished at any time upon request to the
Trust.

     The Broker and Nominee Form and appropriate instructions must be received
by the Administrator not later than 4:00 pm Eastern time on the Broker and
Nominee Form Due Date in order for any optional cash investment to be invested
on the OCI Investment Date.

SOURCE AND PRICE OF SHARES FOR DRIP AND OCI

SOURCE OF SHARES

     WHEN THE TRUST'S SHARES ARE TRADING AT A PREMIUM

     If the Market Price, plus the estimated fees to purchase the Shares, is
equal to or exceeds the net asset value per Share on the Valuation Date, the
Trust may issue the Shares to be acquired under the Program.

     WHEN THE TRUST'S SHARES ARE TRADING AT A DISCOUNT

     If the Market Price, plus the estimated fees to purchase the Shares, is
less than the net asset value per Share on the Valuation Date, the Administrator
will purchase Shares on the Open Market through a bank or securities broker
(including an affiliate of the Administrator) as provided herein. If the Market
Price, plus estimated fees, exceeds the net asset value before the Administrator
has completed its purchases, the Administrator will use reasonable efforts to
cease purchasing Shares, and the Trust shall issue the remaining Shares.

     The Trust may, without prior notice to participants, determine that it will
not issue new Shares for purchase pursuant to the Program, even when shares are
trading at a Premium, in which case the Administrator will purchase Shares
pursuant to the Program on the Open Market.

PRICE OF SHARES

     SHARES ISSUED BY THE TRUST

     Dividend Reinvestment:

                                        5
<Page>

     Shares issued by the Trust in connection with the reinvestment of Dividends
will be acquired under the Program on the relevant Dividend Reinvestment Date at
the greater of (i) net asset value at the close of business on the Valuation
Date, or (ii) the average of the daily Market Price of the Shares during the
DRIP Pricing Period, minus a discount of 5%.

     Optional Cash Investments:

     Shares issued by the Trust will be acquired under the Program on the
relevant OCI Investment Date at the greater of (i) net asset value at the close
of business on the Valuation Date, or (ii) the average of the daily Market Price
of the Shares during the OCI Pricing Period minus a discount, determined at the
sole discretion of the Trust, ranging from 0% to 5%.

     On the last business day of each month, the Trust may establish a discount
applicable to optional cash investments. The discount will be in effect for the
following OCI Pricing Period. The discount for optional cash investments is set
by the Trust and may be changed or eliminated by the Trust without prior notice
to participants at any time. Participants may obtain the applicable discount by
telephoning the Trust at (800) 992-0180.

     SHARES PURCHASED ON THE OPEN MARKET

     Dividend Reinvestment:

     If some or all of the Shares are purchased on the Open Market, Shares
purchased pursuant to the reinvestment of Dividends will be credited to the
participant's account at the weighted average price per share of all such shares
purchased with respect to the relevant Dividend Reinvestment Date.

     Optional Cash Investments:

     If some or all of the Shares are purchased on the Open Market, Shares
purchased pursuant to optional cash investments will be credited to the
participant's account at the weighted average price per share of all such Shares
purchased as of the relevant OCI Investment Date.

     When Shares are to be purchased on the Market, the Administrator will begin
making purchases as soon as practicable on the day after the Valuation Date and
in no event later than 6 business days after the Valuation Date, except where
and to the extent necessary under any applicable federal securities laws or
other government or stock exchange regulations. Shares will be applied to the
Participant's account as of the relevant Investment Date. The Administrator may
commingle each participant's funds with those of other participants for the
purpose of executing purchases.

     Dividend and voting rights on shares purchased in the Open Market will
commence upon settlement, which is normally three business days after purchase.
However, shares purchased in the Open Market within a period of three business
days prior to and including a Dividend record date are considered purchased
"ex-dividend" and therefore are not entitled to payment of that

                                        6
<Page>

Dividend or voting rights.

     Shares purchased on the Open Market will not be eligible for the discount
to Market Price and are subject to such terms and conditions, including price
and delivery, as the Administrator may accept.

OPTIONAL CASH INVESTMENTS MAY BE MADE IN THE FOLLOWING WAYS:

<Table>
<S>                     <C>
BY WIRE                 Optional cash investments may be made by wire transfer to the
                        Administrator. Call the Administrator at (800) 992-0180 to obtain
                        a wire reference number. Give that number to your bank and
                        instruct them to wire the funds to the Trust as follows:

                        Investors Fiduciary Trust Co. (Kansas City, MO)
                        ABA #101003621
                        Credit to: ING Prime Rate Trust
                        A/C# 751-8315 For Further Credit to (Your Name and Account Number)

                        Participants making wire investments may be charged fees by the
                        commercial bank initiating the transfer.

BY ELECTRONIC           Optional cash investments may be made by an On-Demand Electronic
FUNDS                   Funds Transfer. You must establish the privilege by completing an
TRANSFER                OCI Electronic Funds Transfer Form prior to initiating an
                        Electronic Funds Transfer. The properly completed form must be
                        received by the Administrator prior to the last business day of
                        the month to be effective for the next OCI Investment Date. Call
                        the Administrator at (800) 992-0180 to obtain the form.

                        Once the Administrator receives and processes your properly
                        completed form, you may initiate an Electronic Funds Transfer
                        from your pre-designated U.S. bank account by instructing the
                        Trust by telephone at (800) 992-0180, or in writing, to complete
                        a purchase into your account for a specified amount (not less
                        than $100 and not more than $100,000). Each On-Demand Electronic
                        Funds Transfer must be separately initiated. Instructions must be
                        received by the Trust on or before the OCI Payment Due Date

                        Once the Electronic Funds Transfer is initiated by your telephone
                        call or letter of instruction, the funds will be drawn from the
                        pre-designated bank account providing the account contains funds
                        sufficient to complete the transfer and will be invested in
                        Shares on the relevant OCI Investment Date. An insufficient or
                        uncollected account balance will void the transaction and you may
                        be subject to fees by your bank.

                        You may change the pre-designated bank by providing new written
                        instructions to the Administrator. The new instructions must be
                        received by the Administrator prior to the last business day of
                        the month to be effective for the next month's OCI Investment
                        Date.
</Table>

                                        7
<Page>

<Table>
<S>                     <C>
BY MAIL                 An optional cash investment may be made by personal check, drawn
                        on a U.S. bank and payable in U.S. dollars, to "ING Prime Rate
                        Trust." Checks should be mailed to:

                                        ING Prime Rate Trust
                                        c/o DST Systems, Inc.
                                        P.O. Box 219368
                                        Kansas City, MO 64141

                        Checks drawn on non-U.S. banks and third-party checks (as defined
                        by the Administrator) will not be accepted. To avoid investment
                        delays write your account number on the check or you may include
                        a completed Participation Form.

BY CONTACTING           Beneficial Owners may participate by either (i) becoming a
YOUR DEALER             Shareholder of Record or (ii) by contacting their broker, bank or
                        other nominee.
</Table>

The Trust reserves the right to reject any purchase.

REPORTS TO PARTICIPANTS; TAX IMPLICATIONS

     Participants will receive an account confirmation after each transaction.
Participants should retain these account confirmations to be able to establish
the cost basis of shares purchased under the Program for income tax and other
purposes.

     The automatic reinvestment of dividends will not relieve you of any income
tax payable on the dividends. If shares are purchased at a discount from the
market price, participants may have income equal to the discount. Please consult
with your personal tax advisor.

     All notices, account confirmations and reports from the Administrator to a
participant will be addressed to the participant at his or her latest address of
record with the Administrator. Therefore, participants must promptly notify the
Administrator of any change of address. To be effective with respect to mailings
of Dividend checks and account confirmations, address changes must be received
by the Administrator or the Trust prior to the record date for that Dividend.

CERTIFICATES FOR SHARES

     The Administrator will hold Shares purchased under the Program in book
entry form. Participants may obtain a certificate for all or some of the whole
Shares held in their account by writing or telephoning the Trust's Shareholder
Services Department. Issuance of a certificate pursuant to such request in no
way affects Dividend reinvestment (see "Reinvestment of Dividends" above).

     Shares of stock held in book entry form for a participant cannot be pledged
or assigned. A participant who wishes to pledge or assign any such Shares must
request that a certificate for such Shares be issued in the participant's name.

                                        8
<Page>

PLAN OF DISTRIBUTION; EXPENSES

     Subject to the availability of Shares registered for issuance under the
Program, there is no total maximum number of Shares that can be issued pursuant
to the Program.

     From time to time, financial intermediaries, including brokers and dealers,
and other persons may engage in positioning transactions in order to benefit
from the discount from the market price of Shares acquired through the Program.
Such Shares may be resold in market transactions (including coverage of short
positions) on any national securities exchange on which Shares of the Trust
trade or in privately negotiated transactions. Such transactions could cause
fluctuations in the trading volume and price of the Shares. The difference
between the price such owners pay to the Trust for Shares acquired under the
Program, after deduction of the applicable discount from the market price, and
the price at which such Shares are resold, may be deemed to constitute
underwriting commissions received by such owners in connection with such
transactions.

     The Trust will pay the costs of administering the Program. There will be no
brokerage charges on purchases of Shares by the Administrator directly from the
Trust in connection with the reinvestment of dividends or Optional Cash
Investments. For shares purchased on the Open Market, participants will pay a
PRO RATA portion of brokerage commissions for such purchase. Brokerage charges
for purchasing Shares for individual accounts through the Program may be
expected, but are not guaranteed, to be less than the usual brokerage charge for
such transactions, as the Administrator will usually be purchasing shares for
all participants in blocks and prorating the lower commission thus attainable.

     The Administrator may charge a participant for additional services not
provided under the Program or where specified charges are indicated. Brokers or
nominees who participate on behalf of Beneficial Owners for whom they are
holding shares may charge such Beneficial Owners fees in connection with such
participation, for which neither the Administrator nor the Trust will be
responsible.

CLOSING OF A PARTICIPANT'S ACCOUNT

     When a shareholder wants to close his/her account, a stock certificate for
full Shares in the account must be requested from the Trust. The shareholder can
then deliver the certificate to their broker or dealer for sale on the Open
Market. Fractional Shares will be held and aggregated with other fractional
Shares being liquidated by the Administrator, as agent of the Program and as
Transfer Agent of the Trust, and paid by check when actually sold. Fractional
Shares will be sold by the Administrator either on the Open Market or to the
Program for use in Dividend reinvestment or cash investment transactions. The
price for fractional Shares will be either the actual market price received,
after deducting any commissions, for open market sales, or the average daily
Market Price for the two Trading Days immediately preceding the relevant
Investment Date for sales to the Program. If the certificate for full Shares or
sale proceeds for fractional Shares are to be sent to

                                        9
<Page>

anyone other than the registered owner(s) at the address of record or
broker/dealer of record, a signature guaranteed request will be required in
order to process the request.

MISCELLANEOUS

REQUESTING CASH DIVIDENDS

     Shareholders may request to receive their dividends in cash at any time by
giving the Administrator written notice or by contacting the Trust's Shareholder
Service Department at (800) 992-0180. Such request will be effective immediately
if the Administrator receives notice at least three business days prior to the
relative Dividend Record Date; otherwise such notice will be effective for the
next Dividend Record Date and any subsequent Dividends.

VOTING OF SHARES HELD IN THE PROGRAM

     Whole and fractional shares held in an account may be voted in person or by
the proxy sent to the participant.

STOCK DIVIDEND OR RIGHTS OFFERING

     Any Dividends in Shares distributed by the Trust on Shares held in book
entry will be added to the participant's account.

     In the event of a rights offering, the participant will receive rights
based upon the total number of whole shares owned in book entry form and
certificated shares outstanding in the participant's name.

LIMITATION OF LIABILITY

     Neither the Trust nor the Administrator (nor any of their respective
agents, representatives, employees, officers, trustees, directors, or
subcontractors) will be liable in administering the Program for any act
performed in good faith nor for any good faith omission to act, including,
without limitation, any claim of liability arising with respect to the prices or
times at which shares are purchased or sold for participants, or, with respect
to fractional Shares any change in the market value of Shares, or from failure
to terminate a participant's account upon such a participant's death. The
foregoing does not represent a waiver of any rights a participant may have under
applicable securities laws.

CHANGE OR TERMINATION OF THE PROGRAM

     The Trust, in its sole discretion, may suspend, modify or terminate the
Program at any time in whole, in part, or in respect of participants in one or
more jurisdictions. Notice of such suspension, modification or termination will
be sent to all affected participants. No such event will affect any Shares then
credited to a participant's account. Upon any whole or partial termination of
the Program by the Trust, the participant may request a certificate for any
amount of

                                       10
<Page>

full Shares held in book entry form. Fractional Shares will be held and
aggregated with other fractional Shares being liquidated by the Administrator,
as agent of the Program and as Transfer Agent of the Trust, and paid for by
check when actually sold. Any change in the Optional Cash Investment Discount
made by the Trust shall not constitute a modification of the Program requiring
notice to the participants.

TERMINATION OF THE ADMINISTRATOR

     The Administrator may withdraw as Administrator to the Program upon 90 days
written notice to the Trust, in which case the Trust will select a replacement
to serve as Administrator. The Trust may also terminate the Administrator upon
90 days written notice, and select a replacement to serve as Administrator.

TERMINATION OF PARTICIPATION

     If a participant owns fewer than ten whole Shares of the Trust, the
participant's participation in the Program may be terminated. The Trust may also
terminate any participant's participation in the Program for any reason
(including, without limitation, the attempted circumvention by a participant of
the $100,000 monthly maximum for cash purchases through the accumulation of
Program accounts over which the participant has control) after written notice
mailed in advance to such participant at the address appearing on the
Administrator's records. Participants whose participation in the Program has
been terminated will receive a certificate for full Shares in their account.
Fractional Shares will be held and aggregated with other fractional Shares being
liquidated by the Administrator as agent of the Program and as Transfer Agent of
the Trust and paid for by check when actually sold.

PROFITS ON SALES OF SHARES

     There is no assurance that participants will be able to sell Shares
purchased pursuant to the Program at a profit.

FUTURE DIVIDENDS

     The payment of Dividends is dependent upon the generation of income by the
Trust. There is no assurance that income will continue to be generated by the
Trust in the future from which Dividends may be paid, and, therefore, there is
no assurance that there will continue to be Dividends in the future to be
reinvested pursuant to the Program.

ATTACHMENTS

A.   Schedule of Important Dates

                                       11
<Page>

                                  ATTACHMENT A

                         SHAREHOLDER INVESTMENT PROGRAM
             SCHEDULE OF IMPORTANT DATES - OPTIONAL CASH INVESTMENTS

<Table>
<Caption>
      OCI &                                                      OCI &         VALUATION DATE,
 WAIVER DISCOUNT      REQUEST FOR        OCI & WAIVER       WAIVER PRICING       OCI & WAIVER             OCI            WAIVER
ANNOUNCEMENT DATE   WAIVER DEADLINE   PAYMENT DUE DATE(1)   PERIOD BEGINS    PRICING PERIOD ENDS    INVESTMENT DATE  INVESTMENT DATE
- -----------------   ---------------   -------------------   --------------   -------------------   ----------------  ---------------
    <S>               <C>                 <C>                 <C>                 <C>                 <C>              <C>
    1/30/2004          2/5/2004            2/6/2004            2/10/2004          2/17/2004            2/18/2004        2/19/2004
    2/27/2004          3/4/2004            3/5/2004            3/9/2004           3/15/2004            3/16/2004        3/17/2004
    3/31/2004          4/5/2004            4/6/2004            4/8/2004           4/15/2004            4/16/2004        4/19/2004
    4/30/2004          5/6/2004            5/7/2004            5/11/2004          5/17/2004            5/18/2004        5/19/2004
    5/28/2004          6/4/2004            6/7/2004            6/9/2004           6/15/2004            6/16/2004        6/17/2004
    6/30/2004          7/6/2004            7/7/2004            7/9/2004           7/15/2004            7/16/2004        7/19/2004
    7/30/2004          8/5/2004            8/6/2004            8/10/2004          8/16/2004            8/17/2004        8/18/2004
    8/31/2004          9/3/2004            9/7/2004            9/9/2004           9/15/2004            9/16/2004        9/17/2004
    9/30/2004          10/6/2004          10/7/2004           10/11/2004          10/15/2004          10/18/2004       10/19/2004
    10/29/2004         11/4/2004          11/5/2004            11/9/2004          11/15/2004          11/16/2004       11/17/2004
    11/30/2004         12/6/2004          12/7/2004            12/9/2004          12/15/2004          12/16/2004       12/17/2004
    12/20/2004        12/27/2004          12/28/2004          12/30/2004           1/5/2005            1/6/2005         1/7/2005
</Table>

                                       12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(G)(I)(1)
<SEQUENCE>3
<FILENAME>a2138029zex-99_gi1.txt
<DESCRIPTION>EX 99.(G)(I)(1)
<TEXT>
<Page>

                                                            Exhibit 99.(g)(i)(1)

                          AMENDED SCHEDULE OF APPROVALS

                               WITH RESPECT TO THE

                         INVESTMENT MANAGEMENT AGREEMENT

                                     BETWEEN

                              ING PRIME RATE TRUST

                                       AND

                              ING INVESTMENTS, LLC
                      AN ARIZONA LIMITED LIABILITY COMPANY

<Table>
<Caption>
                                       ANNUAL INVESTMENT MANAGEMENT FEE
  TRUST                          (AS A PERCENTAGE OF AVERAGE DAILY NET ASSETS)
  -----                          ---------------------------------------------
  <S>                                                 <C>
  ING Prime Rate Trust                                0.80%
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(G)(II)(1)
<SEQUENCE>4
<FILENAME>a2138029zex-99_gii1.txt
<DESCRIPTION>EX 99.(G)(II)(1)
<TEXT>
<Page>

                                                           Exhibit 99.(g)(ii)(1)

                    FIRST AMENDMENT TO SUB-ADVISORY AGREEMENT

                              ING PRIME RATE TRUST

     This First Amendment, effective as of September 1, 2003, amends the
Sub-Advisory Agreement (the "Agreement") dated the 19th day of August, 2003
between ING Investments, LLC, an Arizona limited liability company (the
"Manager"), and Aeltus Investment Management, Inc., a Connecticut corporation
(the "Sub-Adviser") with regards to ING Prime Rate Trust, a Series of ING Prime
Rate Trust.

                               W I T N E S S E T H

     WHEREAS, the parties desire to amend the Agreement and agree that the
amendment will be effective as of September 1, 2003.

     NOW, THEREFORE, the parties agree as follows:

     1.   The following Section 11 is hereby inserted between existing Section
10 and Section 11:

          11.  NON-EXCLUSIVITY. The services of the Sub-Adviser to the Series
and the Fund are not to be deemed to be exclusive, and the Sub-Adviser shall be
free to render investment advisory or other services to others (including other
investment companies) and to engage in other activities, provided, however, that
the Sub-Adviser may not consult with any other sub-adviser of the Fund
concerning transactions in securities or other assets for any investment
portfolio of the Fund, including the Series, except that such consultations are
permitted between the current and successor sub-advisers of the Series in order
to effect an orderly transition of sub-advisory duties so long as such
consultations are not concerning transactions prohibited by Section 17(a) of the
1940 Act.

     2.   Each Section number and applicable references to each Section
following the inserted Section 11 above, will increase numerically by one (i.e.,
Section 13 will be Section 14, etc.).

     3.   Capitalized terms used herein and not otherwise defined shall have the
meanings ascribed to them in the Agreement.

     4.   In all other respects, the Agreement is hereby confirmed and remains
in full force and effect.

                                        1
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed as of the day and year first above written.

                               ING INVESTMENTS, LLC


                               By:  /s/ Michael J. Roland
                                    ---------------------
                                    Michael J. Roland
                                    Executive Vice President


                               AELTUS INVESTMENT MANAGEMENT, INC.


                               By:  /s/ Michael Gioffre
                                    -------------------
                                    Name:  Michael Gioffre
                                    Title: Senior Vice President

                                        2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(H)(I)
<SEQUENCE>5
<FILENAME>a2138029zex-99_hi.txt
<DESCRIPTION>EX 99.(H)(I)
<TEXT>
<Page>

                                                                   Ex 99.(h)(i)
               FORM OF AMENDED AND RESTATED DISTRIBUTION AGREEMENT
                               (5 MILLION SHARES)

Parties:    ING Prime Rate Trust (the "Trust")
            ING Funds Distributor, LLC (the "Distributor")

Date:       June 15, 2004

     WHEREAS, ING Prime Rate Trust is a Massachusetts business trust operating
as a closed-end management investment company;

     WHEREAS, the Trust has filed a registration statement (the "Registration
Statement") on Form N-2 under the Investment Company Act of 1940, as amended
(the "1940 Act") (File No. 333-68239) and under the Securities Act of 1933, as
amended (the "1933 Act") (File No. 811-5410) to register shares of the Trust
which may be issued and sold from time to time;

     WHEREAS, the Distributor is registered as a broker-dealer under the
provisions of the Securities Exchange Act of 1934 and is a member in good
standing of the National Association of Securities Dealers, Inc.;

     WHEREAS, the Trust and the Distributor have previously entered into a
Distribution Agreement dated September 1, 2000, as amended, pursuant to which
the Trust appointed the Distributor (and its predecessors) to distribute the
Trust's shares under the Registration Statement;

     WHEREAS, the parties wish to amend and restate the above referenced
Distribution Agreement; and

     WHEREAS, the Trust's Board of Trustees (the "Trustees") has adopted a
resolution approving this Amended and Restated Distribution Agreement (the
"Agreement"), and such resolution was adopted at a meeting of the Trustees, at
which a majority of Trustees, including a majority of the Trust's Trustees who
are not otherwise interested persons of the Trust's investment manager or its
related organizations, were present and voted in favor of the said resolution
approving this Agreement.

     NOW, THEREFORE, the parties agree as follows:

     1.   APPOINTMENT OF DISTRIBUTOR; ACCEPTANCE. The Trust hereby appoints the
Distributor as the principal underwriter and distributor for shares of the Trust
to be issued pursuant to the Registration Statement (the "Shares") and the
Distributor hereby accepts such appointment and agrees to serve as the principal
underwriter and distributor for the Shares.

     2.   SALE OF SHARES. The Distributor will use reasonable efforts to promote
the sale of the Shares, but the Distributor is not obligated to sell any
specific number of Shares. The Shares will only be sold on such days as shall be
agreed to between the Distributor and the Trust. The

                                        1
<Page>

Trust will deliver to the Distributor such Shares as the Distributor may sell.

     3.   OFFERING PRICE. The public offering price per Share shall be
determined in accordance with the then current prospectus of the Trust under the
Registration Statement. In no event shall the public offering price be less than
the current net asset value per Share (the "Minimum Price"). The Distributor
shall suspend the sale of Shares if the per share price of the Shares is less
than the Minimum Price.

     4.   SALES COMMISSIONS AND DISCOUNTS. The Distributor shall not be entitled
to receive any sales commission or discount from the Trust for its services
hereunder.

     5.   FURNISHING OF INFORMATION. The Trust will furnish the Distributor with
such number of copies of the Registration Statement as distributor shall
reasonably request, and the Trust warrants to the Distributor that the
statements therein contained are true and correct as of the date of the
Registration Statement, as it may be amended or supplemented from time to time.
The Trust will also furnish the Distributor with such other information that the
Distributor may reasonably request for use in connection with the distribution
of the Shares, including, at least annually, audited financial statements of the
Trust's books and accounts certified by independent public accountants.

     6.   CONDUCT OF BUSINESS. Other than the currently effective Prospectus and
Statement of Additional Information, the Distributor will not use any sales
materials or statements except literature or advertising which conforms to the
requirements of federal and state securities laws and regulations and which have
been filed, where necessary, with the appropriate regulatory authorities. the
Distributor will furnish to the Trust copies of all material prior to its use
and no such material shall be published if the Trust shall reasonably and
promptly object.

     7.   COMPLIANCE WITH LAW. The Distributor shall comply with applicable
federal and state laws and regulations where the Trust's Shares are offered for
sale and conduct its affairs with the Trust and with dealers, brokers or
investors in accordance with the Conduct Rules of the National Association of
Securities Dealers, Inc.

     8.   OTHER ACTIVITIES. The Distributor's services pursuant to this
Agreement shall not be deemed to be exclusive, and the Distributor may render
similar services and act as an underwriter, distributor or dealer for other
investment companies in the offering of their shares.

     9.   SUSPENSION OF SALES. The Trust reserves the right at all times to
suspend or limit the public offering of the Shares upon written notice to the
Distributor, and to reject any order in whole or in part.

     10.  PAYMENT OF EXPENSES. The Distributor shall bear all expenses incurred
by it in connection with its duties and activities under this Agreement. The
Trust shall bear all costs and expenses of the Trust, including expenses
(including legal fees) pertaining to the preparation and filing of the
Registration Statement and Prospectus and any amendments or supplements thereto,
and expenses pertaining to the preparation, printing and distribution of any
reports or communications to shareholders, including Prospectuses and Statements
of Additional

                                        2
<Page>

Information, annual or interim reports or proxy materials.

     11.  AGENT OF TRUST. Any person, even though also an officer, employee or
agent of the Distributor, who may be or become an officer, Trustee, employee or
agent of the Trust, shall be deemed, when rendering services to the Trust or
acting in any business of the Trust, to be rendering such services to or acting
solely for the Trust and not as an officer, partner, employee or agent or one
under the control or direction of the Distributor even though paid by the
Distributor.

     12.  RECORDS. All records maintained by the Distributor in connection with
this Agreement shall be the property of the Trust and shall be returned to the
Trust upon termination of this Agreement, free from any claims or retention of
rights by the Distributor. the Distributor shall keep confidential any
information obtained pursuant to this Agreement and shall disclose such
information only if the Trust has authorized such disclosure or if such
disclosure is expressly required by applicable federal or state regulatory
authorities.

     13.  DURATION AND TERMINATION. This Agreement shall take effect on the date
of its execution and shall continue in effect, unless sooner terminated as
provided herein, for two years from such date and shall continue from year to
year thereafter so long as such continuance is specifically approved at least
annually (a) by the vote of a majority of those Trustees who are not "interested
persons," cast in person at a meeting called for the purpose of voting on such
approval, and (b) either by a majority of the Trustees of the Trust or by a
majority vote (as defined in the Prospectus) of the shareholders of the Trust;
PROVIDED, HOWEVER, that this Agreement may be terminated by the Trust or by a
majority vote of the shareholders of the Trust on 60 days' written notice to the
Distributor, or by the Distributor at any time on 60 days' written notice to the
Trust, in all cases without the payment of any penalty. This Agreement will
automatically and immediately terminate in the event of its assignment (as
described in the 1940 Act).

     14.  LIABILITY OF DISTRIBUTOR. The Distributor shall not be liable to the
Trust for any error of judgment or mistake of law or for any loss suffered by
the Trust in connection with the matters to which this Agreement relates, except
a loss resulting from the Distributor's willful misfeasance, bad faith or
negligence in the performance of its duties, or by reason of its reckless
disregard of its obligations and duties under this Agreement.

     15.  AGREEMENT AND DECLARATION OF TRUST AND LIMITATION OF LIABILITY. A copy
of the Agreement and Declaration of Trust of the Trust is on file with the
Secretary of State of the Commonwealth of Massachusetts, and notice is hereby
given that this Agreement is executed by an officer of the Trust on behalf of
the Trustees of the Trust, as Trustees and not individually, and that the
obligations of this Agreement with respect to the Trust shall be binding upon
the assets and properties of the Trust only and shall not be binding upon the
assets or properties of the Trustees, officers, employees, agents or
shareholders of the Trust individually.

     16.  NOTICES. Notices of any kind to be given to the Distributor by the
Trust shall be in writing and shall be duly given if mailed, first class postage
prepaid, or delivered to the Distributor at its principal place of business or
at such other address or to such individual as shall

                                        3
<Page>

be specified by the Distributor to the Trust. Notices of any kind to be given to
the Trust shall be in writing and shall be duly given if mailed, first class
postage prepaid, or delivered to the Trust at its principal place of business or
at such other address or to such individual as shall be specified by the Trust.

     17.  REPORTS. The Distributor shall prepare reports to the Trustees of the
Trust showing such information as from time to time shall be reasonably
requested by the Trustees or as are required of the Distributor by applicable
laws and regulations.

     18.  INDEPENDENT CONTRACTOR STATUS. The Distributor shall for all purposes
herein provided be deemed to be an independent contractor and, unless otherwise
expressly provided or authorized, shall have no authority to act for or
represent the Trust in any way or otherwise be deemed an agent of the Trust. It
is understood and agreed that the Distributor, by separate agreement with the
Trust, may also serve the Trust in other capacities.

     19.  MISCELLANEOUS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed to be an original. This Agreement
shall be governed by the laws of the State of New York, provided that nothing
herein shall be construed in a manner inconsistent with the 1940 Act, the
Securities Exchange Act of 1934, as amended, or any rule or order of the
Securities and Exchange Commission. If any provision of this Agreement shall be
held or made invalid by a court decision, statute, rule or otherwise, the
remainder of this Agreement shall not be affected thereby and, to this extent,
the provisions of this Agreement shall be deemed to be severable.


ING PRIME RATE TRUST                         ING FUNDS DISTRIBUTOR, LLC


By:                                          By:
     ------------------------------                -----------------------------
     Robert S. Naka                                Michael J. Roland
     Senior Vice President                         Executive Vice President

                                        4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(H)(II)
<SEQUENCE>6
<FILENAME>a2138029zex-99_hii.txt
<DESCRIPTION>EX 99.(H)(II)
<TEXT>
<Page>

                                                              Exhibit 99 (h)(ii)

                    Auction Rate Cumulative Preferred Shares


                            PILGRIM PRIME RATE TRUST

                             3,600 Shares, Series T

                             3,600 Shares, Series Th

                    Liquidation Preference $25,000 Per Share

                             UNDERWRITING AGREEMENT

                                                               November 13, 2000

SALOMON SMITH BARNEY INC.
UBS WARBURG LLC
LEHMAN BROTHERS INC.
GRUNTAL & CO., L.L.C.

c/o SALOMON SMITH BARNEY INC.
      388 Greenwich Street
      New York, New York 10013

Ladies and Gentlemen:

          Pilgrim Prime Rate Trust, a Massachusetts business trust (the
"Trust"), proposes, upon the terms and conditions set forth herein, to issue and
sell an aggregate of 3,600 shares of its Auction Rate Cumulative Preferred
Shares, Series T, and 3,600 shares of its Auction Rate Cumulative Preferred
Shares, Series Th, each with a liquidation preference of $25,000 per share (the
shares of Auction Rate Cumulative Preferred Shares to be sold hereby are
referred to herein, collectively, as the "Shares"). The Shares will be
authorized by, and subject to the terms and conditions of, the Certificate of
Designation for Preferred Shares of the Trust (the "Certificate") in the form
filed as an exhibit to the Registration Statement referred to in Section 1 of
this agreement. The Trust and its investment adviser, ING Pilgrim Investments,
Inc. (the "Adviser"), wish to confirm as follows their agreement with Salomon
Smith Barney Inc., UBS Warburg LLC, Lehman Brothers Inc. and Gruntal & Co.,
L.L.C. (the "Underwriters"), in connection with the purchase of the Shares by
the Underwriters.

          Collectively, the Investment Management Agreement dated as of
September 1, 2000 between the Trust and the Adviser ("the "Investment Management
Agreement"), the

<Page>

                                        2

Custodian Agreement dated as of July 1, 1996 between the Trust and State Street
Bank and Trust - Kansas City, the Agency Agreement dated as of October 1, 1996
between the Trust and DST Systems, Inc. and the Auction Agency Agreement between
the Trust and Bankers Trust Company are hereinafter referred to as the "Trust
Agreements." This Underwriting Agreement is hereinafter referred to as the
"Agreement."

          1. REGISTRATION STATEMENT AND PROSPECTUS. The Trust has prepared in
conformity with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and,
together with the 1933 Act Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2, as amended by Pre-Effective Amendment No. 1
(File Nos. 333-48782 and 811-05410), under the 1933 Act and the 1940 Act (the
"registration statement"), including a prospectus relating to the Shares, and
has filed the registration statement and prospectus in accordance with the 1933
Act and the 1940 Act. The Trust also has filed a notification of registration of
the Trust as an investment company under the 1940 Act on Form N-8A (the "1940
Act Notification"). The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective under the 1933 Act or, if
the registration statement became effective under the 1933 Act prior to the
execution of this Agreement, as amended or supplemented at the time it became
effective, prior to the execution of this Agreement. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed under the 1933 Act and must be declared
effective before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as amended
by said post-effective amendment. If the Trust has filed an abbreviated
registration statement to register an additional amount of Shares pursuant to
Rule 462(b) under the 1933 Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall include such Rule
462 Registration Statement. The term "Prospectus" as used in this Agreement
means the prospectus and statement of additional information in the forms
included in the Registration Statement or, if the prospectus and statement of
additional information included in the Registration Statement omit information
in reliance on Rule 430A under the 1933 Act Rules and Regulations and such
information is included in a prospectus and statement of additional information
filed with the Commission pursuant to Rule 497(h) under the 1933 Act, the term
"Prospectus" as used in this Agreement means the prospectus and statement of
additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
filed with the Commission pursuant to Rule 497(h). The term "Prepricing
Prospectus" as used in this Agreement means the prospectus and statement of
additional information subject to completion in the forms included in the
registration statement at the time of filing of amendment no. 1 to the
registration statement with the Commission on November 6, 2000, and as such
prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus and statement of additional information relating to the Trust other
than the Prospectus approved in writing by or directly or indirectly prepared by
the Trust or the Adviser; it being understood that the definition of Prepricing
Prospectus above shall not include any Prepricing Prospectus

<Page>

                                        3

prepared by the Underwriters unless approved in writing by the Trust or Adviser.
The terms "Registration Statement," "Prospectus" and "Prepricing Prospectus"
shall also include any financial statements incorporated by reference therein.

          The Trust has furnished Salomon Smith Barney Inc. with copies of such
registration statement, each amendment to such registration statement filed with
the Commission and each Prepricing Prospectus, and Salomon Smith Barney Inc. has
provided the same to the other Underwriters.

          2. AGREEMENTS TO SELL AND PURCHASE. The Trust hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to the
Underwriters and, upon the basis of the representations, warranties and
agreements of the Trust and the Adviser herein contained and subject to all the
terms and conditions set forth herein, the Underwriters agree to purchase from
the Trust, at a purchase price of $24,750 per Share, the number of shares of
each series of Auction Rate Cumulative Preferred Shares set forth opposite the
name of each Underwriter in Schedule I hereto.

          3. TERMS OF PUBLIC OFFERING. The Trust and the Adviser have been
advised by the Underwriters that they propose to make a public offering of the
Shares as soon after the Registration Statement and this Agreement have become
effective as in the Underwriters' judgment is advisable and initially to offer
the Shares upon the terms set forth in the Prospectus.

          4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Shares shall be made at the office of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, NY 10017, or through
the facilities of The Depository Trust Company or another mutually agreeable
facility, at 9:30 A.M., New York City time, on November 16, 2000 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between you and the Trust.

          Certificates for the Shares shall be registered in such names and in
such denominations as the Underwriters shall request prior to 9:30 A.M., New
York City time, on the second business day preceding the Closing Date. Such
certificates shall be made available to the Underwriters in New York City for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date. The certificates evidencing the Shares shall be
delivered to the Underwriters on the Closing Date, through the facilities of The
Depository Trust Company or another mutually agreeable facility, against payment
of the purchase price therefor in immediately available funds.

          5. AGREEMENTS OF THE TRUST AND THE ADVISER. The Trust and the Adviser,
jointly and severally, agree with the Underwriters as follows:

          (a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the 1933 Act before the offering of the Shares
may commence, the Trust will endeavor to cause the Registration Statement or
such post-effective amendment to become effective under the 1933 Act as soon as
possible and will advise the Underwriters promptly and, if requested by the

<Page>

                                        4

Underwriters, will confirm such advice in writing when the Registration
Statement or such post-effective amendment has become effective.

          (b) The Trust will advise the Underwriters promptly and, if requested
by the Underwriters, will confirm such advice in writing: (i) of any request
made by the Commission for amendment of or a supplement to the Registration
Statement, any Prepricing Prospectus or the Prospectus (or any amendment or
supplement to any of the foregoing) or for additional information, (ii) of the
issuance by the Commission, the National Association of Securities Dealers, Inc.
(the "NASD"), any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory, self-regulatory
or administrative agency or any official of any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any Prepricing Prospectus, or any sales material (as
hereinafter defined), of any notice pursuant to Section 8(e) of the 1940 Act, of
the suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Trust, the Adviser, any affiliate of the Trust or the Adviser
or any representative or attorney of the Trust or the Adviser of any other
material communication from the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or any
other governmental, regulatory, self-regulatory or administrative agency or any
official relating to the Trust (if such communication relating to the Trust is
received by such person within three years after the date of this Agreement),
the Registration Statement, the 1940 Act Notification, the Prospectus, any
Prepricing Prospectus, any sales material (as herein defined) (or any amendment
or supplement to any of the foregoing) or this Agreement or any of the Trust
Agreements and (iv) within the period of time referred to in paragraph (f)
below, of any material adverse change in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Trust or the Adviser or of the happening of any other event which makes any
statement of a material fact made in the Registration Statement or the
Prospectus, or any Prepricing Prospectus or any sales materials (as herein
defined) (or any amendment or supplement to any of the foregoing) untrue or
which requires the making of any additions to or changes in the Registration
Statement or the Prospectus, or any Prepricing Prospectus or any sales materials
(as herein defined) (or any amendment or supplement to any of the foregoing) in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations to be stated therein or necessary in order to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made), not misleading or of the necessity to amend or
supplement the Registration Statement, the Prospectus, or any Prepricing
Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) to comply with the 1933 Act, the 1940 Act,
the Rules and Regulations or any other law or order of any court or regulatory
body. If at any time the Commission, the NASD, any state securities commission,
any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official shall issue any order suspending the effectiveness of the Registration
Statement, prohibiting or suspending the use of the Prospectus or any sales
material (as herein defined) (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or sale in
any jurisdiction, the Trust will make every reasonable effort to obtain the
withdrawal of such order at the earliest possible time.

<Page>

                                        5

          (c) The Trust will furnish to you, without charge, three signed copies
of the Registration Statement as originally filed with the Commission and of
each amendment thereto, including financial statements and all exhibits thereto,
and will also furnish to you, without charge, such number of conformed copies of
the Registration Statement as originally filed and of each amendment thereto,
but without exhibits, as you may reasonably request.

          (d) The Trust will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, or any sales
material (as herein defined), of which you shall not previously have been
advised or to which you shall reasonably object after being so advised or (ii)
so long as, in the opinion of counsel for the Underwriters, a Prospectus is
required by the 1933 Act to be delivered in connection with sales by the
Underwriters or any dealer, file any information, documents or reports pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"), without
delivering a copy of such information, documents or reports to you prior to or
concurrently with such filing.

          (e) Prior to the execution and delivery of this Agreement, the Trust
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Trust consents to the use,
in accordance with the provisions of the 1933 Act and with the state securities
or blue sky laws of the jurisdictions in which the Shares are offered by the
Underwriters and by dealers, prior to the date of the Prospectus, of each
Prepricing Prospectus so furnished by the Trust.

          (f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales by the Underwriters or any dealer, the Trust
will expeditiously deliver to the Underwriters and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto) as
the Underwriters may reasonably request. The Trust consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the 1933 Act to be delivered in connection with sales by the
Underwriters or any dealer. If during such period of time any event shall occur
that in the judgment of the Trust or in the opinion of counsel for the
Underwriters is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading, or if it
is necessary to supplement or amend the Registration Statement or the Prospectus
to comply with the 1933 Act, the 1940 Act, the Rules and Regulations or any
other federal law, rule or regulation, or any state securities or blue sky
disclosure laws, rules or regulations, the Trust will forthwith prepare and,
subject to the provisions of paragraph (d) above, promptly file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters and dealers, without charge, a
reasonable number of copies thereof. In the event that the Trust and the
Underwriters agree that the Registration Statement or the Prospectus should be
amended

<Page>

                                        6

or supplemented, the Trust, if requested by the Underwriters, will promptly
issue a press release announcing or disclosing the matters to be covered by the
proposed amendment or supplement.

          (g) The Trust will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month period
ending not later than 15 months after the effective date of the Registration
Statement as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and Rule
158 of the 1933 Act Rules and Regulations.

          (h) During the period of five years after the date of this Agreement,
the Trust will furnish to you (i) as soon as available, a copy of each report of
the Trust mailed to stockholders or filed with the Commission or furnished to
the New York Stock Exchange (the "NYSE") other than reports on Form N-SAR, and
(ii) from time to time such other information concerning the Trust as the
Underwriters may reasonably request.

          (i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than by notice given by
the Underwriters terminating this Agreement pursuant to Section 12 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Trust or the Adviser to comply with the terms or
fulfill any of the conditions of this Agreement, the Trust and the Adviser,
jointly and severally, agree to reimburse the Underwriters for all out-of-pocket
expenses (including reasonable fees and expenses of counsel for the
Underwriters) incurred by the Underwriters in connection herewith.

          (j) The Trust will apply the net proceeds from the sale of the Shares
substantially in accordance with the description set forth in the Prospectus and
in such a manner as to comply with the investment objectives, policies and
restrictions of the Trust as described in the Prospectus.

          (k) The Trust will timely file the Prospectus with the Commission
pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules and Regulations,
whichever is applicable or, if applicable, will timely file the certification
permitted by Rule 497(j) of the 1933 Act Rules and Regulations and will advise
the Underwriters of the time and manner of such filing.

          (l) Except as provided in this Agreement, the Trust will not sell,
contract to sell, or otherwise dispose of any senior securities (as defined in
the 1940 Act) (other than senior securities sold in an underwriting lead-managed
by Salomon Smith Barney Inc.) of the Trust, or grant any options or warrants to
purchase senior securities of the Trust, for a period of 180 days after the date
of the Prospectus, without the prior written consent of the Underwriters.

          (m) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, neither the Trust nor the Adviser has taken, nor
will it take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or manipulation of
the price of any securities issued by the Trust to facilitate the sale or resale
of the Shares.

<Page>

                                        7

          (n) The Trust will use commercially reasonable efforts to cause the
Shares, prior to the Closing Date, to be assigned a rating of 'aaa' by Moody's
Investors Service, Inc. ("Moody's") and 'AAA' by Standard & Poor's, a division
of McGraw-Hill Companies, Inc. ("S&P" and, together with Moody's, the "Rating
Agencies").

          (o) The Trust and the Adviser will use commercially reasonable efforts
to perform all of the agreements required of them and discharge all conditions
to closing as set forth in this Agreement.

          6. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE ADVISER. The
Trust and the Adviser, jointly and severally, represent and warrant to the
Underwriters that:

          (a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 497 of the 1933 Act Rules and Regulations, complied
when so filed in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus.

          (b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 497 of the 1933
Act Rules and Regulations and the 1940 Act Notification when originally filed
with the Commission and any amendment or supplement thereto when filed with the
Commission, complied or will comply in all material respects with the provisions
of the 1933 Act, the 1940 Act and the Rules and Regulations and did not or will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, except that this representation and
warranty does not apply to statements in or omissions from the registration
statement or the Prospectus made in reliance upon and in conformity with
information relating to the Underwriters furnished to the Trust in writing by or
on behalf of the Underwriters expressly for use therein.

          (c) All the outstanding shares of beneficial interest of the Trust
have been duly authorized and validly issued by the Trust, are fully paid and
nonassessable and are free of any preemptive or similar rights; the Shares have
been duly authorized and, when issued and delivered to the Underwriters against
payment therefor in accordance with the terms hereof, will be validly issued by
the Trust, fully paid and nonassessable and free of any preemptive or similar
rights and will conform to the description thereof in the Registration Statement
and the Prospectus (and any amendment or supplement to either of them); and the
capitalization of the Trust conforms to the description thereof in the
Registration Statement and the Prospectus (and any amendment or supplement to
either of them).

          (d) The Trust is a business trust duly organized and validly existing
under the laws of the State of Massachusetts with full business trust power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and

<Page>

                                        8

the Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or qualify does not have a material adverse effect on the
condition (financial or other), business, prospects, properties, net assets or
results of operations of the Trust; and the Trust has no subsidiaries.

          (e) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust, threatened, against the Trust, or to which the Trust or
any of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.

          (f) The Trust is not in violation of its Agreement and Declaration of
Trust (the "Declaration"), or bylaws (the "Bylaws"), or other organizational
documents or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Trust or of any decree of the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court or governmental agency, body or official having
jurisdiction over the Trust, or in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Trust is a party or
by which it or any of its properties may be bound.

          (g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Trust Agreements by the
Trust, nor the consummation by the Trust of the transactions contemplated hereby
or thereby (A) requires the Trust to obtain any consent, approval, authorization
or other order of or registration or filing with, the Commission, the NASD, any
state securities commission, any national securities exchange, any arbitrator,
any court, regulatory body, administrative agency or other governmental body,
agency or official (except such as may have been obtained prior to the date
hereof and such as may be required for compliance with the state securities or
blue sky laws of various jurisdictions which have been or will be effected in
accordance with this Agreement) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the Declaration,
the Bylaws or other organizational documents of the Trust or (B) conflicts or
will conflict with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which the Trust is
a party or by which it or any of its properties may be bound, or violates or
will violate any statute, law, regulation or judgment, injunction, order or
decree applicable to the Trust or any of its properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Trust pursuant to the terms of any agreement or instrument to
which it is a party or by which it may be bound or to which any of its property
or assets is subject. The Trust is not subject to any order of any court or of
any arbitrator, governmental authority or administrative agency.

<Page>

                                        9

          (h) The accountants, KPMG LLP, who have certified or shall certify the
financial statements included or incorporated by reference in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them)
have represented to the Trust that they are independent public accountants as
required by the 1933 Act, the 1940 Act and the Rules and Regulations.

          (i) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly the financial position, results of operations and changes in financial
position of the Trust on the basis stated or incorporated by reference in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Trust.

          (j) The execution and delivery of, and the performance by the Trust of
its obligations under, this Agreement and the Trust Agreements have been duly
and validly authorized by the Trust, and this Agreement and the Trust Agreements
have been duly executed and delivered by the Trust and constitute the valid and
legally binding agreements of the Trust, enforceable against the Trust in
accordance with their terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Trust's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.

          (k) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Trust has not incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Trust, and there has not been any change in the capital stock,
or material increase in the short-term debt or long-term debt, of the Trust, or
any material adverse change, or any development involving or which may
reasonably be expected to involve, a prospective material adverse change, in the
condition (financial or other), business, prospects, properties, net assets or
results of operations of the Trust, whether or not arising in the ordinary
course of business.

          (1) The Trust has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the Prepricing Prospectus, the
Prospectus or other materials, if any, permitted by the 1933 Act, the 1940 Act
or the Rules and Regulations.

<Page>

                                       10

          (m) The Trust has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus; the Trust has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Trust under any such permit, subject in each
case to such qualification as may be set forth in the Prospectus (and any
amendment or supplement thereto); and, except as described in the Prospectus
(and any amendment or supplement thereto), none of such permits contains any
restriction that is materially burdensome to the Trust.

          (n) The Trust maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions in portfolio
securities are executed in accordance with management's general or specific
authorization and with the applicable requirements of the 1940 Act, the 1940 Act
Rules and Regulations and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets and to maintain compliance with the
books and records requirements under the 1940 Act and the 1940 Act Rules and
Regulations; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

          (o) To the Trust's knowledge, neither the Trust nor any employee or
agent of the Trust has made any payment of funds of the Trust or received or
retained any funds, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus and that is not so
disclosed.

          (p) The Trust has filed all tax returns required to be filed, which
returns are complete and correct in all material respects, and the Trust is not
in material default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.

          (q) No holder of any security of the Trust has any right to require
registration of common shares of beneficial interest or any other security of
the Trust because of the filing of the registration statement or consummation of
the transactions contemplated by this Agreement.

          (r) The Trust, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
1933 Act Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.

          (s) The conduct by the Trust of its business (as described in the
Prospectus) does not, to the knowledge of the Trust or the Adviser after
reasonable inquiry, require the Trust to be

<Page>

                                       11

the owner, possessor or licensee of any patents, patent licenses, trademarks,
service marks or trade names which it does not own, possess or license.

          (t) The Trust is registered under the 1940 Act as a closed-end,
diversified management investment company and the 1940 Act Notification has been
duly filed with the Commission and, at the time of filing thereof and any
amendment or supplement thereto, conformed in all material respects with all
applicable provisions of the 1940 Act and the Rules and Regulations. The Trust
is, and at all times through the completion of the transactions contemplated
hereby, will be, in compliance in all material respects with the terms and
conditions of the 1933 Act and the 1940 Act. No person is serving or acting as
an officer, trustee or investment adviser of the Trust except in accordance with
the provisions of the 1940 Act and the 1940 Act Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the rules
and regulations of the Commission promulgated under the Advisers Act (the
"Advisers Act Rules and Regulations").

          (u) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Trust has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Trust to facilitate the sale or resale of the Shares,
and the Trust is not aware of any such action taken or to be taken by any
affiliates of the Trust.

          (v) The Trust has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.

          (w) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and "road
show scripts") authorized in writing by or prepared by the Trust or the Adviser
for use in connection with the offering and sale of the Shares (collectively,
"sales material") complied and comply in all material respects with the
applicable requirements of the 1933 Act, the 1940 Act, the Rules and Regulations
and the rules and interpretations of the NASD and no such sales material
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

          (x) Each of the Trust Agreements complies in all material respects
with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations, except
as to rights of indemnity and contribution.

          (y) The Shares have been, or prior to the Closing Date will be,
assigned a rating of 'aaa' by Moody's and 'AAA' by S&P.

<Page>

                                       12

          (z) As required by Subchapter M of the Code, the Trust is currently in
compliance with the requirements to qualify as a regulated investment company
under the Code.

          (aa) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee of the
Trust is an "interested person" (as defined in the 1940 Act) of the Trust or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter listed in
Schedule I hereto.

          7. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser
represents and warrants to the Underwriters as follows:

          (a) The Adviser is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or to qualify does not have a material adverse effect on the
condition (financial or other), business, prospects, properties, net assets or
results of operations of the Adviser or on the ability of the Adviser to perform
its obligations under this Agreement and the Investment Management Agreement.

          (b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Investment Management Agreement for the
Trust as contemplated by the Prospectus (or any amendment or supplement
thereto). There does not exist any proceeding or any facts or circumstances the
existence of which could lead to any proceeding which might adversely affect the
registration of the Adviser with the Commission.

          (c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser, or to which the
Adviser or any of its properties is subject, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or supplement
to either of them) but are not described as required or that may reasonably be
expected to involve a prospective material adverse change in the condition
(financial or other), business, prospects, properties, net assets or results of
operations of the Adviser or on the ability of the Adviser to perform its
obligations under this Agreement and the Investment Management Agreement.

          (d) Neither the execution, delivery or performance of this Agreement
or the Investment Management Agreement by the Adviser, nor the consummation by
the Adviser of the transactions contemplated hereby or thereby (A) requires the
Adviser to obtain any consent, approval, authorization or other order of or
registration or filing with, the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court,
regulatory body, administrative agency or other governmental body, agency or
official or

<Page>

                                       13

conflicts or will conflict with or constitutes or will constitute a breach of or
a default under, the certificate of incorporation or by-laws, or other
organizational documents, of the Adviser or (B) conflicts or will conflict with
or constitutes or will constitute a breach of or a default under, any agreement,
indenture, lease or other instrument to which the Adviser is a party or by which
it or any of its properties may be bound, or violates or will violate any
statute, law, regulation or filing or judgment, injunction, order or decree
applicable to the Adviser or any of its properties or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Adviser pursuant to the terms of any agreement or instrument to
which it is a party or by which it may be bound or to which any of the property
or assets of the Adviser is subject. The Adviser is not subject to any order of
any court or of any arbitrator, governmental authority or administrative agency.

          (e) The execution and delivery of, and the performance by the Adviser
of its obligations under, this Agreement and the Investment Management Agreement
have been duly and validly authorized by the Adviser, and this Agreement and the
Investment Management Agreement have been duly executed and delivered by the
Adviser and each constitutes the valid and legally binding agreement of the
Adviser, enforceable against the Adviser in accordance with its terms except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Trust's obligations thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and by general equitable principles.

          (f) The Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Prospectus (or any amendment or supplement thereto) and under this Agreement and
the Investment Management Agreement.

          (g) The description of the Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) complied and comply in
all material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.

          (h) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Adviser has not incurred any liability or obligation, direct or contingent,
or entered into any transaction, not in the ordinary course of business, that is
material to the Adviser or the Trust and that is required to be disclosed in the
Registration Statement or the Prospectus and there has not been any material
adverse change, or any development involving or which may reasonably be expected
to involve, a prospective material adverse change, in the condition (financial
or other), business, prospects, properties, net assets or results of operations
of the Adviser, whether or not arising in the ordinary course of business, or
which,

<Page>

                                       14

in each case, could have a material adverse effect on the ability of the Adviser
to perform its obligations under this Agreement and the Investment Management
Agreement.

          (i) The Adviser has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto); the
Adviser has fulfilled and performed all its material obligations with respect to
such permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the Adviser under any such permit; and,
except as described in the Prospectus (and any amendment or supplement thereto),
none of such permits contains any restriction that is materially burdensome to
the Adviser.

          (j) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), the Adviser has not taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in, stabilization or manipulation of the price of
any securities issued by the Trust to facilitate the sale or resale of the
Shares, and the Adviser is not aware of any such action taken or to be taken by
any affiliates of the Adviser.

          8. INDEMNIFICATION AND CONTRIBUTION.

          (a) The Trust and the Adviser, jointly and severally, agree to
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation), joint or
several, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to any Underwriter furnished in writing to the
Trust by or on behalf of any Underwriter through you expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the 1933 Act and the 1933 Act Rules and Regulations, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a material fact contained in such Prepricing Prospectus was corrected in the
Prospectus, provided that the Trust has delivered the Prospectus to the several
Underwriters in requisite quantity on a

<Page>

                                       15

timely basis to permit such delivery or sending. The foregoing indemnity
agreement shall be in addition to any liability which the Trust or the Adviser
may otherwise have.

          (b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Trust or the Adviser, such Underwriter or
such controlling person shall promptly notify the Trust or the Adviser, and the
Trust or the Adviser shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the Trust or the Adviser has agreed in
writing to pay such fees and expenses, (ii) the Trust and the Adviser have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Trust or the Adviser
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Trust or the
Adviser by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Trust and the Adviser shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Trust and the Adviser
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by the Underwriters, and that all such fees and expenses shall be
reimbursed as they are incurred. The Trust and the Adviser shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Trust and the Adviser agree to indemnify and hold harmless any Underwriter, to
the extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.

          (c) Each Underwriter agrees to indemnify and hold harmless the Trust
and the Adviser, their trustees, directors, any officers who sign the
Registration Statement, and any person who controls the Trust or the Adviser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
to the same extent as the foregoing indemnity from the Trust and the Adviser to
each Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Trust or the Adviser, any of their
trustees or directors, any such officer, or any such controlling person based on
the Registration Statement, the Prospectus or any Prepricing Prospectus, or any
amendment or supplement thereto, and in respect of which indemnity may be sought
against any Underwriter

<Page>

                                       16

pursuant to this paragraph (c), such Underwriter shall have the rights and
duties given to the Trust and the Adviser by paragraph (b) above (except that if
the Trust or the Adviser shall have assumed the defense thereof such Underwriter
shall not be required to do so, but may employ separate counsel therein and
participate in the defense thereof, but the fees and expenses of such counsel
shall be at such Underwriter's expense), and the Trust and the Adviser, their
trustees or directors, any such officer, and any such controlling person shall
have the rights and duties given to the Underwriters by paragraph (b) above. The
foregoing indemnity agreement shall be in addition to any liability which the
Underwriters may otherwise have.

          (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Trust and the Adviser on the one hand (treated jointly for this purpose as one
person) and the Underwriters on the other hand from the offering of the Shares,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Trust and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Trust and the Adviser on the one hand (treated jointly
for this purpose as one person) and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Trust bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Trust and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Trust and the Adviser on the one hand
(treated jointly for this purpose as one person) or by the Underwriters on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

          (e) The Trust, the Adviser and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such

<Page>

                                       17

untrue or alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the 1933 Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective numbers of Shares set forth opposite their names in Schedule I hereto
(or such numbers of Shares increased as set forth in Section 11 hereof) and not
joint.

          (f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

          (g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Trust and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Trust, the Adviser, their trustees, directors
or officers, or any person controlling the Trust or the Adviser, (ii) acceptance
of any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Trust, the Adviser, their trustees, directors or
officers, or any person controlling the Trust or the Adviser, shall be entitled
to the benefits of the indemnity, contribution, and reimbursement agreements
contained in this Section 8.

          9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the following
conditions:

          (a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by the
Underwriters, and all filings, if any, required by Rules 497 and 430A under the
1933 Act and the 1933 Act Rules and Regulations shall have been timely made; no
stop order suspending the effectiveness of the Registration Statement or order
pursuant to Section 8(e) of the 1940 Act shall have been issued and no
proceeding for those purposes shall have been instituted or, to the knowledge of
the Trust, the Adviser or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in the
registration statement or the prospectus or otherwise) shall have been complied
with to the Underwriters' satisfaction.

          (b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the

<Page>

                                       18

condition (financial or other), business, prospects, properties, net assets, or
results of operations of the Trust or the Adviser not contemplated by the
Prospectus, which in the Underwriters' opinion would materially, adversely
affect the market for the Shares, or (ii) any event or development relating to
or involving the Trust or the Adviser or any officer, trustee or director of the
Trust or the Adviser which makes any statement made in the Prospectus untrue or
which, in the opinion of the Trust and its counsel or the Underwriters and their
counsel, requires the making of any addition to or change in the Prospectus in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations or any other law to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading, if amending or supplementing the Prospectus to
reflect such event or development would, in the Underwriters' opinion,
materially adversely affect the market for the Shares.

          (c) The Trust shall have furnished to you a report showing compliance
with the asset coverage requirements of the 1940 Act and a Preferred Shares
Basic Maintenance Certificate (as defined in the Certificate), each dated the
Closing Date and in form and substance satisfactory to you. Each such report may
use portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Date, provided, however, that
the Trust represents in such report that its total net assets as of the Closing
Date have not declined by 5% or more from such valuation date.

          (d) The Underwriters shall have received on the Closing Date an
opinion of Dechert, counsel for the Trust, dated the Closing Date and addressed
to you, in form and substance satisfactory to you and to the effect that:

                 (i) The Trust (A) is a business trust duly formed by virtue of
          the execution and delivery of the Agreement and Declaration of Trust
          on December 2, 1987 and is validly existing under the laws of the
          State of Massachusetts with full business trust power and authority to
          own, lease and operate its properties and to conduct its business as
          described in the Registration Statement and the Prospectus (and any
          amendment or supplement to either of them), and (B) is duly registered
          and qualified to conduct its business and is in good standing in the
          State of Arizona;

                 (ii) The Trust has no subsidiaries;

                 (iii) The authorized and outstanding capital stock of the Trust
          is as set forth under the caption "Capitalization" in the Prospectus;
          and the authorized capital stock of the Trust conforms in all material
          respects as to legal matters to the description thereof contained in
          the Prospectus under the caption "Description of Capital Structure";

                 (iv) All the shares of beneficial interest of the Trust
          outstanding prior to the issuance of the Shares have been duly
          authorized and validly issued by the Trust, and are fully paid and
          nonassessable;

<Page>

                                       19

                 (v) The Shares have been duly authorized and, when issued and
          delivered to the Underwriters against payment therefor in accordance
          with the terms hereof, will be validly issued by the Trust, fully paid
          and nonassessable and free of any preemptive, or to the best knowledge
          of such counsel after reasonable inquiry, similar rights that entitle
          or will entitle any person to acquire any Shares upon the issuance
          thereof by the Trust, and will conform to the description thereof
          contained in the Prospectus under the caption "Description of
          Preferred Shares";

                 (vi) The form of certificates for the Shares conforms to the
          requirements of Massachusetts law;

                 (vii) The Registration Statement and all post-effective
          amendments, if any, have become effective under the 1933 Act and the
          1933 Act Rules and Regulations and, to the best knowledge of such
          counsel after reasonable inquiry, no stop order suspending the
          effectiveness of the Registration Statement or order pursuant to
          Section 8(e) of the 1940 Act has been issued and no proceedings for
          that purpose are pending before or contemplated by the Commission; and
          any required filing of the Prospectus pursuant to Rule 497 of the 1933
          Act Rules and Regulations has been made in accordance with Rule 497;

                 (viii) The Trust has business trust power and authority to
          enter into this Agreement and each of the Trust Agreements and to
          issue, sell and deliver the Shares to the Underwriters as provided
          herein, and this Agreement and each of the Trust Agreements have been
          duly authorized, executed and delivered by the Trust and each is a
          valid, legal and binding agreement of the Trust, enforceable against
          the Trust in accordance with its terms, except as enforcement of
          rights to indemnity and contribution hereunder may be limited by
          Federal or state securities laws or principles of public policy and
          subject to the qualification that the enforceability of the Trust's
          obligations hereunder may be limited by bankruptcy, fraudulent
          conveyance, insolvency, reorganization, moratorium and other laws
          relating to or affecting creditors' rights generally and by general
          equitable principles;

                 (ix) (A) The Trust is not in violation of the Declaration,
          including the Certificate, or Bylaws, or other organizational
          documents, and (B) based upon a certificate executed by officers of
          the Trust delivered to us, is not in default in the performance of any
          material obligation, agreement or condition contained in any bond,
          debenture, note or other evidence of indebtedness, except as may be
          disclosed in the Prospectus;

                 (x) Neither the offer, sale or delivery of the Shares, the
          execution, delivery or performance of this Agreement and in the Trust
          Agreements by the Trust, compliance by the Trust with the provisions
          hereof or thereof nor consummation by the Trust of the transactions
          contemplated hereby and the Trust Agreements constitutes or will
          constitute a breach of, or a default under, the Declaration, including
          the Certificate, or Bylaws, or other organizational

<Page>

                                       20

          documents, of the Trust or any agreement, indenture, lease or other
          instrument to which the Trust is a party or by which it or any of its
          properties is bound that is an exhibit to the Registration Statement,
          nor will any such action result in any violation of any existing law,
          regulation, ruling (assuming compliance with all applicable state
          securities or blue sky laws), judgment, injunction, order or decree
          known to such counsel after reasonable inquiry, applicable to the
          Trust or any of its properties;

                 (xi) No consent, approval, authorization or other order of, or
          registration or filing with, the Commission, the NASD, any national
          securities exchange, or, to counsel's knowledge, any state securities
          commission, any arbitrator, any court, regulatory body, administrative
          agency or other governmental body, agency, or official is required on
          the part of the Trust (except such as may have been obtained prior to
          the date hereof and such as may be required for compliance with the
          state securities or blue sky laws of various jurisdictions) for the
          valid issuance and sale of the Shares to the Underwriters as
          contemplated by this Agreement, the execution, delivery and
          performance by the Trust of this Agreement and the Trust Agreements or
          the consummation of the transactions contemplated hereby and thereby;

                 (xii) The 1940 Act Notification, the Registration Statement,
          the Prospectus and any supplements or amendments thereto (except for
          the financial statements and the notes thereto and the schedules and
          other financial and statistical data included therein, as to which
          such counsel need not express any opinion) comply as to form in all
          material respects with the requirements of the 1933 Act, the 1940 Act
          and the Rules and Regulations;

                 (xiii) Based upon a certificate executed by officers of the
          Trust delivered to us, (A) other than as described or contemplated in
          the Registration Statement or Prospectus (or any amendment or
          supplement thereto), there are no legal or governmental proceedings
          pending or threatened against the Trust, or to which the Trust or any
          of its properties is subject, which are required to be described in
          the Registration Statement or Prospectus (or any amendment or
          supplement to either of them) and (B) there are no agreements,
          contracts, indentures, leases or other instruments that are required
          to be described in the Registration Statement or the Prospectus (or
          any amendment or supplement thereto) or to be filed as an exhibit to
          the Registration Statement that are not described or filed as
          required, as the case may be;

                 (xiv) The statements in the Registration Statement and
          Prospectus, insofar as they (A) are descriptions of contracts,
          agreements or other legal documents, or (B) refer to statements of law
          or legal conclusions, are accurate and present fairly the information
          required to be shown;

                 (xv) Each of the Trust Agreements complies in all material
          respects with all applicable provisions of the 1933 Act, the 1940 Act,
          the Advisers Act, the

<Page>

                                       21

          Rules and Regulations and the Advisers Act Rules and Regulations,
          except as to rights of indemnity and contribution;

                 (xvi) The Trust is duly registered with the Commission under
          the 1940 Act and the 1940 Act Rules and Regulations as a closed-end,
          diversified management investment company and, to such counsel's best
          knowledge after reasonable inquiry, no order of suspension or
          revocation of such registration under the 1940 Act and the 1940 Act
          Rules and Regulations has been issued or proceedings therefor
          initiated or threatened by the Commission; the provisions of the
          Declaration, including the Certificate, and Bylaws comply as to form
          in all material respects with the applicable provisions of the 1940
          Act and the 1940 Act Rules and Regulations, the provisions of the
          Declaration, including the Certificate, and Bylaws and the investment
          policies and restrictions described in the Registration Statement and
          the Prospectus under the captions "Investment Objective and Policies",
          "Risk Factors", "Additional Information About Investments and
          Investment Techniques" and "Investment Restrictions" (in the
          Prospectus and the statement of additional information) comply in all
          material respects with the requirements of the 1940 Act, and all
          action has been taken by the Trust as is required of the Trust by the
          1933 Act and the 1940 Act and the Rules and Regulations in connection
          with the issuance and sale of the Shares to make the public offering
          and consummate the sale of the Shares as contemplated by this
          Agreement;

                 (xvii) Except as described in the Prospectus, there are no
          outstanding options, warrants or other rights calling for the issuance
          of, and such counsel does not know of any commitment, plan or
          arrangement to issue, any shares of beneficial interest of the Trust
          or any security convertible into or exchangeable or exercisable for
          shares of beneficial interest of the Trust;

                 (xviii) Except as described in the Prospectus, such counsel
          does not know of any holder of any security of the Trust or any other
          person who has the right, contractual or otherwise, to cause the Trust
          to sell or otherwise issue to them, or to permit them to underwrite
          the sale of, the Shares or the right to have any securities of the
          Trust included in the registration statement or the right, as a result
          of the filing of the registration statement, to require registration
          under the 1933 Act of any securities of the Trust;

                 (xix) If the Trust operates as described in the Prospectus, the
          Trust will qualify as a regulated investment company under the Code;
          and

                 (xx) Such counsel shall also state that, while they have not
          themselves checked the accuracy and completeness of or otherwise
          verified, and are not passing upon and assume no responsibility for
          the accuracy or completeness of, the statements contained in the
          Registration Statement or the Prospectus, except to the limited extent
          stated in paragraphs (iii), (xiv) and (xvi) above, in the course of
          their review and discussion of the contents of the Registration
          Statement and

<Page>

                                       22

          Prospectus with certain officers and employees of the Trust and its
          independent accountants, no facts have come to their attention which
          cause them to believe that the Registration Statement or any amendment
          or supplement thereto (except as to any financial statements or other
          financial data included in the Registration Statement or any such
          amendment or supplement, as to which they express no belief), as of
          its effective date, contained an untrue statement of a material fact
          or omitted to state a material fact required to be stated therein or
          necessary to make the statements contained therein not misleading or
          that the Prospectus or any amendment or supplement thereto (except as
          to any financial statements or other financial data included in the
          Prospectus or any such amendment or supplement, as to which they
          express no belief), as of its issue date and as of the Closing Date,
          contained an untrue statement of a material fact or omitted to state a
          material fact required to be stated therein or necessary to make the
          statements contained therein, in the light of the circumstances under
          which they were made, not misleading.

                 Such counsel may state in its opinion letter that "[O]ur
          opinion is limited solely to those laws, rulings and regulations that
          are normally applicable to transactions of the type contemplated by
          the Underwriting Agreement by closed-end management investment
          companies registered under the 1940 Act, and to Massachusetts law with
          respect to the matters covered by paragraphs (i)(A), (iii), (iv), (v),
          (vi) and (viii). Moreover, the opinions given under paragraphs (ix)(B)
          and (xiii) are based solely upon the receipt of a certificate signed
          by officers of the Trust attesting to the statements made therein."

          (e) The Underwriters shall have received on the Closing Date an
opinion of Bryan Cave LLP, counsel for the Adviser, dated the Closing Date and
addressed to you, in form and substance satisfactory to you and to the effect
that:

                 (i)     The Adviser is a corporation duly incorporated and
          validly existing in good standing under the laws of the State of
          Delaware with full corporate power and authority to own, lease and
          operate its properties and to conduct its business as described in the
          Registration Statement and the Prospectus (and any amendment or
          supplement to either of them), and is duly registered and qualified to
          conduct its business and is in good standing in each of the following
          jurisdictions: Arizona and California;

                 (ii)    The Adviser is duly registered with the Commission as
          an investment adviser under the Advisers Act and is not prohibited by
          the Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act
          or the 1940 Act Rules and Regulations from acting under the Investment
          Management Agreement for the Trust as contemplated by the Prospectus
          (or any amendment or supplement thereto); and, to such counsel's
          knowledge, no order of suspension or revocation of such registration
          under the Advisers Act and the Advisers Act Rules and Regulations has
          been issued or proceedings therefor initiated or threatened by the
          Commission;

<Page>

                                       23

                 (iii)   The Adviser has corporate power and authority to enter
          into this Agreement and the Investment Management Agreement, and this
          Agreement and the Investment Management Agreement have been duly
          authorized, executed and delivered by the Adviser and each is a valid,
          legal and binding agreement of the Adviser, enforceable against the
          Adviser in accordance with its terms except as enforcement of rights
          to indemnity and contribution hereunder may be limited by Federal or
          state securities laws or principles of public policy and subject to
          the qualification that the enforceability of the Adviser's obligations
          hereunder may be limited by bankruptcy, fraudulent conveyance,
          insolvency, reorganization, moratorium, and other laws relating to or
          affecting creditors' rights generally and by general equitable
          principles;

                 (iv)    Neither the execution, delivery or performance of this
          Agreement or the Investment Management Agreement by the Adviser,
          compliance by the Adviser with the provisions hereof or thereof nor
          consummation by the Adviser of the transactions contemplated hereby
          and by the Investment Management Agreement conflicts or will conflict
          with, or constitutes or will constitute a breach of or default under,
          the certificate of incorporation or bylaws, or other organizational
          documents, of the Adviser or any agreement, indenture, lease or other
          instrument to which the Adviser is a party or by which it or any of
          its properties is bound that is known to such counsel, or will result
          in the creation or imposition of any lien, charge or encumbrance upon
          any property or assets of the Adviser, nor will any such action result
          in any violation of any existing law, regulation, ruling, judgment,
          injunction, order or decree known to such counsel after reasonable
          inquiry, applicable to the Adviser or any of its properties;

                 (v)     No consent, approval, authorization or other order of,
          or registration or filing with, the Commission, the NASD, any state
          securities commission, any national securities exchange, any
          arbitrator, any court, regulatory body, administrative agency or other
          governmental body, agency, or official is required on the part of the
          Adviser for the execution, delivery and performance by it of this
          Agreement and the Investment Management Agreement or the consummation
          by it of the transactions contemplated hereby and thereby;

                 (vi)    To the best knowledge of such counsel after reasonable
          inquiry, there are no legal or governmental proceedings pending or
          threatened against the Adviser or to which the Adviser or any of its
          properties is subject, which are required to be described in the
          Registration Statement or the Prospectus (or any amendment or
          supplement to either of them) but are not described as required or
          which may reasonably be expected to involve a prospective material
          adverse change on the ability of the Adviser to perform its
          obligations under this Agreement and the Investment Management
          Agreement;

                 (vii)   The obligations of the Adviser under this Agreement and
          the Investment Management Agreement comply in all material respects
          with all

<Page>

                                       24

          applicable provisions of the 1940 Act, the 1940 Act Rules and
          Regulations, the Advisers Act and the Advisers Act Rules and
          Regulations, except as to rights of indemnity and contribution; and

                 (viii)  Such counsel shall also state that, while they have not
          checked or verified the accuracy and completeness of, and are not
          passing upon and assume no responsibility for the accuracy and
          completeness of, any statements in the Registration Statement or the
          Prospectus, no facts have come to their attention in the course of
          their representation of the Adviser which cause them to believe that
          the description of the Adviser contained in the Registration Statement
          (and any amendment or supplement thereto), as of its effective date,
          contains an untrue statement of a material fact or omits to state a
          material fact required to be stated therein or necessary to make the
          statements contained therein not misleading or that the description of
          the Adviser contained in the Prospectus or any amendment or supplement
          thereto, as of its issue date and as of the Closing Date, contains an
          untrue statement of a material fact or omits to state a material fact
          required to be stated therein or necessary to make the statements
          contained therein, in the light of the circumstances under which they
          were made, not misleading.

          (f) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated the
Closing Date and addressed to you, with respect to such matters as you may
reasonably request. It is agreed that Simpson Thacher & Bartlett may rely on the
opinions of Dechert contained in Sections 9(d)(i)(A), 9(d)(v), 9(d)(viii) and
9(d)(xiv)(B) of this Agreement to the extent those opinions relate to or are
dependent upon matters governed by the laws of the State of Massachusetts.

          (g) The Underwriters shall have received letters addressed to you,
dated the date hereof and the Closing Date, from KPMG LLP, independent certified
public accountants, substantially in the forms heretofore approved by you.

          (h) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use of
the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus or any sales material shall have been issued and no proceedings for
such purpose or for the purpose of commencing an enforcement action against the
Trust, the Adviser or, with respect to the transactions contemplated by the
Prospectus (or any amendment or supplement thereto) and this Agreement, the
Underwriters, may be pending before or, to the knowledge of the Trust, the
Adviser or the Underwriters or in the reasonable view of counsel to the
Underwriters, shall be threatened or contemplated by the Commission at or prior
to the Closing Date and that any request for additional information on the part
of the Commission (to be included in the Registration Statement, the Prospectus
or otherwise) be complied with to the satisfaction of the Underwriters; (ii)
there shall not have been any change in the capital stock of the Trust nor any
material increase in the short-term or long-term debt of the Trust (other than
in the ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement
thereto); (iii) there shall not have been, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus
(or any amendment or

<Page>

                                       25

supplement thereto), except as may otherwise be stated in the Registration
Statement and Prospectus (or any amendment or supplement thereto), any material
adverse change in the condition (financial or other), business, prospects,
properties, net assets or results of operations of the Trust or the Adviser;
(iv) the Trust shall not have any liabilities or obligations, direct or
contingent (whether or not in the ordinary course of business), that are
material to the Trust, other than those reflected in the Registration Statement
or the Prospectus (or any amendment or supplement to either of them); and (v)
all the representations and warranties of the Trust and the Adviser contained in
this Agreement shall be true and correct on and as of the date hereof and on and
as of the Closing Date as if made on and as of the Closing Date, and the
Underwriters shall have received a certificate of the Trust and the Adviser,
dated the Closing Date and signed by the chief executive officer and the chief
financial officer of each of the Trust and the Adviser (or such other officers
as are acceptable to the Underwriters), to the effect set forth in this Section
9(h) and in Section 9(i) hereof.

          (i) That neither the Trust nor the Adviser shall have failed at or
prior to the Closing Date to have performed or complied in all material respects
with any of its agreements herein contained and required to be performed or
complied with by it hereunder at or prior to the Closing Date.

          (j) The Trust shall have delivered and the Underwriters shall have
received evidence satisfactory to the Underwriters that each series of Shares
are rated 'aaa' by Moody's and 'AAA' by S&P as of the Closing Date, and there
shall not have been given any notice of any intended or potential downgrading,
or of any review for a potential downgrading, in the rating accorded to the
shares of each series of the Shares by either Rating Agency.

          (k) The Trust and the Adviser shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.

          All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and the Underwriters' counsel.

          Any certificate or document signed by any officer of the Trust or the
Adviser and delivered to the Underwriters, or to counsel for the Underwriters,
shall be deemed a representation and warranty by the Trust or the Adviser to the
Underwriters as to the statements made therein.

<Page>

                                       26

          10. EXPENSES. The Trust agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and
each amendment or supplement to any of them (including, without limitation, the
filing fees prescribed by the 1933 Act, the 1940 Act and the Rules and
Regulations); (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, each Prepricing Prospectus, the
Prospectus, any sales material and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; (iv) the reproduction and
delivery of this Agreement, any dealer agreements, the preliminary blue sky
memorandum and all other agreements or documents reproduced and delivered in
connection with the offering of the Shares; (v) the reasonable fees, expenses
and disbursements of counsel for the Underwriters relating to the preparation,
reproduction, and delivery of the preliminary blue sky memorandum; (vi) fees
paid to the Rating Agencies; (vii) the transportation and other expenses
incurred by or on behalf of Trust representatives in connection with
presentations to prospective purchasers of the Shares; and (viii) the fees and
expenses of the Trust's accountants and the fees and expenses of counsel
(including local and special counsel) for the Trust and of the transfer agent.

          11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Trust,
by notifying the Underwriters, or by the Underwriters, by notifying the Trust.

          If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the number of Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Shares
set forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase on the Closing Date and the aggregate
number of Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to purchase on the Closing Date and arrangements satisfactory to you and the
Trust for the purchase of such Shares by one or more non-defaulting Underwriters
or other party or parties approved by you and the Trust are not made within 36

<Page>

                                       27

hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter, the Trust or the Adviser. In any such
case which does not result in termination of this Agreement, either you or the
Trust shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Trust,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.

          Any notice under this Section 11 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

          12. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the Underwriters' absolute discretion, without liability on the
part of any Underwriter to the Trust or the Adviser, by notice to the Trust or
the Adviser, if prior to the Closing Date (i) trading in the Shares or the
Trust's common shares of beneficial interest or securities generally on the NYSE
shall have been suspended or materially limited or minimum prices shall have
been established on the NYSE, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Trust by telegram, telecopy or telephone and
shall be subsequently confirmed by letter.

          13. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set
forth in the last paragraph on the cover page and the statements in the third
and fifth paragraphs under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus, constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred to
in Sections 6(b) and 8 hereof.

          14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and
12 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Trust or the Adviser, at the office
of the Trust at 7337 E. Doubletree Ranch Rd., Scottsdale, Arizona 85258-2034,
Attention: Daniel A. Norman, Senior Vice President; or (ii) if to the
Underwriters, to Salomon Smith Barney Inc., 388 Greenwich Street, New York, New
York 10013, Attention: Manager, Investment Banking Division.

          This Agreement has been and is made solely for the benefit of the
Underwriters, the Trust, the Adviser, their trustees, directors and officers,
and the other controlling persons

<Page>

                                       28

referred to in Section 8 hereof and their respective successors and assigns, to
the extent provided herein, and no other person shall acquire or have any right
under or by virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from the Underwriters of any of the Shares in his status as such purchaser.

          Consistent with the Trust's Declaration, notice is hereby given and
the parties hereto acknowledge and agree that this Agreement is executed on
behalf of the trustees of the Trust as trustees and not individually and that
obligations of this Agreement are not binding upon any of the trustees or
shareholders of the Trust individually but are binding only against the assets
and property of the Trust.

          15. APPLICABLE LAW; COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

          This Agreement may be signed in various counterparts, which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

<Page>

          Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Adviser and the several Underwriters.


                                   Very truly yours,


                                   PILGRIM PRIME RATE TRUST


                                   By:
                                          -------------------------------
                                             Name:
                                             Title:


                                   ING PILGRIM INVESTMENTS, INC.


                                   By:
                                          -------------------------------
                                             Name:
                                             Title:


Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.

SALOMON SMITH BARNEY INC.
UBS WARBURG LLC
LEHMAN BROTHERS INC.
GRUNTAL & CO., L.L.C.


By:  SALOMON SMITH BARNEY INC.


By:  /s/ Robert F. Bush Jr.
     -------------------------------
     Name:  Robert F. Bush Jr.
     Title: Director

<Page>

          Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Adviser and the several Underwriters.


                             Very truly yours,


                             PILGRIM PRIME RATE TRUST


                             By:     /s/ Daniel A. Norman
                                  -------------------------------
                                     Name: Daniel A. Norman
                                     Title: Senior Vice President and Treasurer


                             ING PILGRIM INVESTMENTS, INC.


                             By:     /s/ Daniel A. Norman
                                  -------------------------------
                                     Name: Daniel A. Norman
                                     Title: Senior Vice President and Treasurer


Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.

SALOMON SMITH BARNEY INC.
UBS WARBURG LLC
LEHMAN BROTHERS INC.
GRUNTAL & CO., L.L.C.

By:  SALOMON SMITH BARNEY INC.


By:
     -------------------------------
     Name:
     Title:

<Page>

                                   SCHEDULE I

                            PILGRIM PRIME RATE TRUST

<Table>
<Caption>
                                             NUMBER OF
          UNDERWRITER                        SHARES
          -----------                        ---------
          <S>                                <C>
          Salomon Smith Barney Inc.          2,160 Series T
                                             2,160 Series Th

          UBS Warburg LLC                    1,080 Series T
                                             1,080 Series Th

          Lehman Brothers Inc.               180 Series T
                                             180 Series Th

          Gruntal & Co., L.L.C.              180 Series T
                                             180 Series Th

                                             ---------------
          Total                              3,600 Series T
                                             3,600 Series Th
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(H)(II)(1)
<SEQUENCE>7
<FILENAME>a2138029zex-99_hii1.txt
<DESCRIPTION>EX 99.(H)(II)(1)
<TEXT>
<Page>

                                                           Exhibit 99.(h)(ii)(1)

                    Auction Rate Cumulative Preferred Shares


                            PILGRIM PRIME RATE TRUST

                             3,600 Shares, Series M

                             3,600 Shares, Series W

                             3,600 Shares, Series F

                    Liquidation Preference $25,000 Per Share

                             UNDERWRITING AGREEMENT

                                                                October 30, 2000

SALOMON SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
LEHMAN BROTHERS INC.
GRUNTAL & CO., L.L.C.

c/o SALOMON SMITH BARNEY INC.
      388 Greenwich Street
      New York, New York 10013

Ladies and Gentlemen:

          Pilgrim Prime Rate Trust, a Massachusetts business trust (the
"Trust"), proposes, upon the terms and conditions set forth herein, to issue and
sell an aggregate of 3,600 shares of its Auction Rate Cumulative Preferred
Shares, Series M, 3,600 shares of its Auction Rate Cumulative Preferred Shares,
Series W and 3,600 shares of its Auction Rate Cumulative Preferred Shares,
Series F, each with a liquidation preference of $25,000 per share (the shares of
Auction Rate Cumulative Preferred Shares to be sold hereby are referred to
herein, collectively, as the "Shares"). The Shares will be authorized by, and
subject to the terms and conditions of, the Certificate of Designation for
Preferred Shares of the Trust (the "Certificate") in the form filed as an
exhibit to the Registration Statement referred to in Section 1 of this
agreement. The Trust and its investment adviser, ING Pilgrim Investments, Inc.
(the "Adviser"), wish to confirm as follows their agreement with Salomon Smith
Barney Inc., PaineWebber Incorporated, Lehman Brothers Inc. and Gruntal & Co.,
L.L.C. (the "Underwriters"), in connection with the purchase of the Shares by
the Underwriters.

<Page>

                                        2

          Collectively, the Investment Management Agreement dated as of
September 1, 2000 between the Trust and the Adviser ("the "Investment Management
Agreement"), the Custodian Agreement dated as of July 1, 1996 between the Trust
and State Street Bank and Trust - Kansas City, the Agency Agreement dated as of
October 1, 1996 between the Trust and DST Systems, Inc. and the Auction Agency
Agreement between the Trust and Bankers Trust Company are hereinafter referred
to as the "Trust Agreements." This Underwriting Agreement is hereinafter
referred to as the "Agreement."

          1. REGISTRATION STATEMENT AND PROSPECTUS. The Trust has prepared in
conformity with the provisions of the Securities Act of 1933, as amended (the
"1933 Act"), the Investment Company Act of 1940, as amended (the "1940 Act"),
and the rules and regulations of the Securities and Exchange Commission (the
"Commission") promulgated under the 1933 Act (the "1933 Act Rules and
Regulations") and the 1940 Act (the "1940 Act Rules and Regulations" and,
together with the 1933 Act Rules and Regulations, the "Rules and Regulations") a
registration statement on Form N-2, as amended by Pre-Effective Amendment No. 1
(File Nos. 333-44918 and 811-05410), under the 1933 Act and the 1940 Act (the
"registration statement"), including a prospectus relating to the Shares, and
has filed the registration statement and prospectus in accordance with the 1933
Act and the 1940 Act. The Trust also has filed a notification of registration of
the Trust as an investment company under the 1940 Act on Form N-8A (the "1940
Act Notification"). The term "Registration Statement" as used in this Agreement
means the registration statement (including all financial schedules and
exhibits), as amended at the time it becomes effective under the 1933 Act or, if
the registration statement became effective under the 1933 Act prior to the
execution of this Agreement, as amended or supplemented at the time it became
effective, prior to the execution of this Agreement. If it is contemplated, at
the time this Agreement is executed, that a post-effective amendment to the
registration statement will be filed under the 1933 Act and must be declared
effective before the offering of the Shares may commence, the term "Registration
Statement" as used in this Agreement means the registration statement as amended
by said post-effective amendment. If the Trust has filed an abbreviated
registration statement to register an additional amount of Shares pursuant to
Rule 462(b) under the 1933 Act (the "Rule 462 Registration Statement"), then any
reference herein to the term "Registration Statement" shall include such Rule
462 Registration Statement. The term "Prospectus" as used in this Agreement
means the prospectus and statement of additional information in the forms
included in the Registration Statement or, if the prospectus and statement of
additional information included in the Registration Statement omit information
in reliance on Rule 430A under the 1933 Act Rules and Regulations and such
information is included in a prospectus and statement of additional information
filed with the Commission pursuant to Rule 497(h) under the 1933 Act, the term
"Prospectus" as used in this Agreement means the prospectus and statement of
additional information in the forms included in the Registration Statement as
supplemented by the addition of the information contained in the prospectus
filed with the Commission pursuant to Rule 497(h). The term "Prepricing
Prospectus" as used in this Agreement means the prospectus and statement of
additional information subject to completion in the forms included in the
registration statement at the time of filing of amendment no. 1 to the
registration statement with the Commission on October 23, 2000, and as such
prospectus and statement of additional information shall have been amended from
time to time prior to the date of the Prospectus, together with any other
prospectus and

<Page>

                                        3

statement of additional information relating to the Trust other than the
Prospectus approved in writing by or directly or indirectly prepared by the
Trust or the Adviser; it being understood that the definition of Prepricing
Prospectus above shall not include any Prepricing Prospectus prepared by the
Underwriters unless approved in writing by the Trust or Adviser. The terms
"Registration Statement," "Prospectus" and "Prepricing Prospectus" shall also
include any financial statements incorporated by reference therein.

          The Trust has furnished Salomon Smith Barney Inc. with copies of such
registration statement, each amendment to such registration statement filed with
the Commission and each Prepricing Prospectus, and Salomon Smith Barney Inc. has
provided the same to the other Underwriters.

          2. AGREEMENTS TO SELL AND PURCHASE. The Trust hereby agrees, subject
to all the terms and conditions set forth herein, to issue and sell to the
Underwriters and, upon the basis of the representations, warranties and
agreements of the Trust and the Adviser herein contained and subject to all the
terms and conditions set forth herein, the Underwriters agree to purchase from
the Trust, at a purchase price of $24,750 per Share, the number of shares of
each series of Auction Rate Cumulative Preferred Shares set forth opposite the
name of each Underwriter in Schedule I hereto.

          3. TERMS OF PUBLIC OFFERING. The Trust and the Adviser have been
advised by the Underwriters that they propose to make a public offering of the
Shares as soon after the Registration Statement and this Agreement have become
effective as in the Underwriters' judgment is advisable and initially to offer
the Shares upon the terms set forth in the Prospectus.

          4. DELIVERY OF THE SHARES AND PAYMENT THEREFOR. Delivery to the
Underwriters of and payment for the Shares shall be made at the office of
Simpson Thacher & Bartlett, 425 Lexington Avenue, New York, NY 10017, or through
the facilities of The Depository Trust Company or another mutually agreeable
facility, at 9:30 A.M., New York City time, on November 2, 2000 (the "Closing
Date"). The place of closing for the Shares and the Closing Date may be varied
by agreement between you and the Trust.

          Certificates for the Shares shall be registered in such names and in
such denominations as the Underwriters shall request prior to 9:30 A.M., New
York City time, on the second business day preceding the Closing Date. Such
certificates shall be made available to the Underwriters in New York City for
inspection not later than 9:30 A.M., New York City time, on the business day
next preceding the Closing Date. The certificates evidencing the Shares shall be
delivered to the Underwriters on the Closing Date, through the facilities of The
Depository Trust Company or another mutually agreeable facility, against payment
of the purchase price therefor in immediately available funds.

          5. AGREEMENTS OF THE TRUST AND THE ADVISER. The Trust and the Adviser,
jointly and severally, agree with the Underwriters as follows:

          (a) If, at the time this Agreement is executed and delivered, it is
necessary for the Registration Statement or a post-effective amendment thereto
to be declared effective under the

<Page>

                                        4

1933 Act before the offering of the Shares may commence, the Trust will endeavor
to cause the Registration Statement or such post-effective amendment to become
effective under the 1933 Act as soon as possible and will advise the
Underwriters promptly and, if requested by the Underwriters, will confirm such
advice in writing when the Registration Statement or such post-effective
amendment has become effective.

          (b) The Trust will advise the Underwriters promptly and, if requested
by the Underwriters, will confirm such advice in writing: (i) of any request
made by the Commission for amendment of or a supplement to the Registration
Statement, any Prepricing Prospectus or the Prospectus (or any amendment or
supplement to any of the foregoing) or for additional information, (ii) of the
issuance by the Commission, the National Association of Securities Dealers, Inc.
(the "NASD"), any state securities commission, any national securities exchange,
any arbitrator, any court or any other governmental, regulatory, self-regulatory
or administrative agency or any official of any order suspending the
effectiveness of the Registration Statement, prohibiting or suspending the use
of the Prospectus or any Prepricing Prospectus, or any sales material (as
hereinafter defined), of any notice pursuant to Section 8(e) of the 1940 Act, of
the suspension of qualification of the Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for any such purposes, (iii)
of receipt by the Trust, the Adviser, any affiliate of the Trust or the Adviser
or any representative or attorney of the Trust or the Adviser of any other
material communication from the Commission, the NASD, any state securities
commission, any national securities exchange, any arbitrator, any court or any
other governmental, regulatory, self-regulatory or administrative agency or any
official relating to the Trust (if such communication relating to the Trust is
received by such person within three years after the date of this Agreement),
the Registration Statement, the 1940 Act Notification, the Prospectus, any
Prepricing Prospectus, any sales material (as herein defined) (or any amendment
or supplement to any of the foregoing) or this Agreement or any of the Trust
Agreements and (iv) within the period of time referred to in paragraph (f)
below, of any material adverse change in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Trust or the Adviser or of the happening of any other event which makes any
statement of a material fact made in the Registration Statement or the
Prospectus, or any Prepricing Prospectus or any sales materials (as herein
defined) (or any amendment or supplement to any of the foregoing) untrue or
which requires the making of any additions to or changes in the Registration
Statement or the Prospectus, or any Prepricing Prospectus or any sales materials
(as herein defined) (or any amendment or supplement to any of the foregoing) in
order to state a material fact required by the 1933 Act, the 1940 Act or the
Rules and Regulations to be stated therein or necessary in order to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made), not misleading or of the necessity to amend or
supplement the Registration Statement, the Prospectus, or any Prepricing
Prospectus or any sales material (as herein defined) (or any amendment or
supplement to any of the foregoing) to comply with the 1933 Act, the 1940 Act,
the Rules and Regulations or any other law or order of any court or regulatory
body. If at any time the Commission, the NASD, any state securities commission,
any national securities exchange, any arbitrator, any court or any other
governmental, regulatory, self-regulatory or administrative agency or any
official shall issue any order suspending the effectiveness of the Registration
Statement, prohibiting or suspending the use of the Prospectus or any sales
material (as herein defined) (or any amendment or supplement to any of the
foregoing) or suspending the qualification of the Shares for offering or sale in
any jurisdiction,

<Page>

                                        5

the Trust will make every reasonable effort to obtain the withdrawal of such
order at the earliest possible time.

          (c) The Trust will furnish to you, without charge, three signed copies
of the Registration Statement as originally filed with the Commission and of
each amendment thereto, including financial statements and all exhibits thereto,
and will also furnish to you, without charge, such number of conformed copies of
the Registration Statement as originally filed and of each amendment thereto,
but without exhibits, as you may reasonably request.

          (d) The Trust will not (i) file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus, or any sales
material (as herein defined), of which you shall not previously have been
advised or to which you shall reasonably object after being so advised or (ii)
so long as, in the opinion of counsel for the Underwriters, a Prospectus is
required by the 1933 Act to be delivered in connection with sales by the
Underwriters or any dealer, file any information, documents or reports pursuant
to the Securities Exchange Act of 1934, as amended (the "1934 Act"), without
delivering a copy of such information, documents or reports to you prior to or
concurrently with such filing.

          (e) Prior to the execution and delivery of this Agreement, the Trust
has delivered to you, without charge, in such quantities as you have requested,
copies of each form of the Prepricing Prospectus. The Trust consents to the use,
in accordance with the provisions of the 1933 Act and with the state securities
or blue sky laws of the jurisdictions in which the Shares are offered by the
Underwriters and by dealers, prior to the date of the Prospectus, of each
Prepricing Prospectus so furnished by the Trust.

          (f) As soon after the execution and delivery of this Agreement as
possible and thereafter from time to time for such period as in the opinion of
counsel for the Underwriters a prospectus is required by the 1933 Act to be
delivered in connection with sales by the Underwriters or any dealer, the Trust
will expeditiously deliver to the Underwriters and each dealer, without charge,
as many copies of the Prospectus (and of any amendment or supplement thereto) as
the Underwriters may reasonably request. The Trust consents to the use of the
Prospectus (and of any amendment or supplement thereto) in accordance with the
provisions of the 1933 Act and with the state securities or blue sky laws of the
jurisdictions in which the Shares are offered by the Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering and
sale of the Shares and for such period of time thereafter as the Prospectus is
required by the 1933 Act to be delivered in connection with sales by the
Underwriters or any dealer. If during such period of time any event shall occur
that in the judgment of the Trust or in the opinion of counsel for the
Underwriters is required to be set forth in the Registration Statement or the
Prospectus (as then amended or supplemented) or should be set forth therein in
order to make the statements therein (in the case of the Prospectus, in the
light of the circumstances under which they were made) not misleading, or if it
is necessary to supplement or amend the Registration Statement or the Prospectus
to comply with the 1933 Act, the 1940 Act, the Rules and Regulations or any
other federal law, rule or regulation, or any state securities or blue sky
disclosure laws, rules or regulations, the Trust will forthwith prepare and,
subject to the provisions of paragraph (d) above, promptly file with the
Commission an appropriate supplement or amendment thereto, and will
expeditiously furnish to the Underwriters

<Page>

                                        6

and dealers, without charge, a reasonable number of copies thereof. In the event
that the Trust and the Underwriters agree that the Registration Statement or the
Prospectus should be amended or supplemented, the Trust, if requested by the
Underwriters, will promptly issue a press release announcing or disclosing the
matters to be covered by the proposed amendment or supplement.

          (g) The Trust will make generally available to its security holders an
earnings statement, which need not be audited, covering a twelve-month period
ending not later than 15 months after the effective date of the Registration
Statement as soon as practicable after the end of such period, which earnings
statement shall satisfy the provisions of Section 11(a) of the 1933 Act and
Rule 158 of the 1933 Act Rules and Regulations.

          (h) During the period of five years after the date of this Agreement,
the Trust will furnish to you (i) as soon as available, a copy of each report of
the Trust mailed to stockholders or filed with the Commission or furnished to
the New York Stock Exchange (the "NYSE") other than reports on Form N-SAR, and
(ii) from time to time such other information concerning the Trust as the
Underwriters may reasonably request.

          (i) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof (otherwise than by notice given by
the Underwriters terminating this Agreement pursuant to Section 12 hereof) or if
this Agreement shall be terminated by the Underwriters because of any failure or
refusal on the part of the Trust or the Adviser to comply with the terms or
fulfill any of the conditions of this Agreement, the Trust and the Adviser,
jointly and severally, agree to reimburse the Underwriters for all out-of-pocket
expenses (including reasonable fees and expenses of counsel for the
Underwriters) incurred by the Underwriters in connection herewith.

          (j) The Trust will apply the net proceeds from the sale of the Shares
substantially in accordance with the description set forth in the Prospectus and
in such a manner as to comply with the investment objectives, policies and
restrictions of the Trust as described in the Prospectus.

          (k) The Trust will timely file the Prospectus with the Commission
pursuant to Rule 497(c) or Rule 497(h) of the 1933 Act Rules and Regulations,
whichever is applicable or, if applicable, will timely file the certification
permitted by Rule 497(j) of the 1933 Act Rules and Regulations and will advise
the Underwriters of the time and manner of such filing.

          (l) Except as provided in this Agreement, the Trust will not sell,
contract to sell, or otherwise dispose of any senior securities (as defined in
the 1940 Act) (other than senior securities sold in an underwriting lead-managed
by Salomon Smith Barney Inc.) of the Trust, or grant any options or warrants to
purchase senior securities of the Trust, for a period of 180 days after the date
of the Prospectus, without the prior written consent of the Underwriters.

          (m) Except as stated in this Agreement and in the Prepricing
Prospectus and the Prospectus, neither the Trust nor the Adviser has taken, nor
will it take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or

<Page>

                                        7

manipulation of the price of any securities issued by the Trust to facilitate
the sale or resale of the Shares.

          (n) The Trust will use commercially reasonable efforts to cause the
Shares, prior to the Closing Date, to be assigned a rating of 'aaa' by Moody's
Investors Service, Inc. ("Moody's") and 'AAA' by Standard & Poor's, a division
of McGraw-Hill Companies, Inc. ("S&P" and, together with Moody's, the "Rating
Agencies").

          (o) The Trust and the Adviser will use commercially reasonable efforts
to perform all of the agreements required of them and discharge all conditions
to closing as set forth in this Agreement.

          6. REPRESENTATIONS AND WARRANTIES OF THE TRUST AND THE ADVISER. The
Trust and the Adviser, jointly and severally, represent and warrant to the
Underwriters that:

          (a) Each Prepricing Prospectus included as part of the registration
statement as originally filed or as part of any amendment or supplement thereto,
or filed pursuant to Rule 497 of the 1933 Act Rules and Regulations, complied
when so filed in all material respects with the provisions of the 1933 Act, the
1940 Act and the Rules and Regulations. The Commission has not issued any order
preventing or suspending the use of any Prepricing Prospectus.

          (b) The registration statement in the form in which it became or
becomes effective and also in such form as it may be when any post-effective
amendment thereto shall become effective and the Prospectus and any supplement
or amendment thereto when filed with the Commission under Rule 497 of the 1933
Act Rules and Regulations and the 1940 Act Notification when originally filed
with the Commission and any amendment or supplement thereto when filed with the
Commission, complied or will comply in all material respects with the provisions
of the 1933 Act, the 1940 Act and the Rules and Regulations and did not or will
not at any such times contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein (in the case of the Prospectus, in light of the circumstances
under which they were made) not misleading, except that this representation and
warranty does not apply to statements in or omissions from the registration
statement or the Prospectus made in reliance upon and in conformity with
information relating to the Underwriters furnished to the Trust in writing by or
on behalf of the Underwriters expressly for use therein.

          (c) All the outstanding common shares of beneficial interest of the
Trust have been duly authorized and validly issued by the Trust, are fully paid
and nonassessable and are free of any preemptive or similar rights; the Shares
have been duly authorized and, when issued and delivered to the Underwriters
against payment therefor in accordance with the terms hereof, will be validly
issued by the Trust, fully paid and nonassessable and free of any preemptive or
similar rights and will conform to the description thereof in the Registration
Statement and the Prospectus (and any amendment or supplement to either of
them); and the capitalization of the Trust conforms to the description thereof
in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them).

<Page>

                                        8

          (d) The Trust is a business trust duly organized and validly existing
under the laws of the State of Massachusetts with full business trust power and
authority to own, lease and operate its properties and to conduct its business
as described in the Registration Statement and the Prospectus (and any amendment
or supplement to either of them), and is duly registered and qualified to
conduct its business and is in good standing in each jurisdiction or place where
the nature of its properties or the conduct of its business requires such
registration or qualification, except where the failure so to register or
qualify does not have a material adverse effect on the condition (financial or
other), business, prospects, properties, net assets or results of operations of
the Trust; and the Trust has no subsidiaries.

          (e) There are no legal or governmental proceedings pending or, to the
knowledge of the Trust, threatened, against the Trust, or to which the Trust or
any of its properties is subject, that are required to be described in the
Registration Statement or the Prospectus (and any amendment or supplement to
either of them) but are not described as required, and there are no agreements,
contracts, indentures, leases or other instruments that are required to be
described in the Registration Statement or the Prospectus (and any amendment or
supplement to either of them) or to be filed as an exhibit to the Registration
Statement that are not described or filed as required by the 1933 Act, the 1940
Act or the Rules and Regulations.

          (f) The Trust is not in violation of its Agreement and Declaration of
Trust (the "Declaration"), or bylaws (the "Bylaws"), or other organizational
documents or of any law, ordinance, administrative or governmental rule or
regulation applicable to the Trust or of any decree of the Commission, the NASD,
any state securities commission, any national securities exchange, any
arbitrator, any court or governmental agency, body or official having
jurisdiction over the Trust, or in default in any material respect in the
performance of any obligation, agreement or condition contained in any bond,
debenture, note or any other evidence of indebtedness or in any material
agreement, indenture, lease or other instrument to which the Trust is a party or
by which it or any of its properties may be bound.

          (g) Neither the issuance and sale of the Shares, the execution,
delivery or performance of this Agreement or any of the Trust Agreements by the
Trust, nor the consummation by the Trust of the transactions contemplated hereby
or thereby (A) requires the Trust to obtain any consent, approval, authorization
or other order of or registration or filing with, the Commission, the NASD, any
state securities commission, any national securities exchange, any arbitrator,
any court, regulatory body, administrative agency or other governmental body,
agency or official (except such as may have been obtained prior to the date
hereof and such as may be required for compliance with the state securities or
blue sky laws of various jurisdictions which have been or will be effected in
accordance with this Agreement) or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the Declaration,
the Bylaws or other organizational documents of the Trust or (B) conflicts or
will conflict with or constitutes or will constitute a breach of, or a default
under, any agreement, indenture, lease or other instrument to which the Trust is
a party or by which it or any of its properties may be bound, or violates or
will violate any statute, law, regulation or judgment, injunction, order or
decree applicable to the Trust or any of its properties, or will result in the
creation or imposition of any lien, charge or encumbrance upon any property or
assets of the Trust pursuant to the terms of any agreement or instrument to
which it is a party or by which it

<Page>

                                        9

may be bound or to which any of its property or assets is subject. The Trust is
not subject to any order of any court or of any arbitrator, governmental
authority or administrative agency.

          (h) The accountants, KPMG LLP, who have certified or shall certify the
financial statements included or incorporated by reference in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them)
have represented to the Trust that they are independent public accountants as
required by the 1933 Act, the 1940 Act and the Rules and Regulations.

          (i) The financial statements, together with related schedules and
notes, included or incorporated by reference in the Registration Statement and
the Prospectus (and any amendment or supplement to either of them), present
fairly the financial position, results of operations and changes in financial
position of the Trust on the basis stated or incorporated by reference in the
Registration Statement at the respective dates or for the respective periods to
which they apply; such statements and related schedules and notes have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved, except as disclosed
therein; and the other financial and statistical information and data included
in the Registration Statement and the Prospectus (and any amendment or
supplement to either of them) are accurately presented and prepared on a basis
consistent with such financial statements and the books and records of the
Trust.

          (j) The execution and delivery of, and the performance by the Trust of
its obligations under, this Agreement and the Trust Agreements have been duly
and validly authorized by the Trust, and this Agreement and the Trust Agreements
have been duly executed and delivered by the Trust and constitute the valid and
legally binding agreements of the Trust, enforceable against the Trust in
accordance with their terms, except as rights to indemnity and contribution
hereunder and thereunder may be limited by federal or state securities laws or
principles of public policy and subject to the qualification that the
enforceability of the Trust's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other laws relating to or affecting creditors' rights generally and by general
equitable principles.

          (k) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Trust has not incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Trust, and there has not been any change in the capital stock,
or material increase in the short-term debt or long-term debt, of the Trust, or
any material adverse change, or any development involving or which may
reasonably be expected to involve, a prospective material adverse change, in the
condition (financial or other), business, prospects, properties, net assets or
results of operations of the Trust, whether or not arising in the ordinary
course of business.

          (1) The Trust has not distributed and, prior to the later to occur of
(i) the Closing Date and (ii) completion of the distribution of the Shares, will
not distribute any offering material in connection with the offering and sale of
the Shares other than the Registration Statement, the

<Page>

                                       10

Prepricing Prospectus, the Prospectus or other materials, if any, permitted by
the 1933 Act, the 1940 Act or the Rules and Regulations.

          (m) The Trust has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto), subject
to such qualifications as may be set forth in the Prospectus; the Trust has
fulfilled and performed all its material obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any other material
impairment of the rights of the Trust under any such permit, subject in each
case to such qualification as may be set forth in the Prospectus (and any
amendment or supplement thereto); and, except as described in the Prospectus
(and any amendment or supplement thereto), none of such permits contains any
restriction that is materially burdensome to the Trust.

          (n) The Trust maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions in portfolio
securities are executed in accordance with management's general or specific
authorization and with the applicable requirements of the 1940 Act, the 1940 Act
Rules and Regulations and the Internal Revenue Code of 1986, as amended (the
"Code"); (ii) transactions are recorded as necessary to permit preparation of
financial statements in conformity with generally accepted accounting principles
and to maintain accountability for assets and to maintain compliance with the
books and records requirements under the 1940 Act and the 1940 Act Rules and
Regulations; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.

          (o) To the Trust's knowledge, neither the Trust nor any employee or
agent of the Trust has made any payment of funds of the Trust or received or
retained any funds, which payment, receipt or retention of funds is of a
character required to be disclosed in the Prospectus and that is not so
disclosed.

          (p) The Trust has filed all tax returns required to be filed, which
returns are complete and correct in all material respects, and the Trust is not
in material default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.

          (q) No holder of any security of the Trust has any right to require
registration of common shares of beneficial interest or any other security of
the Trust because of the filing of the registration statement or consummation of
the transactions contemplated by this Agreement.

          (r) The Trust, subject to the registration statement having been
declared effective and the filing of the Prospectus under Rule 497 under the
1933 Act Rules and Regulations, has taken all required action under the 1933
Act, the 1940 Act and the Rules and Regulations to make the public offering and
consummate the sale of the Shares as contemplated by this Agreement.

<Page>

                                       11

          (s) The conduct by the Trust of its business (as described in the
Prospectus) does not, to the knowledge of the Trust or the Adviser after
reasonable inquiry, require the Trust to be the owner, possessor or licensee of
any patents, patent licenses, trademarks, service marks or trade names which it
does not own, possess or license.

          (t) The Trust is registered under the 1940 Act as a closed-end,
diversified management investment company and the 1940 Act Notification has been
duly filed with the Commission and, at the time of filing thereof and any
amendment or supplement thereto, conformed in all material respects with all
applicable provisions of the 1940 Act and the Rules and Regulations. The Trust
is, and at all times through the completion of the transactions contemplated
hereby, will be, in compliance in all material respects with the terms and
conditions of the 1933 Act and the 1940 Act. No person is serving or acting as
an officer, trustee or investment adviser of the Trust except in accordance with
the provisions of the 1940 Act and the 1940 Act Rules and Regulations and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), and the rules
and regulations of the Commission promulgated under the Advisers Act (the
"Advisers Act Rules and Regulations").

          (u) Except as stated in this Agreement and in the Prospectus (and any
amendment or supplement thereto), the Trust has not taken, nor will it take,
directly or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the price of any
securities issued by the Trust to facilitate the sale or resale of the Shares,
and the Trust is not aware of any such action taken or to be taken by any
affiliates of the Trust.

          (v) The Trust has filed in a timely manner each document or report
required to be filed by it pursuant to the 1934 Act and the rules and
regulations of the Commission promulgated thereunder (the "1934 Act Rules and
Regulations"); each such document or report at the time it was filed conformed
to the requirements of the 1934 Act and the 1934 Act Rules and Regulations; and
none of such documents or reports contained an untrue statement of any material
fact or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.

          (w) All advertising, sales literature or other promotional material
(including "prospectus wrappers," "broker kits," "road show slides" and "road
show scripts") authorized in writing by or prepared by the Trust or the Adviser
for use in connection with the offering and sale of the Shares (collectively,
"sales material") complied and comply in all material respects with the
applicable requirements of the 1933 Act, the 1940 Act, the Rules and Regulations
and the rules and interpretations of the NASD and no such sales material
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were made,
not misleading.

          (x) Each of the Trust Agreements complies in all material respects
with all applicable provisions of the 1940 Act, the 1940 Act Rules and
Regulations, the Advisers Act and the Advisers Act Rules and Regulations, except
as to rights of indemnity and contribution.

<Page>

                                       12

          (y) The Shares have been, or prior to the Closing Date will be,
assigned a rating of 'aaa' by Moody's and 'AAA' by S&P.

          (z) As required by Subchapter M of the Code, the Trust is currently in
compliance with the requirements to qualify as a regulated investment company
under the Code.

          (aa) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), no trustee of the
Trust is an "interested person" (as defined in the 1940 Act) of the Trust or an
"affiliated person" (as defined in the 1940 Act) of any Underwriter listed in
Schedule I hereto.

          7. REPRESENTATIONS AND WARRANTIES OF THE ADVISER. The Adviser
represents and warrants to the Underwriters as follows:

          (a) The Adviser is a corporation duly incorporated and validly
existing in good standing under the laws of the State of Delaware, with full
corporate power and authority to own, lease and operate its properties and to
conduct its business as described in the Registration Statement and the
Prospectus (and any amendment or supplement to either of them), and is duly
registered and qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the conduct of its
business requires such registration or qualification, except where the failure
so to register or to qualify does not have a material adverse effect on the
condition (financial or other), business, prospects, properties, net assets or
results of operations of the Adviser or on the ability of the Adviser to perform
its obligations under this Agreement and the Investment Management Agreement.

          (b) The Adviser is duly registered with the Commission as an
investment adviser under the Advisers Act and is not prohibited by the Advisers
Act, the Advisers Act Rules and Regulations, the 1940 Act or the 1940 Act Rules
and Regulations from acting under the Investment Management Agreement for the
Trust as contemplated by the Prospectus (or any amendment or supplement
thereto). There does not exist any proceeding or any facts or circumstances the
existence of which could lead to any proceeding which might adversely affect the
registration of the Adviser with the Commission.

          (c) There are no legal or governmental proceedings pending or, to the
knowledge of the Adviser, threatened against the Adviser, or to which the
Adviser or any of its properties is subject, that are required to be described
in the Registration Statement or the Prospectus (or any amendment or supplement
to either of them) but are not described as required or that may reasonably be
expected to involve a prospective material adverse change in the condition
(financial or other), business, prospects, properties, net assets or results of
operations of the Adviser or on the ability of the Adviser to perform its
obligations under this Agreement and the Investment Management Agreement.

          (d) Neither the execution, delivery or performance of this Agreement
or the Investment Management Agreement by the Adviser, nor the consummation by
the Adviser of the transactions contemplated hereby or thereby (A) requires the
Adviser to obtain any consent,

<Page>

                                       13

approval, authorization or other order of or registration or filing with, the
Commission, the NASD, any state securities commission, any national securities
exchange, any arbitrator, any court, regulatory body, administrative agency or
other governmental body, agency or official or conflicts or will conflict with
or constitutes or will constitute a breach of or a default under, the
certificate of incorporation or by-laws, or other organizational documents, of
the Adviser or (B) conflicts or will conflict with or constitutes or will
constitute a breach of or a default under, any agreement, indenture, lease or
other instrument to which the Adviser is a party or by which it or any of its
properties may be bound, or violates or will violate any statute, law,
regulation or filing or judgment, injunction, order or decree applicable to the
Adviser or any of its properties or will result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Adviser
pursuant to the terms of any agreement or instrument to which it is a party or
by which it may be bound or to which any of the property or assets of the
Adviser is subject. The Adviser is not subject to any order of any court or of
any arbitrator, governmental authority or administrative agency.

          (e) The execution and delivery of, and the performance by the Adviser
of its obligations under, this Agreement and the Investment Management Agreement
have been duly and validly authorized by the Adviser, and this Agreement and the
Investment Management Agreement have been duly executed and delivered by the
Adviser and each constitutes the valid and legally binding agreement of the
Adviser, enforceable against the Adviser in accordance with its terms except as
rights to indemnity and contribution hereunder may be limited by federal or
state securities laws or principles of public policy and subject to the
qualification that the enforceability of the Trust's obligations thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium and other laws relating to or affecting creditors' rights generally
and by general equitable principles.

          (f) The Adviser has the financial resources available to it necessary
for the performance of its services and obligations as contemplated in the
Prospectus (or any amendment or supplement thereto) and under this Agreement and
the Investment Management Agreement.

          (g) The description of the Adviser in the Registration Statement and
the Prospectus (and any amendment or supplement thereto) complied and comply in
all material respects with the provisions of the 1933 Act, the 1940 Act, the
Advisers Act, the Rules and Regulations and the Advisers Act Rules and
Regulations and did not and will not contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
to make the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading.

          (h) Except as disclosed in the Registration Statement and the
Prospectus (or any amendment or supplement to either of them), subsequent to the
respective dates as of which such information is given in the Registration
Statement and the Prospectus (or any amendment or supplement to either of them),
the Adviser has not incurred any liability or obligation, direct or contingent,
or entered into any transaction, not in the ordinary course of business, that is
material to the Adviser or the Trust and that is required to be disclosed in the
Registration Statement or the Prospectus and there has not been any material
adverse change, or any development

<Page>

                                       14

involving or which may reasonably be expected to involve, a prospective material
adverse change, in the condition (financial or other), business, prospects,
properties, net assets or results of operations of the Adviser, whether or not
arising in the ordinary course of business, or which, in each case, could have a
material adverse effect on the ability of the Adviser to perform its obligations
under this Agreement and the Investment Management Agreement.

          (i) The Adviser has such permits, licenses, franchises and
authorizations of governmental or regulatory authorities ("permits") as are
necessary to own its properties and to conduct its business in the manner
described in the Prospectus (and any amendment or supplement thereto); the
Adviser has fulfilled and performed all its material obligations with respect to
such permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the Adviser under any such permit; and,
except as described in the Prospectus (and any amendment or supplement thereto),
none of such permits contains any restriction that is materially burdensome to
the Adviser.

          (j) Except as stated in this Agreement and in the Prospectus (and in
any amendment or supplement thereto), the Adviser has not taken, nor will it
take, directly or indirectly, any action designed to or which might reasonably
be expected to cause or result in, stabilization or manipulation of the price of
any securities issued by the Trust to facilitate the sale or resale of the
Shares, and the Adviser is not aware of any such action taken or to be taken by
any affiliates of the Adviser.

          8. INDEMNIFICATION AND CONTRIBUTION.

          (a) The Trust and the Adviser, jointly and severally, agree to
indemnify and hold harmless each of the Underwriters and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation), joint or
several, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Prepricing Prospectus or in the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein (in the case of the Prospectus, in light of the
circumstances under which they were made) not misleading, except insofar as such
losses, claims, damages, liabilities or expenses arise out of or are based upon
any untrue statement or omission or alleged untrue statement or omission which
has been made therein or omitted therefrom in reliance upon and in conformity
with the information relating to any Underwriter furnished in writing to the
Trust by or on behalf of any Underwriter through you expressly for use in
connection therewith; provided, however, that the indemnification contained in
this paragraph (a) with respect to any Prepricing Prospectus shall not inure to
the benefit of any Underwriter (or to the benefit of any person controlling such
Underwriter) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Shares by such Underwriter to any person if a copy
of the Prospectus shall not have been delivered or sent to such person within
the time required by the 1933 Act and the 1933 Act Rules and Regulations, and
the untrue statement or alleged untrue statement or omission or alleged omission
of a

<Page>

                                       15

material fact contained in such Prepricing Prospectus was corrected in the
Prospectus, provided that the Trust has delivered the Prospectus to the several
Underwriters in requisite quantity on a timely basis to permit such delivery or
sending. The foregoing indemnity agreement shall be in addition to any liability
which the Trust or the Adviser may otherwise have.

          (b) If any action, suit or proceeding shall be brought against any
Underwriter or any person controlling any Underwriter in respect of which
indemnity may be sought against the Trust or the Adviser, such Underwriter or
such controlling person shall promptly notify the Trust or the Adviser, and the
Trust or the Adviser shall assume the defense thereof, including the employment
of counsel and payment of all fees and expenses. Such Underwriter or any such
controlling person shall have the right to employ separate counsel in any such
action, suit or proceeding and to participate in the defense thereof, but the
fees and expenses of such counsel shall be at the expense of such Underwriter or
such controlling person unless (i) the Trust or the Adviser has agreed in
writing to pay such fees and expenses, (ii) the Trust and the Adviser have
failed to assume the defense and employ counsel, or (iii) the named parties to
any such action, suit or proceeding (including any impleaded parties) include
both such Underwriter or such controlling person and the Trust or the Adviser
and such Underwriter or such controlling person shall have been advised by its
counsel that representation of such indemnified party and the Trust or the
Adviser by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Trust and the Adviser shall not have the right to assume the
defense of such action, suit or proceeding on behalf of such Underwriter or such
controlling person). It is understood, however, that the Trust and the Adviser
shall, in connection with any one such action, suit or proceeding or separate
but substantially similar or related actions, suits or proceedings in the same
jurisdiction arising out of the same general allegations or circumstances, be
liable for the reasonable fees and expenses of only one separate firm of
attorneys (in addition to any local counsel) at any time for all such
Underwriters and controlling persons not having actual or potential differing
interests with you or among themselves, which firm shall be designated in
writing by the Underwriters, and that all such fees and expenses shall be
reimbursed as they are incurred. The Trust and the Adviser shall not be liable
for any settlement of any such action, suit or proceeding effected without their
written consent, but if settled with such written consent, or if there be a
final judgment for the plaintiff in any such action, suit or proceeding, the
Trust and the Adviser agree to indemnify and hold harmless any Underwriter, to
the extent provided in the preceding paragraph, and any such controlling person
from and against any loss, claim, damage, liability or expense by reason of such
settlement or judgment.

          (c) Each Underwriter agrees to indemnify and hold harmless the Trust
and the Adviser, their trustees, directors, any officers who sign the
Registration Statement, and any person who controls the Trust or the Adviser
within the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act,
to the same extent as the foregoing indemnity from the Trust and the Adviser to
each Underwriter, but only with respect to information relating to such
Underwriter furnished in writing by or on behalf of such Underwriter expressly
for use in the Registration Statement, the Prospectus or any Prepricing
Prospectus, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Trust or the Adviser, any of their
trustees or directors, any such officer, or any such controlling person based

<Page>

                                       16

on the Registration Statement, the Prospectus or any Prepricing Prospectus, or
any amendment or supplement thereto, and in respect of which indemnity may be
sought against any Underwriter pursuant to this paragraph (c), such Underwriter
shall have the rights and duties given to the Trust and the Adviser by paragraph
(b) above (except that if the Trust or the Adviser shall have assumed the
defense thereof such Underwriter shall not be required to do so, but may employ
separate counsel therein and participate in the defense thereof, but the fees
and expenses of such counsel shall be at such Underwriter's expense), and the
Trust and the Adviser, their trustees or directors, any such officer, and any
such controlling person shall have the rights and duties given to the
Underwriters by paragraph (b) above. The foregoing indemnity agreement shall be
in addition to any liability which the Underwriters may otherwise have.

          (d) If the indemnification provided for in this Section 8 is
unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Trust and the Adviser on the one hand (treated jointly for this purpose as one
person) and the Underwriters on the other hand from the offering of the Shares,
or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Trust and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other in connection with the statements
or omissions that resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Trust and the Adviser on the one hand (treated jointly
for this purpose as one person) and the Underwriters on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Trust bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault of
the Trust and the Adviser on the one hand (treated jointly for this purpose as
one person) and the Underwriters on the other hand shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Trust and the Adviser on the one hand
(treated jointly for this purpose as one person) or by the Underwriters on the
other hand and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.

          (e) The Trust, the Adviser and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, liabilities and expenses referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above,
any legal or other expenses reasonably incurred by such indemnified party in
connection with investigating any claim or defending any such action, suit or
proceeding. Notwithstanding the provisions of this Section 8, no Underwriter
shall be required to contribute any amount in excess of the amount by which the

<Page>

                                       17

total price of the Shares underwritten by it and distributed to the public
exceeds the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the 1933 Act) shall be entitled to contribution
from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute pursuant to this Section 8 are several
in proportion to the respective numbers of Shares set forth opposite their names
in Schedule I hereto (or such numbers of Shares increased as set forth in
Section 11 hereof) and not joint.

          (f) No indemnifying party shall, without the prior written consent of
the indemnified party, effect any settlement of any pending or threatened
action, suit or proceeding in respect of which any indemnified party is or could
have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such action, suit or proceeding.

          (g) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 8 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 8 and the
representations and warranties of the Trust and the Adviser set forth in this
Agreement shall remain operative and in full force and effect, regardless of (i)
any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Trust, the Adviser, their trustees, directors
or officers, or any person controlling the Trust or the Adviser, (ii) acceptance
of any Shares and payment therefor hereunder, and (iii) any termination of this
Agreement. A successor to any Underwriter or any person controlling any
Underwriter, or to the Trust, the Adviser, their trustees, directors or
officers, or any person controlling the Trust or the Adviser, shall be entitled
to the benefits of the indemnity, contribution, and reimbursement agreements
contained in this Section 8.

          9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase the Shares hereunder are subject to the following
conditions:

          (a) If, at the time this Agreement is executed and delivered, it is
necessary for the registration statement or a post-effective amendment thereto
to be declared effective before the offering of the Shares may commence, the
registration statement or such post-effective amendment shall have become
effective not later than 5:30 P.M., New York City time, on the date hereof, or
at such later date and time as shall be consented to in writing by the
Underwriters, and all filings, if any, required by Rules 497 and 430A under the
1933 Act and the 1933 Act Rules and Regulations shall have been timely made; no
stop order suspending the effectiveness of the Registration Statement or order
pursuant to Section 8(e) of the 1940 Act shall have been issued and no
proceeding for those purposes shall have been instituted or, to the knowledge of
the Trust, the Adviser or any Underwriter, threatened by the Commission, and any
request of the Commission for additional information (to be included in the
registration statement or the prospectus or otherwise) shall have been complied
with to the Underwriters' satisfaction.

<Page>

                                       18

          (b) Subsequent to the effective date of this Agreement, there shall
not have occurred (i) any change or any development involving a prospective
change in or affecting the condition (financial or other), business, prospects,
properties, net assets, or results of operations of the Trust or the Adviser not
contemplated by the Prospectus, which in the Underwriters' opinion would
materially, adversely affect the market for the Shares, or (ii) any event or
development relating to or involving the Trust or the Adviser or any officer,
trustee or director of the Trust or the Adviser which makes any statement made
in the Prospectus untrue or which, in the opinion of the Trust and its counsel
or the Underwriters and their counsel, requires the making of any addition to or
change in the Prospectus in order to state a material fact required by the 1933
Act, the 1940 Act or the Rules and Regulations or any other law to be stated
therein or necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, if amending or
supplementing the Prospectus to reflect such event or development would, in the
Underwriters' opinion, materially adversely affect the market for the Shares.

          (c) The Trust shall have furnished to you a report showing compliance
with the asset coverage requirements of the 1940 Act and a Preferred Shares
Basic Maintenance Certificate (as defined in the Certificate), each dated the
Closing Date and in form and substance satisfactory to you. Each such report may
use portfolio holdings and valuations as of the close of business of any day not
more than six business days preceding the Closing Date, provided, however, that
the Trust represents in such report that its total net assets as of the Closing
Date have not declined by 5% or more from such valuation date.

          (d) The Underwriters shall have received on the Closing Date an
opinion of Dechert, counsel for the Trust, dated the Closing Date and addressed
to you, in form and substance satisfactory to you and to the effect that:

                (i) The Trust (A) is a business trust duly formed by virtue of
          the execution and delivery of the Agreement and Declaration of Trust
          on December 2, 1987 and is validly existing under the laws of the
          State of Massachusetts with full business trust power and authority to
          own, lease and operate its properties and to conduct its business as
          described in the Registration Statement and the Prospectus (and any
          amendment or supplement to either of them), and (B) is duly registered
          and qualified to conduct its business and is in good standing in the
          State of Arizona;

                (ii) The Trust has no subsidiaries;

                (iii) The authorized and outstanding capital stock of the Trust
          is as set forth under the caption "Capitalization" in the Prospectus;
          and the authorized capital stock of the Trust conforms in all material
          respects as to legal matters to the description thereof contained in
          the Prospectus under the caption "Description of Capital Structure";

                (iv) All the shares of beneficial interest of the Trust
          outstanding prior to the issuance of the Shares have been duly
          authorized and validly issued by the Trust, and are fully paid and
          nonassessable;

<Page>

                                       19

                (v) The Shares have been duly authorized and, when issued and
          delivered to the Underwriters against payment therefor in accordance
          with the terms hereof, will be validly issued by the Trust, fully paid
          and nonassessable and free of any preemptive, or to the best knowledge
          of such counsel after reasonable inquiry, similar rights that entitle
          or will entitle any person to acquire any Shares upon the issuance
          thereof by the Trust, and will conform to the description thereof
          contained in the Prospectus under the caption "Description of
          Preferred Shares";

                (vi) The form of certificates for the Shares conforms to the
          requirements of Massachusetts law;

                (vii) The Registration Statement and all post-effective
          amendments, if any, have become effective under the 1933 Act and the
          1933 Act Rules and Regulations and, to the best knowledge of such
          counsel after reasonable inquiry, no stop order suspending the
          effectiveness of the Registration Statement or order pursuant to
          Section 8(e) of the 1940 Act has been issued and no proceedings for
          that purpose are pending before or contemplated by the Commission; and
          any required filing of the Prospectus pursuant to Rule 497 of the 1933
          Act Rules and Regulations has been made in accordance with Rule 497;

                (viii) The Trust has business trust power and authority to enter
          into this Agreement and each of the Trust Agreements and to issue,
          sell and deliver the Shares to the Underwriters as provided herein,
          and this Agreement and each of the Trust Agreements have been duly
          authorized, executed and delivered by the Trust and each is a valid,
          legal and binding agreement of the Trust, enforceable against the
          Trust in accordance with its terms, except as enforcement of rights to
          indemnity and contribution hereunder may be limited by Federal or
          state securities laws or principles of public policy and subject to
          the qualification that the enforceability of the Trust's obligations
          hereunder may be limited by bankruptcy, fraudulent conveyance,
          insolvency, reorganization, moratorium and other laws relating to or
          affecting creditors' rights generally and by general equitable
          principles;

                (ix) (A) The Trust is not in violation of the Declaration,
          including the Certificate, or Bylaws, or other organizational
          documents, and (B) based upon a certificate executed by officers of
          the Trust delivered to us, is not in default in the performance of any
          material obligation, agreement or condition contained in any bond,
          debenture, note or other evidence of indebtedness, except as may be
          disclosed in the Prospectus;

                (x) Neither the offer, sale or delivery of the Shares, the
          execution, delivery or performance of this Agreement and in the Trust
          Agreements by the Trust, compliance by the Trust with the provisions
          hereof or thereof nor consummation by the Trust of the transactions
          contemplated hereby and the Trust Agreements constitutes or will
          constitute a breach of, or a default under, the

<Page>

                                       20

          Declaration, including the Certificate, or Bylaws, or other
          organizational documents, of the Trust or any agreement, indenture,
          lease or other instrument to which the Trust is a party or by which it
          or any of its properties is bound that is an exhibit to the
          Registration Statement, nor will any such action result in any
          violation of any existing law, regulation, ruling (assuming compliance
          with all applicable state securities or blue sky laws), judgment,
          injunction, order or decree known to such counsel after reasonable
          inquiry, applicable to the Trust or any of its properties;

                (xi) No consent, approval, authorization or other order of, or
          registration or filing with, the Commission, the NASD, any national
          securities exchange, or, to counsel's knowledge, any state securities
          commission, any arbitrator, any court, regulatory body, administrative
          agency or other governmental body, agency, or official is required on
          the part of the Trust (except such as may have been obtained prior to
          the date hereof and such as may be required for compliance with the
          state securities or blue sky laws of various jurisdictions) for the
          valid issuance and sale of the Shares to the Underwriters as
          contemplated by this Agreement, the execution, delivery and
          performance by the Trust of this Agreement and the Trust Agreements or
          the consummation of the transactions contemplated hereby and thereby;

                (xii) The 1940 Act Notification, the Registration Statement, the
          Prospectus and any supplements or amendments thereto (except for the
          financial statements and the notes thereto and the schedules and other
          financial and statistical data included therein, as to which such
          counsel need not express any opinion) comply as to form in all
          material respects with the requirements of the 1933 Act, the 1940 Act
          and the Rules and Regulations;

                (xiii) Based upon a certificate executed by officers of the
          Trust delivered to us, (A) other than as described or contemplated in
          the Registration Statement or Prospectus (or any amendment or
          supplement thereto), there are no legal or governmental proceedings
          pending or threatened against the Trust, or to which the Trust or any
          of its properties is subject, which are required to be described in
          the Registration Statement or Prospectus (or any amendment or
          supplement to either of them) and (B) there are no agreements,
          contracts, indentures, leases or other instruments that are required
          to be described in the Registration Statement or the Prospectus (or
          any amendment or supplement thereto) or to be filed as an exhibit to
          the Registration Statement that are not described or filed as
          required, as the case may be;

                (xiv) The statements in the Registration Statement and
          Prospectus, insofar as they (A) are descriptions of contracts,
          agreements or other legal documents, or (B) refer to statements of law
          or legal conclusions, are accurate and present fairly the information
          required to be shown;

<Page>

                                       21

                (xv) Each of the Trust Agreements complies in all material
          respects with all applicable provisions of the 1933 Act, the 1940 Act,
          the Advisers Act, the Rules and Regulations and the Advisers Act Rules
          and Regulations, except as to rights of indemnity and contribution;

                (xvi) The Trust is duly registered with the Commission under the
          1940 Act and the 1940 Act Rules and Regulations as a closed-end,
          diversified management investment company and, to such counsel's best
          knowledge after reasonable inquiry, no order of suspension or
          revocation of such registration under the 1940 Act and the 1940 Act
          Rules and Regulations has been issued or proceedings therefor
          initiated or threatened by the Commission; the provisions of the
          Declaration, including the Certificate, and Bylaws comply as to form
          in all material respects with the applicable provisions of the 1940
          Act and the 1940 Act Rules and Regulations, the provisions of the
          Declaration, including the Certificate, and Bylaws and the investment
          policies and restrictions described in the Registration Statement and
          the Prospectus under the captions "Investment Objective and Policies",
          "Risk Factors", "Additional Information About Investments and
          Investment Techniques" and "Investment Restrictions" (in the
          Prospectus and the statement of additional information) comply in all
          material respects with the requirements of the 1940 Act, and all
          action has been taken by the Trust as is required of the Trust by the
          1933 Act and the 1940 Act and the Rules and Regulations in connection
          with the issuance and sale of the Shares to make the public offering
          and consummate the sale of the Shares as contemplated by this
          Agreement;

                (xvii) Except as described in the Prospectus, there are no
          outstanding options, warrants or other rights calling for the issuance
          of, and such counsel does not know of any commitment, plan or
          arrangement to issue, any shares of beneficial interest of the Trust
          or any security convertible into or exchangeable or exercisable for
          shares of beneficial interest of the Trust;

                (xviii) Except as described in the Prospectus, such counsel does
          not know of any holder of any security of the Trust or any other
          person who has the right, contractual or otherwise, to cause the Trust
          to sell or otherwise issue to them, or to permit them to underwrite
          the sale of, the Shares or the right to have any securities of the
          Trust included in the registration statement or the right, as a result
          of the filing of the registration statement, to require registration
          under the 1933 Act of any securities of the Trust;

                (xix) If the Trust operates as described in the Prospectus, the
          Trust will qualify as a regulated investment company under the Code;
          and

                (xx) Such counsel shall also state that, while they have not
          themselves checked the accuracy and completeness of or otherwise
          verified, and are not passing upon and assume no responsibility for
          the accuracy or completeness of, the statements contained in the
          Registration Statement or the Prospectus, except to

<Page>

                                       22

          the limited extent stated in paragraphs (iii), (xiv) and (xvi) above,
          in the course of their review and discussion of the contents of the
          Registration Statement and Prospectus with certain officers and
          employees of the Trust and its independent accountants, no facts have
          come to their attention which cause them to believe that the
          Registration Statement or any amendment or supplement thereto (except
          as to any financial statements or other financial data included in the
          Registration Statement or any such amendment or supplement, as to
          which they express no belief), as of its effective date, contained an
          untrue statement of a material fact or omitted to state a material
          fact required to be stated therein or necessary to make the statements
          contained therein not misleading or that the Prospectus or any
          amendment or supplement thereto (except as to any financial statements
          or other financial data included in the Prospectus or any such
          amendment or supplement, as to which they express no belief), as of
          its issue date and as of the Closing Date, contained an untrue
          statement of a material fact or omitted to state a material fact
          required to be stated therein or necessary to make the statements
          contained therein, in the light of the circumstances under which they
          were made, not misleading.

                Such counsel may state in its opinion letter that "[O]ur opinion
          is limited solely to those laws, rulings and regulations that are
          normally applicable to transactions of the type contemplated by the
          Underwriting Agreement by closed-end management investment companies
          registered under the 1940 Act, and to Massachusetts law with respect
          to the matters covered by paragraphs (i)(A), (iii), (iv), (v), (vi)
          and (viii). Moreover, the opinions given under paragraphs (ix)(B) and
          (xiii) are based solely upon the receipt of a certificate signed by
          officers of the Trust attesting to the statements made therein."

          (e) The Underwriters shall have received on the Closing Date an
opinion of Bryan Cave LLP, counsel for the Adviser, dated the Closing Date and
addressed to you, in form and substance satisfactory to you and to the effect
that:

                (i) The Adviser is a corporation duly incorporated and validly
          existing in good standing under the laws of the State of Delaware with
          full corporate power and authority to own, lease and operate its
          properties and to conduct its business as described in the
          Registration Statement and the Prospectus (and any amendment or
          supplement to either of them), and is duly registered and qualified to
          conduct its business and is in good standing in each of the following
          jurisdictions: Arizona and California;

                (ii) The Adviser is duly registered with the Commission as an
          investment adviser under the Advisers Act and is not prohibited by the
          Advisers Act, the Advisers Act Rules and Regulations, the 1940 Act or
          the 1940 Act Rules and Regulations from acting under the Investment
          Management Agreement for the Trust as contemplated by the Prospectus
          (or any amendment or supplement thereto); and, to such counsel's
          knowledge, no order of suspension or revocation of such registration
          under the Advisers Act and the Advisers Act Rules and

<Page>

                                       23

          Regulations has been issued or proceedings therefor initiated or
          threatened by the Commission;

                (iii) The Adviser has corporate power and authority to enter
          into this Agreement and the Investment Management Agreement, and this
          Agreement and the Investment Management Agreement have been duly
          authorized, executed and delivered by the Adviser and each is a valid,
          legal and binding agreement of the Adviser, enforceable against the
          Adviser in accordance with its terms except as enforcement of rights
          to indemnity and contribution hereunder may be limited by Federal or
          state securities laws or principles of public policy and subject to
          the qualification that the enforceability of the Adviser's obligations
          hereunder may be limited by bankruptcy, fraudulent conveyance,
          insolvency, reorganization, moratorium, and other laws relating to or
          affecting creditors' rights generally and by general equitable
          principles;

                (iv) Neither the execution, delivery or performance of this
          Agreement or the Investment Management Agreement by the Adviser,
          compliance by the Adviser with the provisions hereof or thereof nor
          consummation by the Adviser of the transactions contemplated hereby
          and by the Investment Management Agreement conflicts or will conflict
          with, or constitutes or will constitute a breach of or default under,
          the certificate of incorporation or bylaws, or other organizational
          documents, of the Adviser or any agreement, indenture, lease or other
          instrument to which the Adviser is a party or by which it or any of
          its properties is bound that is known to such counsel, or will result
          in the creation or imposition of any lien, charge or encumbrance upon
          any property or assets of the Adviser, nor will any such action result
          in any violation of any existing law, regulation, ruling, judgment,
          injunction, order or decree known to such counsel after reasonable
          inquiry, applicable to the Adviser or any of its properties;

                (v) No consent, approval, authorization or other order of, or
          registration or filing with, the Commission, the NASD, any state
          securities commission, any national securities exchange, any
          arbitrator, any court, regulatory body, administrative agency or other
          governmental body, agency, or official is required on the part of the
          Adviser for the execution, delivery and performance by it of this
          Agreement and the Investment Management Agreement or the consummation
          by it of the transactions contemplated hereby and thereby;

                (vi) To the best knowledge of such counsel after reasonable
          inquiry, there are no legal or governmental proceedings pending or
          threatened against the Adviser or to which the Adviser or any of its
          properties is subject, which are required to be described in the
          Registration Statement or the Prospectus (or any amendment or
          supplement to either of them) but are not described as required or
          which may reasonably be expected to involve a prospective material
          adverse change on the ability of the Adviser to perform its
          obligations under this Agreement and the Investment Management
          Agreement;

<Page>

                                       24

                (vii) The obligations of the Adviser under this Agreement and
          the Investment Management Agreement comply in all material respects
          with all applicable provisions of the 1940 Act, the 1940 Act Rules and
          Regulations, the Advisers Act and the Advisers Act Rules and
          Regulations, except as to rights of indemnity and contribution; and

                (viii) Such counsel shall also state that, while they have not
          checked or verified the accuracy and completeness of, and are not
          passing upon and assume no responsibility for the accuracy and
          completeness of, any statements in the Registration Statement or the
          Prospectus, no facts have come to their attention in the course of
          their representation of the Adviser which cause them to believe that
          the description of the Adviser contained in the Registration Statement
          (and any amendment or supplement thereto), as of its effective date,
          contains an untrue statement of a material fact or omits to state a
          material fact required to be stated therein or necessary to make the
          statements contained therein not misleading or that the description of
          the Adviser contained in the Prospectus or any amendment or supplement
          thereto, as of its issue date and as of the Closing Date, contains an
          untrue statement of a material fact or omits to state a material fact
          required to be stated therein or necessary to make the statements
          contained therein, in the light of the circumstances under which they
          were made, not misleading.

          (f) The Underwriters shall have received on the Closing Date an
opinion of Simpson Thacher & Bartlett, counsel for the Underwriters, dated the
Closing Date and addressed to you, with respect to such matters as you may
reasonably request. It is agreed that Simpson Thacher & Bartlett may rely on the
opinions of Dechert contained in Sections 9(d)(i)(A), 9(d)(v), 9(d)(viii) and
9(d)(xiv)(B) of this Agreement to the extent those opinions relate to or are
dependent upon matters governed by the laws of the State of Massachusetts.

          (g) The Underwriters shall have received letters addressed to you,
dated the date hereof and the Closing Date, from KPMG LLP, independent certified
public accountants, substantially in the forms heretofore approved by you.

          (h) (i) No order suspending the effectiveness of the registration
statement or the Registration Statement or prohibiting or suspending the use of
the Prospectus (or any amendment or supplement thereto) or any Prepricing
Prospectus or any sales material shall have been issued and no proceedings for
such purpose or for the purpose of commencing an enforcement action against the
Trust, the Adviser or, with respect to the transactions contemplated by the
Prospectus (or any amendment or supplement thereto) and this Agreement, the
Underwriters, may be pending before or, to the knowledge of the Trust, the
Adviser or the Underwriters or in the reasonable view of counsel to the
Underwriters, shall be threatened or contemplated by the Commission at or prior
to the Closing Date and that any request for additional information on the part
of the Commission (to be included in the Registration Statement, the Prospectus
or otherwise) be complied with to the satisfaction of the Underwriters; (ii)
there shall not have been any change in the capital stock of the Trust nor any
material increase in the short-term or long-term debt of the Trust (other than
in the ordinary course of business) from that set forth or contemplated in the
Registration Statement or the Prospectus (or any amendment or supplement

<Page>

                                       25

thereto); (iii) there shall not have been, subsequent to the respective dates as
of which information is given in the Registration Statement and the Prospectus
(or any amendment or supplement thereto), except as may otherwise be stated in
the Registration Statement and Prospectus (or any amendment or supplement
thereto), any material adverse change in the condition (financial or other),
business, prospects, properties, net assets or results of operations of the
Trust or the Adviser; (iv) the Trust shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), that are material to the Trust, other than those reflected in the
Registration Statement or the Prospectus (or any amendment or supplement to
either of them); and (v) all the representations and warranties of the Trust and
the Adviser contained in this Agreement shall be true and correct on and as of
the date hereof and on and as of the Closing Date as if made on and as of the
Closing Date, and the Underwriters shall have received a certificate of the
Trust and the Adviser, dated the Closing Date and signed by the chief executive
officer and the chief financial officer of each of the Trust and the Adviser (or
such other officers as are acceptable to the Underwriters), to the effect set
forth in this Section 9(h) and in Section 9(i) hereof.

          (i) That neither the Trust nor the Adviser shall have failed at or
prior to the Closing Date to have performed or complied in all material respects
with any of its agreements herein contained and required to be performed or
complied with by it hereunder at or prior to the Closing Date.

          (j) The Trust shall have delivered and the Underwriters shall have
received evidence satisfactory to the Underwriters that each series of Shares
are rated 'aaa' by Moody's and 'AAA' by S&P as of the Closing Date, and there
shall not have been given any notice of any intended or potential downgrading,
or of any review for a potential downgrading, in the rating accorded to the
shares of each series of the Shares by either Rating Agency.

          (k) The Trust and the Adviser shall have furnished or caused to be
furnished to you such further certificates and documents as you shall have
reasonably requested.

          All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are satisfactory in form
and substance to the Underwriters and the Underwriters' counsel.

          Any certificate or document signed by any officer of the Trust or the
Adviser and delivered to the Underwriters, or to counsel for the Underwriters,
shall be deemed a representation and warranty by the Trust or the Adviser to the
Underwriters as to the statements made therein.

<Page>

                                       26

          10. EXPENSES. The Trust agrees to pay the following costs and expenses
and all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the registration statement (including financial
statements and exhibits thereto), each Prepricing Prospectus, the Prospectus and
each amendment or supplement to any of them (including, without limitation, the
filing fees prescribed by the 1933 Act, the 1940 Act and the Rules and
Regulations); (ii) the printing (or reproduction) and delivery (including
postage, air freight charges and charges for counting and packaging) of such
copies of the Registration Statement, each Prepricing Prospectus, the
Prospectus, any sales material and all amendments or supplements to any of them
as may be reasonably requested for use in connection with the offering and sale
of the Shares; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Shares, including any stamp taxes in connection
with the original issuance and sale of the Shares; (iv) the reproduction and
delivery of this Agreement, any dealer agreements, the preliminary blue sky
memorandum and all other agreements or documents reproduced and delivered in
connection with the offering of the Shares; (v) the reasonable fees, expenses
and disbursements of counsel for the Underwriters relating to the preparation,
reproduction, and delivery of the preliminary blue sky memorandum; (vi) fees
paid to the Rating Agencies; (vii) the transportation and other expenses
incurred by or on behalf of Trust representatives in connection with
presentations to prospective purchasers of the Shares; and (viii) the fees and
expenses of the Trust's accountants and the fees and expenses of counsel
(including local and special counsel) for the Trust and of the transfer agent.

          11. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective: (i) upon the execution and delivery hereof by the parties hereto; or
(ii) if, at the time this Agreement is executed and delivered, it is necessary
for the registration statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares may commence, when
notification of the effectiveness of the registration statement or such
post-effective amendment has been released by the Commission. Until such time as
this Agreement shall have become effective, it may be terminated by the Trust,
by notifying the Underwriters, or by the Underwriters, by notifying the Trust.

          If any one or more of the Underwriters shall fail or refuse to
purchase Shares which it or they are obligated to purchase hereunder on the
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters are obligated but fail or refuse to purchase is not
more than one-tenth of the aggregate number of Shares which the Underwriters are
obligated to purchase on the Closing Date, each non-defaulting Underwriter shall
be obligated, severally, in the proportion which the number of Shares set forth
opposite its name in Schedule I hereto bears to the aggregate number of Shares
set forth opposite the names of all non-defaulting Underwriters or in such other
proportion as you may specify, to purchase the Shares which such defaulting
Underwriter or Underwriters are obligated, but fail or refuse, to purchase. If
any one or more of the Underwriters shall fail or refuse to purchase Shares
which it or they are obligated to purchase on the Closing Date and the aggregate
number of Shares with respect to which such default occurs is more than
one-tenth of the aggregate number of Shares which the Underwriters are obligated
to purchase on the Closing Date and arrangements satisfactory to you and the
Trust for the purchase of such Shares by one or more non-defaulting Underwriters
or other party or parties approved by you and the Trust are not made within 36

<Page>

                                       27

hours after such default, this Agreement will terminate without liability on the
part of any non-defaulting Underwriter, the Trust or the Adviser. In any such
case which does not result in termination of this Agreement, either you or the
Trust shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or arrangements
may be effected. Any action taken under this paragraph shall not relieve any
defaulting Underwriter from liability in respect of any such default of any such
Underwriter under this Agreement. The term "Underwriter" as used in this
Agreement includes, for all purposes of this Agreement, any party not listed in
Schedule I hereto who, with your approval and the approval of the Trust,
purchases Shares which a defaulting Underwriter is obligated, but fails or
refuses, to purchase.

          Any notice under this Section 11 may be given by telegram, telecopy or
telephone but shall be subsequently confirmed by letter.

          12. TERMINATION OF AGREEMENT. This Agreement shall be subject to
termination in the Underwriters' absolute discretion, without liability on the
part of any Underwriter to the Trust or the Adviser, by notice to the Trust or
the Adviser, if prior to the Closing Date (i) trading in the Shares or the
Trust's common shares of beneficial interest or securities generally on the NYSE
shall have been suspended or materially limited or minimum prices shall have
been established on the NYSE, (ii) a general moratorium on commercial banking
activities in New York shall have been declared by either federal or state
authorities, or (iii) there shall have occurred any outbreak or escalation of
hostilities, declaration by the United States of a national emergency or war, or
other international or domestic calamity, crisis or change in political,
financial or economic conditions, the effect of which on the financial markets
of the United States is to make it, in your judgment, impracticable or
inadvisable to commence or continue the offering of the Shares at the offering
price to the public set forth on the cover page of the Prospectus or to enforce
contracts for the resale of the Shares by the Underwriters. Notice of such
termination may be given to the Trust by telegram, telecopy or telephone and
shall be subsequently confirmed by letter.

          13. INFORMATION FURNISHED BY THE UNDERWRITERS. The statements set
forth in the last paragraph on the cover page and the statements in the third
and fifth paragraphs under the caption "Underwriting" in any Prepricing
Prospectus and in the Prospectus, constitute the only information furnished by
or on behalf of the Underwriters through you as such information is referred to
in Sections 6(b) and 8 hereof.

          14. MISCELLANEOUS. Except as otherwise provided in Sections 5, 11 and
12 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Trust or the Adviser, at the office
of the Trust at 7337 E. Doubletree Ranch Rd., Scottsdale, Arizona 85258-2034,
Attention: Daniel A. Norman, Senior Vice President; or (ii) if to the
Underwriters, to Salomon Smith Barney Inc., 388 Greenwich Street, New York, New
York 10013, Attention: Manager, Investment Banking Division.

          This Agreement has been and is made solely for the benefit of the
Underwriters, the Trust, the Adviser, their trustees, directors and officers,
and the other controlling persons

<Page>

                                       28

referred to in Section 8 hereof and their respective successors and assigns, to
the extent provided herein, and no other person shall acquire or have any right
under or by virtue of this Agreement. Neither the term "successor" nor the term
"successors and assigns" as used in this Agreement shall include a purchaser
from the Underwriters of any of the Shares in his status as such purchaser.

          Consistent with the Trust's Declaration, notice is hereby given and
the parties hereto acknowledge and agree that this Agreement is executed on
behalf of the trustees of the Trust as trustees and not individually and that
obligations of this Agreement are not binding upon any of the trustees or
shareholders of the Trust individually but are binding only against the assets
and property of the Trust.

          15. APPLICABLE LAW: COUNTERPARTS. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.

          This Agreement may be signed in various counterparts, which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.

<Page>

          Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Adviser and the several Underwriters.


                                        Very truly yours,


                                        PILGRIM PRIME RATE TRUST


                                        By:
                                              ----------------------------------
                                                  Name:
                                                  Title:


                                        ING PILGRIM INVESTMENTS, INC.


                                        By:
                                              ----------------------------------
                                                  Name:
                                                  Title:


Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.

SALOMON SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
LEHMAN BROTHERS INC.
GRUNTAL & CO., L.L.C.


By:   SALOMON SMITH BARNEY INC.


By:   /s/ Robert F. Bush, Jr
      -----------------------------
      Name:   Robert F. Bush, Jr
      Title:  Director

<Page>

          Please confirm that the foregoing correctly sets forth the agreement
among the Trust, the Adviser and the several Underwriters.


                                        Very truly yours,


                                        PILGRIM PRIME RATE TRUST


                                        By:    /s/ Daniel A. Norman
                                              ----------------------------------
                                                  Name:      DANIEL A. NORMAN
                                                  Title:   SENIOR VICE PRESIDENT


                                        ING PILGRIM INVESTMENTS, INC.


                                        By:    /s/ Daniel A. Norman
                                              ----------------------------------
                                                  Name:      DANIEL A. NORMAN
                                                  Title:   SENIOR VICE PRESIDENT


Confirmed as of the date first above
mentioned on behalf of themselves
and the other several Underwriters
named in Schedule I hereto.

SALOMON SMITH BARNEY INC.
PAINEWEBBER INCORPORATED
LEHMAN BROTHERS INC.
GRUNTAL & CO., L.L.C.


By:   SALOMON SMITH BARNEY INC.


By:
      -----------------------------
      Name:
      Title:

<Page>

                                   SCHEDULE I

                            PILGRIM PRIME RATE TRUST

<Table>
<Caption>
                                                      NUMBER OF
             UNDERWRITER                              SHARES
             -----------                              ---------
             <S>                                      <C>
             Salomon Smith Barney Inc.                2,160 Series M,
                                                      2,160 Series W
                                                      2,160 Series F

             PaineWebber Incorporated                 1,080 Series M
                                                      1,080 Series W
                                                      1,080 Series F

             Lehman Brothers Inc.                     180 Series M
                                                      180 Series W
                                                      180 Series F

                                                      180 Series M
             Gruntal & Co., L.L.C.                    180 Series W
                                                      180 Series F

                                                      --------------
             Total                                    3,600 Series M
                                                      3,600 Series W
                                                      3,600 Series F
</Table>

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(I)
<SEQUENCE>8
<FILENAME>a2138029zex-99_ji.txt
<DESCRIPTION>EX 99.(J)(I)
<TEXT>
<Page>

                                                               Exhibit 99.(j)(i)

                  CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT

     This Agreement is made effective the 1st day of November, 2001, by and
between EACH OF THE FUNDS SET FORTH ON EXHIBIT A HERETO, each a business trust
or corporation organized and existing under the laws of the jurisdiction listed
on Exhibit A (each a "FUND"), and STATE STREET BANK AND TRUST COMPANY, a
Massachusetts trust company ("STATE STREET"),

                                   WITNESSETH:

     WHEREAS, Fund is authorized to issue shares in separate series, with each
such series representing interests in a separate portfolio of securities and
other assets; and

     WHEREAS, Fund intends that this Agreement be applicable to each of its
series existing on the date hereof (such series together with all other series
subsequently established by Fund and made subject to this Agreement in
accordance with Section 16.2, be referred to herein as the "PORTFOLIO(s)");

     NOW THEREFORE, in consideration of the mutual covenants and agreements
hereinafter contained, the parties hereto agree as follows:

SECTION 1   APPOINTMENT OF STATE STREET AS CUSTODIAN AND RECORDKEEPING AGENT.
Fund hereby appoints State Street as the custodian of the assets of the
Portfolios, including securities that Fund, on behalf of the applicable
Portfolio, desires to be held in places within the United States ("DOMESTIC
SECURITIES") and securities it desires to be held outside the United States
("FOREIGN SECURITIES"). Fund, on behalf of the Portfolio(s), agrees to deliver
to State Street all securities and cash of the Portfolios, and all payments of
income, payments of principal or capital distributions received by it with
respect to all securities owned by the Portfolio(s) from time to time, and the
cash consideration received by it for such new or treasury shares of beneficial
interest of Fund representing interests in the Portfolios ("SHARES") as may be
issued or sold from time to time. State Street shall not be responsible for any
property of a Portfolio held or received by the Portfolio and not delivered to
State Street.

Upon receipt of "PROPER INSTRUCTIONS" (as such term is defined in Section 6
hereof), State Street shall on behalf of the applicable Portfolio(s) from time
to time appoint one or more sub-custodians located in the United States, but
only in accordance with an applicable vote by the Board of Trustees or Directors
of Fund (the "BOARD") on behalf of the applicable Portfolio(s). State Street may
appoint as sub-custodian for Fund's foreign securities on behalf of the
applicable Portfolio(s) the foreign banking institutions and foreign securities
depositories designated in Schedules A and B hereto, but only in accordance with
the applicable provisions of Sections 3 and 4. State Street shall have the same
responsibility or liability to Fund on account of any actions or omissions of
any sub-custodian so appointed that State Street would have if State Street had
not retained such sub-custodian.

Fund hereby appoints State Street as agent to perform certain investment
accounting and recordkeeping functions relating to portfolio transactions
required of a duly registered investment company under Rule 31a of the
Investment Company Act of 1940, as amended and the rules promulgated thereunder,
including without limitation Rules 31a-1, 31a-2 and 31a-3 (the

<Page>

"1940 ACT") and to calculate the net asset value of the Portfolio(s) in
accordance with the provisions of Section 9 hereof.

SECTION 2   DUTIES OF STATE STREET WITH RESPECT TO PROPERTY OF FUND HELD BY
            STATE STREET IN THE UNITED STATES

     SECTION 2.1   HOLDING SECURITIES. State Street shall hold and physically
segregate for the account of each Portfolio all non-cash property to be held by
it in the United States, including all domestic securities other than securities
which are maintained pursuant to Section 2.8 in a clearing agency which acts as
a securities depository or in a book-entry system authorized by the U.S.
Department of the Treasury (each, a "U.S. SECURITIES SYSTEM").

     SECTION 2.2   DELIVERY OF SECURITIES. State Street shall release and
deliver domestic securities held by State Street or in a U.S. Securities System
account of State Street only upon receipt of Proper Instructions on behalf of
the applicable Portfolio, which may be continuing instructions when deemed
appropriate by the parties, and only in the following cases:

     1)     Upon sale of such securities for the account of the Portfolio and
            receipt of payment therefor;

     2)     Upon the receipt of payment in connection with any repurchase
            agreement related to such securities entered into by the Portfolio;

     3)     In the case of a sale effected through a U.S. Securities System, in
            accordance with the provisions of Section 2.8 hereof;

     4)     To the depository agent in connection with tender or other similar
            offers for securities of the Portfolio;

     5)     To the issuer thereof or its agent when such securities are called,
            redeemed, retired or otherwise become payable; provided that, in any
            such case, the cash or other consideration is to be delivered to
            State Street;

     6)     To the issuer thereof, or its agent, for transfer into the name of
            the Portfolio or into the name of any nominee(s) of State Street or
            into the name or nominee name of any agent appointed pursuant to
            Section 2.7 or into the name or nominee name of any sub-custodian
            appointed pursuant to Section 1; or for exchange for a different
            number of bonds, certificates or other evidence representing the
            same aggregate face amount or number of units; PROVIDED that, in any
            such case, the new securities are to be delivered to State Street;

     7)     Upon the sale of such securities for the account of the Portfolio,
            to the broker or its clearing agent, against a receipt, for
            examination in accordance with "street delivery" custom; provided
            that in any such case, State Street shall have no responsibility or
            liability for any loss arising from the delivery of such securities
            prior to receiving payment for such securities except as may arise
            from State Street's own negligence or willful misconduct;

<Page>

     8)     For exchange or conversion pursuant to any corporate action,
            including without limitation, any calls for redemption, tender or
            exchange offers, declarations, record and payment dates and amounts
            of any dividends or income, plan of merger, consolidation,
            recapitalization, reorganization, readjustment, split-up of shares,
            changes of par value, or conversion ("CORPORATE ACTION") of the
            securities of the issuer of such securities, or pursuant to
            provisions for conversion contained in such securities, or pursuant
            to any deposit agreement; provided that, in any such case, the new
            securities and cash, if any, are to be delivered to State Street;

     9)     In the case of warrants, rights or similar securities, the surrender
            thereof in the exercise of such warrants, rights or similar
            securities or the surrender of interim receipts or temporary
            securities for definitive securities; provided that, in any such
            case, the new securities and cash, if any, are to be delivered to
            State Street;

     10)    For delivery in connection with any loans of securities made by the
            Portfolio, BUT ONLY against receipt of adequate collateral as agreed
            upon from time to time by State Street and Fund on behalf of the
            Portfolio, which may be in the form of cash or obligations issued by
            the United States government, its agencies or instrumentalities,
            except that in connection with any loans for which collateral is to
            be credited to State Street's account in the book-entry system
            authorized by the U.S. Department of the Treasury, State Street will
            not be held liable or responsible for the delivery of securities
            owned by the Portfolio prior to the receipt of such collateral;

     11)    For delivery as security in connection with any borrowing by Fund on
            behalf of the Portfolio requiring a pledge of assets by Fund, BUT
            ONLY against receipt of amounts borrowed;

     12)    For delivery in accordance with the provisions of any agreement
            among Fund on behalf of the Portfolio, State Street and a
            broker-dealer registered under the Securities Exchange Act of 1934
            (the "EXCHANGE ACT") and a member of The National Association of
            Securities Dealers, Inc. ("NASD"), relating to compliance with the
            rules of The Options Clearing Corporation and of any registered
            national securities exchange, or of any similar organization or
            organizations, regarding escrow or other arrangements in connection
            with transactions by the Portfolio;

     13)    For delivery in accordance with the provisions of any agreement
            among Fund on behalf of the Portfolio, State Street, and a futures
            commission merchant registered under the Commodity Exchange Act,
            relating to compliance with the rules of the Commodity Futures
            Trading Commission ("CFTC") and/or any contract market, or any
            similar organization or organizations, regarding account deposits in
            connection with transactions by the Portfolio;

     14)    Upon receipt of instructions from the transfer agent for Fund (the
            "TRANSFER AGENT") for delivery to such Transfer Agent or to the
            holders of Shares in connection with distributions in kind, as may
            be described from time to time in the currently effective prospectus
            and statement of additional information related to the Portfolio
            (the "PROSPECTUS"), in satisfaction of requests by holders of Shares
            for repurchase or redemption; and

<Page>

     15)    For any other purpose, BUT ONLY upon receipt of Proper Instructions
            on behalf of the applicable Portfolio specifying the securities to
            be delivered and naming the person or persons to whom delivery of
            such securities shall be made.

     SECTION 2.3   REGISTRATION OF SECURITIES. Domestic securities (other than
bearer securities) shall be registered in the name of the Portfolio or in the
name of any nominee of Fund on behalf of the Portfolio or of State Street which
nominee shall be assigned exclusively to the Portfolio, UNLESS Fund has
authorized in writing the appointment of a nominee to be used in common with
other registered investment companies having the same investment advisor as the
Portfolio, or in the name or nominee name of any agent appointed pursuant to
Section 2.7 or in the name or nominee name of any sub-custodian appointed
pursuant to Section 1. All securities accepted by State Street under the terms
hereof shall be in "street name" or other good delivery form. If, however, Fund
directs State Street to maintain securities in "street name", State Street shall
continuously utilize its best efforts to timely collect income due Fund on such
securities and to notify Fund on a best efforts basis only of relevant
information regarding securities such as maturities and pendency of calls and
Corporate Actions.

     SECTION 2.4   BANK ACCOUNTS. State Street shall open and maintain a
separate bank account or accounts in the United States in the name of each
Portfolio, subject only to draft or order by State Street acting pursuant
hereto, and shall hold in such account or accounts, subject to the provisions
hereof, all cash received by it from or for the account of the Portfolio, other
than cash maintained by the Portfolio in an account established and used in
accordance with Rule 17f-3 under the 1940 Act. Funds held by State Street for a
Portfolio may be deposited by it to its credit as custodian in the banking
department of State Street or in such other banks or trust companies as it may
in its discretion deem necessary or desirable; PROVIDED, however, that every
such bank or trust company shall be qualified to act as a custodian under the
1940 Act and that each such bank or trust company and the funds to be deposited
with each such bank or trust company shall on behalf of each applicable
Portfolio be approved by vote of a majority of the Board. Such funds shall be
deposited by State Street in its capacity as custodian and shall be withdrawable
by State Street only in that capacity.

     SECTION 2.5   COLLECTION OF INCOME. Subject to the provisions of Section
2.3, State Street shall collect on a timely basis all income and other payments
with respect to registered domestic securities to which each Portfolio shall be
entitled either by law or pursuant to custom in the securities business, and
shall collect on a timely basis all income and other payments with respect to
bearer domestic securities if, on the date of payment by the issuer, such
securities are held by State Street or its agent thereof and shall credit such
income, as collected, to such Portfolio's custodian account. Without limiting
the generality of the foregoing, State Street shall detach and present for
payment all coupons and other income items requiring presentation as and when
they become due and shall collect interest when due on securities held
hereunder. Income due each Portfolio on securities loaned pursuant to the
provisions of Section 2.2 (10) shall be the responsibility of Fund. State Street
will have no duty or responsibility in connection therewith, other than to
provide Fund with such information or data as may be necessary to assist Fund in
arranging for the timely delivery to State Street of the income to which the
Portfolio is properly entitled.

     SECTION 2.6  PAYMENT OF PORTFOLIO MONIES. Except to the extent that Section
4.4.2 applies, upon receipt of Proper Instructions on behalf of the applicable
Portfolio, which may be

<Page>

continuing instructions when deemed appropriate by the parties, State Street
shall pay out monies of a Portfolio in the following cases only:

     1)     Upon the purchase of domestic securities, options, futures contracts
            or options on futures contracts for the account of the Portfolio but
            only (a) against the delivery of such securities or evidence of
            title to such options, futures contracts or options on futures
            contracts to State Street (or any bank, banking firm or trust
            company doing business in the United States or abroad which is
            qualified under the 1940 Act to act as a custodian and has been
            designated by State Street as its agent for this purpose) registered
            in the name of the Portfolio or in the name of a nominee of State
            Street referred to in Section 2.3 hereof or in proper form for
            transfer; (b) in the case of a purchase effected through a U.S.
            Securities System, in accordance with the conditions set forth in
            Section 2.8 hereof; (c) in the case of repurchase agreements entered
            into between Fund on behalf of the Portfolio and State Street, or
            another bank, or a broker-dealer which is a member of NASD, (i)
            against delivery of the securities either in certificate form or
            through an entry crediting State Street's account at the Federal
            Reserve Bank with such securities or (ii) against delivery of the
            receipt evidencing purchase by the Portfolio of securities owned by
            State Street along with written evidence of the agreement by State
            Street to repurchase such securities from the Portfolio; or (d) for
            transfer to a time deposit account of Fund in any bank, whether
            domestic or foreign; such transfer may be effected prior to receipt
            of a confirmation from a broker and/or the applicable bank pursuant
            to Proper Instructions ;

     2)     In connection with conversion, exchange or surrender of securities
            owned by the Portfolio as set forth in Section 2.2 hereof;

     3)     For the redemption or repurchase of Shares issued as set forth in
            Section 5 hereof;

     4)     For the payment of any expense or liability incurred by the
            Portfolio, including but not limited to the following payments for
            the account of the Portfolio: interest, taxes, management,
            accounting, transfer agent and legal fees, and operating expenses of
            Fund whether or not such expenses are to be in whole or part
            capitalized or treated as deferred expenses;

     5)     For the payment of any dividends on Shares declared pursuant to the
            Declaration of Trust, Articles of Incorporation, Bylaws or other
            governing documents of Fund (collectively, the "GOVERNING
            DOCUMENTS");

     6)     For payment of the amount of dividends received in respect of
            securities sold short; and

     7)     For any other purpose, BUT ONLY upon receipt of Proper Instructions
            on behalf of the Portfolio specifying the amount of such payment and
            naming the person or persons to whom such payment is to be made.

     SECTION 2.7   APPOINTMENT OF AGENTS. State Street may at any time or times
in its discretion appoint (and may at any time remove) any other bank or trust
company which is itself qualified under the 1940 Act to act as a custodian, as
its agent to carry out such of the provisions

<Page>

of this Section 2 as State Street may from time to time direct; PROVIDED,
however, that the appointment of any agent shall not relieve State Street of its
responsibilities or liabilities hereunder.

     SECTION 2.8   DEPOSIT OF FUND ASSETS IN U.S. SECURITIES SYSTEMS. State
Street may deposit and/or maintain securities owned by a Portfolio in a U.S.
Securities System subject to the following provisions:

     1)     State Street may keep securities of the Portfolio in a U.S.
            Securities System provided that such securities are represented in
            an account of State Street in the U.S. Securities System (the "U.S.
            SECURITIES SYSTEM ACCOUNT") which account shall not include any
            assets of State Street other than assets held as a fiduciary,
            custodian or otherwise for customers;

     2)     The records of State Street with respect to securities of the
            Portfolio which are maintained in a U.S. Securities System shall
            identify by book-entry those securities belonging to the Portfolio;

     3)     State Street shall pay for securities purchased for the account of
            the Portfolio upon (i) receipt of advice from the U.S. Securities
            System that such securities have been transferred to the U.S.
            Securities System Account, and (ii) the making of an entry on the
            records of State Street to reflect such payment and transfer for the
            account of the Portfolio. State Street shall transfer securities
            sold for the account of the Portfolio upon (i) receipt of advice
            from the U.S. Securities System that payment for such securities has
            been transferred to the U.S. Securities System Account, and (ii) the
            making of an entry on the records of State Street to reflect such
            transfer and payment for the account of the Portfolio. Copies of all
            advices from the U.S. Securities System of transfers of securities
            for the account of the Portfolio shall identify the Portfolio, be
            maintained for the Portfolio by State Street and be provided to Fund
            at its request. Upon request, State Street shall furnish Fund on
            behalf of the Portfolio confirmation of each transfer to or from the
            account of the Portfolio in the form of a written advice or notice
            and shall furnish to Fund on behalf of the Portfolio copies of daily
            transaction sheets reflecting each day's transactions in the U.S.
            Securities System for the account of the Portfolio;

     4)     State Street shall provide Fund with any report obtained by State
            Street on the U.S. Securities System's accounting system, internal
            accounting control and procedures for safeguarding securities
            deposited in the U.S. Securities System;

     5)     Anything to the contrary herein notwithstanding, State Street shall
            be liable to Fund for the benefit of the Portfolio for any loss or
            damage to the Portfolio resulting from use of the U.S. Securities
            System by reason of any negligence, misfeasance or misconduct of
            State Street or any of its agents or of any of its their employees
            or from failure of State Street or any such agent to enforce
            effectively such rights as it may have against the U.S. Securities
            System; at the election of Fund, it shall be entitled to be
            subrogated to the rights of State Street with respect to any claim
            against the U.S. Securities System or any other person which State

<Page>

            Street may have as a consequence of any such loss or damage if and
            to the extent that the Portfolio has not been made whole for any
            such loss or damage.

     SECTION 2.9   SEGREGATED ACCOUNT. State Street shall upon receipt of Proper
Instructions on behalf of each applicable Portfolio establish and maintain a
segregated account or accounts for and on behalf of each such Portfolio, into
which account or accounts may be transferred cash and/or securities, including
securities maintained in an account by State Street pursuant to Section 2.8
hereof, (i) in accordance with the provisions of any agreement among Fund on
behalf of the Portfolio, State Street and a broker-dealer registered under the
Exchange Act and a member of the NASD (or any futures commission merchant
registered under the Commodity Exchange Act), relating to compliance with the
rules of The Options Clearing Corporation and of any registered national
securities exchange (or the CFTC or any registered contract market), or of any
similar organization or organizations, regarding escrow or other arrangements in
connection with transactions by the Portfolio, (ii) for purposes of segregating
cash or government securities in connection with options purchased, sold or
written by the Portfolio or commodity futures contracts or options thereon
purchased or sold by the Portfolio, (iii) for the purposes of compliance by the
Portfolio with the procedures required by Investment Company Act Release No.
10666, or any subsequent release of the U.S. Securities and Exchange Commission
(the "SEC"), or interpretative opinion of the staff of the SEC, relating to the
maintenance of segregated accounts by registered investment companies, and (iv)
for any other purpose upon receipt of Proper Instructions on behalf of the
applicable Portfolio.

     SECTION 2.10  OWNERSHIP CERTIFICATES FOR TAX PURPOSES. State Street shall
execute ownership and other certificates and affidavits for all federal and
state tax purposes in connection with receipt of income or other payments with
respect to domestic securities of each Portfolio and in connection with
transfers of securities.

     SECTION 2.11  PROXIES. State Street shall, with respect to domestic
securities, cause to be promptly executed by the registered holder of such
securities, if the securities are registered otherwise than in the name of the
Portfolio or a nominee of the Portfolio, all proxies, without indication of the
manner in which such proxies are to be voted, and shall promptly deliver to the
Portfolio such proxies, all proxy soliciting materials and all notices relating
to such securities.

     SECTION 2.12  COMMUNICATIONS RELATING TO PORTFOLIO SECURITIES. Subject to
the provisions of Section 2.3, State Street shall transmit promptly to Fund for
each Portfolio all written information received by State Street from issuers of
the securities being held for the Portfolio with respect to Corporate Actions,
notices of exercise of call and put options written by Fund on behalf of the
Portfolio, and the maturity of futures contracts purchased or sold by the
Portfolio. With respect to tender or exchange offers, State Street shall
transmit promptly to the Portfolio all written information received by State
Street from issuers of the securities whose tender or exchange is sought and
from the party (or its agents) making the tender or exchange offer. If the
Portfolio desires to take action with respect to any Corporate Action, the
Portfolio shall provide Proper Instruction to State Street at least three
business days prior to the date on which State Street is to take such action.

SECTION 3   PROVISIONS RELATING TO RULES 17F-5 AND 17F-7

     SECTION 3.1   DEFINITIONS. As used throughout this Agreement, the
capitalized terms set forth below shall have the indicated meanings:

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"Country Risk" means all factors reasonably related to the systemic risk of
holding Foreign Assets in a particular country including, but not limited to,
such country's political environment, economic and financial infrastructure
(including any Eligible Securities Depository operating in the country),
prevailing or developing custody and settlement practices, and laws and
regulations applicable to the safekeeping and recovery of Foreign Assets held in
custody in that country. "Country Risk" does not include the risk that State
Street or any sub-custodian or agent will be negligent or will engage in willful
misconduct.

"Eligible Foreign Custodian" has the meaning set forth in section (a)(1) of Rule
17f-5, including a majority-owned or indirect subsidiary of a U.S. Bank (as
defined in Rule 17f-5), a bank holding company meeting the requirements of an
Eligible Foreign Custodian (as set forth in Rule 17f-5 or by other appropriate
action of the SEC, or a foreign branch of a Bank (as defined in section 2(a)(5)
of the 1940 Act) meeting the requirements of a custodian under section 17(f) of
the 1940 Act; the term does not include any Eligible Securities Depository.

"Eligible Securities Depository" has the meaning set forth in section (b)(1) of
Rule 17f-7.

"Foreign Assets" means any of the Portfolios' investments (including foreign
currencies) for which the primary market is outside the United States and such
cash and cash equivalents as are reasonably necessary to effect the Portfolios'
transactions in such investments.

"Foreign Custody Manager" has the meaning set forth in section (a)(3) of Rule
17f-5.

"Rule 17f-5" means Rule 17f-5 promulgated under the 1940 Act.

"Rule 17f-7" means Rule 17f-7 promulgated under the 1940 Act.

     SECTION 3.2   STATE STREET AS FOREIGN CUSTODY MANAGER.

     3.2.1  DELEGATION TO STATE STREET AS FOREIGN CUSTODY MANAGER. Fund, by
     resolution adopted by its Board, hereby delegates to State Street, subject
     to section (b) of Rule 17f-5, the responsibilities set forth in this
     Section 3.2 with respect to Foreign Assets held outside the United States,
     and State Street hereby accepts such delegation as Foreign Custody Manager
     with respect to the Portfolios.

     3.2.2  COUNTRIES COVERED. The Foreign Custody Manager shall be responsible
     for performing the delegated responsibilities defined below only with
     respect to the countries and custody arrangements for each such country
     listed on Schedule A, which list of countries may be amended from time to
     time by Fund with the agreement of the Foreign Custody Manager. The Foreign
     Custody Manager shall list on Schedule A the Eligible Foreign Custodians
     selected by the Foreign Custody Manager to maintain the assets of the
     Portfolios, which list of Eligible Foreign Custodians may be amended from
     time to time in the sole discretion of the Foreign Custody Manager. The
     Foreign Custody Manager will provide amended versions of Schedule A in
     accordance with Section 3.2.5 hereof.

     Upon the receipt by the Foreign Custody Manager of Proper Instructions to
     open an account or to place or maintain Foreign Assets in a country listed
     on Schedule A, and the

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     fulfillment by Fund, on behalf of the Portfolios, of the applicable account
     opening requirements for such country, the Foreign Custody Manager shall be
     deemed to have been delegated by the Board on behalf of the Portfolios
     responsibility as Foreign Custody Manager with respect to that country and
     to have accepted such delegation. Execution hereof by Fund shall be deemed
     (i) to be a Proper Instruction to open an account, or to place or maintain
     Foreign Assets, in each country listed on Schedule A in which State Street
     has previously placed or currently maintains Foreign Assets pursuant to the
     terms of the contract governing the custody arrangement (the parties
     agreeing that the countries in which the Custodian has previously
     maintained or currently maintains Foreign Assets are listed on Schedule B)
     and (ii) to be a delegation by the Board on behalf of the Portfolios to the
     Custodian of responsibility as Foreign Custody Manager with respect to the
     countries listed on Schedule B and the acceptance by the Custodian of such
     delegation. Following the receipt of Proper Instructions directing the
     Foreign Custody Manager to close the account of a Portfolio with the
     Eligible Foreign Custodian selected by the Foreign Custody Manager in a
     designated country, the delegation by the Board on behalf of the Portfolios
     to State Street as Foreign Custody Manager for that country shall be deemed
     to have been withdrawn and State Street shall use commercially reasonable
     efforts to effect the closing of such account and to cease to be the
     Foreign Custody Manager of the Portfolios with respect to that country.

     The Foreign Custody Manager may withdraw its acceptance of delegated
     responsibilities with respect to a designated country upon written notice
     to Fund. Thirty days (or such longer period to which the parties agree in
     writing) after receipt of any such notice by Fund, State Street shall have
     no further responsibility in its capacity as Foreign Custody Manager to
     Fund with respect to the country as to which State Street's acceptance of
     delegation is withdrawn.

     3.2.3  SCOPE OF DELEGATED RESPONSIBILITIES:

            (a)    SELECTION OF ELIGIBLE FOREIGN CUSTODIANS. Subject to the
     provisions of this Section 3.2, the Foreign Custody Manager may place and
     maintain the Foreign Assets in the care of the Eligible Foreign Custodian
     selected by the Foreign Custody Manager in each country listed on Schedule
     A, as amended from time to time. In performing its delegated
     responsibilities as Foreign Custody Manager to place or maintain Foreign
     Assets with an Eligible Foreign Custodian, the Foreign Custody Manager
     shall determine that the Foreign Assets will be subject to reasonable care,
     based on the standards applicable to custodians in the country in which the
     Foreign Assets will be held by that Eligible Foreign Custodian, after
     considering all factors relevant to the safekeeping of such assets,
     including, without limitation the factors specified in Rule 17f-5(c)(1).

            (b)    CONTRACTS WITH ELIGIBLE FOREIGN CUSTODIANS. The Foreign
     Custody Manager shall determine that the contract governing the foreign
     custody arrangements with each Eligible Foreign Custodian selected by the
     Foreign Custody Manager will satisfy the requirements of Rule 17f-5(c)(2).

            (c)    MONITORING. In each case in which the Foreign Custody Manager
     maintains Foreign Assets with an Eligible Foreign Custodian selected by the
     Foreign Custody Manager, the Foreign Custody Manager shall in accordance
     with Rule 17f-

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     5(c)(3)(1), establish a system to monitor (i) the appropriateness of
     maintaining the Foreign Assets with such Eligible Foreign Custodian and
     (ii) the contract governing the custody arrangements established by the
     Foreign Custody Manager with the Eligible Foreign Custodian. In the event
     the Foreign Custody Manager determines that the custody arrangements with
     an Eligible Foreign Custodian it has selected are no longer appropriate,
     the Foreign Custody Manager shall notify the Board in accordance with
     Section 3.2.5 hereunder.

     3.2.4  GUIDELINES FOR THE EXERCISE OF DELEGATED AUTHORITY. For purposes of
     this Section 3.2, the Board shall be deemed to have considered and
     determined to accept such Country Risk as is incurred by placing and
     maintaining the Foreign Assets in each country for which State Street is
     serving as Foreign Custody Manager of the Portfolios.

     3.2.5  REPORTING REQUIREMENTS. The Foreign Custody Manager shall report the
     withdrawal of the Foreign Assets from an Eligible Foreign Custodian and the
     placement of such Foreign Assets with another Eligible Foreign Custodian
     not previously reported to the Board by providing to the Board an amended
     Schedule A at the end of the calendar quarter in which an amendment to such
     Schedule has occurred. The Foreign Custody Manager shall make written
     reports notifying the Board of any other material change in the foreign
     custody arrangements of the Portfolios described in this Section 3.2 after
     the occurrence of the material change.

     3.2.6  STANDARD OF CARE AS FOREIGN CUSTODY MANAGER OF A PORTFOLIO. In
     performing the responsibilities delegated to it, the Foreign Custody
     Manager agrees to exercise reasonable care, prudence and diligence such as
     a person having responsibility for the safekeeping of assets of management
     investment companies registered under the 1940 Act would exercise.

     3.2.7  REPRESENTATIONS WITH RESPECT TO RULE 17F-5. The Foreign Custody
     Manager represents to Fund that (i) it is a U.S. Bank as defined in section
     (a)(7) of Rule 17f-5 (ii) that each institution listed on Schedule A is an
     Eligible Foreign Custodian and (iii) each institution listed in Schedule B
     is an Eligible Securities Depository. Fund represents to State Street that
     the Board has determined that it is reasonable for the Board to rely on
     State Street to perform the responsibilities delegated pursuant hereto to
     State Street as the Foreign Custody Manager of the Portfolios.

     3.2.8  EFFECTIVE DATE AND TERMINATION OF STATE STREET AS FOREIGN CUSTODY
     MANAGER. The Board's delegation to State Street as Foreign Custody Manager
     of the Portfolios shall be effective as of the date hereof and shall remain
     in effect until terminated at any time, without penalty, by written notice
     from the terminating party to the non-terminating party. Termination will
     become effective thirty (30) days after receipt by the non-terminating
     party of such notice. The provisions of Section 3.2.2 hereof shall govern
     the delegation to and termination of State Street as Foreign Custody
     Manager of the Portfolios with respect to designated countries.

     SECTION 3.3   ELIGIBLE SECURITIES DEPOSITORIES.

     3.3.1  ANALYSIS AND MONITORING. State Street shall (a) provide Fund (or its
     duly-authorized investment manager, investment advisor or sub-adviser,
     where applicable)

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     with an analysis of the custody risks associated with maintaining assets
     with the Eligible Securities Depositories set forth on Schedule B hereto in
     accordance with section (a)(1)(i)(A) of Rule 17f-7, and (b) monitor such
     risks on a continuing basis, and promptly notify Fund (or its
     duly-authorized investment manager, investment advisor or sub-adviser,
     where applicable) of any material change in such risks, in accordance with
     section (a)(1)(i)(B) of Rule 17f-7.

     3.3.2  STANDARD OF CARE. State Street agrees to exercise reasonable care,
     prudence and diligence in performing the duties set forth in Section 3.3.1.

SECTION 4   DUTIES OF STATE STREET WITH RESPECT TO PROPERTY HELD OUTSIDE THE
            UNITED STATES

     SECTION 4.1   DEFINITIONS. As used throughout this Agreement, the
capitalized terms set forth below shall have the indicated meanings:

"Foreign Securities System" means an Eligible Securities Depository listed on
Schedule B hereto.

"Foreign Sub-Custodian" means a foreign banking institution serving as an
Eligible Foreign Custodian.

     SECTION 4.2   HOLDING SECURITIES. State Street shall identify on its books
as belonging to the Portfolios the foreign securities held by each Foreign
Sub-Custodian or Foreign Securities System. State Street may hold foreign
securities for all of its customers, including the Portfolios, with any Foreign
Sub-Custodian in an account that is identified as belonging to State Street for
the benefit of its customers, provided however, that (i) the records of State
Street with respect to foreign securities which are maintained in such account
shall identify those securities as belonging to the Portfolios and (ii), to the
extent permitted and customary in the market in which the account is maintained,
State Street shall require that securities so held by the Foreign Sub-Custodian
be held separately from any assets of such Foreign Sub-Custodian or of other
customers of such Foreign Sub-Custodian.

     SECTION 4.3   FOREIGN SECURITIES SYSTEMS. Foreign securities shall be
maintained in a Foreign Securities System in a designated country through
arrangements implemented by State Street or a Foreign Sub-Custodian, as
applicable, in such country. (Foreign Securities Systems and U.S. Securities
Systems are collectively referred to herein as "SECURITIES SYSTEMS").

     SECTION 4.4   TRANSACTIONS IN FOREIGN CUSTODY ACCOUNT.

     4.4.1. DELIVERY OF FOREIGN ASSETS. State Street or a Foreign Sub-Custodian
     shall release and deliver foreign securities held by State Street or such
     Foreign Sub-Custodian, or in a Foreign Securities System account, only upon
     receipt of Proper Instructions on behalf of the Applicable Portfolio, which
     may be continuing instructions when deemed appropriate by the parties, and
     only in the following cases:

            (i)    upon the sale of such foreign securities for the Portfolio in
     accordance with commercially reasonable market practice in the country
     where such foreign

<Page>

     securities are held or traded, including, without limitation: (A) delivery
     against reasonable expectation of receiving later payment; or (B) in the
     case of a sale effected through a Foreign Securities System, in accordance
     with the rules governing the operation of the Foreign Securities System;

            (ii)   in connection with any repurchase agreement related to
     foreign securities;

            (iii)  to the depository agent in connection with tender or other
     similar offers for foreign securities;

            (iv)   to the issuer thereof or its agent when such foreign
     securities are called, redeemed, retired or otherwise become payable;

            (v)    to the issuer thereof, or its agent, for transfer into the
     name of State Street (or the name of the respective Foreign Sub-Custodian
     or of any nominee of State Street or such Foreign Sub-Custodian) or for
     exchange for a different number of bonds, certificates or other evidence
     representing the same aggregate face amount or number of units;

            (vi)   to brokers, clearing banks or other clearing agents for
     examination or trade execution in accordance with market custom; provided
     that in any such case the Foreign Sub-Custodian shall have no
     responsibility or liability for any loss arising from the delivery of such
     securities prior to receiving payment for such securities except as may
     arise from the Foreign Sub-Custodian's own negligence or willful
     misconduct;

            (vii)  for exchange or conversion pursuant to any Corporate Actions
     or pursuant to provisions for conversion contained in such securities, or
     pursuant to any deposit agreement;

            (viii) in the case of warrants, rights or similar foreign
     securities, the surrender thereof in the exercise of such warrants, rights
     or similar securities or the surrender of interim receipts or temporary
     securities for definitive securities;

            (ix)   for delivery as security in connection with any borrowing by
     the Portfolios requiring a pledge of assets by the Portfolios;

            (x)    in connection with trading in options and futures contracts,
     including delivery as original margin and variation margin in accordance
     with applicable regulatory requirements;

            (xi)   in connection with the lending of foreign securities by the
     Portfolio; and

            (xii)  for any other purpose, but only upon receipt of Proper
     Instructions specifying the foreign securities to be delivered and naming
     the person or persons to whom delivery of such securities shall be made.

     4.4.2. PAYMENT OF PORTFOLIO MONIES - FOREIGN SECURITIES. Upon receipt of
     Proper Instructions on behalf of the applicable Portfolio, which may be
     continuing instructions when deemed appropriate by the parties, State
     Street shall pay out, or direct the

<Page>

     respective Foreign Sub-Custodian or the respective Foreign Securities
     System to pay out, monies of a Portfolio in the following cases only:

            (i)    upon the purchase of foreign securities for the Portfolio,
     unless otherwise directed by Proper Instructions, by (A) delivering money
     to the seller thereof or to a dealer therefor (or an agent for such seller
     or dealer) against reasonable expectation of receiving later delivery of
     such foreign securities; or (B) in the case of a purchase effected through
     a Foreign Securities System, in accordance with the rules governing the
     operation of such Foreign Securities System;

            (ii)   in connection with the conversion, exchange or surrender of
     foreign securities;

            (iii)  for the payment of any expense or liability of the Portfolio,
     including but not limited to the following payments: interest, taxes,
     investment advisory fees, transfer agency fees, fees hereunder, legal fees,
     accounting fees, and other operating expenses;

            (iv)   for the purchase or sale of foreign exchange or foreign
     exchange contracts for the Portfolio, including transactions executed with
     or through State Street or its Foreign Sub-Custodians;

            (v)    in connection with trading in options and futures contracts,
     including delivery as original margin and variation margin;

            (vi)   for payment of part or all of the dividends received in
     respect of securities sold short;

            (vii)  in connection with the borrowing or lending of foreign
     securities; and

            (viii) for any other purpose, but only upon receipt of Proper
     Instructions specifying the amount of such payment and naming the person or
     persons to whom such payment is to be made.

     4.4.3. MARKET CONDITIONS. Notwithstanding any provision hereof to the
     contrary, settlement and payment for Foreign Assets received for the
     account of the Portfolios and delivery of Foreign Assets maintained for the
     account of the Portfolios may be effected in accordance with the customary
     established securities trading or processing practices and procedures in
     the country or market in which the transaction occurs, including, without
     limitation, delivering Foreign Assets to the purchaser thereof or to a
     dealer therefor (or an agent for such purchaser or dealer) with the
     expectation of receiving later payment for such Foreign Assets from such
     purchaser or dealer.

     State Street shall provide each Portfolio's adviser (and sub-adviser, where
     applicable), as identified in Proper Instructions by the Board, the
     information with respect to custody and settlement practices in countries
     in which State Street employs a Foreign Sub-Custodian described on Schedule
     C hereto, including without limitation information relating to Foreign
     Securities Systems, at the time or times set forth on such Schedule. State
     Street may revise Schedule C from time to time, provided that no such
     revision

<Page>

     shall result in the Board being provided with substantively less
     information than had been previously provided hereunder.

     SECTION 4.5   REGISTRATION OF FOREIGN SECURITIES. The foreign securities
maintained in the custody of a Foreign Sub-Custodian (other than bearer
securities) shall be registered in the name of the applicable Portfolio or in
the name of State Street or in the name of any Foreign Sub-Custodian or in the
name of any nominee of the foregoing, and Fund on behalf of such Portfolio
agrees to hold any such nominee harmless from any liability as a holder of
record of such foreign securities. State Street or a Foreign Sub-Custodian shall
not be obligated to accept securities on behalf of a Portfolio under the terms
hereof unless the form of such securities and the manner in which they are
delivered are in accordance with reasonable market practice.

     SECTION 4.6   BANK ACCOUNTS. State Street shall identify on its books as
belonging to Fund cash (including cash denominated in foreign currencies)
deposited with State Street. Where State Street is unable to maintain, or market
practice does not facilitate the maintenance of, cash on the books of State
Street, a bank account or bank accounts shall be opened and maintained outside
the United States on behalf of a Portfolio with a Foreign Sub-Custodian. All
accounts referred to in this Section shall be subject only to draft or order by
State Street (or, if applicable, such Foreign Sub-Custodian) acting pursuant to
the terms hereof to hold cash received by or from or for the account of the
Portfolio. Cash maintained on the books of State Street (including its branches,
subsidiaries and affiliates), regardless of currency denomination, is maintained
in bank accounts established under, and subject to the laws of, The Commonwealth
of Massachusetts.

     SECTION 4.7   COLLECTION OF INCOME. State Street shall use reasonable
commercial efforts to collect all income and other payments with respect to the
Foreign Assets held hereunder to which the Portfolios shall be entitled and
shall credit such income, as collected, to the applicable Portfolio. In the
event that extraordinary measures are required to collect such income, Fund and
State Street shall consult as to such measures and as to the compensation and
expenses of State Street relating to such measures.

     SECTION 4.8   SHAREHOLDER RIGHTS. With respect to the foreign securities
held pursuant to this Section 4, State Street will use reasonable commercial
efforts to facilitate the exercise of voting and other shareholder rights,
subject always to the laws, regulations and practical constraints that may exist
in the country where such securities are issued. Fund acknowledges that local
conditions, including lack of regulation, onerous procedural obligations, lack
of notice and other factors may have the effect of severely limiting the ability
of Fund to exercise shareholder rights.

     SECTION 4.9   COMMUNICATIONS RELATING TO FOREIGN SECURITIES. State Street
shall transmit promptly to Fund written information with respect to materials
received by State Street via the Foreign Sub-Custodians from issuers of the
foreign securities being held for the account of the Portfolios (including,
without limitation, pendency of calls and maturities of foreign securities and
expirations of rights in connection therewith). With respect to tender or
exchange offers, State Street shall transmit promptly to Fund written
information with respect to materials so received by State Street from issuers
of the foreign securities whose tender or exchange is sought or from the party
(or its agents) making the tender or exchange offer. State Street shall not be
liable for any untimely exercise of any action, right or power in connection
with foreign securities or other property unless (i) State Street or the
respective Foreign Sub-Custodian is in

<Page>

actual possession of such foreign securities or property and (ii) State Street
receives Proper Instructions with regard to the exercise of any such action,
right or power, and both (i) and (ii) occur at least three business days prior
to the date on which State Street is to take action to exercise such right or
power.

     SECTION 4.10  LIABILITY OF FOREIGN SUB-CUSTODIANS. Each agreement pursuant
to which State Street employs a Foreign Sub-Custodian shall, to the extent
possible, require the Foreign Sub-Custodian to exercise reasonable care in the
performance of its duties, and to indemnify, and hold harmless, State Street
from and against any loss, damage, cost, expense, liability or claim arising out
of or in connection with the Foreign Sub-Custodian's performance of such
obligations. At Fund's election, the Portfolios shall be entitled to be
subrogated to the rights of State Street with respect to any claims against a
Foreign Sub-Custodian as a consequence of any such loss, damage, cost, expense,
liability or claim if and to the extent that the Portfolios have not been made
whole for any such loss, damage, cost, expense, liability or claim.

     SECTION 4.11  TAX LAW. State Street shall have no responsibility or
liability for any obligations now or hereafter imposed on Fund, the Portfolios
or State Street as custodian of the Portfolios by the tax law of the United
States or of any state or political subdivision thereof (except taxes
attributable to the domicile of State Street in the Commonwealth of
Massachusetts, and in such case State Street shall notify Fund). It shall be the
responsibility of Fund to notify State Street of the obligations imposed on Fund
with respect to the Portfolios or State Street as custodian of the Portfolios by
the tax law of countries other than those mentioned in the above sentence,
including responsibility for withholding and other taxes, assessments or other
governmental charges, certifications and governmental reporting. The sole
responsibility of State Street with regard to such tax law shall be to use
reasonable efforts to assist Fund with respect to any claim for exemption or
refund under the tax law of countries for which Fund has provided such
information.

     SECTION 4.12  LIABILITY OF STATE STREET. State Street shall be liable for
the acts or omissions of a Foreign Sub-Custodian to the same extent as set forth
with respect to sub-custodians generally herein and, regardless of whether
assets are maintained in the custody of a Foreign Sub-Custodian or a Foreign
Securities System, State Street shall not be liable for any loss, damage, cost,
expense, liability or claim resulting from nationalization, expropriation,
currency restrictions, or acts of war or terrorism, or any other loss to the
extent that the Sub-Custodian has acted with reasonable care.

SECTION 5   PAYMENTS FOR SALES OR REPURCHASES OR REDEMPTIONS OF SHARES. State
Street shall receive from the distributor for the Shares or from the Transfer
Agent and deposit into the account of the appropriate Portfolio such payments as
are received for Shares thereof issued or sold from time to time by Fund. State
Street will provide timely notification to Fund on behalf of each such Portfolio
and the Transfer Agent of any receipt by it of payments for Shares of such
Portfolio.

From such funds as may be available for the purpose, State Street shall, upon
receipt of instructions from the Transfer Agent, make funds available for
payment to holders of Shares who have delivered to the Transfer Agent a request
for redemption or repurchase of their Shares. In connection with the redemption
or repurchase of Shares, State Street is authorized upon receipt of instructions
from the Transfer Agent to wire funds to or through a commercial bank

<Page>

designated by the redeeming shareholders. In connection with the redemption or
repurchase of Shares, State Street shall honor checks drawn on State Street by a
holder of Shares, which checks have been furnished by Fund to the holder of
Shares, when presented to State Street in accordance with such procedures and
controls as are mutually agreed upon from time to time between Fund and State
Street.

SECTION 6   PROPER INSTRUCTIONS. Proper Instructions as used throughout this
Agreement means a writing signed or initialed by one or more person or persons
as the Board shall have from time to time authorized. Each such writing shall
set forth the specific transaction or type of transaction involved, including a
specific statement of the purpose for which such action is requested. Oral
instructions will be considered Proper Instructions if State Street reasonably
believes them to have been given by a person authorized to give such
instructions with respect to the transaction involved. Fund shall cause all oral
instructions to be confirmed in writing. If given pursuant to procedures to be
agreed upon by the parties, Proper Instructions may include communications
effected directly between electro-mechanical or electronic devices provided that
Fund and State Street agree to security procedures, including but not limited
to, the security procedures selected by Fund in the Funds Transfer Addendum
attached hereto. For purposes of this Section, Proper Instructions shall include
instructions received by State Street pursuant to any three-party agreement that
requires a segregated asset account in accordance with Section 2.9.

SECTION 7   ACTIONS PERMITTED WITHOUT EXPRESS AUTHORITY. State Street may in its
discretion, without express authority from Fund on behalf of each applicable
Portfolio: 1) surrender securities in temporary form for securities in
definitive form; 2) endorse for collection, in the name of the Portfolio,
checks, drafts and other negotiable instruments; and 3) in general, attend to
all non-discretionary details in connection with the sale, exchange,
substitution, purchase, transfer and other dealings with the securities and
property of the Portfolio except as otherwise directed by the Board.

SECTION 8   EVIDENCE OF AUTHORITY. State Street shall be protected in acting
upon any instructions, notice, request, consent, certificate or other instrument
or paper believed by it to be genuine and to have been properly executed by or
on behalf of Fund. State Street may receive and accept a copy of a resolution
certified by the Secretary or an Assistant Secretary of Fund ("CERTIFIED
RESOLUTION") as conclusive evidence (a) of the authority of any person to act in
accordance with such resolution or (b) of any determination or of any action by
the Board as described in such resolution, and such resolution may be considered
as in full force and effect until receipt by State Street of written notice to
the contrary.

SECTION 9   DUTIES OF STATE STREET WITH RESPECT TO THE BOOKS OF ACCOUNT AND
            CALCULATION OF NET ASSET VALUE

     SECTION 9.1   ACCOUNTS AND RECORDS. State Street will prepare and maintain,
under the direction of and as interpreted by Fund, Fund's or Portfolio's
accountants and/or other advisors, in complete, accurate and current form such
accounts and records: (A) required to be maintained by Fund with respect to
portfolio transactions under the 1940 Act; (B) required as a basis for
calculation of each Portfolio's net asset value; and (C) as otherwise agreed
upon by the parties. Fund will advise State Street in writing of all applicable
record retention requirements, other than those set forth in the 1940 Act. State
Street will preserve such accounts and records in the manner and for the periods
prescribed in the 1940 Act or for such longer period as is agreed

<Page>

upon by the parties. Fund will furnish, in writing or its electronic or digital
equivalent, accurate and timely information needed by State Street to complete
such accounts and records when such information is not readily available from
generally accepted securities industry services or publications. State Street
shall, at Fund's request, supply Fund with a tabulation of securities owned by a
Portfolio and held by State Street, including certificate numbers, if
applicable, for such compensation as shall be agreed upon between Fund and State
Street.

     SECTION 9.2   DELIVERY OF ACCOUNTS AND RECORDS. Fund will turn over or
cause to be turned over to State Street all accounts and records needed by State
Street to perform its duties and responsibilities hereunder fully and properly.
State Street may rely conclusively on the completeness and correctness of such
accounts and records.

     SECTION 9.3   ACCOUNTS AND RECORDS PROPERTY OF FUND. State Street
acknowledges that all of the accounts and records maintained by State Street
pursuant hereto are the property of Fund, and will be made available to Fund for
inspection or reproduction within a reasonable period of time, upon demand.
State Street will assist Fund's independent auditors, or upon the prior written
approval of Fund, or upon demand, any regulatory body, in any requested review
of Fund's accounts and records but Fund will reimburse State Street for all
reasonable expenses and employee time invested in any such review outside of
routine and normal periodic reviews. Upon receipt from Fund of the necessary
information or instructions, State Street will supply information from the books
and records it maintains for Fund that Fund may reasonably request for tax
returns, questionnaires, periodic reports to shareholders and such other reports
and information requests as Fund and State Street may agree upon from time to
time.

     SECTION 9.4   ADOPTION OF PROCEDURES. State Street and Fund may from time
to time adopt such procedures as they agree upon, and State Street may
conclusively assume that no procedure approved or directed by Fund, Fund's or
Portfolio's accountants or other advisors conflicts with or violates any
requirements of Fund's Prospectus, governing documents, any applicable law, rule
or regulation, or any order, decree or agreement by which Fund may be bound. The
Fund agrees to notify State Street promptly of any change in the Fund's
circumstances and of any changes in statutes, regulations, rules, requirements
or policies which may impact State Street's performance of its responsibilities
hereunder or its related operational policies and procedures as they relate to
the Fund in a manner different from or in addition to requirements applicable to
investment companies registered under the 1940 Act in general.

     SECTION 9.5   VALUATION OF ASSETS. State Street will value the assets of
each Portfolio in accordance with Proper Instructions utilizing the pricing
sources designated by Fund ("PRICING SOURCES") on the Price Source and
Methodology Authorization Matrix, incorporated herein by this reference. State
Street will assist with the shadow pricing of any money market Portfolios as
requested by Fund. If so directed, State Street shall also calculate daily net
income of a Portfolio as described in the prospectus and shall advise the Fund
periodically of the division of such net income of its various components.

     SECTION 9.6   LIMITATION OF LIABILITY. So long as and to the extent that it
is in the exercise of reasonable care, State Street is not responsible or liable
for, and Fund will indemnify and hold State Street harmless from and against,
any and all costs, expenses, losses, damages, charges, counsel fees (including,
without limitation, disbursements and the allocable cost of in-house counsel),
payments and liabilities which may be asserted against or incurred by State
Street or for which State Street may be held to be liable, arising out of or
attributable to any error, omission,

<Page>

inaccuracy or other deficiency in any Portfolio's accounts and records or other
information provided to State Street by or on behalf of a Portfolio, including
the accuracy of the prices quoted by the Pricing Sources or for the information
supplied by Fund to value the assets, or the failure of Fund to provide, or
provide in a timely manner, any accounts, records, or information needed by
State Street to perform its duties hereunder.

SECTION 10  OPINION OF FUND'S INDEPENDENT ACCOUNTANT. State Street shall take
all reasonable action, as Fund on behalf of each applicable Portfolio may from
time to time request, to obtain from year to year favorable opinions from Fund's
independent accountants with respect to its activities hereunder in connection
with the preparation of Fund's Form N-1A, and Form N-SAR or other annual reports
to the SEC and with respect to any other requirements thereof.

SECTION 11  REPORTS TO FUND BY INDEPENDENT PUBLIC ACCOUNTANTS. State Street
shall provide Fund, on behalf of each of the Portfolios at such times as Fund
may reasonably require, with reports by independent public accountants on the
accounting system, internal accounting control and procedures for safeguarding
securities, futures contracts and options on futures contracts, including
securities deposited and/or maintained in any Securities System, relating to the
services provided by State Street hereunder; such reports, shall be of
sufficient scope and in sufficient detail, as may reasonably be required by Fund
to provide reasonable assurance that any material inadequacies would be
disclosed by such examination, and, if there are no such inadequacies, the
reports shall so state.

SECTION 12  COMPENSATION OF STATE STREET. State Street shall be entitled to
reasonable compensation for its services and expenses as custodian and
recordkeeping agent, as agreed upon from time to time in a fee schedule, as
amended from time to time ("FEE SCHEDULE") between Fund on behalf of each
applicable Portfolio and State Street.

SECTION 13  RESPONSIBILITY OF STATE STREET. So long as and to the extent that
State Street exercises reasonable care, State Street shall not be responsible
for the title, validity or genuineness of any property or evidence of title
thereto received by it or delivered by it pursuant hereto and shall be held
harmless in acting upon any notice, request, consent, certificate or other
instrument reasonably believed by it to be genuine and to be signed by the
proper party or parties, including any futures commission merchant acting
pursuant to the terms of a three-party futures or options agreement. State
Street shall be held to the exercise of reasonable care in carrying out the
provisions hereof, but shall be kept indemnified by and shall be without
liability to Fund for any action taken or omitted by it in good faith without
negligence, including, without limitation, acting in accordance with any Proper
Instruction. It shall be entitled to rely on and may act upon advice of counsel
on all matters, and shall be without liability for any action reasonably taken
or omitted pursuant to such advice. State Street shall be without liability to
Fund and the Portfolios for any loss, liability, claim or expense resulting from
or caused by anything which is part of Country Risk (as defined in Section 3
hereof), including without limitation nationalization, expropriation, currency
restrictions, or acts of war, revolution, riots or terrorism.

Except to the extent of State Street's own negligence or willful misconduct or
the negligence or willful misconduct of a sub-custodian or agent, State Street
shall be without liability to Fund for any loss, liability, claim or expense
resulting from or caused by; (i) events or circumstances beyond the reasonable
control of State Street or any sub-custodian or Securities System or any agent
or nominee of any of the foregoing, including, without limitation, the
interruption,

<Page>

suspension or restriction of trading on or the closure of any securities market,
power or other mechanical or technological failures or interruptions, computer
viruses or communications disruptions, work stoppages, natural disasters, or
other similar events or acts ("Force Majeure Events"); (ii) errors by Fund or
its duly-authorized investment manager or investment advisor in their
instructions to State Street provided such instructions have been in accordance
with this Agreement; (iii) the insolvency of or acts or omissions by a
Securities System; (iv) any delay or failure of any broker, agent or
intermediary, central bank or other commercially prevalent payment or clearing
system to deliver to State Street's sub-custodian or agent securities purchased
or in the remittance or payment made in connection with securities sold; (v) any
delay or failure of any company, corporation, or other body in charge of
registering or transferring securities in the name of State Street, Fund, State
Street's sub-custodians, nominees or agents or any consequential losses arising
out of such delay or failure to transfer such securities including non-receipt
of bonus, dividends and rights and other accretions or benefits; (vi) delays or
inability to perform its duties due to any disorder in market infrastructure
with respect to any particular security or Securities System; and (vii) any
provision of any present or future law or regulation or order of the United
States of America, or any state thereof, or any other country, or political
subdivision thereof or of any court of competent jurisdiction.

State Street shall be liable for the acts or omissions of a Foreign
Sub-Custodian (as defined in Section 4 hereof) to the same extent as set forth
with respect to sub-custodians generally herein.

If Fund on behalf of a Portfolio requires State Street to take any action with
respect to securities, which action involves the payment of money or which
action may, in the opinion of State Street, result in State Street or its
nominee assigned to Fund or the Portfolio being liable for the payment of money
or incurring liability of some other form, Fund on behalf of the Portfolio, as a
prerequisite to requiring State Street to take such action, shall provide
indemnity to State Street in an amount as State Street may reasonably require.

If Fund requires State Street, its affiliates, subsidiaries or agents, to
advance cash or securities for any purpose (including but not limited to
securities settlements, foreign exchange contracts and assumed settlement) or in
the event that State Street or its nominee shall incur or be assessed any taxes,
charges, expenses, assessments, claims or liabilities in connection with the
performance of this Agreement, except such as may arise from State Street's or
its nominee's own negligent action, negligent failure to act or willful
misconduct, any property at any time held for the account of the applicable
Portfolio shall be security therefor and should Fund fail to repay State Street
promptly, State Street shall be entitled to utilize available cash and to
dispose of such Portfolio's assets to the extent necessary to obtain
reimbursement.

In no event shall either party be liable for indirect, special or consequential
damages.

SECTION 14 EFFECTIVE PERIOD, TERMINATION AND AMENDMENT. This Agreement shall
become effective as of its execution, shall continue in full force and effect
until terminated as hereinafter provided, may be amended at any time by mutual
agreement of the parties hereto and may be terminated by either party by an
instrument in writing delivered or mailed, postage prepaid to the other party,
such termination to take effect not sooner than sixty (60) days after the date
of such delivery or mailing; PROVIDED, however, that Fund shall not amend or
terminate this Agreement in contravention of any applicable federal or state
regulations, or any provision of the governing documents, and further provided,
that Fund on behalf of one or more of the Portfolios may at any time by action
of its Board (i) substitute another bank or trust company for State

<Page>

Street by giving notice as described above to State Street, or (ii) immediately
terminate this Agreement in the event of the appointment of a conservator or
receiver for State Street by the Comptroller of the Currency or upon the
happening of a like event at the direction of an appropriate regulatory agency
or court of competent jurisdiction.

Upon termination hereof, Fund on behalf of each applicable Portfolio shall pay
to State Street such compensation and reimbursement as may be due as of the date
of such termination in accordance with the Fee Schedule, and State Street shall
pay amounts due to any Portfolio.

SECTION 15  SUCCESSOR CUSTODIAN AND RECORDKEEPING AGENT. Upon termination of
State Street as recordkeeping agent, State Street shall, upon payment of all
sums due to it from Fund that are not in dispute, deliver all accounts and
records to the successor recordkeeping agent (or, if none, to Fund) at the
office of State Street.

Upon termination of State Street as Custodian, if a successor custodian for one
or more Portfolios shall be appointed by the Board, State Street shall deliver
to such successor custodian at the office of State Street, duly endorsed and in
the form for transfer, all securities of each applicable Portfolio then held by
it hereunder and shall transfer to an account of the successor custodian all of
the securities of each such Portfolio held in a Securities System.

If no such successor custodian shall be appointed, State Street shall, in like
manner, upon receipt of a Certified Resolution, deliver at the office of State
Street and transfer such securities, funds and other properties in accordance
with such resolution.

In the event that no written order designating a successor custodian or
Certified Resolution shall have been delivered to State Street on or before the
date when such termination shall become effective, then State Street shall have
the right to deliver to a bank or trust company, which is a "bank" as defined in
the 1940 Act, doing business in Boston, Massachusetts, or New York, New York, of
its own selection, having an aggregate capital, surplus, and undivided profits,
as shown by its last published report, of not less than $25,000,000, all
securities, funds and other properties held by State Street on behalf of each
applicable Portfolio and all instruments held by State Street relative thereto
and all other property held by it hereunder on behalf of each applicable
Portfolio, and to transfer to an account of such successor custodian all of the
securities of each such Portfolio held in any Securities System. Thereafter,
such bank or trust company shall be the successor of State Street hereunder.

In the event that accounts, records, securities, funds and other properties
remain in the possession of State Street after the date of termination hereof
owing to failure of Fund to procure the Certified Resolution to appoint a
successor custodian or otherwise, State Street shall be entitled to fair
compensation for its services during such period as State Street retains
possession of such accounts, records, securities, funds and other properties and
the provisions hereof relating to the duties and obligations of State Street
shall remain in full force and effect.

     SECTION 16    CONFIDENTIAL INFORMATION. The parties acknowledge that in the
course of performing their responsibilities under the Agreement, they may be
exposed to or acquire certain non-public information belonging to the other
party ("Confidential Information"). The parties agree to hold any such
Confidential Information in strict confidence and not to copy, reproduce, sell,
assign, license, market, transfer or otherwise dispose of, give or disclose such
Confidential Information to third parties or to use such Confidential
Information for any

<Page>

purposes whatsoever other than the provision of the services under this
Agreement and to advise each of its officers, directors, employees and agents
who may be exposed to such Confidential Information of their obligations to keep
such information confidential. It is understood that in the event of a breach of
this Section, damages may not be an adequate remedy and the non-breaching party
shall be entitled to injunctive relief to restrain any such breach, threatened
or actual.

The foregoing confidentiality obligations shall not apply to such Confidential
Information (1) which at the time of disclosure, is publicly available or in the
public knowledge; (2) which, after disclosure, lawfully becomes part of the
public knowledge through publication or otherwise, but through no fault of the
receiving party; (3) which the receiving party possesses at the time of
disclosure of such Confidential Information and which was not acquired, directly
or indirectly, from the disclosing party; (4) was acquired by the receiving
party from a third party which has the right to disclose such Confidential
Information; or (5) is independently developed by the receiving party without
reference to the Confidential Information.

SECTION 17  GENERAL

     SECTION 17.1  INTERPRETIVE AND ADDITIONAL PROVISIONS. In connection with
the operation hereof, State Street and Fund on behalf of each of the Portfolios,
may from time to time agree on such provisions interpretive of or in addition to
the provisions hereof as may in their joint opinion be consistent with the
general tenor of this Agreement. Any such interpretive or additional provisions
shall be in a writing signed by both parties and shall be annexed hereto,
PROVIDED that no such interpretive or additional provisions shall contravene any
applicable federal or state regulations or any provision of the governing
documents. No interpretive or additional provisions made as provided in the
preceding sentence shall be deemed to be an amendment of this Agreement.

     SECTION 17.2  ADDITIONAL PORTFOLIOS. In the event that Fund establishes one
or more additional series with respect to which it desires to have State Street
render services as custodian and recordkeeping agent under the terms hereof, it
shall so notify State Street in writing, and if State Street agrees to provide
such services, such series shall become a Portfolio hereunder.

     SECTION 17.3  MASSACHUSETTS LAW TO APPLY. This Agreement shall be construed
and the provisions thereof interpreted under and in accordance with laws of The
Commonwealth of Massachusetts.

     SECTION 17.4  PRIOR AGREEMENTS. This Agreement supersedes and terminates,
as of the date hereof, all prior agreements between Fund on behalf of each of
the Portfolios and State Street relating to the custody or recordkeeping of
Fund's assets, as more specifically set forth on Exhibit A hereto.

     SECTION 17.5  NOTICES. Any notice, instruction or other instrument required
to be given hereunder may be delivered in person to the offices of the parties
as set forth herein during normal business hours or delivered prepaid registered
mail or by telex, cable or telecopy to the parties at the following addresses or
such other addresses as may be notified by any party from time to time.

<Page>

To Fund:                                    To State Street:

ING PILGRIM INVESTMENTS                     STATE STREET BANK AND TRUST COMPANY
7337 E. Doubletree Ranch Road               801 Pennsylvania Avenue
Scottsdale, Arizona  85258-2034             Kansas City, MO  64105
Attention:  Maria M. Anderson               Attention: Vice President, Custody
Telephone: 480-477-2169                     Telephone: 816-871-4100
Telecopy: 480-477-2706                      Telecopy: 816-871-9648

Such notice, instruction or other instrument shall be deemed to have been served
in the case of a registered letter at the expiration of five business days after
posting, in the case of cable twenty-four hours after dispatch and, in the case
of telex, immediately on dispatch and if delivered outside normal business hours
it shall be deemed to have been received at the next time after delivery when
normal business hours commence and in the case of cable, telex or telecopy on
the business day after the receipt thereof. Evidence that the notice was
properly addressed, stamped and put into the post shall be conclusive evidence
of posting.

     SECTION 17.6  REPRODUCTION OF DOCUMENTS. This Agreement and all schedules,
addenda, exhibits, attachments and amendments hereto may be reproduced by any
photographic, photostatic, microfilm, micro-card, miniature photographic or
other similar process. The parties hereto all/each agree that any such
reproduction shall be admissible in evidence as the original itself in any
judicial or administrative proceeding, whether or not the original is in
existence and whether or not such reproduction was made by a party in the
regular course of business, and that any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.

     SECTION 17.7  REMOTE ACCESS SERVICES ADDENDUM. State Street and Fund agree
to be bound by the terms of the Remote Access Services Addendum attached hereto.

     SECTION 17.8  ASSIGNMENT. Except as otherwise set forth herein, this
Agreement may not be assigned by either party without the written consent of the
other.

     SECTION 17.9  COUNTERPARTS. This Agreement may be executed in several
counterparts, each of which shall be deemed to be an original, and all such
counterparts taken together shall constitute but one and the same Agreement.

     SECTION 17.10 SEVERABILITY. If any provision in this Agreement is
determined to be invalid, illegal, in conflict with any law or otherwise
unenforceable, the remaining provisions hereof will be considered severable and
will not be affected thereby, and every remaining provision hereof will remain
in full force and effect and will remain enforceable to the fullest extent
permitted by applicable law.

     SECTION 17.11 SHAREHOLDER COMMUNICATIONS ELECTION. SEC Rule 14b-2 requires
banks which hold securities for the account of customers to respond to requests
by issuers of securities for the names, addresses and holdings of beneficial
owners of securities of that issuer held by the bank unless the beneficial owner
has expressly objected to disclosure of this information. In order to comply
with the rule, State Street needs Fund to indicate whether it authorizes State
Street to provide Fund's name, address, and share position to requesting
companies whose securities Fund owns. If Fund tells State Street "no", State
Street will not

<Page>

provide this information to requesting companies. If Fund tells State Street
"yes" or does not check either "yes" or "no" below, State Street is required by
the rule to treat Fund as consenting to disclosure of this information for all
securities owned by Fund or any funds or accounts established by Fund. For
Fund's protection, the Rule prohibits the requesting company from using Fund's
name and address for any purpose other than corporate communications. Please
indicate below whether Fund consents or objects by checking one of the
alternatives below.

YES / /   State Street is authorized to release Fund's name, address, and share
          positions.

NO  /X/   State Street is not authorized to release Fund's name, address, and
          share positions.

     IN WITNESS WHEREOF, each of the parties has caused this instrument to be
executed in its name and behalf by its duly authorized representative effective
as of the day and year first written above.

ON BEHALF OF EACH OF THE FUNDS
SET FORTH ON EXHIBIT A HERETO             FUND SIGNATURE ATTESTED TO BY:

By:    /s/ Michael J. Roland              By:    /s/ Robert S. Naka
       -----------------------------             ---------------------------

Name:  Michael J. Roland                  Name:  Robert S. Naka
       -----------------------------             ---------------------------

Title: Executive Vice President           Title: Senior Vice President
       -----------------------------             ---------------------------


STATE STREET BANK AND TRUST COMPANY       SIGNATURE ATTESTED TO BY:

By:    /s/ illegible                      By:    /s/ Angie Keough
       -----------------------------             ---------------------------

Name:  illegible                          Name:  Angie Keough
       -----------------------------             ---------------------------

Title: Senior Vice President              Title: Legal Assistant
       -----------------------------             ---------------------------

<Page>

          SCHEDULE A: STATE STREETGLOBAL CUSTODY NETWORK SUBCUSTODIANS

<Table>
<Caption>
COUNTRY                                        SUBCUSTODIAN
<S>                      <C>
Argentina                Citibank, N.A.

Australia                Westpac Banking Corporation

Austria                  Erste Bank der Osterreichischen Sparkassen AG

Bahrain                  HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Bangladesh               Standard Chartered Bank

Belgium                  Fortis Bank nv-sa

Benin                    via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Bermuda                  The Bank of Bermuda Limited

Bolivia                  Citibank, N. A.

Botswana                 Barclays Bank of Botswana Limited

Brazil                   Citibank, N.A.

Bulgaria                 ING Bank N.V.

Burkina Faso             via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Canada                   State Street Trust Company Canada

Chile                    BankBoston, N.A.

People's Republic        Hongkong and Shanghai Banking Corporation Limited,
of China                 Shanghai and Shenzhen branches

Colombia                 Cititrust Colombia S.A. Sociedad Fiduciaria

Costa Rica               Banco BCT S.A.

Croatia                  Privredna Banka Zagreb d.d

Cyprus                   The Cyprus Popular Bank Ltd.

Czech Republic           Ceskoslovenska Obchodni Banka, A.S.

Denmark                  Danske Bank A/S

Ecuador                  Citibank, N.A.

Egypt                    HSBC Bank Egypt S.A.E.
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Estonia                  Hansabank

Finland                  Nordea Bank Finland Plc.

France                   BNP Paribas Securities Services, S.A.

Germany                  Dresdner Bank AG
</Table>

<Page>

<Table>
<Caption>
COUNTRY                                        SUBCUSTODIAN
<S>                      <C>
Ghana                    Barclays Bank of Ghana Limited

Greece                   National Bank of Greece S.A.

Guinea-Bissau            via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Hong Kong                Standard Chartered Bank

Hungary                  HVB Bank Hungary Rt.

Iceland                  Icebank Ltd.

India                    Deutsche Bank AG

                         Hongkong and Shanghai Banking Corporation Limited

Indonesia                Standard Chartered Bank

Ireland                  Bank of Ireland

Israel                   Bank Hapoalim B.M.

Italy                    BNP Paribas Securities Services, S.A.

Ivory Coast              Societe Generale de Banques en Cote d'Ivoire

Jamaica                  Scotiabank Jamaica Trust and Merchant Bank Ltd.

Japan                    The Fuji Bank, Limited

                         Sumitomo Mitsui Banking Corporation

Jordan                   HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Kazakhstan               HSBC Bank Kazakhstan
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Kenya                    Barclays Bank of Kenya Limited

Republic of Korea        Hongkong and Shanghai Banking Corporation Limited

Latvia                   A/s Hansabanka

Lebanon                  HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Lithuania                Vilniaus Bankas AB

Malaysia                 Standard Chartered Bank Malaysia Berhad

Mali                     via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Mauritius                Hongkong and Shanghai Banking Corporation Limited

Mexico                   Banco Nacional de Mexico S.A.

Morocco                  Banque Commerciale du Maroc
</Table>

<Page>

<Table>
<Caption>
COUNTRY                                        SUBCUSTODIAN
<S>                      <C>
Namibia                  Standard Bank Namibia Limited               -

Netherlands              Fortis Bank (Nederland) N.V.

New Zealand              Westpac Banking Corporation

Niger                    via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Nigeria                  Stanbic Merchant Bank Nigeria Limited

Norway                   Nordea Bank Norge ASA

Oman                     HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Pakistan                 Deutsche Bank AG

Palestine                HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Panama                   BankBoston, N.A.

Peru                     Citibank, N.A.

Philippines              Standard Chartered Bank

Poland                   Bank Handlowy w Warszawie S.A.

Portugal                 Banco Comercial Portugues

Qatar                    HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

Romania                  ING Bank N.V.

Russia                   Credit Suisse First Boston AO - Moscow
                         (as delegate of Credit Suisse First Boston - Zurich)

Senegal                  via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Singapore                The Development Bank of Singapore Limited

Slovak Republic          Ceskoslovenska Obchodni Banka, A.S.

Slovenia                 Bank Austria Creditanstalt d.d. - Ljubljana

South Africa             Standard Bank of South Africa Limited

Spain                    Banco Santander Central Hispano S.A.

Sri Lanka                Hongkong and Shanghai Banking Corporation Limited

Swaziland                Standard Bank Swaziland Limited

Sweden                   Skandinaviska Enskilda Banken

Switzerland              UBS AG

Taiwan - R.O.C.          Central Trust of China
</Table>

<Page>

<Table>
<Caption>
COUNTRY                                        SUBCUSTODIAN
<S>                      <C>
Thailand                 Standard Chartered Bank

Togo                     via Societe Generale de Banques en Cote d'Ivoire, Abidjan, Ivory Coast

Trinidad & Tobago        Republic Bank Limited

Tunisia                  Banque Internationale Arabe de Tunisie

Turkey                   Citibank, N.A.

Ukraine                  ING Bank Ukraine

United Arab Emirates     HSBC Bank Middle East
                         (as delegate of the Hongkong and Shanghai Banking Corporation Limited)

United Kingdom           State Street Bank and Trust Company, London Branch

Uruguay                  BankBoston, N.A.

Venezuela                Citibank, N.A.

Vietnam                  The Hongkong and Shanghai
                         Banking Corporation Limited

Zambia                   Barclays Bank of Zambia Limited

Zimbabwe                 Barclays Bank of Zimbabwe Limited
</Table>

<Page>

                 SCHEDULE B: STATE STREETGLOBAL CUSTODY NETWORK
                    DEPOSITORIES OPERATING IN NETWORK MARKETS

<Table>
<Caption>
COUNTRY                                                    DEPOSITORIES
<S>                            <C>
Argentina                      Caja de Valores S.A.

Australia                      Austraclear Limited Reserve Bank Information and Transfer System

Austria                        Oesterreichische Kontrollbank AG (Wertpapiersammelbank Division)

Belgium                        Caisse Interprofessionnelle de Depots et de Virements de Titres, S.A.

                               Banque Nationale de Belgique

Benin                          Depositaire Central - Banque de Reglement

Brazil                         Companhia Brasileira de Liquidacao e Custodia

                               Sistema Especial de Liquidacao e de Custodia (SELIC)

                               Central de Custodia e de Liquidacao Financeira de Titulos Privados (CETIP)

Bulgaria                       Central Depository AD

                               Bulgarian National Bank

Burkina Faso                   Depositaire Central - Banque de Reglement

Canada                         Canadian Depository for Securities Limited

Chile                          Deposito Central de Valores S.A.

People's Republic of China     China Securities Depository and Clearing Corporation Limited Shanghai Branch

                               China Securities Depository and Clearing Corporation Limited Shenzhen Branch

Colombia                       Deposito Centralizado de Valores

Costa Rica                     Central de Valores S.A.

Croatia                        Ministry of Finance

                               National Bank of Croatia

                               Sredisnja Depozitarna Agencija d.d.

Czech Republic                 Stredisko cennych papiru - Ceska republika

                               Czech National Bank

Denmark                        Vaerdipapircentralen (Danish Securities Center)

Egypt                          Misr for Clearing, Settlement, and Depository S.A.E.

Estonia                        Eesti Vaartpaberite Keskdepositoorium

Finland                        Finnish Central Securities Depository

France                         Euroclear France
</Table>

<Page>

<Table>
<Caption>
COUNTRY                                                    DEPOSITORIES
<S>                            <C>
Germany                        Clearstream Banking AG, Frankfurt

Greece                         Bank of Greece,
                               System for Monitoring Transactions in Securities in Book-Entry Form

                               Apothetirion Titlon AE - Central Securities Depository

Guinea-Bissau                  Depositaire Central - Banque de Reglement

Hong Kong                      Hong Kong Securities Clearing Company Limited

                               Central Moneymarkets Unit

Hungary                        Kozponti Elszamolohaz es Ertektar (Budapest) Rt. (KELER)

Iceland                        Iceland Securities Depository Limited

India                          National Securities Depository Limited

                               Central Depository Services India Limited

                               Reserve Bank of India

Indonesia                      Bank Indonesia

                               PT Kustodian Sentral Efek Indonesia

Israel                         Tel Aviv Stock Exchange Clearing House Ltd. (TASE Clearinghouse)

Italy                          Monte Titoli S.p.A.

Ivory Coast                    Depositaire Central - Banque de Reglement

Jamaica                        Jamaica Central Securities Depository

Japan                          Japan Securities Depository Center (JASDEC)

                               Bank of Japan

Kazakhstan                     Central Depository of Securities

Kenya                          Central Bank of Kenya

Republic of Korea              Korea Securities Depository

Latvia                         Latvian Central Depository

Lebanon                        Custodian and Clearing Center of Financial Instruments for
                               Lebanon and the Middle East (Midclear) S.A.L.

                               Banque du Liban

Lithuania                      Central Securities Depository of Lithuania

Malaysia                       Malaysian Central Depository Sdn. Bhd.

                               Bank Negara Malaysia
</Table>

<Page>

<Table>
<Caption>
COUNTRY                                                    DEPOSITORIES
<S>                            <C>
Mali                           Depositaire Central - Banque de Reglement

Mauritius                      Central Depository and Settlement Co. Ltd.

                               Bank of Mauritius

Mexico                         S.D. Indeval, S.A. de C.V.

Morocco                        Maroclear

Netherlands                    Nederlands Centraal Instituut voor  Giraal Effectenverkeer B.V. (NECIGEF)

New Zealand                    New Zealand Central Securities Depository Limited

Niger                          Depositaire Central - Banque de Reglement

Nigeria                        Central Securities Clearing System Limited

Norway                         Verdipapirsentralen (Norwegian Central Securities Depository)

Oman                           Muscat Depository & Securities Registration Company, SAOC

Pakistan                       Central Depository Company of Pakistan Limited

                               State Bank of Pakistan

Palestine                      Clearing Depository and Settlement, a department
                               of the Palestine Stock Exchange

Peru                           Caja de Valores y Liquidaciones, Institucion
                               de Compensacion y Liquidacion de Valores S.A

Philippines                    Philippine Central Depository, Inc.

                               Registry of Scripless Securities (ROSS) of the Bureau of Treasury

Poland                         National Depository of Securities
                               (Krajowy Depozyt Papierow Wartosciowych SA)

                               Central Treasury Bills Registrar

Portugal                       INTERBOLSA - Sociedade Gestora de Sistemas de Liquidacao e de
                               Sistemas Centralizados de Valores Mobiliarios, S.A.

Qatar                          Central Clearing and Registration (CCR), a
                               department of the Doha Securities Market

Romania                        National Securities Clearing, Settlement and Depository Company

                               Bucharest Stock Exchange Registry Division

                               National Bank of Romania

Russia                         Vneshtorgbank, Bank for Foreign Trade of the Russian Federation

Senegal                        Depositaire Central - Banque de Reglement
</Table>

<Page>

<Table>
<Caption>
COUNTRY                                                    DEPOSITORIES
<S>                            <C>
Singapore                      Central Depository (Pte) Limited

                               Monetary Authority of Singapore

Slovak Republic                Stredisko cennych papierov SR, a.s.

                               National Bank of Slovakia

Slovenia                       KDD - Centralna klirinsko depotna druzba d.d.

South Africa                   Central Depository Limited

                               Share Transactions Totally Electronic (STRATE) Ltd.

Spain                          Servicio de Compensacion y Liquidacion de Valores, S.A.

                               Banco de Espana, Central de Anotaciones en Cuenta

Sri Lanka                      Central Depository System (Pvt) Limited

Sweden                         Vardepapperscentralen  VPC AB (Swedish Central Securities Depository)

Switzerland                    SegaIntersettle AG (SIS)

Taiwan - R.O.C.                Taiwan Securities Central Depository Co., Ltd.

Thailand                       Thailand Securities Depository Company Limited

Togo                           Depositaire Central - Banque de Reglement

Tunisia                        Societe Tunisienne Interprofessionelle pour la
                               Compensation et de Depots des Valeurs Mobilieres

Turkey                         Takas ve Saklama Bankasi A.S. (TAKASBANK)

                               Central Bank of Turkey

Ukraine                        National Bank of Ukraine

                               Mizhregionalny Fondovy Souz

United Arab Emirates           Clearing and Depository System, a department of theDubai Financial Market

Venezuela                      Banco Central de Venezuela

Zambia                         LuSE Central Shares Depository Limited

                               Bank of Zambia
</Table>

TRANSNATIONAL
Euroclear
Clearstream Banking AG

<Page>

                         SCHEDULE C: MARKET INFORMATION

<Table>
<Caption>
PUBLICATION/TYPE OF INFORMATION                      BRIEF DESCRIPTION
- -------------------------------                      -----------------
(SCHEDULED FREQUENCY)
<S>                                       <C>
THE GUIDE TO CUSTODY IN WORLD MARKETS     An overview of settlement and safekeeping procedures,
(hardcopy annually and regular            custody practices and foreign investor considerations for
website updates)                          the markets in which State Street offers custodial
                                          services.

GLOBAL CUSTODY NETWORK REVIEW             Information relating to Foreign Sub-Custodians in State
(annually)                                Street's Global Custody Network. The Review stands as an
                                          integral part of the materials that State Street provides
                                          to its U.S. mutual fund clients to assist them in
                                          complying with SEC Rule 17f-5. The Review also gives
                                          insight into State Street's market expansion and Foreign
                                          Sub-Custodian selection processes, as well as the
                                          procedures and controls used to monitor the financial
                                          condition and performance of our Foreign Sub-Custodian
                                          banks.

SECURITIES DEPOSITORY REVIEW              Custody risk analyses of the Foreign Securities
(annually)                                Depositories presently operating in Network markets. This
                                          publication is an integral part of the materials that
                                          State Street provides to its U.S. mutual fund clients to
                                          meet informational obligations created by SEC Rule 17f-7.

GLOBAL LEGAL SURVEY                       With respect to each market in which State Street offers
(annually)                                custodial services, opinions relating to whether local law
                                          restricts (i) access of a fund's independent public
                                          accountants to books and records of a Foreign
                                          Sub-Custodian or Foreign Securities System, (ii) a fund's
                                          ability to recover in the event of bankruptcy or
                                          insolvency of a Foreign Sub-Custodian or Foreign
                                          Securities System, (iii) a fund's ability to recover in
                                          the event of a loss by a Foreign Sub-Custodian or Foreign
                                          Securities System, and (iv) the ability of a foreign
                                          investor to convert cash and cash equivalents to U.S.
                                          dollars.

SUBCUSTODIAN AGREEMENTS                   Copies of the contracts that State Street has entered into
(annually)                                with each Foreign Sub-Custodian that maintains U.S. mutual
                                          fund assets in the markets in which State Street offers
                                          custodial services.

GLOBAL MARKET BULLETIN                    Information on changing settlement and custody conditions
(daily or as necessary)                   in markets where State Street offers custodial services.
                                          Includes changes in market and tax regulations, depository
                                          developments, dematerialization information, as well as
                                          other market changes that may impact State Street's
                                          clients.

FOREIGN CUSTODY ADVISORIES                For those markets where State Street offers custodial
(as necessary)                            services that exhibit special risks or infrastructures
                                          impacting custody, State Street issues market advisories
                                          to highlight those unique market factors which might
                                          impact our ability to offer recognized custody service
                                          levels.

MATERIAL CHANGE NOTICES                   Informational letters and accompanying materials
(presently on a quarterly                 confirming State Street's foreign custody arrangements,
basis or as otherwise necessary)          including a summary of material changes with Foreign
                                          Sub-Custodians that have occurred during the previous
                                          quarter. The notices also identify any material changes in
                                          the custodial risks associated with maintaining assets
                                          with Foreign Securities Depositories.
</Table>

<Page>

                                 FUNDS TRANSFER OPERATING GUIDELINES

1.   OBLIGATION OF THE SENDER: State Street Bank and Trust Company and
affiliates ("SSB") is authorized to promptly debit Client's account(s) upon the
receipt of a payment order in compliance with any of the Security Procedures
chosen by the Client, from those offered on the attached selection form (and any
updated selection forms hereafter executed by the Client), for funds transfers
and in the amount of money that SSB has been instructed to transfer. SSB is
hereby instructed to accept funds transfer instructions only via the delivery
methods and Security Procedures indicated on the attached selection form (and
any updated selection forms hereafter executed by the Client). The Client agrees
that the Security Procedures are reasonable and adequate for its wire transfer
transactions and agrees to be bound by any payment orders, amendments and
cancellations, whether or not authorized, issued in its name and accepted by SSB
after being confirmed by any of the selected Security Procedures. The Client
also agrees to be bound by any other valid and authorized payment order accepted
by SSB. SSB shall execute payment orders in compliance with the selected
Security Procedures and with the Client's/Investment Manager's instructions on
the execution date provided that such payment order is received by the customary
deadline for processing such a request, unless the payment order specifies a
later time. SSB will use reasonable efforts to execute on the execution date
payment orders received after the customary deadline, but if it is unable to
execute any such payment order on the execution date, such payment order will be
deemed to have been received on the next business day.

2.   SECURITY PROCEDURES: The Client acknowledges that the selected Security
Procedures were selected by the Client from Security Procedures offered by SSB.
The Client shall restrict access to confidential information relating to the
Security Procedures to authorized persons as communicated in writing to SSB. The
Client must notify SSB immediately if it has reason to believe unauthorized
persons may have obtained access to such information or of any change in the
Client's authorized personnel. SSB shall verify the authenticity of all
instructions according to the selected Security Procedures.

3.   ACCOUNT NUMBERS: SSB shall process all payment orders on the basis of the
account number contained in the payment order. In the event of a discrepancy
between any name indicated on the payment order and the account number, the
account number shall take precedence and govern. Financial institutions that
receive payment orders initiated by SSB at the instruction of the Client may
also process payment orders on the basis of account numbers, regardless of any
name included in the payment order. SSB shall be entitled to reasonably rely on
any financial institution identification numbers included in any payment order,
regardless of any financial institution name included in the payment order.

     4.   REJECTION: SSB reserves the right to decline to process or delay the
processing of a payment order which (a) is in excess of the collected balance in
the account to be charged at the time of SSB's receipt of such payment order;
(b) if initiating such payment order would cause SSB, in SSB's reasonable
judgment, to exceed any applicable volume, aggregate dollar, network, time,
credit or similar limits upon wire transfers; or (c) if SSB, in good faith, is
unable to satisfy itself that the transaction has been properly authorized.

     5.   CANCELLATION OR AMENDMENT: SSB shall use reasonable efforts to act on
all authorized requests to cancel or amend payment orders received in compliance
with the selected Security Procedures provided that such requests are received
in sufficient time to afford SSB a reasonable opportunity to act prior to
executing the payment order. However, SSB assumes no liability if the request
for amendment or cancellation cannot be satisfied by SSB's reasonable efforts.

     6.   ERRORS: SSB shall assume no responsibility hereunder for failure to
detect any erroneous payment order provided that SSB complies with the payment
order instructions as received and SSB complies with the selected Security
Procedures. The Security Procedures are established for the purpose of
authenticating payment orders only and not for the detection of errors in
payment orders.

<Page>

     7.   INTEREST AND LIABILITY LIMITS: SSB shall assume no responsibility for
lost interest with respect to the refundable amount of any unauthorized payment
order, unless SSB is notified of the unauthorized payment order within thirty
(30) days of notification by SSB of the acceptance of such payment order. In no
event (including but not limited to failure to execute a payment order) shall
SSB be liable for special, indirect or consequential damages, even if advised of
the possibility of such damages.

     8.   AUTOMATED CLEARING HOUSE ("ACH") CREDIT ENTRIES/PROVISIONAL PAYMENTS:
When the Client initiates or receives ACH credit and debit entries pursuant to
these Guidelines and the rules of the National Automated Clearing House
Association and the Mid-America Payment Exchange or other similar body, SSB or
its agent will act as an Originating Depository Financial Institution and/or
Receiving Depository Financial Institution, as the case may be, with respect to
such entries. Credits given with respect to an ACH credit entry are provisional
until final settlement for such entry is received from the Federal Reserve Bank.
If such final settlement is not received, the Client agrees to promptly refund
the amount credited to the Client in connection with such entry, and the party
making payment to the Client via such entry shall not be deemed to have paid the
amount of the entry.

     9.   CONFIRMATIONS: Confirmation of SSB's execution of payment orders shall
ordinarily be provided within 24 hours. Notice may be delivered through SSB's
account statements, advices, information systems, or by facsimile or callback.
The Client must report any objections to the execution of a payment order within
30 days of receipt of confirmation.

     10.  MISCELLANEOUS: SSB may use the Federal Reserve System Fedwire to
execute payment orders, and any payment order carried in whole or in part
through Fedwire will be subject to applicable Federal Reserve Board rules and
regulations. SSB and the Client agree to cooperate to attempt to recover any
funds erroneously paid to wrong parties, regardless of any fault of SSB or the
Client, but the party responsible for the erroneous payment shall bear all costs
and expenses incurred in trying to effect such recovery. These Guidelines may
not be amended except by a written agreement signed by the parties.

     11.  LIABILITY ON FOREIGN ACCOUNTS: State Street shall not be required to
repay any deposit made at a non-U.S. branch of State Street, or any deposit made
with State Street and denominated in a non-U.S. dollar currency, if repayment of
such deposit or the use of assets denominated in the non-U.S. dollar currency is
prevented, prohibited or otherwise blocked due to: (a) an act of war,
insurrection or civil strife; (b) any action by a non-U.S. government or
instrumentality or authority asserting governmental, military or police power of
any kind, whether such authority be recognized as a defacto or a dejure
government, or by any entity, political or revolutionary movement or otherwise
that usurps, supervenes or otherwise materially impairs the normal operation of
civil authority; or (c) the closure of a non-U.S. branch of State Street in
order to prevent, in the reasonable judgment of State Street, harm to the
employees or property of State Street. The obligation to repay any such deposit
shall not be transferred to and may not be enforced against any other branch of
State Street.

     The foregoing provisions constitute the disclosure required by
Massachusetts General Laws, Chapter 167D, Section 36.

     While State Street is not obligated to repay any deposit made at a non-U.S.
branch or any deposit denominated in a non-U.S. currency during the period in
which its repayment has been prevented, prohibited or otherwise blocked, State
Street will repay such deposit when and if all circumstances preventing,
prohibiting or otherwise blocking repayment cease to exist.

<Page>

                       SECURITY PROCEDURES SELECTION FORM

Please select at least two of the funds transfer security procedures indicated
below.

/ /  SWIFT
     SWIFT (Society for Worldwide Interbank Financial Telecommunication) is a
cooperative society owned and operated by member financial institutions that
provides telecommunication services for its membership. Participation is limited
to securities brokers and dealers, clearing and depository institutions,
recognized exchanges for securities, and investment management institutions.
SWIFT provides a number of security features through encryption and
authentication to protect against unauthorized access, loss or wrong delivery of
messages, transmission errors, loss of confidentiality and fraudulent changes to
messages. SELECTION OF THIS SECURITY PROCEDURE WOULD BE MOST APPROPRIATE FOR
EXISTING SWIFT MEMBERS.

/ /  REMOTE BATCH TRANSMISSION
     Wire transfer instructions are delivered via Computer-to-Computer (CPU-CPU)
data communications between the Client and/or its agent and SSB and/or its
agent. Security procedures include encryption and/or the use of a test key by
those individuals authorized as Automated Batch Verifiers or a callback
procedure to those individuals. CLIENTS SELECTING THIS OPTION SHOULD HAVE AN
EXISTING FACILITY FOR COMPLETING CPU-CPU TRANSMISSIONS. THIS DELIVERY MECHANISM
IS TYPICALLY USED FOR HIGH-VOLUME BUSINESS SUCH AS SHAREHOLDER REDEMPTIONS AND
DIVIDEND PAYMENTS.

/ /  AUTOMATED CLEARING HOUSE (ACH)
SSB or its agent receives an automated transmission from a Client for the
initiation of payment (credit) or collection (debit) transactions through the
ACH network. The transactions contained on each transmission or tape must be
authenticated by the Client. The transmission is sent from the Client's or its
agent's system to SSB's or its agent's system with encryption.

/ /  REPETITIVE WIRES
     For situations where funds are transferred periodically from an existing
authorized account to the same payee (destination bank and account number) and
only the date and currency amount are variable, a repetitive wire may be
implemented. Repetitive wires will be subject to a $10 million limit. If the
payment order exceeds the $10 million limit, the instruction will be confirmed
by Telephone Confirmation (Call Back) or Test Key prior to execution. Repetitive
wire instructions must be reconfirmed annually. Clients may establish Repetitive
Wires by following the agreed upon security procedures as described by Telephone
Confirmation (Call Back) or Test Key. THIS ALTERNATIVE IS RECOMMENDED WHENEVER
FUNDS ARE FREQUENTLY TRANSFERRED BETWEEN THE SAME TWO ACCOUNTS. IF THIS OPTION
IS SELECTED, CHOOSE EITHER TELEPHONE CONFIRMATION OR TEST KEY TO BE USED AS A
SECONDARY PROCEDURE WHEN OVER $10 MILLION.

/ /  STANDING INSTRUCTIONS
     Funds are transferred by SSB to a counter party on the Client's established
list of authorized counter parties. Only the date and the dollar amount are
variable. Clients may establish Standby Instructions by following the agreed
upon security procedures as described by Telephone Confirmation (Call Back) or
Test Key. Additional paperwork will be required from insurance Clients using
1031 drawdowns. THIS OPTION IS USED FOR TRANSACTIONS THAT INCLUDE BUT ARE NOT
LIMITED TO FOREIGN EXCHANGE CONTRACTS, TIME DEPOSITS AND TRI-PARTY REPURCHASE
AGREEMENTS. IF THIS OPTION IS SELECTED, CHOOSE EITHER TELEPHONE CONFIRMATION OR
TEST KEY TO BE USED AS A SECONDARY PROCEDURE WHEN OVER $10 MILLION.

/ /  TELEPHONE CONFIRMATION (CALL BACK)
     This procedure requires Clients to designate individuals as authorized
initiators and authorized verifiers. SSB will verify that the instruction
contains the signature of an authorized person and prior to execution of the
payment order, will contact someone other than the originator at the Client's
location to authenticate the instruction. SELECTION OF THIS ALTERNATIVE IS
APPROPRIATE FOR CLIENTS WHO DO NOT HAVE THE CAPABILITY TO USE OTHER SECURITY
PROCEDURES. PLEASE COMPLETE THE TELEPHONE CONFIRMATION INSTRUCTIONS ATTACHED AS
A SCHEDULE HERETO.

/ /  TEST KEY
     Test Key confirmation will be used to verify all non-repetitive funds
transfer instructions received via facsimile or phone. SSB will provide test
keys if this option is chosen. SSB will verify that the instruction contains the
signature of an authorized person and prior to execution of the payment order,
will authenticate the test key provided with the corresponding test key at SSB.
SELECTION OF THIS ALTERNATIVE IS APPROPRIATE FOR CLIENTS WHO DO NOT HAVE THE
CAPABILITY TO USE OTHER SECURITY PROCEDURES.

The individual signing below must be authorized to sign contract on behalf of
the client. The execution of payment orders under the selected Security
Procedures is governed by the Funds Transfer Operating Guidelines, which are
incorporated by reference.

On behalf of the ING Pilgrim funds listed on Exhibit A to the Custody and
Investment Accounting Agreement, as amended

By:
    ----------------------------------------
          Authorized Signature

- --------------------------------------------
          Type or Print Name and Title

Date:
          ----------------------------------

<Page>

                 SCHEDULE TO FUNDS TRANSFER OPERATING GUIDELINES
                     AND SECURITY PROCEDURES SELECTION FORM

CLIENT/INVESTMENT MANAGER:______________________________________________
                                         Company Name

KEY CONTACT INFORMATION
Whom shall we contact to implement your selection(s)?

CLIENT OPERATIONS CONTACT                 ALTERNATE CONTACT

Name                                      Name

Address                                   Address

City/State/Zip Code                       City/State/Zip Code

Telephone Number                          Telephone Number

Facsimile Number                          Facsimile Number

SWIFT Number

TELEPHONE CONFIRMATION INSTRUCTIONS
Authorized Initiators (Please Type or Print) - Please provide a listing of your
staff members who are currently authorized to INITIATE wire transfer
instructions:

<Table>
<Caption>
NAME                           TITLE                          SPECIMEN SIGNATURE
<S>                            <C>                            <C>
- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------
</Table>

Authorized Verifiers (Please Type or Print) - Please provide a listing of your
staff members who will be CALLED BACK to verify the initiation of repetitive
wires of $10 million or more and all non-repetitive wire instructions:

<Table>
<Caption>
NAME                           CALLBACK PHONE NUMBER          DOLLAR LIMITATION (IF ANY)
<S>                            <C>                            <C>
- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------

- -----------------------        -----------------------        -----------------------
</Table>

<Page>

                         REMOTE ACCESS SERVICES ADDENDUM
          TO CUSTODY AND INVESTMENT ACCOUNTING AGREEMENT BY AND BETWEEN
STATE STREET BANK AND TRUST COMPANY AND ING PILGRIM FUNDS DATED NOVEMBER 1, 2001

     State Street has developed proprietary accounting and other systems, and
has acquired licenses for other such systems, which it utilizes in conjunction
with the services we provide to you (the "Systems"). In this regard, we maintain
certain information in databases under our control and ownership that we make
available on a remote basis to our customers (the "Remote Access Services").

     THE SERVICES. This addendum shall govern use of all Systems that State
Street may from time to time agree to provide you, the Customer, and your
designated investment advisors, consultants or other third parties authorized by
State Street who agree to abide by the terms of this Addendum ("Authorized
Designees") in order to provide Remote Access Services for the purpose of
obtaining and analyzing reports and information.

     SECURITY PROCEDURES. You agree to comply, and to cause your Authorized
Designees to comply, with remote access operating standards and procedures and
with user identification or other password control requirements and other
security procedures as may be issued from time to time by State Street for use
of the Systems and access to the Remote Access Services. You agree to advise
State Street immediately in the event that you learn or have reason to believe
that any person to whom you have given access to the Systems or the Remote
Access Services has violated or intends to violate the terms of this Addendum
and you will cooperate with State Street in seeking injunctive or other
equitable relief. You agree to discontinue use of the Systems and Remote Access
Services, if requested, for any security reasons cited by State Street.

     FEES. Fees and charges (if any) for the use of the Systems and the Remote
Access Services and related payment terms shall be as set forth in the fee
schedule in effect from time to time between the parties (the "Fee Schedule").
You shall be responsible for any tariffs, duties or taxes imposed or levied by
any government or governmental agency by reason of the transactions contemplated
by this Addendum, including, without limitation, federal, state and local taxes,
use, value added and personal property taxes (other than income, franchise or
similar taxes which may be imposed or assessed against State Street). Any
claimed exemption from such tariffs, duties or taxes shall be supported by
proper documentary evidence delivered to State Street.

     PROPRIETARY INFORMATION/INJUNCTIVE RELIEF. The Systems and Remote Access
Services and the databases, computer programs, screen formats, report formats,
interactive design techniques, formulae, processes, systems, software, know-how,
algorithms, programs, training aids, printed materials, methods, books, records,
files, documentation and other information made available to you by State Street
as part of the Remote Access Services and through the use of the Systems and all
copyrights, patents, trade secrets and other proprietary rights of State Street
and its relevant licensors related thereto are the exclusive, valuable and
confidential property of State Street and its relevant licensors, as applicable
(the "Proprietary Information").

     You agree on behalf of yourself and your Authorized Designees to keep the
Proprietary Information confidential and to limit access to your employees and
Authorized Designees (under a similar duty of confidentiality) who require
access to the Systems for the purposes intended. The foregoing shall not apply
to Proprietary Information in the public domain or required by law

<Page>

to be made public.

     You agree to use the Remote Access Services only in connection with the
proper purposes of this Addendum. You will not, and will cause your employees
and Authorized Designees not to, (i) permit any third party to use the Systems
or the Remote Access Services, (ii) sell, rent, license or otherwise use the
Systems or the Remote Access Services in the operation of a service bureau or
for any purpose other than as expressly authorized under this Addendum, (iii)
use the Systems or the Remote Access Services for any fund, trust or other
investment vehicle without the prior written consent of State Street, or (iv)
allow or cause any information transmitted from State Street's databases,
including data from third party sources, available through use of the Systems or
the Remote Access Services, to be redistributed or retransmitted for other than
use for or on behalf of yourself, as our Customer.

     You agree that neither you nor your Authorized Designees will modify the
Systems in any way, enhance or otherwise create derivative works based upon the
Systems, nor will you or your Authorized Designees reverse engineer, decompile
or otherwise attempt to secure the source code for all or any part of the
Systems.

     You acknowledge that the disclosure of any Proprietary Information, or of
any information which at law or equity ought to remain confidential, will
immediately give rise to continuing irreparable injury inadequately compensable
in damages at law, and that State Street and its licensor, if applicable, shall
be entitled to obtain immediate injunctive relief against the breach or
threatened breach of any of the foregoing undertakings, in addition to any other
legal remedies which may be available.

     LIMITED WARRANTIES. State Street represents and warrants that it has the
right to grant access to the Systems and to provide the Remote Access Services
contemplated herein. Because of the nature of computer information technology,
including but not limited to the use of the Internet, and the necessity of
relying upon third-party sources, and data and pricing information obtained from
third parties, the Systems and Remote Access Services are provided "AS IS", and
you and your Authorized Designees shall be solely responsible for the investment
decisions, results obtained, regulatory reports and statements produced using
the Remote Access Services. State Street and its relevant licensors will not be
liable to you or your Authorized Designees for any direct or indirect, special,
incidental, punitive or consequential damages arising out of or in any way
connected with the Systems or the Remote Access Services, nor shall either party
be responsible for delays or nonperformance under this Addendum arising out of
any cause or event beyond such party's control.

     EXCEPT AS EXPRESSLY SET FORTH IN THIS ADDENDUM, STATE STREET FOR ITSELF AND
ITS RELEVANT LICENSORS EXPRESSLY DISCLAIMS ANY AND ALL WARRANTIES CONCERNING THE
SYSTEM AND THE SERVICES TO BE RENDERED HEREUNDER, WHETHER EXPRESS OR IMPLIED,
INCLUDING WITHOUT LIMITATION ANY WARRANTY OF MERCHANTIBILITY OR FITNESS FOR A
PARTICULAR PURPOSE.

     INFRINGEMENT. State Street will defend or, at our option, settle any claim
or action brought against you to the extent that it is based upon an assertion
that access to any proprietary System developed and owned by State Street or use
of the Remote Access Services through any such proprietary System by you under
this Addendum constitutes direct infringement of any United

<Page>

States patent or copyright or misappropriation of a trade secret, provided that
you notify State Street promptly in writing of any such claim or proceeding and
cooperate with State Street in the defense of such claim or proceeding. Should
any such proprietary System or the Remote Access Services accessed thereby or
any part thereof become, or in State Street's opinion be likely to become, the
subject of a claim of infringement or the like under the patent or copyright or
trade secret laws of the United States, State Street shall have the right, at
State Street's sole option, to (i) procure for you the right to continue using
such System or Remote Access Services, (ii) replace or modify such System or
Remote Access Services so that the System or the Remote Access Services becomes
noninfringing, or (iii) terminate access to the Remote Access Services without
further obligation.

     TERMINATION. Either party may terminate access to the Remote Access
Services (i) for any reason by giving the other party at least one-hundred and
eighty (180) days' prior written notice in the case of notice of termination by
State Street to you or thirty (30) days' notice in the case of notice from you
to State Street of termination, or (ii) immediately for failure of the other
party to comply with any material term and condition of the Addendum by giving
the other party written notice of termination. In the event of termination, you
will return to State Street all Proprietary Information in your possession or in
the possession of your Authorized Designees. The foregoing provisions with
respect to confidentiality and infringement will survive termination for a
period of three (3) years.

     MISCELLANEOUS. Except as provided in the next sentence, this Addendum
constitutes our entire understanding with respect to access to the Systems and
the Remote Access Services. If any State Street custody, accounting or other
services agreement with you contains terms and conditions relating to computer
systems or data access, this Addendum shall constitute an amendment and
supplement to them, and in the event of any inconsistency the provisions
providing the greatest benefit to State Street shall control. This Addendum
cannot be modified or altered except in a writing duly executed by both of us
and shall be governed by and construed in accordance with the laws of the
Commonwealth of Massachusetts.

     CONFIRMED AND AGREED:


     ----------------------------------
     On Behalf of Each of the Funds Set Forth on Exhibit A to the Custody and
     Investment Accounting Agreement, as amended from time to time

     By:    /s/ Michael J. Roland
            ---------------------

     Name:  Michael J. Roland
            -----------------

     Title: Executive Vice President
            ------------------------

     Date:  11-1-01

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(I)(1)
<SEQUENCE>9
<FILENAME>a2138029zex-99_ji1.txt
<DESCRIPTION>EX 99.(J)(I)(1)
<TEXT>
<Page>

                                                            Exhibit 99.(j)(i)(1)

                        FIRST AMENDMENT TO CUSTODIAN AND
                         INVESTMENT ACCOUNTING AGREEMENT

     THIS FIRST AMENDMENT TO CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT (the
"Amendment") is made and entered into as of March 1, 2002 by and between EACH OF
THE FUNDS SET FORTH ON EXHIBIT A DATED NOVEMBER 1, 2001, attached to the
Agreement and attached hereto for reference (each a "Client") and STATE STREET
BANK AND TRUST COMPANY, a Massachusetts trust company ("State Street").

                                   WITNESSETH:

     WHEREAS, Client and State Street are parties to that certain Custodian and
Investment Accounting Agreement dated as of November 1, 2001 (the "Agreement");
and

     WHEREAS, Client and State Street desire to amend and supplement the
Agreement upon the following terms and conditions.

     NOW THEREFORE, for and in consideration of the mutual promises contained
herein and other good and valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, Client and State Street hereby agree that the
Agreement is amended and supplemented as follows:

1.   Exhibit A shall be replaced in its entirety by the Exhibit A dated March 1,
     2002 attached hereto and incorporated herein by this reference.

2.   General Provisions. This Amendment will at all times and in all respects be
     construed, interpreted, and governed by the laws of The Commonwealth of
     Massachusetts, without giving effect to the conflict of laws provisions
     thereof. This Amendment may be executed in any number of counterparts, each
     constituting an original and all considered one and the same agreement.
     This Amendment is intended to modify and amend the Agreement and the terms
     of this Amendment and the Agreement are to be construed to be cumulative
     and not exclusive of each other. Except as provided herein, the Agreement
     is hereby ratified and confirmed and remains in full force and effect.

     IN WITNESS WHEREOF, the parties have caused this Amendment to be executed
by their duly authorized officers to be effective as of the date first above
written.

STATE STREET BANK AND TRUST             ON BEHALF OF EACH OF THE FUNDS SET FORTH
COMPANY                                 ON EXHIBIT A ATTACHED HERETO

By: /s/ illegible                       By: /s/ Michael J. Roland
    -------------                           ---------------------
Name: illegible                         Name: Michael J. Roland
      ---------                               -----------------
Title: Senior Vice President            Title: Executive Vice President
       ---------------------                   ------------------------

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(I)(2)
<SEQUENCE>10
<FILENAME>a2138029zex-99_ji2.txt
<DESCRIPTION>EX 99.(J)(I)(2)
<TEXT>
<Page>

                                                            Exhibit 99.(j)(i)(2)

                         AMENDED AND RESTATED EXHIBIT A
                               WITH RESPECT TO THE
                  CUSTODIAN AND INVESTMENT ACCOUNTING AGREEMENT
                DATED NOVEMBER 1, 2001 AND AMENDED MARCH 1, 2002
                              BETWEEN THE FUNDS AND
                       STATE STREET BANK AND TRUST COMPANY
                        EFFECTIVE AS OF NOVEMBER 22, 2002

                                  LIST OF FUNDS

<Table>
<Caption>
                      ENTITY NAME                                      JURISDICTION
- -------------------------------------------------------   --------------------------------------
<S>                                                       <C>
ING EQUITY TRUST                                          Massachusetts Business Trust
     ING Biotechnology Fund
     ING Convertible Fund
     ING Equity and Bond Fund
     ING Financial Services Fund
     ING Growth Opportunities Fund
     ING Large Company Value Fund
     ING LargeCap Growth Fund
     ING MidCap Opportunities Fund
     ING MidCap Value Fund
     ING Principal Protection Fund
     ING Principal Protection Fund II
     ING Principal Protection Fund III
     ING Principal Protection Fund IV
     ING Principal Protection Fund V
     ING Principal Protection Fund VI*
     ING Real Estate Fund
     ING Research Enhanced Index Fund
     ING SmallCap Opportunities Fund
     ING SmallCap Value Fund
     ING Tax Efficient Equity Fund
</Table>

- ----------
* This Amended and Restated Exhibit A will be effective with respect to the Fund
upon the effective date of the post-effective amendment to the Trust's
Registration Statement with respect to the Fund.

<Page>

<Table>
<Caption>
                      ENTITY NAME                                      JURISDICTION
- -------------------------------------------------------   --------------------------------------
<S>                                                       <C>
ING FUNDS TRUST                                           Delaware Business Trust
     ING Classic Money Market Fund
     ING GNMA Income Fund
     ING High Yield Bond Fund
     ING High Yield Opportunity Fund
     ING Intermediate Bond Fund
     ING Lexington Money Market Trust
     ING Money Market Fund
     ING National Tax-Exempt Bond Fund
     ING Strategic Bond Fund
     ING National Tax-Exempt Money Market Fund

ING INVESTMENT FUNDS, INC.                                Maryland Corporation
     ING MagnaCap Fund

ING MAYFLOWER TRUST                                       Massachusetts Business Trust
     ING Growth + Value Fund

ING SENIOR INCOME FUND                                    Delaware Business Trust

ING PRIME RATE TRUST                                      Massachusetts Business Trust

ING VP NATURAL RESOURCES TRUST                            Massachusetts Business Trust

ING VARIABLE INSURANCE TRUST                              Delaware Business Trust
     ING VP High Yield Bond Fund

ING VARIABLE PRODUCTS TRUST                               Massachusetts Business Trust
     ING VP Convertible Portfolio
     ING VP Financial Services Portfolio
     ING VP Growth + Value Portfolio
     ING VP Growth Opportunities Portfolio
     ING VP High Yield Bond Portfolio
     ING VP Large Company Value Portfolio
     ING VP LargeCap Growth Portfolio
     ING VP MagnaCap Portfolio
     ING VP MidCap Opportunities Portfolio
     ING VP Research Enhanced Index Portfolio
     ING VP SmallCap Opportunities Portfolio

USLICO SERIES FUND                                        Massachusetts Business Trust
     Asset Allocation Portfolio
     Bond Portfolio
     Money Market Portfolio
     Stock Portfolio
</Table>

Last Approved: 11/22/02

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(II)
<SEQUENCE>11
<FILENAME>a2138029zex-99_jii.txt
<DESCRIPTION>EX 99.(J)(II)
<TEXT>
<Page>

                                                              Exhibit 99.(j)(ii)

                                 FT INTERACTIVE

                            FEE ALLOCATION AGREEMENT

     FT INTERACTIVE FEE ALLOCATION AGREEMENT, made as of the 21st day of August
2003 (the "Agreement") is entered into by and among the ING funds listed on
SCHEDULE A attached hereto (each a "Fund," collectively the "Funds") each acting
on its own behalf, and on behalf of its series portfolios.

     WHEREAS, the Board of Directors/Trustees of each Fund (the "Board") has
authorized the retention of an independent fair value pricing information
service, FT Interactive Data Corporation ("FT"), in accordance with the Funds'
valuation procedures; and

     WHEREAS, ING Investments, LLC ("ING Investments"), has entered into a
Services Agreement with FT dated as of the 1st day of March 2000 on behalf of
certain Customers, as such term is defined in the Services Agreement. (All
capitalized terms, unless herein defined, will have the meaning set forth in the
Services Agreement.) The FundRun Schedule of Data Services commencing on
February 3, 2003, as amended, sets forth the cost of FT's fair valuation
services ("FT Fees") in connection with the certain Customers including the
Funds set forth on SCHEDULE A; and

     WHEREAS, the Funds now desire to establish (i) the criteria by which the FT
Fees shall be allocated among the Funds in connection with the fees set forth in
the FundRun Schedule of Data Services; and (ii) the basis on which additional
Funds may be added to the Agreement.

     NOW, THEREFORE, IT IS HEREBY AGREED by and among the Funds as follows:

     SECTION 1.   ALLOCATION OF FT FEES

     Each Fund shall pay on behalf of itself, and its series portfolios, a
portion of the FT Fees based upon the following allocation:

     Each Fund will pay a pro rata portion of the FT Fees based upon the
percentage of each Fund's portfolios' net assets that are invested in equity
securities traded on a foreign exchange as determined at each month-end.

     SECTION 2.   PAYMENT OF FT FEES

     Each Fund will pay a portion of the FT Fees as specified in Section 1
above. Such amounts will be calculated by ING Fund Services, LLC and
communicated to each Fund's Custodian. Payments shall be forwarded by each Fund
to FT monthly as follows:

           FT Interactive Data
           P.O. Box 98616
           Chicago, IL  60693

     SECTION 3.   ADDITIONAL FUNDS

<Page>

     (a)   If ING Investments adds any additional Funds to the Services
Agreement through an amendment to the FundRun Schedule of Data Services, in
connection with FT's fair valuation of equity securities traded on a foreign
exchange services, such Fund and its portfolios shall become subject to this
Agreement immediately upon being added to the SCHEDULE A.

     (b)   Each additional Fund that becomes subject to this Agreement in
accordance with Section 3(a) above shall pay a portion of the FT Fees as
described in Section 1 above based on the percentage of such Fund's portfolios'
net assets that are invested in equity securities traded on a foreign exchange
as determined at the first month-end after such Fund becomes subject to this
Agreement. Such allocation will be adjusted monthly thereafter.

     SECTION 4.   CONTINUATION AND TERMINATION

     The Agreement shall become effective on the date first written above. It
shall continue with respect to a Fund until such Fund is removed as a Customer
from the FundRun Schedule of Data Services provided that such Fund's portion of
the FT Fees have been paid for the period that the Fund utilized FT's services.

     The Agreement shall terminate for all Funds upon termination of the
Services Agreement and FundRun Schedule of Data Services provided that all FT
Fees have been paid for the period that the Funds utilized FT's services.

     IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the date and year first above
written.

     ON BEHALF OF ALL FUNDS
     SET FORTH ON SCHEDULE A


     /s/ Michael J. Roland
     ---------------------
     By:   Michael J. Roland*
           Executive Vice President

     * Duly authorized to execute and deliver this Agreement on behalf of each
     Fund set forth on Schedule A to the Agreement.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(II)(1)
<SEQUENCE>12
<FILENAME>a2138029zex-99_jii1.txt
<DESCRIPTION>EX 99.(J)(II)(1)
<TEXT>
<Page>

                                                           Exhibit 99.(j)(ii)(1)

                               AMENDED SCHEDULE A

                                    THE FUNDS

ING INVESTORS TRUST
Fund For Life Series(1)
ING AIM Mid Cap Growth Portfolio(1)
ING Alliance Mid Cap Growth Portfolio(1)
ING American Funds Growth Portfolio
ING American Funds Growth-Income Portfolio
ING American Funds International Portfolio
ING Capital Guardian Large Cap Value Portfolio(1)
ING Capital Guardian Managed Global Portfolio(1)
ING Capital Guardian Small Cap Portfolio(1)
ING Developing World Portfolio(1)
ING Eagle Asset Capital Appreciation Portfolio(1)
ING Evergreen Health Sciences Portfolio
ING Evergreen Omega Portfolio
ING FMR(SM) Diversified Mid Cap Portfolio(1)
ING Goldman Sachs Internet Tollkeeper(SM) Portfolio(1)
ING Hard Assets Portfolio(1)
ING International Portfolio(1)
ING Janus Special Equity Portfolio(1)
ING Jennison Equity Opportunities Portfolio(1)
ING JPMorgan Small Cap Equity Portfolio(1)
ING Julius Baer Foreign Portfolio(1)
ING Legg Mason Value Portfolio(1)
ING Limited Maturity Bond Portfolio(1)
ING Liquid Assets Portfolio(1)
ING Marsico Growth Portfolio(1)
ING Mercury Focus Value Portfolio(1)
ING Mercury Fundamental Growth Portfolio(1)
ING MFS Mid Cap Growth Portfolio(1)
ING MFS Research Portfolio(1)
ING MFS Total Return Portfolio(1)
ING PIMCO Core Bond Portfolio(1)
ING PIMCO High Yield Bond Portfolio(1)
ING Salomon Brothers All Cap Portfolio(1)
ING Salomon Brothers Investors Portfolio(1)
ING Stock Index Portfolio(1)
ING T. Rowe Price Capital Appreciation Portfolio(1)
ING T. Rowe Price Equity Income Portfolio(1)
ING UBS U.S. Balanced Portfolio(1)
ING Van Kampen Equity Growth Portfolio(1)
ING Van Kampen Global Franchise Portfolio(1)
ING Van Kampen Growth and Income Portfolio(1)
ING Van Kampen Real Estate Portfolio(1)

ING EQUITY TRUST
ING Convertible Fund
ING Disciplined LargeCap Fund
ING Equity and Bond Fund
ING Financial Services Fund
ING Growth Opportunities Fund
ING LargeCap Growth Fund
ING LargeCap Value Fund
ING MidCap Opportunities Fund
ING MidCap Value Fund
ING Principal Protection Fund
ING Principal Protection Fund II
ING Principal Protection Fund III
ING Principal Protection Fund IV
ING Principal Protection Fund V
ING Principal Protection Fund VI
ING Principal Protection Fund VII
ING Principal Protection Fund VIII
ING Principal Protection Fund IX
ING Principal Protection Fund X
ING Principal Protection Fund XI
ING Real Estate Fund
ING SmallCap Opportunities Fund
ING SmallCap Value Fund
ING Tax Efficient Equity Fund

ING FUNDS TRUST
ING Classic Money Market Fund
ING GNMA Income Fund

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of FT Fees allocated to the Fund under the Agreement
will be borne directly by Directed Services, Inc. as provided in the Management
Agreement.

<Page>

ING High Yield Bond Fund
ING High Yield Opportunity Fund
ING Intermediate Bond Fund
ING Lexington Money Market Trust
ING Money Market Fund
ING National Tax-Exempt Bond Fund

ING INVESTMENT FUNDS, INC.
ING MagnaCap Fund

ING MAYFLOWER TRUST
ING Growth + Value Fund
ING International Value Fund

ING MUTUAL FUNDS
ING Emerging Countries Fund
ING Foreign Fund
ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING International Fund
ING International SmallCap Growth Fund
ING Precious Metals Fund
ING Russia Fund
ING Worldwide Growth Fund

ING PRIME RATE TRUST

ING SENIOR INCOME FUND

ING VARIABLE INSURANCE TRUST
ING GET U.S. Core Portfolio - Series 1
ING GET U.S. Core Portfolio - Series 2
ING GET U.S. Core Portfolio - Series 3
ING GET U.S. Core Portfolio - Series 4
ING GET U.S. Core Portfolio - Series 5
ING GET U.S. Core Portfolio - Series 6
ING GET U.S. Opportunity Portfolio - Series 1
ING GET U.S. Opportunity Portfolio - Series 2
ING VP Worldwide Growth Portfolio

ING VARIABLE PRODUCTS TRUST
ING VP Convertible Portfolio
ING VP Disciplined LargeCap Portfolio
ING VP Financial Services Portfolio
ING VP Growth + Value Portfolio
ING VP Growth Opportunities Portfolio
ING VP High Yield Bond Portfolio
ING VP International Value Portfolio
ING VP LargeCap Growth Portfolio
ING VP MagnaCap Portfolio
ING VP MidCap Opportunities Portfolio
ING VP Real Estate Portfolio
ING VP SmallCap Opportunities Portfolio

ING VP EMERGING MARKETS FUND, INC.

ING VP NATURAL RESOURCES TRUST

USLICO SERIES FUND
The Asset Allocation Portfolio
The Bond Portfolio
The Money Market Portfolio
The Stock Portfolio

ING PARTNERS, INC.
ING Alger Aggressive Growth Portfolio
ING Alger Capital Appreciation Portfolio
ING Alger Growth Portfolio
ING American Century Small Cap Value Portfolio
ING Baron Small Cap Growth Portfolio
ING DSI Enhanced Index Portfolio
ING Goldman Sachs(R) Capital Growth Portfolio
ING Goldman Sachs(R) Core Equity Portfolio
ING JPMorgan Fleming International Portfolio
ING JPMorgan Mid Cap Value Portfolio
ING MFS Capital Opportunities Portfolio
ING MFS Global Growth Portfolio
ING MFS Research Equity Portfolio
ING OpCap Balanced Value Portfolio
ING PIMCO Total Return Portfolio
ING Salomon Brothers Aggressive Growth Portfolio
ING Salomon Brothers Fundamental Value Portfolio
ING Salomon Brothers Investors Value Portfolio
ING T. Rowe Price Growth Equity Portfolio
ING UBS Tactical Asset Allocation Portfolio

                                        2
<Page>

ING Van Kampen Comstock Portfolio

ING VP BALANCED PORTFOLIO, INC.

ING STRATEGIC ALLOCATION PORTFOLIOS, INC.
ING VP Strategic Allocation Balanced Portfolio
ING VP Strategic Allocation Growth Portfolio
ING VP Strategic Allocation Income Portfolio

ING GET FUND
ING GET Fund - Series E
ING GET Fund - Series G
ING GET Fund - Series H
ING GET Fund - Series I
ING GET Fund - Series J
ING GET Fund - Series K
ING GET Fund - Series L
ING GET Fund - Series M
ING GET Fund - Series N
ING GET Fund - Series P
ING GET Fund - Series Q
ING GET Fund - Series R
ING GET Fund - Series S
ING GET Fund - Series T
ING GET Fund - Series U
ING GET Fund - Series V

ING VP BOND PORTFOLIO

ING VP MONEY MARKET PORTFOLIO

ING VARIABLE FUNDS
ING VP Growth and Income Portfolio

ING VARIABLE PORTFOLIOS, INC.
ING VP Global Science and Technology Portfolio
ING VP Growth Portfolio
ING VP Index Plus LargeCap Portfolio
ING VP Index Plus MidCap Portfolio
ING VP Index Plus SmallCap Portfolio
ING VP International Equity Portfolio
ING VP Small Company Portfolio
ING VP Value Opportunity Portfolio

ING SERIES FUND, INC.
Brokerage Cash Reserves
ING Aeltus Money Market Fund
ING Balanced Fund
ING Bond Fund
ING Classic Principal Protection Fund I
ING Classic Principal Protection Fund II
ING Classic Principal Protection Fund III
ING Classic Principal Protection Fund IV
ING Equity Income Fund
ING Global Science and Technology Fund
ING Government Fund
ING Growth Fund
ING Index Plus LargeCap Fund
ING Index Plus MidCap Fund
ING Index Plus Protection Fund
ING Index Plus SmallCap Fund
ING International Growth Fund
ING Small Company Fund
ING Strategic Allocation Balanced Fund
ING Strategic Allocation Growth Fund
ING Strategic Allocation Income Fund
ING Value Opportunity Fund

                                        3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(III)
<SEQUENCE>13
<FILENAME>a2138029zex-99_jiii.txt
<DESCRIPTION>EX 99.(J)(III)
<TEXT>
<Page>

                                                             Exhibit 99.(j)(iii)

                                   PROXY AGENT
                            FEE ALLOCATION AGREEMENT

PROXY VOTING FEE ALLOCATION AGREEMENT, made as of the 21st day of August, 2003
(the "Agreement"), is entered into by and among ING Investments, LLC ("ING
Investments"), Directed Services, Inc. ("DSI"), ING Life Insurance and Annuity
Company ("ILIAC") and the ING funds listed on SCHEDULE A attached hereto (each a
"Fund," and collectively the "Funds"), each acting on its own behalf, and on
behalf of its series portfolios.

WHEREAS, each Fund is an investment company registered under the Investment
Company Act of 1940, as amended (the "1940 Act"), the series of which are
managed by ING Investments, DSI or ILIAC (each an "Adviser," and collectively
the "Advisers"); and

WHEREAS, the Board of Directors/Trustees of each Fund (the "Board") has adopted
procedures and guidelines to govern the voting of proxies relating to each
Fund's portfolio securities; and

WHEREAS, the Board has authorized the retention of an independent proxy voting
service, Institutional Shareholder Services, Inc. ("ISS"), to assist in the
voting of Fund proxies through the provision of vote analysis, implementation
and recordkeeping and disclosure services; and

WHEREAS, the Advisers for the Funds have entered into a Master Services
Agreement with ISS dated as of the 1st day of July, 2003 which sets forth the
fees ("ISS Fees") for the ISS services ("Services") set forth on Addendum No.
(ING Funds-ADN.US & Global Voting Agent Service.8/1/2003-I) to the Master
Services Agreement in connection with Fund proxies that are to be paid in
advance of receipt of such Services; and

WHEREAS, the Advisers and the Funds now desire to establish (i) the criteria by
which the ISS Fees shall be allocated among the Advisers and the Funds in
connection with the Services to be provided in connection with the Master
Services Agreement; and (ii) the basis on which additional Advisers or Funds for
which the Advisers may act as investment manager may be added to the Agreement.

NOW, THEREFORE, IT IS HEREBY AGREED by and among the Advisers and the Funds as
follows:

     1.   ALLOCATION OF ISS FEES ATTRIBUTABLE TO PROXY ADVISORY SERVICES.

          The Advisers and each Fund, on behalf of itself and its series
          portfolios, shall pay a portion of the ISS Fees attributable to Proxy
          Advisory Services based upon the following allocation:

          A. U.S. Proxy Advisory Service

             The Advisers will pay fifty percent (50%) of the ISS Fees
             attributable

<Page>

             to U.S. Proxy Advisory Services. The amount will be allocated among
             the Advisers based upon Fund assets under management that are
             invested in U.S. equity positions, as of June 30, 2003, and will be
             adjusted semi-annually. Each Fund's Net Assets as of June 30, 2003
             is listed on SCHEDULE B attached hereto.

             Each Fund will pay a pro rata portion of the remaining fifty
             percent (50%) of the ISS Fees attributable to U.S. Proxy Advisory
             Services based upon the percentage of each Fund's net assets that
             are invested in U.S. equity positions as of June 30, 2003. Such
             allocations will be adjusted semi-annually based on the percentage
             of each Fund's net assets that are invested in U.S. equity
             positions.

          B. Global Proxy Advisory Service

             The Advisers will pay fifty percent (50%) of the ISS Fees
             attributable to Global Proxy Advisory Services. The amount will be
             allocated among the Advisers based on Fund assets under management
             that are invested in equity securities traded on a foreign exchange
             as of June 30, 2003, and will be adjusted semi-annually.

             Each Fund will pay a pro rata portion of the remaining fifty
             percent (50%) of the ISS Fees attributable to Global Proxy Advisory
             Services based upon the percentage of each Fund's net assets that
             are invested in equity securities traded on a foreign exchange as
             of June 30, 2003. Such allocations will be adjusted semi-annually
             based on the percentage of each Fund's net assets that are invested
             in equity securities traded on a foreign exchange.

     2.   ALLOCATION OF ISS FEES ATTRIBUTABLE TO VOTING AGENT SERVICE.

          The Advisers and each Fund, on behalf of itself, and its series
          portfolios, shall pay a portion of the ISS Fees attributable to Voting
          Agent Services based upon the following allocation:

          A.   Per Ballot

          The Advisers shall pay fifty percent (50%) of the ISS Fees
          attributable to the Per Ballot portion of the Voting Agent Services.
          The amount will be allocated among the Advisers based on Fund assets
          under management that are invested in U.S. and foreign equity
          positions as of June 30, 2003, and will be adjusted semi-annually.

          Each Fund, on behalf of itself, and its series portfolios, shall pay a
          pro rata portion of fifty percent (50%) of the ISS Fees attributable
          to the Per Ballot portion of the Voting Agent Services based upon the
          percentage of each Fund's net assets that are invested in U.S. and
          foreign equity positions as of June 30, 2003. Such allocations will be
          adjusted semi-annually based on the percentage of each Fund's net
          assets that are invested in equity

<Page>

          positions.

          B.   Per Account

          The amount will be allocated among the Funds equally based upon the
          number of Funds or their series portfolios as of June 30, 2003. Such
          allocations will be adjusted semi-annually based on the number of
          Funds or their series portfolios.

     3.   ALLOCATION OF ISS FEES ATTRIBUTABLE TO VOTE DISCLOSURE SERVICES.

     Each Fund shall pay on behalf of itself, and its series portfolios, the ISS
     Fees attributable to Vote Disclosure Services based up on the following
     allocation:

          The amount will be allocated on a pro rata basis based upon the
          percentage of each Fund's net assets that are invested in equity
          positions as of June 30, 2003. Such allocations will be adjusted
          semi-annually based on the percentage of each Fund's net assets that
          are invested in equity positions.

     4.   ALLOCATION OF ISS FEES ATTRIBUTABLE TO CUSTOM POLICY SERVICE.

     Each Fund shall pay on behalf of itself, and its series portfolios, the ISS
     Fees attributable to Custom Policy Service fees based upon the following
     allocation:

          The amount will be allocated equally based upon the number of Funds or
          their series portfolios as of June 30, 2003. Such allocations will be
          adjusted semi-annually based on the number of Funds or their series
          portfolios.

     5.   PAYMENTS.

     Each Adviser and Fund will pay a portion of the ISS Fees as specified in
     Sections 1, 2, 3 and 4 above. Such amounts will be calculated by and
     communicated to each Fund's Adviser and/or custodian as applicable by ING
     Funds Services, LLC. Payments shall be forwarded quarterly by each Adviser
     and/or custodian to ISS as follows:

          Routing Number: 052001633
          A/C # 03935295204
          Bank of America
          Rockville MD

     6.   ADDITIONAL FUNDS.

          (a)  If any Advisers are added to the Master Services Agreement, such
          Adviser shall become subject to this Agreement immediately upon being
          added to the Master Services Agreement.

          (b)  If the Advisers add any additional Funds to the Master Services
          Agreement, such Fund shall become subject to this Agreement

<Page>

          immediately upon being added to the Master Services Agreement.

          (c)  Each additional Adviser that becomes subject to this Agreement in
          accordance with Section 6(a) above shall pay a portion of the ISS Fees
          as described in Sections 1 and 2 above, as of the date such Adviser
          becomes subject to this Agreement. Such allocation will be adjusted
          semi-annually as described in Sections 1 and 2.

          (d)  Each additional Fund that becomes subject to this Agreement in
          accordance with Section 6(b) above shall pay a portion of the ISS Fees
          as described in Sections 1, 2, 3 and 4 above based on the Fund's net
          assets or number of Funds, as applicable, as of the date such Fund
          becomes subject to this Agreement. Such allocation will be adjusted
          semi-annually as described in Sections 1, 2, 3 and 4.

     7.   CONTINUATION AND TERMINATION.

     The Agreement shall become effective on the date first written above. It
     shall continue with respect to an Adviser or a Fund until such Adviser or
     Fund is removed from the Master Services Agreement provided that such
     Adviser or Fund's portion of the ISS Fees has been paid for the period that
     the Adviser or Fund utilized the Services.

     The Agreement shall terminate for all Advisers and Funds upon termination
     of the Master Services Agreement provided that all ISS Fees have been paid
     for the period that the Advisers and Funds utilized the Services.

     8.   COUNTERPART

     This Agreement may be executed simultaneously in two or more counterparts,
     each of which taken together will constitute one and the same instrument.

<Page>

IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their duly authorized officers as of the date and year first above
written.


     ON BEHALF OF: ALL FUNDS SET FORTH ON SCHEDULE A


     /s/ James M. Hennessy
     ---------------------
     By:     James M. Hennessy
             President
             Duly authorized to execute
             and deliver this Agreement
             on behalf of each Fund set
             forth on Schedule A to the
             Agreement.


     ING INVESTMENTS, LLC


     /s/ Michael J. Roland
     ---------------------
     By:     Michael J. Roland
             Executive Vice President


     DIRECTED SERVICES, INC.


     /s/ David L. Jacobson
     ---------------------
     By:     David L. Jacobson
             Executive Vice President


     ING LIFE INSURANCE AND ANNUITY COMPANY


     /s/ Laurie M. Tillinghast
     -------------------------
     By:     Laurie M. Tillinghast
             Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(III)(1)
<SEQUENCE>14
<FILENAME>a2138029zex-99_jiii1.txt
<DESCRIPTION>EX 99.(J)(III)(1)
<TEXT>
<Page>

                                                          Exhibit 99.(j)(iii)(1)

                               AMENDED SCHEDULE A

                                    THE FUNDS

ING INVESTORS TRUST
Fund For Life Series(1)
ING AIM Mid Cap Growth Portfolio(1)
ING Alliance Mid Cap Growth Portfolio(1)
ING Capital Guardian Large Cap Value Portfolio(1)
ING Capital Guardian Managed Global Portfolio(1)
ING Capital Guardian Small Cap Portfolio(1)
ING Developing World Portfolio(1)
ING Eagle Asset Capital Appreciation Portfolio(1)
ING Evergreen Health Sciences Portfolio
ING Evergreen Omega Portfolio
ING FMR(SM) Diversified Mid Cap Portfolio(1)
ING Goldman Sachs Internet Tollkeeper(SM) Portfolio(1)
ING Hard Assets Portfolio(1)
ING International Portfolio(1)
ING Janus Special Equity Portfolio(1)
ING Jennison Equity Opportunities Portfolio(1)
ING JPMorgan Small Cap Equity Portfolio(1)
ING Julius Baer Foreign Portfolio(1)
ING Legg Mason Value Portfolio(1)
ING Lifestyle Aggressive Growth Portfolio
ING Lifestyle Growth Portfolio
ING Lifestyle Moderate Growth Portfolio
ING Lifestyle Moderate Portfolio
ING Limited Maturity Bond Portfolio(1)
ING Liquid Assets Portfolio(1)
ING Marsico Growth Portfolio(1)
ING Mercury Focus Value Portfolio(1)
ING Mercury Fundamental Growth Portfolio(1)
ING MFS Mid Cap Growth Portfolio(1)
ING MFS Research Portfolio(1)
ING MFS Total Return Portfolio(1)
ING PIMCO Core Bond Portfolio(1)
ING PIMCO High Yield Portfolio(1)
ING Salomon Brothers All Cap Portfolio(1)
ING Salomon Brothers Investors Portfolio(1)
ING Stock Index Portfolio(1)
ING T. Rowe Price Capital Appreciation Portfolio(1)
ING T. Rowe Price Equity Income Portfolio(1)
ING UBS U.S. Balanced Portfolio(1)
ING Van Kampen Equity Growth Portfolio(1)
ING Van Kampen Global Franchise Portfolio(1)
ING Van Kampen Growth and Income Portfolio(1)
ING Van Kampen Real Estate Portfolio(1)

ING EQUITY TRUST
ING Convertible Fund
ING Disciplined LargeCap Fund
ING Equity and Bond Fund
ING Financial Services Fund
ING Growth Opportunities Fund
ING LargeCap Growth Fund
ING LargeCap Value Fund
ING MidCap Opportunities Fund
ING MidCap Value Fund
ING Principal Protection Fund
ING Principal Protection Fund II
ING Principal Protection Fund III
ING Principal Protection Fund IV
ING Principal Protection Fund V
ING Principal Protection Fund VI
ING Principal Protection Fund VII
ING Principal Protection Fund VIII
ING Principal Protection Fund IX
ING Principal Protection Fund X
ING Principal Protection Fund XI
ING Real Estate Fund
ING SmallCap Opportunities Fund
ING SmallCap Value Fund
ING Tax Efficient Equity Fund

ING FUNDS TRUST
ING Classic Money Market Fund

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of FT Fees allocated to the Fund under the Agreement
will be borne directly by Directed Services, Inc. as provided in the Management
Agreement.

<Page>

ING GNMA Income Fund
ING High Yield Bond Fund
ING High Yield Opportunity Fund
ING Intermediate Bond Fund
ING Lexington Money Market Trust
ING Money Market Fund
ING National Tax-Exempt Bond Fund

ING INVESTMENT FUNDS, INC.
ING MagnaCap Fund

ING MAYFLOWER TRUST
ING Growth + Value Fund
ING International Value Fund

ING MUTUAL FUNDS
ING Emerging Countries Fund
ING Foreign Fund
ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING International Fund
ING International SmallCap Growth Fund
ING Precious Metals Fund
ING Russia Fund
ING Worldwide Growth Fund

ING PRIME RATE TRUST

ING SENIOR INCOME FUND

ING VARIABLE INSURANCE TRUST
ING GET U.S. Core Portfolio - Series 1
ING GET U.S. Core Portfolio - Series 2
ING GET U.S. Core Portfolio - Series 3
ING GET U.S. Core Portfolio - Series 4
ING GET U.S. Core Portfolio - Series 5
ING GET U.S. Core Portfolio - Series 6
ING GET U.S. Opportunity Portfolio - Series 1
ING GET U.S. Opportunity Portfolio - Series 2
ING VP Worldwide Growth Portfolio

ING VARIABLE PRODUCTS TRUST
ING VP Convertible Portfolio
ING VP Disciplined LargeCap Portfolio
ING VP Financial Services Portfolio
ING VP Growth + Value Portfolio
ING VP Growth Opportunities Portfolio
ING VP High Yield Bond Portfolio
ING VP International Value Portfolio
ING VP LargeCap Growth Portfolio
ING VP MagnaCap Portfolio
ING VP MidCap Opportunities Portfolio
ING VP Real Estate Portfolio
ING VP SmallCap Opportunities Portfolio

ING VP EMERGING MARKETS FUND, INC.

ING VP NATURAL RESOURCES TRUST

USLICO SERIES FUND
The Asset Allocation Portfolio
The Bond Portfolio
The Money Market Portfolio
The Stock Portfolio

ING PARTNERS, INC.
ING Alger Aggressive Growth Portfolio
ING Alger Capital Appreciation Portfolio
ING Alger Growth Portfolio
ING American Century Small Cap Value Portfolio
ING Baron Small Cap Growth Portfolio
ING DSI Enhanced Index Portfolio
ING Goldman Sachs(R) Capital Growth Portfolio
ING Goldman Sachs(R) Core Equity Portfolio
ING JPMorgan Fleming International Portfolio
ING JPMorgan Mid Cap Value Portfolio
ING MFS Capital Opportunities Portfolio
ING MFS Global Growth Portfolio
ING MFS Research Equity Portfolio
ING OpCap Balanced Value Portfolio
ING PIMCO Total Return Portfolio
ING Salomon Brothers Aggressive Growth Portfolio
ING Salomon Brothers Fundamental Value Portfolio

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of FT Fees allocated to the Fund under the Agreement
will be borne directly by Directed Services, Inc. as provided in the Management
Agreement.

<Page>

ING Salomon Brothers Investors Value Portfolio
ING T. Rowe Price Growth Equity Portfolio
ING UBS Tactical Asset Allocation Portfolio
ING Van Kampen Comstock Portfolio

ING VP BALANCED PORTFOLIO, INC.

ING STRATEGIC ALLOCATION PORTFOLIOS, INC.
ING VP Strategic Allocation Balanced Portfolio
ING VP Strategic Allocation Growth Portfolio
ING VP Strategic Allocation Income Portfolio

ING GET FUND
ING GET Fund - Series E
ING GET Fund - Series G
ING GET Fund - Series H
ING GET Fund - Series I
ING GET Fund - Series J
ING GET Fund - Series K
ING GET Fund - Series L
ING GET Fund - Series M
ING GET Fund - Series N
ING GET Fund - Series P
ING GET Fund - Series Q
ING GET Fund - Series R
ING GET Fund - Series S
ING GET Fund - Series T
ING GET Fund - Series U
ING GET Fund - Series V

ING VP BOND PORTFOLIO

ING VP MONEY MARKET PORTFOLIO

ING VARIABLE FUNDS
ING VP Growth and Income Portfolio

ING VARIABLE PORTFOLIOS, INC.
ING VP Global Science and Technology Portfolio
ING VP Growth Portfolio
ING VP Index Plus LargeCap Portfolio
ING VP Index Plus MidCap Portfolio
ING VP Index Plus SmallCap Portfolio
ING VP International Equity Portfolio
ING VP Small Company Portfolio
ING VP Value Opportunity Portfolio

ING SERIES FUND, INC.
Brokerage Cash Reserves
ING Aeltus Money Market Fund
ING Balanced Fund
ING Bond Fund
ING Classic Principal Protection Fund I
ING Classic Principal Protection Fund II
ING Classic Principal Protection Fund III
ING Classic Principal Protection Fund IV
ING Equity Income Fund
ING Global Science and Technology Fund
ING Government Fund
ING Growth Fund
ING Index Plus LargeCap Fund
ING Index Plus MidCap Fund
ING Index Plus Protection Fund
ING Index Plus SmallCap Fund
ING International Growth Fund
ING Small Company Fund
ING Strategic Allocation Balanced Fund
ING Strategic Allocation Growth Fund
ING Strategic Allocation Income Fund
ING Value Opportunity Fund

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of FT Fees allocated to the Fund under the Agreement
will be borne directly by Directed Services, Inc. as provided in the Management
Agreement.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(IV)
<SEQUENCE>15
<FILENAME>a2138029zex-99_jiv.txt
<DESCRIPTION>EX 99.(J)(IV)
<TEXT>
<Page>

                                                              Exhibit 99.(j)(iv)

                              ALLOCATION AGREEMENT

                                  FIDELITY BOND

THIS AGREEMENT made as of this 24th day of May, 2002 by and among any of the
Funds listed on Schedule A and any separate classes thereof and all future
investment companies and any separate classes thereof (the "Funds"), which are
named insureds under a joint liability policy as described below and for which
ING Investments, LLC acts as investment manager are entered into under the
following circumstances:

     A.   Section 17(g) of the Investment Company Act of 1940, as amended ("the
1940 Act") provides that the Securities and Exchange Commission ("SEC") is
authorized to require that directors, officers and employees of registered
investment companies be covered under a liability, errors and omissions
insurance policy, and the SEC has promulgated rules and regulations dealing with
this subject ("Rule 17g-1");

     B.   The Funds are named as joint insureds under the terms of a joint
insurance policy ("Policy") which insures against illegal profit or gain,
intentional wrongful acts, libel, slander, defamation, ERISA claims, insider
trading, as well as other coverage as outlined in the Policy, by the directors,
officers and employees;

     C.   A majority of those members of the Board of Directors/Trustees of each
of the Funds, who are not "interested persons" as defined by Section 2(a)(19) of
the 1940 Act, have given due consideration to all factors relevant to the form,
amount and apportionment of premiums and recoveries under such Policy and the
Board of Directors/Trustees of each Fund has approved the term and amount of the
Policy, the portion of the premium payable by that party, and the manner in
which recovery on the Policy, if any, shall be shared by and among the parties
thereto; and

     D.   The Funds now desire to enter into the agreement required by Rule
17g-1 of the 1940 Act to establish the manner in which recovery under the
Policy, if any, shall be shared.

<Page>

     NOW, THEREFORE, IT IS HEREBY AGREED by and among the parties as follows:

          1.   Payment of Premiums.

          Each Fund shall pay a portion of the premium due under the Policy
derived by multiplying the premium by a fraction, (i) the denominator of which
is the total net assets of all the Funds combined and (ii) the numerator of
which is the total net assets of each of the Funds individually. The net assets
of the classes are deemed to be represented by the net assets of their
respective funds. Each of the Funds agrees that the appropriateness of the
allocation of said premium will be determined no less often than annually. No
adjustment of the allocation of said premium will be implemented without
approval of the Boards of each of the Funds.

          2.   Allocation of Recoveries

          (a)  If more than one of the parties hereto is damaged in a single
loss for which recovery is received under the policy, each such party shall
receive that portion of the recovery which represents the loss sustained by that
party, unless the recovery is inadequate to fully indemnify such party
sustaining loss.

          (b)  If the recovery is inadequate to fully indemnify each such party
sustaining a loss, the recovery shall be allocated among such parties as
follows:

               (i)   Each Party sustaining a loss shall be allocated an amount
equal to the lesser of its actual loss or the minimum amount of policy which
would be required to be maintained by such party under a single insured policy
(determined as of the time of loss) in accordance with the provisions of Rule
17g-1.

               (ii)  The remaining portion of the proceeds shall be allocated to
each party sustaining a loss not fully covered by the allocation under
subparagraph (i) in the proportion that each such party's last payment of
premium bears to the sum of the last such premium payments of all such parties.
If such allocation would result in any party which had sustained a loss
receiving a portion of the recovery in excess of the loss actually sustained,
such excess portion shall be allocated among the other parties whose losses
would not be fully indemnified. The allocation shall bear the same proportion as
each such party's last payment of premium bears to the sum of the last premium
payments of all parties entitled to receive a share of the excess. Any
allocation in excess of a loss actually sustained by any such party shall be
reallocated in the same manner.

                                        2
<Page>

          3.   OBLIGATION TO MAINTAIN MINIMUM COVERAGE.

          Each of the Funds represents and warrants to each of the other parties
hereto that the minimum amount of coverage required of it by Rule 17g-1 as of
the date hereof is as reflected in the schedule attached hereto. Each of the
Funds agrees that it will determine, no less than at the end of each calendar
quarter, the minimum amount of coverage which would be required of it by Rule
17g-1 if a determination with respect to the adequacy of the coverage were
currently being made. In the event that the total amount of the minimum coverage
thus determined exceeds the amount of coverage of the then effective policy, the
Boards of each of the Funds will be notified and will determine whether it is
necessary or appropriate to increase the total amount of coverage of the policy
to an amount not less than the total amount of such minimums, or to secure such
excess coverage for one or more of the parties hereto, which, when added to the
total coverage of the policy, will equal an amount of such minimums. Unless a
Fund elects to terminate this Agreement (pursuant to Paragraph 4) and its
participation in a joint-insured policy, each Fund agrees to pay its fair
portion of the new or additional premium (taking into account all of the then
existing circumstances).

          4.   CONTINUATION AND TERMINATION. This Agreement shall become
effective on the date first written above, subject to the condition that the
Fund's Board of Directors/Trustees, including a majority of those
Directors/Trustees who are not interested persons (as such term is defined in
the 1940 Act) of the Manager, shall have approved this Agreement. This Agreement
shall supersede all prior agreements relating to an allocation of premium on any
joint insured policy and shall apply to the present liability policy coverage
and any renewal or replacement thereof. It shall continue until terminated by
any party hereto upon the giving of not less than sixty (60) days notice to the
other parties hereto in writing.

          5.   AMENDMENTS. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. A written amendment of this Agreement is effective
upon the approval of the Board of Directors/Trustees and the Manager.

                                        3
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed by their duly authorized officers as of the date first above
written.


On Behalf of:  All ING Funds Listed on Schedule A


By:/s/ Michael J. Roland
   ---------------------
        Michael J. Roland
        Executive Vice President

                                        4

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(IV)(1)
<SEQUENCE>16
<FILENAME>a2138029zex-99_jiv1.txt
<DESCRIPTION>EX 99.(J)(IV)(1)
<TEXT>
<Page>

                                                           Exhibit 99.(j)(iv)(1)

                               AMENDED SCHEDULE A

                               WITH RESPECT TO THE

                       ALLOCATION AGREEMENT - BLANKET BOND

FUNDS
Fund For Life Series(1)
ING AIM Mid Cap Growth Portfolio(1)
ING Alliance Mid Cap Growth Portfolio(1)
ING American Funds Growth Portfolio
ING American Funds Growth-Income Portfolio
ING American Funds International Portfolio
ING Capital Guardian Large Cap Value Portfolio(1)
ING Capital Guardian Managed Global Portfolio(1)
ING Capital Guardian Small Cap Portfolio(1)
ING Classic Money Market Fund
ING Convertible Fund
ING Developing World Portfolio(1)
ING Disciplined LargeCap Fund
ING Eagle Asset Capital Appreciation Portfolio(1)
ING Emerging Countries Fund
ING Equity and Bond Fund
ING Evergreen Health Sciences Portfolio
ING Evergreen Omega Portfolio
ING Financial Services Fund
ING FMR(SM) Diversified Mid Cap Portfolio(1)
ING Foreign Fund
ING GET U.S. Core Portfolio - Series 1
ING GET U.S. Core Portfolio - Series 2
ING GET U.S. Core Portfolio - Series 3
ING GET U.S. Core Portfolio - Series 4
ING GET U.S. Core Portfolio - Series 5
ING GET U.S. Core Portfolio - Series 6
ING GET U.S. Core Select Portfolio - Series 1
ING GET U.S. Core Select Portfolio - Series 2
ING GET U.S. Opportunity Portfolio - Series 1
ING GET U.S. Opportunity Portfolio - Series 2
ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING GNMA Income Fund
ING Goldman Sachs Internet Tollkeeper(SM) Portfolio(1)
ING Growth + Value Fund
ING Growth Opportunities Fund
ING Hard Assets Portfolio(1)
ING High Yield Bond Fund
ING High Yield Opportunity Fund
ING Intermediate Bond Fund
ING International Fund
ING International Portfolio(1)
ING International SmallCap Growth Fund
ING International Value Fund
ING Janus Special Equity Portfolio(1)
ING Jennison Equity Opportunities Portfolio(1)
ING JPMorgan Small Cap Equity Portfolio(1)
ING Julius Baer Foreign Portfolio(1)
ING LargeCap Growth Fund
ING LargeCap Value Fund
ING Legg Mason Value Portfolio(1)
ING Lexington Money Market Trust
ING Lifestyle Aggressive Growth Portfolio
ING Lifestyle Growth Portfolio
ING Lifestyle Moderate Growth Portfolio
ING Lifestyle Moderate Portfolio
ING Limited Maturity Bond Portfolio(1)
ING Liquid Assets Portfolio(1)
ING MagnaCap Fund
ING Marsico Growth Portfolio(1)
ING Mercury Focus Value Portfolio(1)
ING Mercury Fundamental Growth Portfolio(1)
ING MFS Mid Cap Growth Portfolio(1)
ING MFS Research Portfolio(1)
ING MFS Total Return Portfolio(1)

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of Blanket Bond premium allocated to the Fund under the
Agreement will be borne directly by Directed Services, Inc. as provided in the
Management Agreement.

<Page>

ING MidCap Opportunities Fund
ING MidCap Value Fund
ING Money Market Fund
ING National Tax-Exempt Bond Fund
ING PIMCO Core Bond Portfolio(1)
ING PIMCO High Yield Portfolio(1)
ING Precious Metals Fund
ING PRIME RATE TRUST
ING Principal Protection Fund
ING Principal Protection Fund II
ING Principal Protection Fund III
ING Principal Protection Fund IV
ING Principal Protection Fund V
ING Principal Protection Fund VI
ING Principal Protection Fund VII
ING Principal Protection Fund VIII
ING Principal Protection Fund IX
ING Principal Protection Fund X
ING Principal Protection Fund XI
ING Real Estate Fund
ING Russia Fund
ING Salomon Brothers All Cap Portfolio(1)
ING Salomon Brothers Investors Portfolio(1)
ING SENIOR INCOME FUND
ING SmallCap Opportunities Fund
ING SmallCap Value Fund
ING Stock Index Portfolio(1)
ING T. Rowe Price Capital Appreciation Portfolio(1)
ING T. Rowe Price Equity Income Portfolio(1)
ING Tax Efficient Equity Fund
ING UBS U.S. Balanced Portfolio(1)
ING Van Kampen Equity Growth Portfolio(1)
ING Van Kampen Global Franchise Portfolio(1)
ING Van Kampen Growth and Income Portfolio(1)
ING Van Kampen Real Estate Portfolio(1)
ING VP Convertible Portfolio
ING VP Disciplined LargeCap Portfolio
ING VP EMERGING MARKETS FUND, INC.
ING VP Financial Services Portfolio
ING VP Growth + Value Portfolio
ING VP Growth Opportunities Portfolio
ING VP High Yield Bond Portfolio
ING VP International Value Portfolio
ING VP LargeCap Growth Portfolio
ING VP MagnaCap Portfolio
ING VP MidCap Opportunities Portfolio
ING VP NATURAL RESOURCES TRUST
ING VP Real Estate Portfolio
ING VP SmallCap Opportunities Portfolio
ING VP Worldwide Growth Portfolio
ING Worldwide Growth Fund
The Asset Allocation Portfolio
The Bond Portfolio
The Money Market Portfolio
The Stock Portfolio

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of Blanket Bond premium allocated to the Fund under the
Agreement will be borne directly by Directed Services, Inc. as provided in the
Management Agreement.

                                        2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(V)
<SEQUENCE>17
<FILENAME>a2138029zex-99_jv.txt
<DESCRIPTION>EX 99.(J)(V)
<TEXT>
<Page>

                                                               Exhibit 99.(j)(v)

                              ALLOCATION AGREEMENT

                         DIRECTORS & OFFICERS LIABILITY

THIS AGREEMENT made as of this 24th day of May, 2002 by and among the Funds
listed on Schedule A and any separate classes thereof and all future investment
companies and any separate classes thereof (the "Funds"), which are named
insureds under a joint liability policy as described below and for which ING
Investments, LLC acts as investment manager are entered into under the following
circumstances:

     A.   Section 17d-1(d)(7) of the Investment Company Act of 1940, as amended
("the 1940 Act") provides that the Securities and Exchange Commission ("SEC") is
authorized to require that directors, officers and employees of registered
investment companies be covered under a liability, errors and omissions
insurance policy, and the SEC has promulgated rules and regulations dealing with
this subject ("Rule 17d-1(d)(7)");

     B.   The Funds are named as joint insureds under the terms of a joint
insurance policy ("Policy") which insures against illegal profit or gain,
intentional wrongful acts, libel, slander, defamation, ERISA claims, insider
trading, as well as other coverage as outlined in the Policy, by the directors,
officers and employees;

     C.   A majority of those members of the Board of Directors/Trustees of each
of the Funds, who are not "interested persons" as defined by Section 2(a)(19) of
the 1940 Act, have given due consideration to all factors relevant to the form,
amount and apportionment of premiums and recoveries under such Policy and the
Board of Directors/Trustees of each Fund has approved the term and amount of the
Policy, the portion of the premium payable by that party, and the manner in
which recovery on the Policy, if any, shall be shared by and among the parties
thereto; and

     D.   The Funds now desire to enter into the agreement required by Rule
17d-1(d)(7) of the 1940 Act to establish the manner in which recovery under the
Policy, if any, shall be shared.

     NOW, THEREFORE, IT IS HEREBY AGREED by and among the parties as follows:

<Page>

          1.    PAYMENT OF PREMIUMS.

          Each Fund shall pay a portion of the premium due under the Policy
derived by multiplying the premium by a fraction, (i) the denominator of which
is the total net assets of all the Funds combined and (ii) the numerator of
which is the total net assets of each of the Funds individually. The net assets
of the classes are deemed to be represented by the net assets of their
respective funds. Each of the Funds agrees that the appropriateness of the
allocation of said premium will be determined no less often than annually. No
adjustment of the allocation of said premium will be implemented without
approval of the Boards of each of the Funds.

          2.    ALLOCATION OF RECOVERIES

          (a)   If more than one of the parties hereto is damaged in a single
loss for which recovery is received under the policy, each such party shall
receive that portion of the recovery which represents the loss sustained by that
party, unless the recovery is inadequate to fully indemnify such party
sustaining loss.

          (b)   If the recovery is inadequate to fully indemnify each such party
sustaining a loss, the recovery shall be allocated among such parties as
follows:

                (i)   Each Party sustaining a loss shall be allocated an amount
equal to the lesser of its actual loss or the minimum amount of policy which
would be required to be maintained by such party under a single insured policy
(determined as of the time of loss) in accordance with the provisions of Rule
17d-1(d)(7).

                (ii)  The remaining portion of the proceeds shall be allocated
to each party sustaining a loss not fully covered by the allocation under
subparagraph (i) in the proportion that each such party's last payment of
premium bears to the sum of the last such premium payments of all such parties.
If such allocation would result in any party which had sustained a loss
receiving a portion of the recovery in excess of the loss actually sustained,
such excess portion shall be allocated among the other parties whose losses
would not be fully indemnified. The allocation shall bear the same proportion as
each such party's last payment of premium bears to the sum of the last premium
payments of all parties entitled to receive a share of the excess. Any
allocation in excess of a loss actually sustained by any such party shall be
reallocated in the same manner.

          3.    OBLIGATION TO MAINTAIN MINIMUM COVERAGE.

          Each of the Funds represents and warrants to each of the other parties
hereto that the minimum amount of coverage required of it by Rule 17d-1(d)(7) as
of the date hereof is as reflected in the schedule attached hereto. Each of the
Funds agrees that it will determine, no less

<Page>

than at the end of each calendar quarter, the minimum amount of coverage which
would be required of it by Rule 17d-1(d)(7) if a determination with respect to
the adequacy of the coverage were currently being made. In the event that the
total amount of the minimum coverage thus determined exceeds the amount of
coverage of the then effective policy, the Boards of each of the Funds will be
notified and will determine whether it is necessary or appropriate to increase
the total amount of coverage of the policy to an amount not less than the total
amount of such minimums, or to secure such excess coverage for one or more of
the parties hereto, which, when added to the total coverage of the policy, will
equal an amount of such minimums. Unless a Fund elects to terminate this
Agreement (pursuant to Paragraph 4) and its participation in a joint-insured
policy, each Fund agrees to pay its fair portion of the new or additional
premium (taking into account all of the then existing circumstances).

          4.    CONTINUATION AND TERMINATION. This Agreement shall become
effective on the date first written above, subject to the condition that the
Fund's Board of Directors/Trustees, including a majority of those
Directors/Trustees who are not interested persons (as such term is defined in
the 1940 Act) of the Manager, shall have approved this Agreement. This Agreement
shall supersede all prior agreements relating to an allocation of premium on any
joint insured policy and shall apply to the present liability policy coverage
and any renewal or replacement thereof. It shall continue until terminated by
any party hereto upon the giving of not less than sixty (60) days notice to the
other parties hereto in writing.

          5.    AMENDMENTS. No provision of this Agreement may be changed,
waived, discharged or terminated orally, but only by an instrument in writing
signed by the party against which enforcement of the change, waiver, discharge
or termination is sought. A written amendment of this Agreement is effective
upon the approval of the Board of Directors/Trustees and the Manager.

     IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed by their duly authorized officers as of the date first above
written.


On Behalf of:  All ING Funds Listed on Schedule A


By:/s/ Michael J. Roland
   ---------------------
Name:  Michael J. Roland
Title: Executive Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(V)(1)
<SEQUENCE>18
<FILENAME>a2138029zex-99_jv1.txt
<DESCRIPTION>EX 99.(J)(V)(1)
<TEXT>
<Page>

                                                            Exhibit 99.(j)(v)(1)

                               AMENDED SCHEDULE A

                               WITH RESPECT TO THE

              ALLOCATION AGREEMENT - DIRECTORS & OFFICERS LIABILITY

FUNDS
Fund For Life Series(1)
ING AIM Mid Cap Growth Portfolio(1)
ING Alliance Mid Cap Growth Portfolio(1)
ING American Funds Growth Portfolio
ING American Funds Growth-Income Portfolio
ING American Funds International Portfolio
ING Capital Guardian Large Cap Value Portfolio(1)
ING Capital Guardian Managed Global Portfolio(1)
ING Capital Guardian Small Cap Portfolio(1)
ING Classic Money Market Fund
ING Convertible Fund
ING Developing World Portfolio(1)
ING Disciplined LargeCap Fund
ING Eagle Asset Capital Appreciation Portfolio(1)
ING Emerging Countries Fund
ING Equity and Bond Fund
ING Evergreen Health Sciences Portfolio
ING Evergreen Omega Portfolio
ING Financial Services Fund
ING FMR(SM) Diversified Mid Cap Portfolio(1)
ING Foreign Fund
ING GET U.S. Core Portfolio - Series 1
ING GET U.S. Core Portfolio - Series 2
ING GET U.S. Core Portfolio - Series 3
ING GET U.S. Core Portfolio - Series 4
ING GET U.S. Core Portfolio - Series 5
ING GET U.S. Core Portfolio - Series 6
ING GET U.S. Core Select Portfolio - Series 1
ING GET U.S. Core Select Portfolio - Series 2
ING GET U.S. Opportunity Portfolio - Series 1
ING GET U.S. Opportunity Portfolio - Series 2
ING Global Equity Dividend Fund
ING Global Real Estate Fund
ING GNMA Income Fund
ING Goldman Sachs Internet Tollkeeper(SM) Portfolio(1)
ING Growth + Value Fund

ING Growth Opportunities Fund
ING Hard Assets Portfolio(1)
ING High Yield Bond Fund
ING High Yield Opportunity Fund
ING Intermediate Bond Fund
ING International Fund
ING International Portfolio(1)
ING International SmallCap Growth Fund
ING International Value Fund
ING Janus Special Equity Portfolio(1)
ING Jennison Equity Opportunities Portfolio(1)
ING JPMorgan Small Cap Equity Portfolio(1)
ING Julius Baer Foreign Portfolio(1)
ING LargeCap Growth Fund
ING LargeCap Value Fund
ING Legg Mason Value Portfolio(1)
ING Lexington Money Market Trust
ING Lifestyle Aggressive Growth Portfolio
ING Lifestyle Growth Portfolio
ING Lifestyle Moderate Growth Portfolio
ING Lifestyle Moderate Portfolio
ING Limited Maturity Bond Portfolio
ING Liquid Assets Portfolio(1)
ING MagnaCap Fund
ING Marsico Growth Portfolio(1)
ING Mercury Focus Value Portfolio(1)
ING Mercury Fundamental Growth Portfolio(1)
ING MFS Mid Cap Growth Portfolio(1)
ING MFS Research Portfolio(1)
ING MFS Total Return Portfolio(1)
ING MidCap Opportunities Fund
ING MidCap Value Fund
ING Money Market Fund
ING National Tax-Exempt Bond Fund

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of D&O premium allocated to the Fund under the
Agreement will be borne directly by Directed Services, Inc. as provided in the
Management Agreement.

<Page>

ING PIMCO Core Bond Portfolio(1)
ING PIMCO High Yield Portfolio(1)
ING Precious Metals Fund
ING PRIME RATE TRUST
ING Principal Protection Fund
ING Principal Protection Fund II
ING Principal Protection Fund III
ING Principal Protection Fund IV
ING Principal Protection Fund V
ING Principal Protection Fund VI
ING Principal Protection Fund VII
ING Principal Protection Fund VIII
ING Principal Protection Fund IX
ING Principal Protection Fund X
ING Principal Protection Fund XI
ING Real Estate Fund
ING Russia Fund
ING Salomon Brothers All Cap Portfolio(1)
ING Salomon Brothers Investors Portfolio(1)
ING SENIOR INCOME FUND
ING SmallCap Opportunities Fund
ING SmallCap Value Fund
ING Stock Index Portfolio(1)
ING T. Rowe Price Capital Appreciation Portfolio(1)
ING T. Rowe Price Equity Income Portfolio(1)
ING Tax Efficient Equity Fund
ING UBS U.S. Balanced Portfolio(1)
ING Van Kampen Equity Growth Portfolio(1)
ING Van Kampen Global Franchise Portfolio(1)
ING Van Kampen Growth and Income Portfolio(1)
ING Van Kampen Real Estate Portfolio
ING VP Convertible Portfolio
ING VP Disciplined LargeCap Portfolio
ING VP EMERGING MARKETS FUND, INC.
ING VP Financial Services Portfolio
ING VP Growth + Value Portfolio
ING VP Growth Opportunities Portfolio
ING VP High Yield Bond Portfolio
ING VP International Value Portfolio
ING VP LargeCap Growth Portfolio
ING VP MagnaCap Portfolio
ING VP MidCap Opportunities Portfolio
ING VP NATURAL RESOURCES TRUST
ING VP Real Estate Portfolio
ING VP SmallCap Opportunities Portfolio
ING VP Worldwide Growth Portfolio
ING Worldwide Growth Fund
The Asset Allocation Portfolio
The Bond Portfolio
The Money Market Portfolio
The Stock Portfolio

(1) Under the terms of the Management Agreement between ING Investors Trust and
Directed Services, Inc., the Fund is subject to a unified fee arrangement.
Accordingly, the portion of D&O premium allocated to the Fund under the
Agreement will be borne directly by Directed Services, Inc. as provided in the
Management Agreement.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(VI)
<SEQUENCE>19
<FILENAME>a2138029zex-99_jvi.txt
<DESCRIPTION>EX-99.(J)(VI)
<TEXT>
<Page>

                                                              Exhibit 99.(j)(vi)

                                AGENCY AGREEMENT

       THIS AGREEMENT made the 30th day of November, 2000, by and between each
of the following registered investment companies (1) LEXINGTON MONEY MARKET
TRUST, a Massachusetts business trust; (2) PILGRIM EQUITY TRUST, a Massachusetts
business trust, currently consisting of Pilgrim Index Plus Protection Fund and
Pilgrim MidCap Opportunities Fund; (3) PILGRIM GROWTH OPPORTUNITIES FUND, a
Massachusetts business trust; (4) PILGRIM MAYFLOWER TRUST, a Massachusetts
business trust, consisting of Pilgrim Growth + Value Fund, Pilgrim International
Value Fund and Pilgrim Research Enhanced Index Fund; (5) PILGRIM NATURAL
RESOURCES TRUST, a Massachusetts business trust; (6) PILGRIM PRIME RATE TRUST, a
Massachusetts business trust; (7) PILGRIM SMALLCAP OPPORTUNITIES FUND, a
Massachusetts business trust; (8) PILGRIM VARIABLE PRODUCTS TRUST, a
Massachusetts business trust, consisting of Pilgrim VP Convertible Portfolio,
Pilgrim VP Emerging Countries Portfolio, Pilgrim VP Financial Services
Portfolio, Pilgrim VP Growth & Income Portfolio, Pilgrim VP Growth + Value
Portfolio, Pilgrim VP Growth Opportunities Portfolio, Pilgrim VP High Yield Bond
Portfolio, Pilgrim VP International Portfolio, Pilgrim VP International SmallCap
Growth Portfolio, Pilgrim VP International Value Portfolio, Pilgrim VP LargeCap
Growth Portfolio, Pilgrim VP MagnaCap Portfolio, Pilgrim VP MidCap Opportunities
Portfolio, Pilgrim VP Research Enhanced Index Portfolio, Pilgrim VP SmallCap
Opportunities Portfolio and Pilgrim VP Worldwide Growth Portfolio; (9) PILGRIM
FUNDS TRUST, a Delaware business trust, consisting of Pilgrim European Equity
Fund, Pilgrim Global Communications Fund, Pilgrim Global Information Technology
Fund, Pilgrim Intermediate Bond Fund, Pilgrim Internet Fund, ING Pilgrim Money
Market Fund, Pilgrim National Tax-Exempt

<Page>

Bond Fund and Pilgrim Tax Efficient Equity Fund; (10) PILGRIM MUTUAL FUNDS, a
Delaware business trust, consisting of Pilgrim Balanced Fund, Pilgrim
Convertible Fund, Pilgrim Emerging Countries Fund, Pilgrim High Yield Fund II,
Pilgrim International Core Growth Fund, Pilgrim International SmallCap Growth
Fund, Pilgrim LargeCap Growth Fund, Pilgrim MidCap Growth Fund, Pilgrim Money
Market Fund, Pilgrim SmallCap Growth Fund, Pilgrim Strategic Income Fund and
Pilgrim Worldwide Growth Fund; (11) PILGRIM SENIOR INCOME FUND, a Delaware
business trust; (12) PILGRIM ADVISORY FUNDS, INC., a Maryland corporation,
consisting of Pilgrim Asia-Pacific Equity Fund; (13) PILGRIM BANK AND THRIFT
FUND, INC., a Maryland corporation; (14) PILGRIM EMERGNG MARKETS FUND, INC., a
Maryland corporation; (15) PILGRIM GNMA INCOME FUND, INC., a Maryland
corporation; (16) PILGRIM PRECIOUS METALS FUND, INC., a Maryland corporation;
(17) PILGRIM GROWTH AND INCOME FUND, INC., a Maryland corporation; (18) PILGRIM
INVESTMENT FUNDS, INC., a Maryland corporation, consisting of Pilgrim High Yield
Fund and Pilgrim MagnaCap Fund; (19) PILGRIM INTERNATIONAL FUND, INC., a
Maryland corporation, and (20) PILGRIM RUSSIA FUND, INC., a Maryland
corporation, and any other registered investment companies set forth on Exhibit
A, attached hereto, as amended from time to time (each such registered
investment company (1-20) and any investment company added to Exhibit A in the
future) hereinafter jointly and severally referred to as "Fund") each having its
principal place of business at 7337 E. Doubletree Ranch Road, Scottsdale,
Arizona, 85258-2034, and DST SYSTEMS, INC., a corporation organized and existing
under the laws of the State of Delaware, having its principal place of business
at 333 West 11th Street, 5th Floor, Kansas City, Missouri 64105 ("DST"):

                                        2
<Page>

                                   WITNESSETH:

       WHEREAS, Fund desires to appoint DST as Transfer Agent and Dividend
Disbursing Agent, and DST desires to accept such appointment;

       NOW, THEREFORE, in consideration of the mutual covenants herein
contained, the parties hereto agree as follows:

1.     DOCUMENTS TO BE FILED WITH APPOINTMENT.

       In connection with the appointment of DST as Transfer Agent and Dividend
       Disbursing Agent for Fund, there will be filed with DST the following
       documents:

       A.     A certified copy of the resolutions of the Board of Directors or
              Trustees of Fund appointing DST as Transfer Agent and Dividend
              Disbursing Agent, approving the form of this Agreement, and
              designating certain persons to sign stock certificates, if any,
              and give written instructions and requests on behalf of Fund;

       B.     A certified copy of the Articles of Incorporation or Declaration
              of Trust of Fund and all amendments thereto;

       C.     A certified copy of the Bylaws of Fund;

       D.     Copies of Registration Statements and amendments thereto, filed
              with the Securities and Exchange Commission;

       E.     Specimens of all forms of outstanding stock certificates, in the
              forms approved by the Board of Directors or Trustees of Fund, with
              a certificate of the Secretary of Fund, as to such approval;

       F.     Specimens of the signatures of the officers of Fund authorized to
              sign stock certificates and individuals authorized to sign written
              instructions and requests;

       G.     An opinion of counsel for Fund with respect to:

                                        3
<Page>

              (1)    Fund's organization and existence under the laws of its
                     state of organization,

              (2)    The status of all shares of stock of Fund covered by the
                     appointment under the Securities Act of 1933, as amended,
                     and any other applicable federal or state statute, and

              (3)    That all issued shares are, and all unissued shares will
                     be, when issued, validly issued, fully paid and
                     nonassessable.

2.     CERTAIN REPRESENTATIONS AND WARRANTIES OF DST.

       DST represents and warrants to Fund that:

       A.     It is a corporation duly organized and existing and in good
              standing under the laws of Delaware.

       B.     It is duly qualified to carry on its business in the State of
              Missouri.

       C.     It is empowered under applicable laws and by its Articles of
              Incorporation and bylaws to enter into and perform the services
              contemplated in this Agreement.

       D.     It is registered as a transfer agent to the extent required under
              the Securities Exchange Act of 1934.

       E.     All requisite corporate proceedings have been taken to authorize
              it to enter into and perform this Agreement.

       F.     It has and will continue to have and maintain the necessary
              facilities, equipment and personnel to perform its duties and
              obligations under this Agreement.

3.     CERTAIN REPRESENTATIONS AND WARRANTIES OF FUND.

       Fund represents and warrants to DST that:

       A.     It is duly organized as heretofore described and existing and in
              good standing under the laws of the State/Commonwealth of
              organization set forth after its name in the opening paragraph or,
              if it does not appear in such opening paragraph, on Exhibit A.

                                        4
<Page>

       B.     It is an open-end or closed-end management investment company
              registered under the Investment Company Act of 1940, as amended.

       C.     A registration statement under the Securities Act of 1933 has been
              filed and will be effective with respect to all shares of Fund
              being offered for sale.

       D.     All requisite steps have been and will continue to be taken to
              register Fund's shares for sale in all applicable states and such
              registration will be effective at all times shares are offered for
              sale in such state.

       E.     Fund is empowered under applicable laws and by its charter or
              declaration and bylaws to enter into and perform this Agreement.

4.     SCOPE OF APPOINTMENT.

       A.     Subject to the conditions set forth in this Agreement, Fund hereby
              appoints DST as Transfer Agent and Dividend Disbursing Agent.

       B.     DST hereby accepts such appointment and agrees that it will act as
              Fund's Transfer Agent and Dividend Disbursing Agent. DST agrees
              that it will also act as agent in connection with Fund's periodic
              withdrawal payment accounts and other open accounts or similar
              plans for shareholders, if any.

       C.     Fund agrees to use its best efforts to deliver to DST in Kansas
              City, Missouri, as soon as they are available, all of its
              shareholder account records.

       D.     DST, utilizing DST's computerized data processing systems for
              securityholder accounting for open-end funds (the "TA2000(R)
              System"), and subject to the provisions of Sections 19, 20 and 21
              of this Agreement, will perform the following services as
              transfer, dividend disbursing and shareholders' servicing agent
              for Fund, and as agent of Fund for shareholder accounts thereof,
              in a timely manner: issuing

                                        5
<Page>

              (including countersigning), transferring and canceling share
              certificates; maintaining all shareholder accounts; providing
              transaction journals; preparing shareholder meeting lists (one
              annually at no charge, lists for additional meetings will be
              charged for), mailing proxies and proxy materials, receiving and
              tabulating proxies, certifying the shareholder votes in Fund (all
              proxy activities are subject to proxy fees and reimbursable fees);
              mailing shareholder reports and prospectuses supplied to DST by
              Fund or its agents; withholding, as required by Federal law and as
              directed by Fund, taxes on nonresident alien and foreign
              corporation accounts, for pension and deferred income, backup
              withholding or other instances agreed upon by Fund and DST;
              disbursing income dividends and capital gains distributions to
              shareholders, preparing, filing and mailing U.S. Treasury
              Department Forms 1099, 1042, 1042S and backup withholding as
              required for all shareholders and as directed by Fund; preparing
              and mailing confirmation forms to shareholders and dealers, as
              instructed, for all purchases and liquidations (not applicable to
              closed-end funds except for transfers into or out of a
              shareholders' account) of shares of Fund and other confirmable
              transactions in shareholders' accounts; recording reinvestment of
              dividends and distributions in shares of Fund; providing or making
              available on-line daily and monthly reports as provided by the
              TA2000 System and as requested by Fund or its management company;
              maintaining those records necessary to carry out DST's duties
              hereunder, including all information reasonably required by Fund
              to account for all transactions (non-valued in closed-end funds)
              in Fund shares, calculating the appropriate sales charge with
              respect to each purchase of Fund shares as set forth in the
              prospectus for Fund (not applicable to closed-end funds); solely
              for open-end funds: determining the portion of each sales charge
              payable to the

                                        6
<Page>

              dealer participating in a sale in accordance with schedules
              delivered to DST by Fund's principal underwriter or distributor
              (hereinafter "principal underwriter") from time to time,
              disbursing dealer commissions collected to such dealers,
              determining the portion of each sales charge payable to such
              principal underwriter and disbursing such commissions to the
              principal underwriter; receiving correspondence pertaining to any
              former, existing or new shareholder account, processing such
              correspondence for proper recordkeeping, and responding promptly
              to shareholder correspondence; mailing to dealers confirmations of
              wire order trades (not applicable to closed-end funds); mailing
              copies of shareholder statements to shareholders and registered
              representatives of dealers in accordance with Fund's instructions;
              and, solely in the case of open-end funds, processing, generally
              on the date of receipt, purchases or redemptions or instructions
              to settle any mail or wire order purchase or redemption (or in the
              case of closed-end funds, effecting transfer of certificates)
              received in proper order as set forth in the prospectus and DST's
              Procedures, as hereinafter defined, rejecting promptly any
              requests not received in proper order (as defined by Fund or its
              agents or DST's Procedures), and, solely in the case of open-end
              funds, causing exchanges of shares to be executed in accordance
              with Fund's instructions, the applicable prospectus, DST's
              Procedures and the general exchange privilege application.

       E.     At the request of an Authorized Person (a person identified as
              such on Exhibit D, attached hereto and incorporated herein for
              reference), DST shall use reasonable efforts to provide the
              services set forth in this Agreement in connection with
              transactions (i) on behalf of retirement plans and participants in
              retirement plans and transactions ordered by brokers as part of a
              "no transaction fee" program ("NTF"),

                                        7
<Page>

              the processing of which transactions require DST to use methods
              and procedures other than those usually employed by DST to perform
              shareholder servicing agent services, (ii) involving the provision
              of information to DST after the commencement of the nightly
              processing cycle of TA2000 System or (iii) which require more
              manual intervention by DST, either in the entry of data or in the
              modification or amendment of reports generated by the TA2000
              System than is usually required by non-retirement plan, non-NTF
              and pre-nightly transactions (the "Exception Services").

       F.     Fund shall have the right to add new series to the TA2000 System
              upon at least thirty (30) days' prior written notice to DST
              provided that the requirements of the new series are generally
              consistent with services then being provided by DST under this
              Agreement and any new series shall be provided services in
              accordance with the Fee Schedules then attached to the existing
              Agency Agreements between DST and the various Funds of Pilgrim
              Capital Corporation, which agreements pre-date this Agency
              Agreement. Rates or charges for additional series shall be as set
              forth in Exhibit B, as hereinafter defined, for the remainder of
              the contract term except as such series use functions, features or
              characteristics for which DST has imposed an additional charge as
              part of its standard pricing schedule. In the latter event, rates
              and charges shall be in accordance with DST's then-standard
              pricing schedule.

       G.     DST shall use reasonable efforts to provide, reasonably promptly
              under the circumstances, the same services with respect to any
              new, additional functions or features or any changes or
              improvements to existing functions or features as provided for in
              Fund's instructions, prospectus or application as amended from
              time to time, for Fund provided (i) DST is advised in advance by
              Fund of any changes

                                        8
<Page>

              therein, (ii) the TA2000 System and the mode of operations
              utilized by DST as then constituted support such additional
              functions and features, and (iii) any new or increased services to
              be provided by DST or commenced to be used by Fund in addition to
              those currently used at execution hereof or any new products or
              functionality added to the TA2000 System shall be provided in
              accordance with the Fee Schedules then attached to the existing
              Agency Agreements between DST and the various Funds of Pilgrim
              Capital Corporation, which agreements pre-date this Agency
              Agreement, or, if not referenced in such fee schedules, at
              mutually agreed to fees and charges. If any addition to,
              improvement of or change in the features and functions currently
              provided by the TA2000 System or the operations as requested by
              Fund requires an enhancement or modification to the TA2000 System
              or to operations as presently conducted by DST, DST shall not be
              liable therefor until such modification or enhancement is, if DST
              agrees to develop or institute it, developed (at Fund's expense)
              and installed on the TA2000 System or a new mode of operation is
              instituted. If any new, additional function or feature or change
              or improvement to existing functions or features or new service or
              mode of operation measurably increases DST's cost of performing
              the services required hereunder at the current level of service,
              DST shall advise Fund of the amount of such increase and if Fund
              elects to utilize such function, feature or service, DST shall be
              entitled to increase its fees by the amount of the increase in
              costs. In no event shall DST be responsible for or liable to
              provide any additional function, feature, improvement or change in
              method of operation until it has consented thereto in writing.

                                        9
<Page>

5.     LIMIT OF AUTHORITY.

       Unless otherwise expressly limited by the resolution of appointment or by
       subsequent action by Fund, the appointment of DST as Transfer Agent will
       be construed to cover the full amount of authorized stock of the class or
       classes for which DST is appointed as the same will, from time to time,
       be constituted, and any subsequent increases in such authorized amount.

       In case of such increase Fund will file with DST:

       A.     If the appointment of DST was theretofore expressly limited, a
              certified copy of a resolution of Fund's Board of Directors or
              Trustees, as applicable, increasing the authority of DST;

       B.     A certified copy of the amendment to Fund's Articles of
              Incorporation or Declaration of Trust, as applicable, authorizing
              the increase of stock;

       C.     A certified copy of the order or consent of each governmental or
              regulatory authority required by law to consent to the issuance of
              the increased stock, and an opinion of counsel that the order or
              consent of no other governmental or regulatory authority is
              required;

       D.     Opinion of counsel for Fund stating:

              (1)    The status of the additional shares of stock of Fund under
                     the Securities Act of 1933, as amended, and any other
                     applicable federal or state statute and that said shares
                     may be legally issued; and

              (2)    That the additional shares are, or when issued will be,
                     validly issued, fully paid and nonassessable by Fund.

                                       10
<Page>

6.     COMPENSATION AND EXPENSES.

       A.     In consideration for its services hereunder as Transfer Agent and
              Dividend Disbursing Agent, Fund will pay to DST from time to time
              a reasonable compensation for all services rendered as Agent, and
              also all its reasonable out-of-pocket expenses, charges, counsel
              fees, and other disbursements (Compensation and Expenses) incurred
              in connection with the agency. Such compensation is set forth in a
              separate schedule to be agreed to, from time to time, by Fund and
              DST, the current copy of which is attached hereto as Exhibit B and
              incorporated herein by reference. If Fund has not paid such
              Compensation and Expenses to DST within a reasonable time, DST
              may, after written notice to Fund, charge against any monies held
              under this Agreement, the amount of any Compensation and/or
              Expenses for which it shall be entitled to reimbursement under
              this Agreement.

       B.     Fund also agrees promptly to reimburse DST for all reasonable
              reimbursable expenses or disbursements incurred by DST in
              connection with the performance of services under this Agreement
              including, but not limited to, expenses for postage, express
              delivery services, freight charges, envelopes, checks, drafts,
              forms (continuous or otherwise), specially requested reports and
              statements, telephone calls, telegrams, stationery supplies,
              counsel fees, outside printing and mailing firms (including DST
              Output SRI, Inc.), magnetic tapes, reels or cartridges (if sent to
              a Fund or to third party at Fund's request) and magnetic tape
              handling charges, off-site record storage, media for storage of
              records (e.g., microfilm, microfiche, optical platters, computer
              tapes), computer equipment installed at Fund's request at Fund's
              or a third party's premises, telecommunications equipment,
              telephone/ telecommunication lines between Fund and its agents, on
              one hand, and DST on the

                                       11
<Page>

              other, proxy mailing, soliciting, processing and/or tabulating
              costs, second-site backup computer facility, transmission of
              statement data for remote printing or processing, and NSCC
              transaction fees (as well as any other expenses set forth on
              Exhibit C, as amended from time to time) to the extent any of the
              foregoing are paid or incurred by DST. Fund agrees to pay postage
              expenses at least one day in advance if so requested. In addition,
              any other expenses incurred by DST at the request or with the
              consent of Fund will be promptly reimbursed by Fund.

       C.     Amounts due hereunder shall be due and paid on or before the
              thirtieth (30th) calendar day after receipt of the statement
              therefor by Fund (the "Due Date"). Fund is aware that its failure
              to pay all amounts in a timely fashion so that they will be
              received by DST on or before the Due Date will give rise to costs
              to DST not contemplated by this Agreement, including but not
              limited to carrying, processing and accounting charges.
              Accordingly, subject to Section 6.D. hereof, in the event that any
              amounts due hereunder are not received by DST by the Due Date,
              Fund shall pay a late charge equal to the rate set forth in the
              fee schedule times the amount overdue, times the number of days
              from the Due Date up to and including the day on which payment is
              received by DST divided by 365. The parties hereby agree that such
              late charge represents a fair and reasonable computation of the
              costs incurred by reason of late payment or payment of amounts not
              properly due. Acceptance of such late charge shall in no event
              constitute a waiver of Fund's or DST's default or prevent the
              non-defaulting party from exercising any other rights and remedies
              available to it.

       D.     In the event that any charges are disputed, Fund shall, on or
              before the Due Date, pay all undisputed amounts due hereunder and
              notify DST in writing of any

                                       12
<Page>

              disputed charges for out-of-pocket expenses that it is disputing
              in good faith. Payment for such disputed charges shall be due on
              or before the close of the fifth (5th) business day after the day
              on which DST provides to Fund documentation which an objective
              observer would agree reasonably supports the disputed charges (the
              "Revised Due Date"). Late charges shall not begin to accrue as to
              charges disputed in good faith until the first day after the
              Revised Due Date.

7.     OPERATION OF DST SYSTEMS.

       In connection with the performance of its services under this Agreement,
       DST is responsible for such items as:

       A.     That entries in DST's records and in Fund's records on the TA2000
              System created by DST accurately reflect the orders, instructions,
              and other information received by DST from Fund, Fund's principal
              manager, underwriter or distributor or Fund's investment adviser,
              sponsor, custodian or administrator (each an "Authorized Person"),
              broker-dealers and shareholders;

       B.     That shareholder lists, shareholder account verifications,
              confirmations and other shareholder account information to be
              produced from its records or data be available and accurately
              reflect the data in Fund's records on the TA2000 System;

       C.     The accurate and timely issuance of dividend and distribution
              checks in accordance with instructions received from Fund and the
              data in Fund's records on the TA2000 System;

       D.     That redemption transactions and payments with respect to shares
              of open-end funds and transfers with respect to closed-end funds
              be effected timely, under normal circumstances on the day of
              receipt, and accurately in accordance with instructions received
              by DST from dealers, shareholders, or an Authorized Person of Fund

                                       13
<Page>

              provided such instructions are in proper order as set forth
              elsewhere in this Agreement and are consistent with the data in
              Fund's records on the TA2000 System;

       E.     The deposit daily in Fund's appropriate special bank account of
              all checks and payments received by DST from NSCC, broker-dealers
              or shareholders for investment in shares of open-end funds;

       F.     Notwithstanding anything herein to the contrary, with respect to
              "as of" adjustments, DST will not necessarily assume one hundred
              percent (100%) responsibility for losses resulting from "as of's"
              due to clerical errors or misinterpretations of shareholder
              instructions. DST shall not be liable for any action taken,
              suffered, or omitted by it or for any error of judgment made by it
              with respect to "as of" adjustments in the absence of bad faith,
              willful misconduct, knowing violations of applicable law
              pertaining to the manner in which transfer agency services are to
              be performed by DST, reckless disregard of the performance of its
              duties, or negligence on its part. DST's liability hereunder shall
              extend only to losses that are "material", that is, that, on a
              given, day arise from dilution or a pricing error that is (i)
              greater than a negligible amount per shareholder, (ii) equals or
              exceeds one ($.01) full cent per share times the number of shares
              outstanding with respect to whether recompense of Fund is
              required, or (iii) equals or exceeds the product of one-half of
              one percent (1/2%) times Fund's Net Asset Value per share times
              the number of shares outstanding with respect to whether
              recompense at the shareholder level is required (or such other
              amounts as may be adopted by applicable accounting or regulatory
              authorities from time to time);

                                       14
<Page>

       G.     Notwithstanding anything in this Agreement to the contrary, DST
              shall perform the services set forth in Section 4.D. of, and
              elsewhere in, this Agreement, including but not limited to the
              requiring of proper forms of instructions, signatures and
              signature guarantees and any necessary documents supporting the
              opening of shareholder accounts (where required), transfers,
              redemptions and other shareholder account transactions, in
              conformance with DST's present procedures as set forth in its
              Legal Manual, Third Party Check Procedures, Checkwriting Draft
              Procedures, and Signature Guarantee Procedures with such changes
              or deviations therefrom as may be from time to time required or
              approved by Fund, its investment adviser or principal underwriter,
              or their or DST's counsel (the "Procedures") and the rejection of
              orders or instructions not in good order in accordance with the
              applicable prospectus or the Procedures;

       H.     The maintenance of customary records in connection with its
              agency, and particularly those records required to be maintained
              pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1
              under the Investment Company Act of 1940, if any; and

       I.     The maintenance of a current, duplicate set of Fund's essential
              records as of the close of business on the prior business day at a
              secure separate location, in a form available and usable forthwith
              in the event of any breakdown or disaster disrupting its main
              operation.

8.     INDEMNIFICATION.

       A.     DST shall at all times use reasonable care, due diligence and act
              in good faith in performing its duties under this Agreement. DST
              shall provide its services as transfer agent in accordance with
              Section 17A of the Exchange Act, and the rules

                                       15
<Page>

              and regulations thereunder. In the absence of bad faith, willful
              misconduct, knowing violations of applicable law pertaining to the
              manner in which transfer agency services are to be performed by
              DST (excluding any violations arising directly or indirectly out
              of the actions of DST-unaffiliated third parties), reckless
              disregard of the performance of its duties, or negligence on its
              part, DST shall not be liable for any action taken, suffered, or
              omitted by it or for any error of judgment made by it in the
              performance of its duties under this Agreement. For those
              activities or actions delineated in the Procedures, DST shall be
              presumed to have used reasonable care, due diligence and acted in
              good faith if it has acted in accordance with the Procedures,
              copies of which have been provided to Fund, as amended from time
              to time with approval of counsel, or for any deviation therefrom
              approved by an Authorized Person, Fund or Fund's or DST's counsel.

       B.     DST shall not be responsible for, and Fund shall indemnify and
              hold DST harmless from and against, any and all losses, damages,
              costs, charges, counsel fees, payments, expenses and liability
              which may be asserted against DST or for which DST may be held to
              be liable, arising out of or attributable to:

              (1)    All actions of DST required to be taken by DST pursuant to
                     this Agreement, provided that DST has acted in accordance
                     with the standards specified in Paragraph A;

              (2)    Fund's refusal or failure to comply with the terms of this
                     Agreement, Fund's negligence or willful misconduct, or the
                     breach of any representation or warranty of Fund hereunder;

              (3)    The good faith reliance on or the carrying out of any
                     written or recorded oral instructions or requests of
                     persons designated by Fund in writing from time

                                       16
<Page>

              to time as authorized to give instructions on its behalf or of
              representatives of an Authorized Person or DST's good faith
              reliance on or use of information, data, records and documents
              received from, or which have been prepared and/or maintained by or
              on behalf of, an Authorized Person;

              (4)    Defaults by dealers or shareowners with respect to payment
                     for share orders previously entered;

              (5)    The offer or sale of Fund's shares in violation of any
                     requirement under federal securities laws or regulations or
                     the securities laws or regulations of any state or in
                     violation of any stop order or other determination or
                     ruling by any federal agency or state with respect to the
                     offer or sale of such shares in such state (unless such
                     violation results from DST's failure to comply with written
                     instructions of Fund or of any officer of Fund that no
                     offers or sales be input into Fund's securityholder records
                     in or to residents of such state);

              (6)    Fund's or its agents' and Authorized Persons' omissions,
                     errors and mistakes: (a) in the use of (i) the TA2000
                     System, (ii) the data center, computer and related
                     equipment used to access the TA2000 System (the "DST
                     Facilities"), and (iii) control procedures in the TA2000
                     System, and (b) in the verification of output and (c) in
                     the remote input of data;

              (7)    Errors, inaccuracies and omissions in, or errors,
                     inaccuracies or omissions of DST arising out of or
                     resulting from such errors, inaccuracies and omissions in,
                     Fund's records, shareholder records and other records,
                     delivered to DST hereunder by Fund or its prior agent(s)
                     (but not including errors, inaccuracies or omissions
                     resulting from the negligence or willful

                                       17
<Page>

                     misconduct of DST while DST was acting as sub-agent on
                     behalf of Investors Fiduciary Trust Company, Fund's prior
                     transfer agent);

              (8)    Actions or omissions to act by Fund or agents designated by
                     Fund with respect to duties assumed thereby as provided for
                     in Section 21 hereof; and

              (9)    DST's performance of AGREED UPON Exception Services except
                     where DST acted or omitted to act in bad faith, with
                     reckless disregard of its obligations or with gross
                     negligence.

       C.     Except where DST is entitled to indemnification under Section 8.B.
              hereof, and subject to the provisions Section 7.F. hereof, DST
              shall indemnify and hold Fund harmless from and against any and
              all losses, damages, costs, charges, counsel fees, payments,
              expenses and liability arising out of DST's failure to comply with
              the terms of this Agreement or arising out of or attributable to
              DST's negligence or willful misconduct or material breach of any
              representation or warranty of DST hereunder.

       D.     EXCEPT FOR VIOLATIONS OF SECTION 23, IN NO EVENT AND UNDER NO
              CIRCUMSTANCES SHALL EITHER PARTY TO THIS AGREEMENT BE LIABLE TO
              ANYONE, INCLUDING, WITHOUT LIMITATION TO THE OTHER PARTY, FOR
              CONSEQUENTIAL DAMAGES FOR ANY ACT OR FAILURE TO ACT UNDER ANY
              PROVISION OF THIS AGREEMENT EVEN IF ADVISED OF THE POSSIBILITY
              THEREOF.

       E.     Promptly after receipt by an indemnified person of notice of the
              commencement of any action, such indemnified person will, if a
              claim in respect thereto is to be made against an indemnifying
              party hereunder, notify the indemnifying party in writing of

                                       18
<Page>

              the commencement thereof; but the failure so to notify the
              indemnifying party will not relieve an indemnifying party from any
              liability that it may have to any indemnified person for
              contribution or otherwise under the indemnity agreement contained
              herein except to the extent it is prejudiced as a proximate result
              of such failure to timely notify. In case any such action is
              brought against any indemnified person and such indemnified person
              seeks or intends to seek indemnity from an indemnifying party, the
              indemnifying party will be entitled to participate in, and, to the
              extent that it may wish, assume the defense thereof (in its own
              name or in the name and on behalf of any indemnified party or both
              with counsel reasonably satisfactory to such indemnified person);
              provided, however, if the defendants in any such action include
              both the indemnified person and an indemnifying party and the
              indemnified person shall have reasonably concluded that there may
              be a conflict between the positions of the indemnified person and
              an indemnifying party in conducting the defense of any such action
              or that there may be legal defenses available to it and/or other
              indemnified persons which are inconsistent with those available to
              an indemnifying party, the indemnified person or indemnified
              persons shall have the right to select one separate counsel (in
              addition to counsel provided by the indemnifying party) to assume
              such legal defense and to otherwise participate in the defense of
              such action on behalf of such indemnified person or indemnified
              persons at such indemnified party's sole expense. Upon receipt of
              notice from an indemnifying party to such indemnified person of
              its election so to assume the defense of such action and approval
              by the indemnified person of counsel, which approval shall not be
              unreasonably withheld (and any disapproval shall be accompanied by
              a written statement of the reasons therefor), the indemnifying
              party

                                       19
<Page>

              will not be liable to such indemnified person hereunder for any
              legal or other expenses subsequently incurred by such indemnified
              person in connection with the defense thereof. An indemnifying
              party will not settle or compromise or consent to the entry of any
              judgment with respect to any pending or threatened claim, action,
              suit or proceeding in respect of which indemnification or
              contribution may be sought hereunder (whether or not the
              indemnified persons are actual or potential parties to such claim,
              action, suit or proceeding) unless such settlement, compromise or
              consent includes an unconditional release of each indemnified
              person from all liability arising out of such claim, action, suit
              or proceeding. An indemnified party will not, without the prior
              written consent of the indemnifying party, settle or compromise or
              consent to the entry of any judgment with respect to any pending
              or threatened claim, action, suit or proceeding in respect of
              which indemnification or contribution may be sought hereunder. If
              it does so, it waives its right to indemnification therefor.

9.     CERTAIN COVENANTS OF DST AND FUND.

       A.     All requisite steps will be taken by Fund from time to time when
              and as necessary to register Fund's shares for sale in all states
              in which Fund's shares shall at the time be offered for sale and
              require registration. If at any time Fund receives notice of any
              stop order or other proceeding in any such state affecting such
              registration or the sale of Fund's shares, or of any stop order or
              other proceeding under the federal securities laws affecting the
              sale of Fund's shares, Fund will give prompt notice thereof to
              DST.

       B.     DST hereby agrees to perform such transfer agency functions as are
              set forth in section 4.D. above and establish and maintain
              facilities and procedures reasonably

                                       20
<Page>

              acceptable to Fund for safekeeping of stock certificates, check
              forms, and facsimile signature imprinting devices, if any; and for
              the preparation or use, and for keeping account of, such
              certificates, forms and devices, and to carry such insurance as it
              considers adequate and reasonably available.

       C.     To the extent required by Section 31 of the Investment Company Act
              of 1940 as amended and Rules thereunder, DST agrees that all
              shareholder- or Fund-related records maintained by DST relating to
              the services performed by DST under this Agreement are the
              property of Fund and will be preserved, and will, upon receipt of
              payment of all sums due to DST in connection with DST's
              performance under this Agreement, be surrendered promptly to Fund
              on request.

       D.     DST agrees to furnish Fund semiannual reports of its financial
              condition, consisting of a balance sheet, earnings statement and
              any other readily and publicly available financial information
              reasonably requested by Fund. The annual financial statements will
              be certified by DST's certified public accountants. DST agrees to
              provide such reports as are produced by the TA2000 System
              respecting its services under this Agreement to Fund's Board as
              the Fund Board may reasonably request.

       E.     DST represents and agrees that it will use its reasonable efforts
              to keep current on the trends of the investment company industry
              relating to shareholder services and will use its reasonable
              efforts to continue to modernize and improve.

       F.     DST will permit Fund and its authorized representatives to make
              periodic inspections of its operations as such would involve Fund
              upon reasonable prior notice and at reasonable times during
              business hours.

       G.     DST agrees to use its reasonable efforts to provide in Kansas City
              at Fund's expense two (2) man weeks of training for Fund's
              personnel in connection with use and

                                       21
<Page>

              operation of the TA2000 System. All travel and reimbursable
              expenses incurred by Fund's personnel in connection with and
              during training at DST's Facility shall be borne by Fund. At
              Fund's option and expense, DST also agrees to use its best efforts
              to provide an additional two (2) man weeks of training at Fund's
              facility for Fund's personnel in connection with the TA2000
              System. Reasonable travel, per diem and reimbursable expenses
              incurred by DST personnel in connection with and during training
              at Fund's facility or in connection with the conversion shall be
              borne by Fund.

10.    RECAPITALIZATION OR READJUSTMENT.

       In case of any recapitalization, readjustment or other change in the
       capital structure of Fund requiring a change in the form of stock
       certificates, DST will, upon agreement with Fund as to the charges to
       apply thereto, issue or register certificates in the new form in exchange
       for, or in transfer of, the outstanding certificates in the old form,
       upon receiving:

       A.     Written instructions from an officer of Fund;

       B.     Certified copy of the amendment to the Articles of Incorporation
              or other document effecting the change;

       C.     Certified copy of the order or consent of each governmental or
              regulatory authority required by law to the issuance of the stock
              in the new form, and an opinion of counsel that the order or
              consent of no other government or regulatory authority is
              required;

       D.     Specimens of the new certificates in the form approved by the
              Board of Directors or Trustees of Fund, with a certificate of the
              Secretary of Fund as to such approval;

       E.     Opinion of counsel for Fund stating:

                                       22
<Page>

              (1)    The status of the shares of stock of Fund in the new form
                     under the Securities Act of 1933, as amended and any other
                     applicable federal or state statute; and

              (2)    That the issued shares in the new form are, and all
                     unissued shares will be, when issued, validly issued, fully
                     paid and nonassessable by the Fund.

11.    STOCK CERTIFICATES.

       Fund will furnish DST with a sufficient supply of blank stock
       certificates and from time to time will renew such supply upon the
       request of DST. Such certificates will be signed manually or by facsimile
       signatures of the officers of Fund authorized by law and by bylaws to
       sign stock certificates and, if required, will bear the corporate seal or
       facsimile thereof.

12.    DEATH, RESIGNATION OR REMOVAL OF SIGNING OFFICER.

       Fund will file promptly with DST written notice of any change in the
       officers authorized to sign stock certificates, written instructions or
       requests, together with two certificates of the Secretary or Clerk
       bearing the specimen signature of each newly authorized officer. In case
       any officer of Fund who has signed manually or whose facsimile signature
       has been affixed to blank stock certificates dies, resigns, or is removed
       prior to the issuance of such certificates, DST may issue or register
       such stock certificates as the stock certificates of Fund notwithstanding
       such death, resignation, or removal, until specifically directed to the
       contrary by Fund in writing. In the absence of such direction, Fund will
       file promptly with DST such approval, adoption, or ratification as may be
       required by law.

13.    FUTURE AMENDMENTS OF CHARTER AND BYLAWS.

       Fund will promptly file with DST copies of all material amendments to its
       Articles of Incorporation or Declaration of Trust, as applicable, or
       bylaws made after the date of this Agreement.

                                       23
<Page>

14.    INSTRUCTIONS, OPINION OF COUNSEL AND SIGNATURES.

       At any time DST may apply to any person authorized by Fund, including
       without limitation the duly authorized representative of any Authorized
       Person and any Authorized Personnel set forth on Exhibit D to this
       Agreement, to give instructions to DST, and may with the approval of a
       Fund officer consult with legal counsel for Fund or its own legal counsel
       at the expense of Fund, with respect to any matter arising in connection
       with the agency and it will not be liable for any action taken or omitted
       by it in good faith in reliance upon such instructions or upon the
       opinion of such counsel. DST will be protected in acting upon any paper
       or document reasonably believed by it to be genuine and to have been
       signed by the proper person or persons and will not be held to have
       notice of any change of authority of any person, until receipt of written
       notice thereof from Fund. It will also be protected in recognizing stock
       certificates which it reasonably believes to bear the proper manual or
       facsimile signatures of the officers of Fund, and the proper
       countersignature of any former Transfer Agent or Registrar, or of a
       present or former co-Transfer Agent or co-Registrar.

15.    FORCE MAJEURE AND DISASTER RECOVERY PLANS.

       A.     DST SHALL NOT BE RESPONSIBLE OR LIABLE FOR ITS FAILURE OR DELAY IN
              PERFORMANCE OF ITS OBLIGATIONS UNDER THIS AGREEMENT ARISING OUT OF
              OR CAUSED, DIRECTLY OR INDIRECTLY, BY CIRCUMSTANCES BEYOND ITS
              REASONABLE CONTROL, INCLUDING, WITHOUT LIMITATION: ANY
              INTERRUPTION, LOSS OR MALFUNCTION OR ANY UTILITY, TRANSPORTATION,
              COMPUTER (HARDWARE OR SOFTWARE) OR COMMUNICATION SERVICE;
              INABILITY TO OBTAIN LABOR, MATERIAL, EQUIPMENT OR TRANSPORTATION,
              OR A DELAY IN

                                       24
<Page>

              MAILS; GOVERNMENTAL OR EXCHANGE ACTION, STATUTE, ORDINANCE,
              RULINGS, REGULATIONS OR DIRECTION; WAR, STRIKE, RIOT, EMERGENCY,
              CIVIL DISTURBANCE, TERRORISM, VANDALISM, EXPLOSIONS, LABOR
              DISPUTES, FREEZES, FLOODS, FIRES, TORNADOS, ACTS OF GOD OR PUBLIC
              ENEMY, REVOLUTIONS, OR INSURRECTION; OR ANY OTHER CAUSE,
              CONTINGENCY, CIRCUMSTANCE OR DELAY NOT SUBJECT TO DST'S CONTROL
              WHICH PREVENTS OR HINDERS DST'S PERFORMANCE HEREUNDER.

       B.     DST currently maintains an agreement with a third party whereby
              DST is to be permitted to use on a "shared use" basis a "hot site"
              (the "Recovery Facility") maintained by such party in event of a
              disaster rendering the DST Facilities inoperable. DST has
              developed and is continually revising a business contingency plan
              (the "Business Contingency Plan") detailing which, how, when, and
              by whom data maintained by DST at the DST Facilities will be
              installed and operated at the Recovery Facility. Provided Fund is
              paying its pro rata portion of the charge therefor, DST would, in
              event of a disaster rendering the DST Facilities inoperable, use
              reasonable efforts to convert the TA2000 System containing the
              designated Fund data to the computers at the Recovery Facility in
              accordance with the then current Business Contingency Plan.

       C.     DST also currently maintains, separate from the area in which the
              operations that provide the services to Fund hereunder are
              located, a Crisis Management Center consisting of phones,
              computers and the other equipment necessary to operate a full
              service transfer agency business in the event one of its
              operations areas is rendered

                                       25
<Page>

              inoperable. The transfer of operations to other operating areas or
              to the Crisis Management Center is also covered in DST's Business
              Contingency Plan.

16.    CERTIFICATION OF DOCUMENTS.

       The required copy of the Articles of Incorporation or Declaration of
       Trust of Fund and copies of all amendments thereto will be certified by
       the Secretary of State (or other appropriate official) of the State of
       Incorporation, and if such Articles of Incorporation or Declaration of
       Trust and amendments are required by law to be also filed with a county,
       city or other officer of an official body, a certificate of such filing
       will appear on the certified copy submitted to DST. A copy of the order
       or consent of each governmental or regulatory authority required by law
       to the issuance of the stock will be certified by the Secretary or Clerk
       of such governmental or regulatory authority, under proper seal of such
       authority. The copy of the Bylaws and copies of all amendments thereto,
       and copies of resolutions of the Board of Directors or Trustees of Fund,
       as applicable, will be certified by the Secretary or Clerk or an
       Assistant Secretary or Clerk of Fund under Fund's seal.

17.    RECORDS.

       DST will maintain customary records in connection with its agency, and
       particularly will maintain those records required to be maintained
       pursuant to subparagraph (2) (iv) of paragraph (b) of Rule 31a-1 under
       the Investment Company Act of 1940, if any.

18.    DISPOSITION OF BOOKS, RECORDS AND CANCELED CERTIFICATES.

       DST may send periodically to Fund, or to where designated by the
       Secretary or an Assistant Secretary of Fund, all books, documents, and
       records no longer deemed needed for current purposes and all stock
       certificates which have been canceled in transfer or in exchange, upon
       the understanding that such books, documents, records, and stock
       certificates will be maintained by Fund under and in accordance with the
       requirements of Section 17Ad-7

                                       26
<Page>

       adopted under the Securities Exchange Act of 1934. Such materials will
       not be destroyed by Fund without the consent of DST (which consent will
       not be unreasonably withheld), but will be safely stored for possible
       future reference and maintained, preserved and made available to DST and
       the U.S. Securities and Exchange Commission in accordance with the
       requirement of Sections 17Ad-7 under the Securities Exchange Act of 1934
       (17 C.F.R. Section 240.17Ad-7).

19.    PROVISIONS RELATING TO DST AS TRANSFER AGENT.

       A.     DST will make original issues of stock certificates upon written
              request of an officer of Fund, and upon mutual agreement as to the
              charges to apply thereto and being furnished with a certified copy
              of a resolution of the Board of Directors or Trustees authorizing
              such original issue, an opinion of counsel as outlined in Section
              1.G. of this Agreement, any documents required by Sections 5. or
              10. of this Agreement, and necessary funds for the payment of any
              original issue tax.

       B.     Before making any original issue of certificates, Fund will
              furnish DST with sufficient funds to pay all required taxes on the
              original issue of the stock, if any. Fund will furnish DST such
              evidence as may be required by DST to show the actual value of the
              stock. If no taxes are payable, DST will be furnished with an
              opinion of outside counsel to that effect.

       C.     Shares of stock will be transferred and new certificates issued in
              transfer, or, except in the case of closed-end funds, shares of
              stock will be accepted for redemption and funds remitted therefor,
              or book entry transfer will be effected, upon surrender of the old
              certificates in form or receipt by DST of instructions deemed by
              DST properly endorsed for transfer or, except in the case of
              closed-end funds, redemption accompanied by such documents as DST
              may deem necessary to evidence the

                                       27
<Page>

              authority of the person making the transfer or redemption. DST
              reserves the right to refuse to transfer or redeem shares until it
              is satisfied that the endorsement or signature on the certificate
              or any other document is valid and genuine, and for that purpose,
              unless Fund has instructed DST not to require a signature
              guarantee, DST may require a guaranty of signature in accordance
              with the Procedures. DST shall have the right to refuse to
              transfer or redeem shares until it is satisfied that the requested
              transfer or redemption is legally authorized, and it will incur no
              liability for the refusal in good faith to make transfers or
              redemptions that, in its judgment, are improper or unauthorized.
              DST may, in effecting transfers or redemptions, rely upon
              Simplification Acts, Uniform Commercial Code, or other statutes
              that protect it and Fund in not requiring complete fiduciary
              documentation. In cases in which DST is not directed or otherwise
              required to maintain the consolidated records of shareholder's
              accounts, DST will not be liable for any loss that may arise by
              reason of not having such records.

       D.     When mail is used for delivery of stock certificates, DST will
              forward stock certificates in "nonnegotiable" form by first class
              or registered mail and stock certificates in "negotiable" form by
              registered mail, all such mail deliveries to be covered while in
              transit to the addressee by insurance arranged for by DST.

       E.     DST will issue and mail subscription warrants, certificates
              representing stock dividends, exchanges or split ups, or act as
              Conversion Agent upon receiving written instructions from any
              officer of Fund and such other documents as DST deems necessary
              upon agreement between DST and Fund as to the charges to apply
              thereto.

                                       28
<Page>

       F.     DST will issue, transfer, and split up certificates and will issue
              certificates of stock representing full shares upon surrender of
              scrip certificates aggregating one full share or more when
              presented to DST for that purpose upon receiving written
              instructions from an officer of Fund and such other documents as
              DST may deem necessary.

       G.     DST may issue new certificates in place of certificates
              represented to have been lost, destroyed, stolen or otherwise
              wrongfully taken upon receiving instructions from Fund and
              indemnity satisfactory to DST and Fund, and may issue new
              certificates in exchange for, and upon surrender of, mutilated
              certificates. Such instructions from Fund will be in such form as
              will be approved by the Board of Directors or Trustees of Fund and
              will be in accordance with the provisions of law and the bylaws of
              Fund governing such matter.

       H.     DST will supply a shareholder's list to Fund for its annual
              meeting upon receiving a request from an officer of Fund. It will
              also supply lists at such other times as may be requested by an
              officer of Fund, subject to payment of applicable charges
              therefor.

       I.     Upon receipt of written instructions of an officer of Fund, DST
              will address and mail notices to shareholders.

       J.     In case of any request or demand for the inspection of the stock
              books of Fund or any other books or records in the possession of
              DST, DST will endeavor to notify Fund and to secure instructions
              as to permitting or refusing such inspection. DST reserves the
              right, however, to exhibit the stock books or other books or
              records to any person in case it is advised by its counsel that it
              may be held responsible for the failure to exhibit the stock books
              or other books to such person.

                                       29
<Page>

20.    PROVISIONS RELATING TO DIVIDEND DISBURSING AGENCY.

       A.     DST will, at the expense of Fund, provide a special form of check
              containing the imprint of any device or other matter desired by
              Fund. Said checks must, however, be of a form and size convenient
              for use by DST.

       B.     If Fund desires to include additional printed matter, financial
              statements, ETC., with the dividend checks, the same will be
              furnished to DST within a reasonable time prior to the date of
              mailing of the dividend checks, at the expense of Fund.

       C.     If Fund desires its distributions mailed in any special form of
              envelopes, sufficient supply of the same will be furnished to DST,
              but the size and form of said envelopes will be subject to the
              approval of DST. If stamped envelopes are used, they must be
              furnished by Fund; or if postage stamps are to be affixed to the
              envelopes, the stamps or the cash necessary for such stamps must
              be furnished by Fund in advance of such mailing.

       D.     DST is hereby authorized to open and to maintain at a Bank
              acceptable to Fund one or more non-interest bearing deposit
              accounts as Agent for Fund, into which the funds for payment of
              dividends, distributions, redemptions or other disbursements
              provided for hereunder will be deposited, and against which checks
              will be drawn.

       E.     DST is authorized and directed to stop payment of checks
              theretofore issued hereunder, but not presented for payment, when
              the payees thereof allege either that they have not received the
              checks or that such checks have been mislaid, lost, stolen,
              destroyed or through no fault of theirs, are otherwise beyond
              their control, and cannot be produced by them for presentation and
              collection, and, to issue and deliver duplicate checks in
              replacement thereof.

                                       30
<Page>

21.    ASSUMPTION OF DUTIES BY FUND OR AGENTS DESIGNATED BY FUND.

       A.     Fund or its designated agents other than DST may assume certain
              duties and responsibilities of DST or those services of Transfer
              Agent and Dividend Disbursement Agent as those terms are referred
              to in Section 4.D. of this Agreement including but not limited to
              answering and responding to telephone inquiries from shareholders
              and brokers, accepting shareholder and broker instructions (either
              or both oral and written) and transmitting orders based on such
              instructions to DST, preparing and mailing confirmations,
              obtaining certified TIN numbers, classifying the status of
              shareholders and shareholder accounts under applicable tax law,
              establishing shareholder accounts on the TA2000 System and
              assigning social codes and Taxpayer Identification Number codes
              thereof, and disbursing monies of Fund, said assumption to be
              embodied in writing to be signed by both parties.

       B.     To the extent Fund or its agent or affiliate assumes such duties
              and responsibilities, DST shall be relieved from all
              responsibility and liability therefor and is hereby indemnified
              and held harmless against any liability therefrom and in the same
              manner and degree as provided for in Section 8 hereof.

       C.     DST MAY, SUBJECT TO THE WRITTEN CONSENT OF THE FUND, APPOINT OTHER
              PARTIES QUALIFIED TO PERFORM TRANSFER AGENCY SERVICES
              ("SUB-TRANSFER AGENTS") TO CARRY OUT SOME OR ALL OF ITS
              RESPONSIBILITIES UNDER THIS AGREEMENT; PROVIDED, HOWEVER, THAT A
              SUB-TRANSFER AGENT SHALL BE THE AGENT OF DST AND NOT THE AGENT OF
              THE FUND, AND THAT UNLESS THE SUB-TRANSFER AGENT IS APPOINTED AT
              THE DIRECTION OF THE FUND, DST SHALL BE FULLY RESPONSIBLE FOR THE
              ACTS OF A SUB-TRANSFER AGENT AND SHALL NOT BE RELIEVED OF ANY OF
              ITS RESPONSIBILITIES HEREUNDER BY THE APPOINTMENT OF A
              SUB-TRANSFER AGENT.

                                       31
<Page>

       D.     Initially Fund shall be responsible for the following: (i)
              answering and responding to phone calls from shareholders and
              broker-dealers, and (ii) scanning items into the AWD(TM) System as
              such calls or items are received by Fund, and (iii) entering and
              confirming wire order trades.

22.    TERMINATION OF AGREEMENT.

       A.     This Agreement shall be in effect from the date set forth on the
              first page (the "Effective Date") through May 31, 2002 and
              thereafter shall remain in effect unless terminated by either
              party upon receipt of six (6) months written notice from the other
              party, provided, however, that the effective date of any
              termination shall not occur during the period from December 15
              through March 30 of any year to avoid adversely impacting year
              end.

       B.     Each party, in addition to any other rights and remedies, shall
              have the right to terminate this Agreement forthwith upon the
              occurrence at any time of any of the following events with respect
              to the other party:

              (1)    Any interruption or cessation of operations by the other
                     party or its assigns that materially interferes with the
                     business operation of the first party;

              (2)    The bankruptcy of the other party or its assigns or the
                     appointment of a receiver for the other party or its
                     assigns;

              (3)    Failure by the other party or its assigns to perform its
                     duties in accordance with the Agreement, which failure
                     materially adversely affects the business operations of the
                     first party and which failure continues for thirty (30)
                     days after receipt of written notice from the first party;
                     and

                                       32
<Page>

              (4)    The acquisition of a controlling interest in DST Systems,
                     Inc. or its assigns, by any broker, dealer, investment
                     adviser or investment company except as may presently
                     exist.

       C.     In the event of any termination, Fund will promptly pay DST all
              amounts due to DST hereunder. In addition, if this Agreement is
              terminated by Fund for any reason other than those set forth in
              Section 22.B. hereof, then Fund shall pay to DST on the last
              business day of each of the next three (3) whole or partial
              calendar months (commencing with the last day of the month in
              which termination actually occurs if termination does not occur on
              the last business day of the month, and with the last business day
              of the immediately following month if termination actually occurs
              on the last business day of a month) an amount equal to the
              average monthly fees, exclusive of the out-of-pocket expenses,
              paid by or on behalf of each terminating party under the affected
              Agreement during the six (6) calendar months preceding the month
              during which the termination notice was received by DST.

       D.     If the termination date set forth in the original termination
              notice is extended by any terminating party (which extension shall
              require the agreement of DST), then the fees and charges payable
              by the terminating party under this Agreement shall increase by
              twenty percent (20%) during the period commencing with the
              original termination date set forth in the initial termination
              notice and concluding with the day upon which termination actually
              occurs. These provisions are in addition to any other contractual
              provision or compensation agreements that may be in existence at
              the time of an actual transfer.

       E.     DST shall, upon termination of this Agreement and receipt of
              payment of all outstanding bills and invoices, deliver to the
              successor so specified or appointed, or

                                       33
<Page>

              to Fund, at DST's office, all records then held by DST hereunder,
              all funds and other properties of Fund deposited with or held by
              DST hereunder. In the event no written order designating a
              successor (which may be Fund) shall have been delivered to DST on
              or before the date when such termination shall become effective,
              then DST shall deliver the records, funds and properties of Fund
              to a bank or trust company at the selection of DST or if a
              satisfactory successor cannot be obtained, DST may deliver the
              assets to Fund, at DST's offices or as otherwise agreed to between
              the parties in any event upon written notice to Fund. Thereafter
              Fund or such bank or trust company shall be the successor under
              this Agreement and shall be entitled to reasonable compensation
              for its services. Notwithstanding the foregoing requirement as to
              delivery upon termination of this Agreement, DST may make any
              other delivery of the funds and property of Fund that shall be
              permitted by the Investment Company Act of 1940 and Fund's
              Articles of Incorporation, Declaration of Trust, and/or Bylaws
              then in effect. Except as otherwise provided herein, neither this
              Agreement nor any portion thereof may be assigned by DST without
              the consent of Fund.

       F.     In the event of termination, DST shall provide reasonable
              assistance to Fund and its designated successor transfer agent and
              other information relating to its services provided hereunder
              (subject to the recompense of DST for such assistance at its
              standard rates and fees for personnel then in effect at that
              time); provided, however, as used herein "reasonable assistance"
              and "other information" shall not include assisting any new
              service or system provider to modify, alter, enhance, or improve
              such new service or system provider's system or to improve,
              enhance, or alter its current, or to provide any new,
              functionality or to require DST to disclose any DST

                                       34
<Page>

              Protected Information, as defined in Section 23 of this Agreement,
              or any information which is otherwise confidential to DST. DST's
              assistance shall be billed at its then current rates. DST's
              present rates, which are subject to annual increase as DST's labor
              costs for such personnel increase, are as is set forth in Exhibit
              B to this Agreement.

       G.     Nothing in this Agreement is intended to, nor does it, compel DST
              to disclose non-public information concerning its operations or
              operating systems, including but not limited to the TA2000 System,
              or to provide programming assistance or information which might
              tend to improve, enhance, or add functionality to anyone else's
              operating systems.

23.    CONFIDENTIALITY.

       A.     DST agrees that, except as provided in the last sentence of
              Section 19.J hereof, or as otherwise required by law, DST will
              keep confidential all records of and information relating to Fund
              or its shareholders or shareholder accounts in its possession and
              will not disclose the same to any person except at the request or
              with the consent of Fund.

       B.     Fund agrees to keep confidential all provisions, terms and
              conditions of this Agreement, all financial statements and other
              financial records (other than statements and records relating
              solely to Fund's business dealings with DST) and all manuals,
              systems and other technical information and data, not publicly
              disclosed, relating to DST's operations and programs furnished to
              it by DST pursuant to this Agreement and will not disclose the
              same to any person except at the request or with the consent of
              DST.

                                       35
<Page>

       C.     Fund acknowledges that DST has proprietary rights in and to the
              computerized data processing recordkeeping system used by DST to
              perform services hereunder including but not limited to the
              maintenance of shareholder accounts and records, processing of
              related information and generation of output, the TA2000 System,
              including without limitation any changes or modifications of the
              TA2000 System and any other DST programs, data bases, supporting
              documentation, or procedures (collectively "DST Protected
              Information") which Fund's access to the TA2000 System or software
              or DST Facilities may permit Fund or its employees or agents to
              become aware of or to access and that the DST Protected
              Information constitutes confidential material and trade secrets of
              DST. Fund agrees to maintain the confidentiality of the DST
              Protected Information.

       D.     Fund acknowledges that any unauthorized use, misuse, disclosure or
              taking of DST Protected Information which is confidential as
              provided by law, or which is a trade secret, residing or existing
              internal or external to a computer, computer system, or computer
              network, or the knowing and unauthorized accessing or causing to
              be accessed of any computer, computer system, or computer network,
              may be subject to civil liabilities and criminal penalties under
              applicable state law. Fund will advise all of its employees and
              agents who have access to any DST Protected Information or to any
              computer equipment capable of accessing DST hardware or software
              of the foregoing.

       E.     Fund acknowledges that disclosure of the DST Confidential
              Information may give rise to an irreparable injury to DST
              inadequately compensable in damages. Accordingly, DST may seek
              (without the posting of any bond or other security) injunctive
              relief against the breach of the foregoing undertaking of
              confidentiality

                                       36
<Page>

              and nondisclosure, in addition to any other legal remedies that
              may be available, and Fund consents to the obtaining of such
              injunctive relief. All of the undertakings and obligations
              relating to confidentiality and nondisclosure, whether contained
              in this Section or elsewhere in this Agreement shall survive the
              termination or expiration of this Agreement for a period of ten
              (10) years.

24.    CHANGES AND MODIFICATIONS.

       A.     During the term of this Agreement DST will use on behalf of Fund
              without additional cost all modifications, enhancements, or
              changes which DST may make to the TA2000 System in the normal
              course of its business and which are applicable to functions and
              features offered by Fund, unless substantially all DST clients are
              charged separately for such modifications, enhancements or
              changes, including, without limitation, substantial system
              revisions or modifications necessitated by changes in existing
              laws, rules or regulations. Fund agrees to pay DST promptly for
              modifications and improvements that are charged for separately at
              the rate provided for in DST's standard pricing schedule that
              shall be identical for substantially all clients, if a standard
              pricing schedule shall exist. If there is no standard pricing
              schedule, the parties shall mutually agree upon the rates to be
              charged.

       B.     DST shall have the right, at any time and from time to time, to
              alter and modify any systems, programs, procedures or facilities
              used or employed in performing its duties and obligations
              hereunder; provided that Fund will be notified as promptly as
              possible prior to implementation of such alterations and
              modifications and that no such alteration or modification or
              deletion shall materially adversely change or affect the
              operations and procedures of Fund in using or employing the TA2000
              System or DST Facilities hereunder or the reports to be generated
              by such system

                                       37
<Page>

              and facilities hereunder, unless Fund is given thirty (30) days
              prior notice to allow Fund to change its procedures and DST
              provides Fund with revised operating procedures and controls.

       C.     All enhancements, improvements, changes, modifications or new
              features added to the TA2000 System however developed or paid for
              shall be, and shall remain, the confidential and exclusive
              property of, and proprietary to, DST.

25.    SUBCONTRACTORS.

       Nothing herein shall impose any duty upon DST in connection with or make
       DST liable for the actions or omissions to act of unaffiliated third
       parties such as, by way of example and not limitation, the banks at which
       the deposit accounts are maintained, The National Securities Clearing
       Corporation, airborne services, the U.S. mails and telecommunication
       companies, provided, if DST selected such company, DST shall have
       exercised due care in selecting the same.

26.    LIMITATIONS ON LIABILITY.

       A.     If Fund is comprised of more than one Portfolio, each Portfolio
              shall be regarded for all purposes hereunder as a separate party
              apart from each other Portfolio. Unless the context otherwise
              requires, with respect to every transaction covered by this
              Agreement, every reference herein to Fund shall be deemed to
              relate solely to the particular Portfolio to which such
              transaction relates. Under no circumstances shall the rights,
              obligations or remedies with respect to a particular Portfolio
              constitute a right, obligation or remedy applicable to any other
              Portfolio or the rights, obligations or remedies with respect to a
              particular Fund constitute a right, obligation or remedy
              applicable to any other Fund. The use of this single document to
              memorialize the separate agreement of each Portfolio or Fund is
              understood to be for clerical

                                       38
<Page>

              convenience only and shall not constitute any basis for joining
              the Portfolios or Funds for any reason.

       B.     Notice is hereby given that a copy of Fund's Articles of
              Incorporation or Trust Agreement (as applicable) and all
              amendments thereto is on file with the Secretary of State of the
              state of its organization; that this Agreement has been executed
              on behalf of Fund by the undersigned duly authorized
              representative of Fund in his/her capacity as such and not
              individually; and that the obligations of this Agreement shall
              only be binding upon the assets and property of Fund and shall not
              be binding upon any director, trustee, officer or shareholder of
              Fund individually.

27.    NOTICES.

       All notices, consents, requests, instructions, approvals and other
       communications provided for herein shall be validly given, made or served
       if in writing and delivered personally, sent by mail, registered or
       certified, return receipt requested, postage prepaid, by telegram or by
       facsimile transmission:

       If to Fund:

       The ING Pilgrim Family of Funds
       7337 E. Doubletree Ranch Road
       Scottsdale, Arizona 85258-2034
       Telephone No.: (408) 477-2117
       Telecopier No.: (408) 477-2082
       Attn:  Rob Naka, Senior Vice President

       And if to DST:

       DST Systems, Inc.
       210 West 10th Street, 7th Floor
       Kansas City, Missouri 64105
       Telephone No.: (816) 843-7500
       Telecopier No.: (816) 843-7502
       Attn:  Jonathan Boehm, Group Vice President

                                       39
<Page>

       With a copy of non-operational notices to:

       DST Systems, Inc.
       333 West 11th Street, 5th Floor
       Kansas City, Missouri 64105
       Telephone No.: (816) 435-8688
       Telecopier No.: (816) 435-8630
       Attn:   Legal Department

       or to such other address as DST or Fund may from time to time designate
       in writing delivered as provided above.

28.    MISCELLANEOUS.

       A.     This Agreement is executed and delivered in the State of Missouri
              and shall be construed according to, and the rights and
              liabilities of the parties hereto shall be governed by, the laws
              of the State of Missouri, excluding that body of law applicable to
              choice of law.

       B.     All terms and provisions of this Agreement shall be binding upon,
              inure to the benefit of and be enforceable by the parties hereto
              and their respective successors and permitted assigns.

       C.     The representations and warranties, all indemnifications and any
              limitations on liability set forth in this Agreement are intended
              to and shall continue after and survive the expiration,
              termination or cancellation of this Agreement until any statute of
              limitations applicable to the matter at issues shall have expired.

       D.     No provisions of this Agreement may be amended or modified in any
              manner except by a written agreement properly authorized and
              executed each party hereto.

       E.     The captions in this Agreement are included for convenience of
              reference only, and in no way define or delimit any of the
              provisions hereof or otherwise affect their construction or
              effect.

                                       40
<Page>

       F.     This Agreement may be executed in two or more counterparts, each
              of which shall be deemed an original but all of which together
              shall constitute one and the same instrument.

       G.     If any part, term or provision of this Agreement is by the courts
              held to be illegal, in conflict with any law or otherwise invalid,
              the remaining portion or portions shall be considered severable
              and not be affected, and the rights and obligations of the parties
              shall be construed and enforced as if this Agreement did not
              contain the particular part, term or provision held to be illegal
              or invalid.

       H.     This Agreement may not be assigned any party hereto without prior
              written consent of the other parties.

       I.     Neither the execution nor performance of this Agreement shall be
              deemed to create a partnership or joint venture by and between
              Fund and DST. It is understood and agreed that all services
              performed hereunder by DST shall be as an independent contractor
              and not as an employee of Fund. This Agreement is between DST and
              Fund and neither this Agreement nor the performance of services
              under it shall create any rights in any third parties. There are
              no third party beneficiaries hereto.

       J.     Except as specifically provided herein, this Agreement does not in
              any way affect any other agreements entered into among the parties
              hereto and any actions taken or omitted by any party hereunder
              shall not affect any rights or obligations of any other party
              hereunder.

       K.     The failure of either party to insist upon the performance of any
              terms or conditions of this Agreement or to enforce any rights
              resulting from any breach of any of the terms or conditions of
              this Agreement, including the payment of damages, shall not be
              construed as a continuing or permanent waiver of any such terms,
              conditions,

                                       41
<Page>

              rights or privileges, but the same shall continue and remain in
              full force and effect as if no such forbearance or waiver had
              occurred.

       L.     This Agreement constitutes the entire agreement between the
              parties hereto and supersedes any prior agreement, draft or
              agreement or proposal with respect to the appointment of DST as
              Agent for the Fund and the provision by DST of transfer agency
              services as such Agent between any Fund and DST, whether oral or
              written.

       IN WITNESS WHEREOF, the parties have caused this Agreement to be executed
by their respective duly authorized officers, to be effective as of the day and
year first above written.


                           DST SYSTEMS, INC.


                           By: /s/ Jonathan Boehm
                              -------------------------------

                           Title: Group VP
                                 ----------------------------

                           Date: 11/30/2000
                                -----------------------------

                           LEXINGTON MONEY MARKET TRUST
                           PILGRIM EQUITY TRUST
                              Pilgrim Index Plus Protection Fund
                              Pilgrim MidCap Opportunities Fund
                           PILGRIM GROWTH OPPORTUNITIES FUND
                           PILGRIM MAYFLOWER TRUST
                              Pilgrim Growth + Value Fund
                              Pilgrim International Value Fund
                              Pilgrim Research Enhanced Index Fund

                                       42
<Page>

                           PILGRIM NATURAL RESOURCES TRUST
                           PILGRIM PRIME RATE TRUST
                           PILGRIM SMALLCAP OPPORTUNITIES FUND
                           PILGRIM VARIABLE PRODUCTS TRUST
                              Pilgrim VP Convertible Portfolio
                              Pilgrim VP Emerging Countries Portfolio
                              Pilgrim VP Financial Services Portfolio
                              Pilgrim VP Growth & Income Portfolio
                              Pilgrim VP Growth + Value Portfolio
                              Pilgrim VP Growth Opportunities Portfolio
                              Pilgrim VP High Yield Bond Portfolio
                              Pilgrim VP International Portfolio
                              Pilgrim VP International SmallCap Growth Portfolio
                              Pilgrim VP International Value Portfolio
                              Pilgrim VP LargeCap Growth Portfolio
                              Pilgrim VP MargnaCap Portfolio
                              Pilgrim VP MidCap Opportunities Portfolio
                              Pilgrim VP Research Enhanced Index Portfolio
                              Pilgrim VP SmallCap Opportunities Portfolio
                              Pilgrim VP Worldwide Growth Portfolio
                           PILGRIM FUNDS TRUST
                              Pilgrim European Equity Fund
                              Pilgrim Global Communications Fund
                              Pilgrim Global Information Technology Fund
                              Pilgrim Intermediate Bond Fund
                              Pilgrim Internet Fund
                              ING Pilgrim Money Market Fund
                              Pilgrim National Tax-Exempt Bond Fund
                              Pilgrim Tax Efficient Equity Fund
                           PILGRIM MUTUAL FUNDS
                              Pilgrim Balanced Fund
                              Pilgrim Convertible Fund
                              Pilgrim Emerging Countries Fund
                              Pilgrim High Yield Fund II
                              Pilgrim International Core Growth Fund
                              Pilgrim International SmallCap Growth Fund
                              Pilgrim LargeCap Growth Fund
                              Pilgrim MidCap Growth Fund
                              Pilgrim Money Market Fund
                              Pilgrim SmallCap Growth Fund
                              Pilgrim Strategic Income Fund
                              Pilgrim Worldwide Growth Fund
                           PILGRIM SENIOR INCOME FUND
                           PILGRIM ADVISORY FUNDS, INC.
                              Pilgrim Asia-Pacific Equity Fund
                           PILGRIM BANK AND THRIFT FUND, INC.

                                       43
<Page>

                           PILGRIM EMERGING MARKETS FUND, INC.
                           PILGRIM GNMA INCOME FUND, INC.
                           PILGRIM PRECIOUS METALS FUND, INC.
                           PILGRIM GROWTH AND INCOME FUND, INC.
                           PILGRIM INVESTMENT FUNDS, INC.
                              Pilgrim High Yield Fund
                              Pilgrim MagnaCap Fund
                           PILGRIM INTERNATIONAL FUND, INC.,
                           PILGRIM RUSSIA FUND, INC.


                           By: /s/ Robert S. Naka
                               -----------------------------------


                           Title: Senior Vice President
                                  --------------------------------


                           Date: 11/30/2000
                                 ---------------------------------

                                       44
<Page>

                                                                 EXHIBIT B, p. 1

                                DST SYSTEMS, INC.
                      PILGRIM TRANSFER AGENCY FEE SCHEDULE
                     EFFECTIVE AUGUST 1, 2000 - MAY 31, 2002

ASSET BASED FEES:

       NET ASSETS PER PORTFOLIO:

<Table>
              <S>                                    <C>
              $0 - $100,000,000                      9.0 basis pts per year
              $100,000,001- $300,000,000             8.5 basis pts per year
              $300,000,001 - $500,000,000            7.5 basis pts per year
              Greater than $500,000,000              7.25 basis pts per year
</Table>

       (APPLIES TO ALL LEXINGTON AND PILGRIM CUSIPS, INCLUDING NEW Q SHARE
       PORTFOLIO CLASSES ESTABLISHED AS A RESULT OF THE NORTHSTAR CONVERSION)

       EXCEPTIONS:

<Table>
              <S>                                    <C>
              Prime Rate Trust                       2.4 basis pts per year
              Bank & Thrift                          24.2 basis pts   per year
              Pilgrim Investment Plan                $7,200 per year
              Northstar Funds                        Covered under separate
                                                     agreement
              ING Money Market Portfolio             6.0 basis pts per year
                                                     (effective 12/1/01)
</Table>

       BUNDLED PRODUCTS AND SERVICES:

       The above asset fees cover a comprehensive bundle of products and
       services. The following products and services are not covered by the
       asset fees and will continue to be billed separately using the current
       rates, subject to current allowable periodic increases:

              - AWD License Fees
              - Escheatment
              - Programming
              - FANMail
              - Vision

                                       45
<Page>

                                                                 EXHIBIT B, p. 2

       Additional products and services not currently utilized would be priced
       separately and would be billed in addition to the asset fees.

       -Computer/Technical Personnel (2000 Rates):
              Business Analyst/Tester:
                    Dedicated - $79,040 per year
                    On Request - $72.80 per hour
              COBOL Programmer:
                    Dedicated - $129,480 per year
                    On Request - $100.88 per hour
              Workstation Programmer:
                    Dedicated - $157,040 per year
                    On Request - $128.96 per hour
       -Full Service Support (2000 Rates):
              Senior Staff Support - $70.00 per hour
              Staff Support - $50.00 per hour
              Clerical Support - $40.00 per hour

RATE ADJUSTMENT TRIGGERS:

       The above asset fees would be adjusted monthly based on the following
       triggers:

       Should either "Average Assets per Account" or "Average Assets per CUSIP"
       decrease 10% in a given month from their baseline March through May 2000
       averages, the basis point fee rates would be adjusted up using the
       formula: Previous Rate divided by .9. When/if a rate adjustment is made,
       both trigger ratios would be reset at new levels equal to 10% below their
       previous level. Subsequent adjustments to the rates would be triggered
       should these ratios decrease in additional 10% increments. Downward
       adjustments would be made to the rates using the same formula should the
       trigger ratios increase in 10% increments, but only to the extent that
       previous upward rate adjustments have been made. The basis point fee
       rates could not be adjusted below the original rates listed above.

       TRIGGERS:

<Table>
<Caption>
                      AVERAGE ASSETS PER ACCOUNT  AVERAGE ASSETS PER CUSIP
                      --------------------------  -------------------------
       <S>                  <C>                       <C>
       Bank & Thrift        $         9,733           $   184,696,341
       Prime Rate           $       113,660           $ 1,259,736,679
       All Others           $        29,452           $    63,379,993
</Table>

                                       46
<Page>

                                                                 EXHIBIT B, p. 3

NOTES TO THE ABOVE FEE SCHEDULE

A.     The above schedule does not include reimbursable expenses that are
       incurred on the Fund's behalf. Examples of reimbursable expenses include
       but are not limited to those set forth on Exhibit C to this Agreement.
       Reimbursable expenses are billed separately from service fees on a
       monthly basis.

B.     Any fees or reimbursable expenses not paid within 30 days of the date of
       the original invoice will be charged a late payment fee of 1.5% per month
       until payment is received.

C.     The above fees, except for those indicated by an "*", are guaranteed
       through May 31, 2002. All items marked by an "*" are subject to change
       with 60 day notice.

                                       47
<Page>

                                                                EXHIBIT B.1, p.1
                                                             TA2000 VOICE SYSTEM
                                                                    FEE SCHEDULE

PER CALL SERVICE FEE
Utilization of DST's TA2000 Voice System is based on a service fee of $.20 per
call. Each call has a maximum duration of seven (7) minutes. This charge is a
flat rate regardless of the number or type of transactions that a shareholder
processes during the call. A given call could result in inquiries and/or
transactions being processed for various funds in the complex. Therefore, on a
monthly basis, DST will report the number of inquiries and/or transactions
processed by fund. A percentage of the total will be derived and reported for
each fund. As a result of this process, DST will allocate the charges among the
individual funds.

MULTIPLE CALL FLOWS
An additional fee of $500 per month will be charged for each additional call
flow that requires different flows, functions, vocabulary, processing, rules or
access method. An additional fee of $200 per month will be charged for each
additional call flow that is identical in flows, functions, vocabulary,
processing rules or access method.

MINIMUM MONTHLY CHARGE
DST's commitment to the reliability and continued enhancement of the TA2000
Voice System necessitates a minimum monthly charge for the service. The minimum
monthly charge will only be assessed when it is greater than the monthly service
fees. The minimum monthly charge will be implemented on a graduated basis based
on the number of cusips and shareholders in a fund complex and is the sum of the
cusip and account charges. The schedule for this charge is as follows:

<Table>
<Caption>
                       YEARS        CHARGE PER            CHARGE PER
                        OF       CUSIP AUTHORIZED        SHAREHOLDER
                      SERVICE      FOR SERVICE*           ACCOUNT**
                      -------    ----------------        -----------
                        <S>         <C>                  <C>
                        1           $     50             $     .002
                        2           $     75             $     .003
                        3           $    100             $     .004
</Table>

       *      CUSIPS ADDED TO THE SERVICE will be subject to the same minimums
              being charged to the other cusips in the complex at the time the
              cusips are added.

       **     THE PER ACCOUNT CHARGE is based on the total number of shareholder
              accounts in authorized cusips at the end of each month.

OUT OF POCKET COSTS
Each fund complex will require a unique WATS number for their shareholders to
call. Each WATS number will require a specific number of trunks to service a
given volume of shareholder calls. All installation and monthly usage charges
associated with these will be billed through monthly out-of-pocket invoices.

                                       48
<Page>

                                                               EXHIBIT B.2, p. 1
                                            NSCC FEES AND OUT-OF-POCKET EXPENSES

DST Fees

       DST charges $1,500 per cusip per year for the NSCC platform

Settling Bank Fees

       Fund may be charged fees by the Settling Bank at which the net settlement
       account resides for monthly maintenance of this account. These are
       negotiated directly between Fund and the Settling Bank.

NSCC Participant Fees

       The NSCC charges $40 per month per management company for CPU
       access/shared line costs.

       A combined participant base fee of $200 per month is charged for the
       following services:

       FUND/SERV:

       The NSCC charges an activity charge of $.30 per inputted transaction.
       Transactions include purchases, redemptions and exchanges.

       NETWORKING: The NSCC charges the following activity fee:

           -  $.02 per account for funds paying dividends on a monthly basis

           -  $.01 per account for funds paying dividends other than monthly

       COMMISSION SETTLEMENT: The NSCC charges the following processing fee:

           -  $.30 per hundred records, per month, for one to 500,000 records;
              there is a $50 per month minimum processing charge

           -  $.20 per hundred records, per month, for 500,001 to 1,000,000
              records

           -  $.10 per hundred records, per month, for 1,000,001 records and
              above

Note:  Participant fees are cumulative when Fund/SERV, Networking and/or
       Commission Settlement are used in conjunction with each other.

                                       49
<Page>

                                                                       EXHIBIT C
                                                           REIMBURSABLE EXPENSES

Forms
Postage (to be paid in advance if so requested)
Mailing Services
Computer Hardware and Software - specific to Fund or installed at remote
    site at Fund's direction
Telecommunications Equipment and Lines/Long Distance Charges
Magnetic Tapes, Reels or Cartridges
Magnetic Tape Handling Charges
Microfiche/Microfilm/CD ROM
Freight Charges
Printing
Bank Wire and ACH Charges
Proxy Processing - per proxy mailed
    not including postage
    Includes:     Proxy Card
                  Printing
                  Outgoing Envelope
                  Return Envelope
                  Tabulation and Certification
Tax Certification Mailings (e.g., W-8 & W-9)
    (Postage associated with the return
    envelope is included)
N.S.C.C. Communications Charge
    (Fund/Serv and Networking)
Record Storage (hardcopy/microfiche/on-call)
Second Site Disaster                                  Currently $.10
    Backup Fee (per account)                          through 12/31/01,
                                                      subject to annual
                                                      adjustment

Transmission of Statement Data for                    Currently $.035/per
Remote Processing                                           record
Travel, Per Diem and other Billables
    Incurred by DST personnel traveling to,
    at and from Fund at the request
    of Fund

                                       50
<Page>

                                                                       EXHIBIT D
                                                            AUTHORIZED PERSONNEL

Pursuant to Section 8.A. of the Agency Agreement between Fund and DST (the
"Agreement"), Fund authorizes the following Fund personnel to provide
instructions to DST, and receive inquiries from DST in connection with the
Agreement:

          NAME                                                  TITLE

_____________________________                        ___________________________

_____________________________                        ___________________________

_____________________________                        ___________________________

_____________________________                        ___________________________

_____________________________                        ___________________________

_____________________________                        ___________________________

_____________________________                        ___________________________

This Exhibit may be revised by Fund by providing DST with a substitute Exhibit
D. Any such substitute Exhibit B shall become effective twenty-four (24) hours
after DST's receipt of the document and shall be incorporated into the
Agreement.

ACKNOWLEDGMENT OF RECEIPT:

                            DST SYSTEMS, INC.

                            By: /s/ Jonathan Boehm
                               ---------------------------

                            Title: Group VP
                                  ------------------------

                            Date: 11/30/2000
                                 -------------------------

                                       51
<Page>

                         LEXINGTON MONEY MARKET TRUST
                         PILGRIM EQUITY TRUST
                             Pilgrim Index Plus Protection Fund
                             Pilgrim MidCap Opportunities Fund
                         PILGRIM GROWTH OPPORTUNITIES FUND
                         PILGRIM MAYFLOWER TRUST
                             Pilgrim Growth + Value Fund
                             Pilgrim International Value Fund
                             Pilgrim Research Enhanced Index Fund
                         PILGRIM NATURAL RESOURCES TRUST
                         PILGRIM PRIME RATE TRUST
                         PILGRIM SMALLCAP OPPORTUNITIES FUND
                         PILGRIM VARIABLE PRODUCTS TRUST
                             Pilgrim VP Convertible Portfolio
                             Pilgrim VP Emerging Countries Portfolio
                             Pilgrim VP Financial Services Portfolio
                             Pilgrim VP Growth & Income Portfolio
                             Pilgrim VP Growth + Value Portfolio
                             Pilgrim VP Growth Opportunities Portfolio
                             Pilgrim VP High Yield Bond Portfolio
                             Pilgrim VP International Portfolio
                             Pilgrim VP International SmallCap Growth Portfolio
                             Pilgrim VP International Value Portfolio
                             Pilgrim VP LargeCap Growth Portfolio
                             Pilgrim VP MargnaCap Portfolio
                             Pilgrim VP MidCap Opportunities Portfolio
                             Pilgrim VP Research Enhanced Index Portfolio
                             Pilgrim VP SmallCap Opportunities Portfolio
                             Pilgrim VP Worldwide Growth Portfolio
                         PILGRIM FUNDS TRUST
                             Pilgrim European Equity Fund
                             Pilgrim Global Communications Fund
                             Pilgrim Global Information Technology Fund
                             Pilgrim Intermediate Bond Fund
                             Pilgrim Internet Fund
                             ING Pilgrim Money Market Fund
                             Pilgrim National Tax-Exempt Bond Fund
                             Pilgrim Tax Efficient Equity Fund
                         PILGRIM MUTUAL FUNDS
                             Pilgrim Balanced Fund
                             Pilgrim Convertible Fund
                             Pilgrim Emerging Countries Fund
                             Pilgrim High Yield Fund II
                             Pilgrim International Core Growth Fund
                             Pilgrim International SmallCap Growth Fund
                             Pilgrim LargeCap Growth Fund
                             Pilgrim MidCap Growth Fund

                                       52
<Page>

                             Pilgrim Money Market Fund
                             Pilgrim SmallCap Growth Fund
                             Pilgrim Strategic Income Fund
                             Pilgrim Worldwide Growth Fund
                         PILGRIM SENIOR INCOME FUND
                         PILGRIM ADVISORY FUNDS, INC.
                             Pilgrim Asia-Pacific Equity Fund
                         PILGRIM BANK AND THRIFT FUND, INC.
                         PILGRIM EMERGING MARKETS FUND, INC.
                         PILGRIM GNMA INCOME FUND, INC.
                         PILGRIM PRECIOUS METALS FUND, INC.
                         PILGRIM GROWTH AND INCOME FUND, INC.
                         PILGRIM INVESTMENT FUNDS, INC.
                             Pilgrim High Yield Fund
                             Pilgrim MagnaCap Fund
                         PILGRIM INTERNATIONAL FUND, INC.,
                         PILGRIM RUSSIA FUND, INC.

                             By: /s/ Robert S. Naka
                                 -----------------------------

                             Title: Senior Vice President
                                    --------------------------

                             Date: 11/30/2000
                                   ---------------------------

                                       53

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(J)(VI)(1)
<SEQUENCE>20
<FILENAME>a2138029zex-99_jvi1.txt
<DESCRIPTION>EX-99.(J)(VI)(1)
<TEXT>
<Page>

                                                           Exhibit 99.(j)(vi)(1)

[ING FUNDS LOGO]

February 25, 2004

Nick Horvath
DST Systems, Inc.
333 West 11th St., 5th Floor
Kansas City, Missouri 64105

Dear Mr. Horvath:

     Pursuant to the Agency Agreement dated November 30, 2000, as amended,
between the Funds (as defined in the Agreement) and DST Systems, Inc. (the
"Agreement"), we hereby notify you of our intention to retain you as Transfer
Agent and Dividend Disbursing Agent to render such services to ING Evergreen
Health Sciences Portfolio, ING Evergreen Omega Portfolio, ING Lifestyle
Aggressive Growth Portfolio, ING Lifestyle Growth Portfolio, ING Lifestyle
Moderate Growth Portfolio and ING Lifestyle Moderate Portfolio, each a new
series of ING Investors Trust, ING Principal Protection Fund X and ING Principal
Protection Fund XI, each a new series of ING Equity Trust, and ING VP Real
Estate Portfolio, a new series of ING Variable Products Trust, (the "New
Funds"), upon all of the terms and conditions set forth in the Agreement. Upon
your acceptance, the Agreement will be modified to give effect to the foregoing
by adding the above-mentioned New Funds to AMENDED AND RESTATED EXHIBIT A of the
Agreement.

     The AMENDED AND RESTATED EXHIBIT A has also been updated by the removal of
ING Strategic Bond Fund, ING VP Emerging Countries Portfolio, ING VP
International Portfolio and ING VP International SmallCap Portfolio as these
funds have been dissolved.

     Please signify your acceptance to act as Transfer Agent and Dividend
Disbursing Agent under the Agreement with respect to the New Funds, by signing
below.

                                                 Very sincerely,

                                                 /s/ Robert S. Naka
                                                 ------------------
                                                 Robert S. Naka
                                                 Senior Vice President
                                                 ING Investors Trust
                                                 ING Equity Trust
                                                 ING Variable Products Trust

ACCEPTED AND AGREED TO:
DST Systems, Inc.


By:   /s/ Nick Horvath
      ----------------
Name: Nick Horvath

7337 E. Doubletree Ranch Rd.    Tel: 480-477-3000            ING Investors Trust
Scottsdale, AZ 85258-2034       Fax: 480-477-2700               ING Equity Trust
                                www.ingfunds.com     ING Variable Products Trust

<Page>

Title: Director or Directors, Duly Authorized
       --------------------------------------


                                        2
<Page>

                         AMENDED AND RESTATED EXHIBIT A

                               WITH RESPECT TO THE

                                AGENCY AGREEMENT

                                     BETWEEN

                                    THE FUNDS

                                       AND

                                DST SYSTEMS, INC.

<Table>
<Caption>
                                                                   TYPE OF              STATE OF            TAXPAYER
TAXPAYER/FUND NAME                                               ORGANIZATION         ORGANIZATION          I.D. NO.
- ------------------                                               ------------         ------------          --------
<S>                                                             <C>                  <C>                    <C>
ING CORPORATE LEADERS TRUST FUND                                Trust                New York               13-6061925

ING EQUITY TRUST                                                Business Trust       Massachusetts          N/A
  ING Convertible Fund                                                                                      33-0552461
  ING Disciplined LargeCap Fund                                                                             06-1533751
  ING Equity and Bond Fund                                                                                  33-0552418
  ING Financial Services Fund                                                                               95-4020286
  ING Growth Opportunities Fund                                                                             04-2886865
  ING LargeCap Growth Fund                                                                                  33-0733557
  ING LargeCap Value Fund                                                                                   20-0437128
  ING MidCap Opportunities Fund                                                                             06-1522344
  ING MidCap Value Fund                                                                                     86-1048451
  ING Principal Protection Fund                                                                             86-1033467
  ING Principal Protection Fund II                                                                          86-1039030
  ING Principal Protection Fund III                                                                         86-1049217
  ING Principal Protection Fund IV                                                                          82-0540557
  ING Principal Protection Fund V                                                                           27-0019774
  ING Principal Protection Fund VI                                                                          48-1284684
  ING Principal Protection Fund VII                                                                         72-1553495
  ING Principal Protection Fund VIII                                                                        47-0919259
  ING Principal Protection Fund IX                                                                          20-0453800
  ING Principal Protection Fund X                                                                           20-0584080
  ING Principal Protection Fund XI                                                                          20-0639761
  ING Real Estate Fund                                                                                      43-1969240
  ING SmallCap Opportunities Fund                                                                           04-2886856
  ING SmallCap Value Fund                                                                                   86-1048453
  ING Tax Efficient Equity Fund                                                                             23-2978988

ING FUNDS TRUST                                                 Business Trust       Delaware               N/A
  ING Classic Money Market Fund                                                                             23-2978935
  ING GNMA Income Fund                                                                                      22-2013958
  ING High Yield Bond Fund                                                                                  23-2978938
  ING High Yield Opportunity Fund                                                                           33-0715888
</Table>

                                        1
<Page>

<Table>
<Caption>
                                                                   TYPE OF              STATE OF            TAXPAYER
TAXPAYER/FUND NAME                                               ORGANIZATION         ORGANIZATION          I.D. NO.
- ------------------                                               ------------         ------------          --------
<S>                                                             <C>                  <C>                    <C>
ING FUNDS TRUST (CONTD.)
  ING Intermediate Bond Fund                                                                                52-2125227
  ING Lexington Money Market Trust                                                                          13-6766350
  ING Money Market Fund                                                                                     86-0955273
  ING National Tax-Exempt Bond Fund                                                                         23-2978941

ING INVESTMENT FUNDS, INC.                                      Corporation          Maryland               N/A
   ING MagnaCap Fund                                                                                        22-1891924

ING INVESTORS TRUST                                             Business Trust       Massachusetts          N/A
  ING American Funds Growth Portfolio                                                                       55-0839555
  ING American Funds Growth-Income Portfolio                                                                55-0839542
  ING American Funds International Portfolio                                                                55-0839952
  ING Evergreen Health Sciences Portfolio                                                                   20-0573913
  ING Evergreen Omega Portfolio                                                                             20-0573935
  ING Lifestyle Aggressive Growth Portfolio                                                                 20-0573999
  ING Lifestyle Growth Portfolio                                                                            20-0573986
  ING Lifestyle Moderate Growth Portfolio                                                                   20-0573968
  ING Lifestyle Moderate Portfolio                                                                          20-0573946

ING MAYFLOWER TRUST                                             Business Trust       Massachusetts          N/A
  ING Growth + Value Fund                                                                                   06-1465531
  ING International Value Fund                                                                              06-1472910

ING MUTUAL FUNDS                                                Business Trust       Delaware               N/A
  ING Emerging Countries Fund                                                                               33-0635177
  ING Foreign Fund                                                                                          72-1563685
  ING Global Equity Dividend Fund                                                                           55-0839557
  ING Global Real Estate Fund                                                                               86-1028620
  ING International Fund                                                                                    22-3278095
  ING International SmallCap Growth Fund                                                                    33-0591838
  ING Precious Metals Fund                                                                                  13-2855309
  ING Russia Fund                                                                                           22-3430284
  ING Worldwide Growth Fund                                                                                 33-0552475

ING PRIME RATE TRUST                                            Business Trust       Massachusetts          95-6874587

ING SENIOR INCOME FUND                                          Business Trust       Delaware               86-1011668

ING VARIABLE INSURANCE TRUST                                    Business Trust       Delaware               N/A
  ING GET U.S. Core Portfolio - Series 1                                                                    43-2007006
  ING GET U.S. Core Portfolio - Series 2                                                                    41-2107140
  ING GET U.S. Core Portfolio - Series 3                                                                    32-0090501
</Table>

                                        2
<Page>

<Table>
<Caption>
                                                                   TYPE OF              STATE OF            TAXPAYER
TAXPAYER/FUND NAME                                               ORGANIZATION         ORGANIZATION          I.D. NO.
- ------------------                                               ------------         ------------          --------
<S>                                                             <C>                  <C>                    <C>
ING VARIABLE INSURANCE TRUST (CONT.)
  ING GET U.S. Core Portfolio - Series 4                                                                    32-0090502
  ING GET U.S. Core Portfolio - Series 5                                                                    32-0090504
  ING GET U.S. Core Portfolio - Series 6                                                                    32-0090505
  ING GET U.S. Opportunity Portfolio - Series 1                                                             43-2007032
  ING GET U.S. Opportunity Portfolio - Series 2                                                             TBD
  ING VP Worldwide Growth Portfolio                                                                         25-6705433

ING VARIABLE PRODUCTS TRUST                                     Business Trust       Massachusetts          N/A
  ING VP Convertible Portfolio                                                                              86-1028318
  ING VP Disciplined LargeCap Fund                                                                          06-6397003
  ING VP Financial Services Portfolio                                                                       86-1028316
  ING VP Growth + Value Portfolio                                                                           06-6396994
  ING VP Growth Opportunities Portfolio                                                                     06-6493759
  ING VP High Yield Bond Portfolio                                                                          06-6396995
  ING VP International Value Portfolio                                                                      06-6453493
  ING VP LargeCap Growth Portfolio                                                                          86-1028309
  ING VP MagnaCap Portfolio                                                                                 06-6493762
  ING VP MidCap Opportunities Portfolio                                                                     06-6493760
  ING VP Real Estate Portfolio                                                                              20-0453833
  ING VP SmallCap Opportunities Portfolio                                                                   06-6397002

ING VP EMERGING MARKETS FUND, INC.                              Corporation          Maryland               06-1287459

ING VP NATURAL RESOURCES TRUST                                  Business Trust       Massachusetts          22-2932678

USLICO SERIES FUND                                              Business Trust       Massachusetts          N/A
  The Asset Allocation Portfolio                                                                            54-1499147
  The Bond Portfolio                                                                                        54-1499901
  The Money Market Portfolio                                                                                54-1499149
  The Stock Portfolio                                                                                       54-1499398
</Table>

Last Approved: February 25, 2004

                                        3

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(I)
<SEQUENCE>21
<FILENAME>a2138029zex-99_ki.txt
<DESCRIPTION>EX 99.(K)(I)
<TEXT>
<Page>

                                                               Exhibit 99.(k)(i)

                              AMENDED AND RESTATED

                            ADMINISTRATION AGREEMENT

     THIS ADMINISTRATION AGREEMENT which was made as of the 20th day of October,
1992, amended and restated as of February 17, 1995, April 7, 1995, May 2, 1996,
April, 7, 1997, and February 2, 1999, and as further amended and restated on the
27th day of April, 2000, by and between PILGRIM PRIME RATE TRUST (formerly
Pilgrim America Prime Rate Trust), a Massachusetts Business Trust (hereinafter
referred to as the "Trust"), and PILGRIM GROUP, INC. (formerly Pilgrim America
Group, Inc.), a corporation organized and existing under the laws of Delaware
(hereinafter called the "Administrator").

                              W I T N E S S E T H:

     WHEREAS, the Trust is a closed-end management investment company,
registered as such under the Investment Company Act of 1940; and

     WHEREAS, the Trust's name was changed to Pilgrim Prime Rate Trust on
November 16, 1998; and

     WHEREAS, the Administrator's name was changed to Pilgrim Group, Inc. on
October 30, 1998; and

     WHEREAS, the Administrator is engaged in the business of providing
management and administrative services, as an independent contractor; and

<Page>

     WHEREAS, the Trust desires to retain the Administrator to furnish
management and administrative services to the Trust pursuant to the terms and
provisions of this Agreement, and the Administrator is interested in providing
said services.

     NOW, THEREFORE, in consideration of the covenants and the mutual promises
hereinafter set forth, the parties hereto, intending to be legally bound hereby,
mutually agree as follows:

     1.   The Trust hereby employs the Administrator and the Administrator
hereby accepts such employment, to render management and administrative services
to the Trust, subject to the supervision and direction of the Trust's Board of
Trustees. The Administrator shall furnish to the Trust the services of executive
and administrative personnel to supervise the performance of all administrative
functions concerning the operation of the Trust, other than the investment
management function. The Administrator shall, as part of its duties hereunder
(i) monitor the provisions of the loan agreements and any agreements with
respect to participations and assignments and be responsible for recordkeeping
with respect to senior loans in the Trust's portfolio; (ii) administer the
Trust's corporate affairs including preparing and filing all reports required by
the Commonwealth of Massachusetts; (iii) furnish the Trust such office space,
equipment, and personnel as is needed by the Trust; (iv) furnish clerical and
bookkeeping services as are needed by the Trust; (v) prepare and furnish annual
and other reports to shareholders, the Securities and Exchange Commission, the
New York Stock Exchange and to any appropriate governmental body; (vi) prepare
and file any federal, state and local income tax returns as requested by the
Trust; (vii) provide shareholder services as are needed by the Trust; (viii)
permit its officers and employees to serve without compensation as trustees or
officers of the Trust if elected to such positions; and (ix) in general,
supervise the performance of all

<Page>

administrative functions of the Trust, subject to the ultimate supervision and
direction of the Trust's Board of Trustees.

     2.   The Administrator shall, for all purposes herein, be deemed to be an
independent contractor, and shall, unless otherwise expressly provided and
authorized, have no authority to act for or represent the Trust in any way, or
in any way be deemed an agent for the Trust. It is expressly understood and
agreed that the services to be rendered by the Administrator to the Trust under
the provisions of this Agreement are not to be deemed exclusive, and the
Administrator shall be free to render similar or different services to others so
long as its ability to render the services provided for in this Agreement shall
not be impaired thereby.

     3.   The Administrator agrees to use its best judgment and efforts in
performing the services to the Trust as contemplated hereunder, and for this
purpose the Administrator shall, at its own expense, maintain such staff and
employ or retain such personnel and consult with such other persons as it shall
from time to time determine to be necessary to the performance of its
obligations under this Agreement.

     4.   In performing the administrative services hereunder, the Administrator
shall at all times comply with the applicable provisions of the Investment
Company Act of 1940 and any other federal or state securities laws.

     5.   The Administrator shall bear and pay the costs of rendering the
services to be performed by it under this Agreement. Without limiting the
generality of the foregoing, the Administrator shall bear the following
expenses: the salaries and expenses of all personnel of the Trust and the
Administrator, except for the fees and expenses of Trustees not affiliated with
the Trust or the Administrator; costs to prepare information for determination
of net asset value by the Trust's recordkeeping and accounting agent; expenses
to maintain the Trust's books and

<Page>

records that are not maintained by the Trust's Manager, Custodian or Transfer
Agent; costs incurred to assist in the preparation of financial information for
the Trust's income tax returns, proxy statements, quarterly and annual
shareholder reports; expenses to provide shareholder services in connection with
the Trust's dividend reinvestment and cash purchase plans; expenses to provide
shareholder services in preparation of tender offers, if any, or to shareholders
proposing to transfer their shares to a third party; and all expenses incurred
by the Administrator or by the Trust in rendering the administrative services
pursuant to the terms of this Agreement.

     6.   The Trust shall bear and pay for all other expenses of its operation,
except for those expenses expressly assumed by the Manager to the Trust pursuant
to an Investment Management Agreement between the Manager and the Trust,
including, but not limited to, the fees payable to the Manager; the fees and
expenses of Trustees who are not affiliated with the Manager or the
Administrator; the fees and certain expenses of the Trust's Custodian and
Transfer Agent, including the cost of providing records to the Administrator in
connection with its obligation of maintaining required records of the Trust; the
charges and expenses of the Trust's legal counsel and independent accountants;
commissions and any issue or transfer taxes chargeable to the Trust in
connection with its transactions; all taxes and corporate fees payable by the
Trust to governmental agencies; the fees of any trade association of which the
Trust is a member; the cost of share certificates representing shares of the
Trust; organizational and offering expenses of the Trust and the fees and
expenses involved in registering and maintaining registration of the Trust and
of its shares with the Securities and Exchange Commission, the New York Stock
Exchange and qualifying its shares under applicable state securities laws
including the preparation and printing of the Trust's registration statements
and prospectuses for such purposes; allocable communications expenses, with
respect to investor services and all expenses

<Page>

of stockholders and Trustees' meetings and of preparing, printing and mailing
reports, proxy statements and prospectuses to stockholders; the cost of
insurance; and litigation and indemnification expenses and extraordinary
expenses not incurred in the ordinary course of the Trust's business.

     7.   To the extent the Administrator incurs any costs or performs any
services which are an obligation of the Trust, as set forth herein, the Trust
shall promptly reimburse the Administrator for such costs and expenses. To the
extent the services for which the Trust is obligated to pay are performed by the
Administrator, the Administrator shall be entitled to recover from the Trust
only to the extent of its costs for such services.

     8.   (a) The Trust agrees to pay to the Administrator, and the
Administrator agrees to accept, as full compensation for all administrative
services furnished or provided to the Trust and as full reimbursement for all
expenses assumed by the Administrator, an administration fee computed at the
annual rate of 0.25% of the average daily net assets of the Trust, plus the
proceeds of any outstanding borrowings.

          (b) The administration fee shall be accrued daily by the Trust and
paid to the Administrator at the end of each calendar month.

     9.   The Administrator agrees that neither it nor any of its officers or
employees shall take any short position in the capital stock of the Trust. This
prohibition shall not prevent the purchase of such shares by any of the officers
and directors or bona fide employees of the Administrator or any trust, pension,
profit-sharing or other benefit plan for such persons or affiliates thereof.

     10.  Nothing herein contained shall be deemed to require the Trust to take
any action contrary to its Trust Indenture or any applicable statute or
regulation, or to relieve or deprive the

<Page>

Board of Trustees of the Trust of its responsibility for and control of the
conduct of the affairs of the Trust.

     11.  (a) In the absence of willful misfeasance, bad faith, gross
negligence, or reckless disregard of obligations or duties hereunder on the part
of the Administrator, the Administrator shall not be subject to liability to the
Trust or to any shareholder of the Trust for any act or omission in the course
of, or connected with, rendering services hereunder or for any losses that may
be sustained in the purchase, holding or sale of any security by the Trust.

          (b) Notwithstanding the foregoing, the Administrator agrees to
reimburse the Trust for any and all costs, expenses, and counsel and Trustees'
fees reasonably incurred by the Trust in the preparation, printing and
distribution of amendments to its registration statement, holding of meetings of
its shareholders or Trustees, the conduct of factual investigations, any legal
or administrative proceedings including any applications for exemptions or
determinations by the Securities and Exchange Commission which the Trust incurs
as the result of action or inaction of the Administrator or any of its
shareholders where the action or inaction necessitating such expenditures (i) is
directly or indirectly related to any transactions or proposed transaction in
the shares or control of the Administrator or its affiliates (or litigation
relates to any pending or proposed future transaction in such shares or control)
which shall have been undertaken without the prior, express approval of the
Trust's Board of Trustees; or (ii) is within the sole control of the
Administrator or any of its affiliates or any of their officers, directors,
employees or shareholders. The Administrator shall not be obligated pursuant to
the provisions of this Subparagraph 11(b), to reimburse the Trust for any
expenditures related to the institution of an administrative proceeding or civil
litigation by the Trust or a Trust shareholder seeking to recover all or a
portion of the proceeds derived by any shareholder of the Administrator or any
of its

<Page>

affiliates from the sale of his shares of the Administrator, or similar matters.
So long as this Agreement is in effect, the Administrator shall pay to the Trust
the amount due for expenses subject to this Subparagraph 11(b) within thirty
(30) days after a bill or statement has been received by the Trust therefor.
This provision shall not be deemed to be a waiver of any claim the Trust may
have or may assert against the Administrator or others or costs, expenses, or
damages heretofore incurred by the Trust for costs, expenses, or damages by the
Trust may hereafter incur which are not reimbursable to it hereunder.

          (c) No provision of this Agreement shall be construed to protect any
Trustee or officer of the Trust, or the Administrator, from liability in
violation of Section 17(h) and (i) of the Investment Company Act of 1940, as
amended.

     12.  (a) This Agreement shall become effective at the close of business on
the date hereof and shall continue in effect from year to year thereafter so
long as such continuation is specifically approved at least annually by (i) the
Board of Trustees of the Trust, and (ii) the vote of a majority of the Trustees
of the Trust who are not parties to this Agreement or interested persons
thereof, cast in person at a meeting called for the purpose of voting on such
approval.

          (b) This Agreement may be terminated at any time, without penalty, by
the Trust by giving 60 days' written notice of such termination to the
Administrator at its principal place of business, or may be terminated at any
time by the Administrator by giving 60 days' written notice of such termination
to the Trust at its principal place of business.

     13.  If any provision of this Agreement shall be held or made invalid by a
court decision, statute, rule, or otherwise, the remainder of this Agreement
shall not be affected thereby.

<Page>

     14.  This Agreement may be amended only by written instrument signed by the
parties hereto.

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed in duplicate by their respective officers on the day and year first
above written.


                                           PILGRIM PRIME RATE TRUST


Attest:                                    By: /s/ Daniel A. Norman
                                              ---------------------
                                           Senior Vice President

/s/ Robert S. Naka
- ------------------
Vice President


                                           PILGRIM GROUP, INC.


                                           By: /s/ James M. Hennessy
                                              ----------------------
Attest:                                    Executive Vice President
                                           and Secretary

/s/ Robert S. Naka
- ------------------
Vice President

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(III)
<SEQUENCE>22
<FILENAME>a2138029zex-99_kiii.txt
<DESCRIPTION>EX 99.(K)(III)
<TEXT>
<Page>

                                                             Exhibit 99.(k)(iii)

                                                                  Execution Copy

================================================================================

                     REVOLVING CREDIT AND SECURITY AGREEMENT


                                      among


                              ING PRIME RATE TRUST,
                                   as Borrower


                                CRC FUNDING, LLC
                                as Conduit Lender


                                 CITIBANK, N.A.,
                               as Secondary Lender


                                       and


                          CITICORP NORTH AMERICA, INC.,
                                    as Agent


                            Dated as of July 16, 2003

================================================================================

                                                  SIDLEY AUSTIN BROWN & WOOD LLP


<Page>

                                TABLE OF CONTENTS

<Table>
<S>                                                                             <C>
                                    ARTICLE I
                     DEFINITIONS AND RULES OF CONSTRUCTION

SECTION 1.01.     DEFINITIONS                                                    1

SECTION 1.02.     RULES OF CONSTRUCTION                                         25

SECTION 1.03.     COMPUTATION OF TIME PERIODS                                   25

                                   ARTICLE II
                            ADVANCES TO THE BORROWER

SECTION 2.01.     ADVANCE FACILITY                                              26

SECTION 2.02.     MAKING OF ADVANCES                                            26

SECTION 2.03.     NOTELESS AGREEMENT; EVIDENCE OF INDEBTEDNESS                  27

SECTION 2.04.     MATURITY OF THE ADVANCES                                      28

SECTION 2.05.     PREPAYMENT OF THE ADVANCES                                    28

SECTION 2.06.     YIELD                                                         29

SECTION 2.07.     INCREASED COSTS                                               29

SECTION 2.08.     COMPENSATION                                                  31

SECTION 2.09.     ADDITIONAL YIELD ON EURODOLLAR RATE ADVANCES                  31

SECTION 2.10.     TERMINATION OR REDUCTION OF THE TOTAL COMMITMENT              31

SECTION 2.11.     RESCISSION OR RETURN OF PAYMENT                               31

SECTION 2.12.     FEES PAYABLE BY BORROWER                                      32

SECTION 2.13.     POST-DEFAULT INTEREST                                         32

SECTION 2.14.     PAYMENTS                                                      32

SECTION 2.15.     RATABLE PAYMENTS                                              33

SECTION 2.16.     BORROWER'S OBLIGATIONS ABSOLUTE                               33

                                   ARTICLE III
                              CONDITIONS PRECEDENT

SECTION 3.01.     CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS AGREEMENT   33

SECTION 3.02.     CONDITIONS PRECEDENT TO ALL ADVANCES                          35
</Table>

                                        i
<Page>

<Table>
<S>                                                                             <C>
                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

SECTION 4.01.     REPRESENTATIONS AND WARRANTIES OF THE BORROWER                35

                                    ARTICLE V
                                    COVENANTS

SECTION 5.01.     AFFIRMATIVE COVENANTS OF THE BORROWER                         39

SECTION 5.02.     NEGATIVE COVENANTS OF THE BORROWER                            44

                                   ARTICLE VI
                                EVENTS OF DEFAULT

SECTION 6.01.     EVENTS OF DEFAULT                                             46

                                   ARTICLE VII
                PLEDGE OF PLEDGED COLLATERAL; RIGHTS OF THE AGENT

SECTION 7.01.     SECURITY INTERESTS                                            50

SECTION 7.02.     SUBSTITUTION OF COLLATERAL AND RELEASE OF SECURITY INTEREST   51

SECTION 7.03.     APPLICATION OF PROCEEDS                                       52

SECTION 7.04.     RIGHTS AND REMEDIES UPON EVENT OF DEFAULT                     53

SECTION 7.05.     REMEDIES CUMULATIVE                                           54

SECTION 7.06.     ENFORCEMENT OF REMEDIES UNDER THE CUSTODIAL AGREEMENT AND
                  LOAN DOCUMENTS                                                54

                                  ARTICLE VIII
                                    THE AGENT

SECTION 8.01.     AUTHORIZATION AND ACTION                                      55

SECTION 8.02.     DELEGATION OF DUTIES                                          55

SECTION 8.03.     AGENT'S RELIANCE, ETC.                                        55

SECTION 8.04.     INDEMNIFICATION                                               56

SECTION 8.05.     SUCCESSOR AGENT                                               56

                                   ARTICLE IX
                                  MISCELLANEOUS

SECTION 9.01.     NO WAIVER; MODIFICATIONS IN WRITING                           57
</Table>

                                       ii
<Page>

<Table>
<S>                                                                             <C>
SECTION 9.02.     NOTICES, ETC.                                                 57

SECTION 9.03.     TAXES                                                         58

SECTION 9.04.     COSTS AND EXPENSES; INDEMNIFICATION                           60

SECTION 9.05.     EXECUTION IN COUNTERPARTS                                     61

SECTION 9.06.     ASSIGNABILITY                                                 61

SECTION 9.07.     GOVERNING LAW                                                 63

SECTION 9.08.     SEVERABILITY OF PROVISIONS                                    63

SECTION 9.09.     CONFIDENTIALITY                                               63

SECTION 9.10.     MERGER                                                        64

SECTION 9.11.     NO PROCEEDINGS; NO RECOURSE                                   65

SECTION 9.12.     SURVIVAL OF REPRESENTATIONS AND WARRANTIES                    65

SECTION 9.13.     LOAN DOCUMENTS                                                65

SECTION 9.14.     SUBMISSION TO JURISDICTION; WAIVERS                           66

SECTION 9.15.     E-MAIL REPORTS                                                66

SECTION 9.16.     WAIVER OF JURY TRIAL                                          67

SECTION 9.17.     SEVERAL OBLIGATIONS                                           67

SECTION 9.18.     LIMITATION ON LIABILITY                                       67
</Table>

SCHEDULES
Schedule I    Form of Investor Report
Schedule II   Form of Weekly Portfolio Report
Schedule III  Scope of Audit Procedures
Schedule IV   Industry Classifications

                                    EXHIBITS

EXHIBIT A     Form of Advance Note (if requested)
EXHIBIT B     Form of Notice of Borrowing
EXHIBIT C     Form of Assignment and Acceptance

                                       iii
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                     REVOLVING CREDIT AND SECURITY AGREEMENT

          REVOLVING CREDIT AND SECURITY AGREEMENT, dated as of July 16, 2003
among CRC FUNDING, LLC, as the Conduit Lender, CITIBANK, N.A., the other
Secondary Lenders (as hereinafter defined) from time to time parties hereto,
CITICORP NORTH AMERICA, INC., as agent for the Secured Parties (as hereinafter
defined) (in such capacity, together with its successors and assigns, the
"Agent") and ING PRIME RATE TRUST (together with its permitted successors and
assigns, the "Borrower").

                              W I T N E S S E T H:

          WHEREAS, the Borrower desires that the Conduit Lender and the
Secondary Lenders from time to time make advances to the Borrower on the terms
and subject to the conditions set forth in this Agreement; and

          WHEREAS, the Conduit Lender and the Secondary Lenders are willing to
make such advances to the Borrower for such purposes on the terms and subject to
the conditions set forth in this Agreement;

          NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:

                                    ARTICLE I
                      DEFINITIONS AND RULES OF CONSTRUCTION

     SECTION 1.01.    DEFINITIONS.

          As used in this Agreement, the following terms shall have the meanings
indicated:

          "ADJUSTED ASSET VALUE" means in respect of any Borrowing Base Eligible
Asset, as of any date of determination, an amount equal to the product of (i)
the Asset Value of such Borrowing Base Eligible Asset as of such date, and (ii)
the applicable Advance Rate for such Borrowing Base Eligible Asset.

          "ADMINISTRATION AGREEMENT" means the Amended and Restated
Administration Agreement dated as of October 20, 1992, as amended and restated
as of February 17, 1995, April 7, 1995, May 2, 1996, April 7, 1997, February 2,
1999 and April 27, 2000, and as amended as of November 2, 2001 between the
Administrator and the Borrower, as the same may be amended, supplemented, waived
or modified as permitted under this Agreement.

          "ADMINISTRATOR" means ING Funds Services, LLC (formerly known as
Pilgrim Group, Inc.), together with its permitted successors and assigns.

<Page>

          "ADMINISTRATOR LETTER AGREEMENT" means the Letter Agreement dated as
of the date hereof from the Administrator to the Agent on behalf of the Secured
Parties, as the same may from time to time be amended, supplemented, waived or
modified.

          "ADVANCE" means each advance by the Conduit Lender or a Secondary
Lender to the Borrower on a Borrowing Date pursuant to ARTICLE II; provided that
if the Conduit Lender assigns a portion of any Advance made by it to a Lender
pursuant to an Asset Purchase Agreement or otherwise, the portion of such
Advance retained by the Conduit Lender and the portion of such Advance acquired
by such Lender shall each be deemed to constitute a separate Advance for
purposes of this Agreement.

          "ADVANCE NOTE" means each promissory note, if any, issued by the
Borrower to the Conduit Lender or a Secondary Lender in accordance with the
provisions of SECTION 2.03, substantially in the form of EXHIBIT A hereto, as
the same may from time to time be amended, supplemented, waived or modified.

          "ADVANCE RATE" means (i) in respect of Cash, 100%, (ii) in respect of
Eligible Commercial Paper Notes, Eligible Money Market Funds and Eligible
Government Securities, 95%, (iii) in respect of Class A Loan Assets, 80%, (iv)
in respect of Class B Loan Assets, 70%, (v) in respect of Class C Loan Assets,
60%, (vi) in respect of Class D Loan Assets, 50%, (vii) in respect of Class A
Bond Asset, 80%, (viii) in respect of Class B Bond Assets, 72%, (ix) in respect
of Class C Bond Assets, 62%, (x) in respect of Class D Bond Assets, 58%, (xi) in
respect of Class E Bond Assets, 45%, and (xii) in respect of Class F Bond
Assets, 28%.

          "ADVERSE CLAIM" means any Lien or other right, claim, encumbrance or
any other type of preferential arrangement in, of or on any Person's assets or
properties in favor of any other Person, other than Permitted Liens.

          "ADVISER" means ING Investments, LLC, together with its permitted
successors and assigns.

          "ADVISER LETTER AGREEMENT" means the Letter Agreement dated as of the
date hereof from the Adviser to the Agent on behalf of the Secured Parties, as
the same may from time to time be amended, supplemented, waived or modified.

          "ADVISORY AGREEMENT" means the Investment Management Agreement,
September 1, 2000, between the Adviser and the Borrower, as the same may be
amended, supplemented, waived or modified as permitted under this Agreement.

          "AFFECTED PERSON" means any Lender, any Secondary Lender, any other
entity which enters into a commitment to make or purchase any Advance or any
interest therein, any of their respective Affiliates, any corporation
controlling any Lender or any Secondary Lender and any permitted assignee or
participant of any Lender or any Secondary Lender.

          "AFFILIATE" means, in respect of a referenced Person, another Person
controlling, controlled by or under common control with such referenced Person
(which in the case of the Conduit Lender and the Agent, shall also include any
entity which is a special purpose entity that

                                        2
<Page>

issues promissory notes and has a relationship to the Agent comparable to that
of the Conduit Lender). The terms "control," "controlling," "controlled" and the
like mean the direct or indirect possession of the power to direct or cause the
direction of the management or policies of a Person or the disposition of its
assets or properties, whether through ownership, by contract, arrangement or
understanding, or otherwise.

          "AGENT" has the meaning assigned to such term in the introduction to
this Agreement.

          "AGENT'S ACCOUNT" means the special account (account number 40517805,
ABA No. 021000089) of the Agent maintained at the office of Citibank at its
Principal Office or to such other account in the United States as the Agent
shall designate in writing to the Borrower.

          "AGGREGATE CUSTODIAN'S ADVANCE AMOUNT" means the sum of (i) the
aggregate unpaid Dollar amount of all outstanding Custodian's Overdraft Advances
of cash, (ii) the aggregate Value of all Custodian's Overdraft Advances of
assets (other than cash) to the extent not reimbursed by the Borrower, and (iii)
the accrued and unpaid interest, if any, on the amounts set forth in CLAUSES (i)
and (ii) above.

          "AGREEMENT" means this Revolving Credit and Security Agreement, as the
same may from time to time be amended, supplemented, waived or modified.

          "ALTERNATE BASE RATE" means in respect of any Advance for any
Settlement Period, a fluctuating interest rate per annum as shall be in effect
from time to time, which rate shall be at all times equal to the sum of (i) the
Applicable Margin PLUS (ii) the highest of:

          (a)  the Base Rate;

          (b)  one-half of one percent (0.5%) above the latest three-week moving
     average of secondary market morning offering rates in the United States for
     three-month certificates of deposit of major United States money market
     banks, such three-week moving average being determined weekly on each
     Monday (or, if such day is not a Business Day, on the next succeeding
     Business Day) for the three-week period ending on the previous Friday by
     Citibank on the basis of such rates reported by certificate of deposit
     dealers to and published by the Federal Reserve Bank of New York or, if
     such publication shall be suspended or terminated, on the basis of
     quotations for such rates received by Citibank from three New York
     certificate of deposit dealers of recognized standing selected by Citibank,
     in either case, adjusted to the nearest 1/16 of one percent or, if there is
     no nearest 1/16 of one percent, to the next higher 1/16 of one percent; and

          (c)  one half of one percent (0.5%) per annum above the Federal Funds
     Rate.

          "APPLICABLE LAW" means any Law of any Authority, including, without
limitation, all Federal and state banking or securities laws, to which the
Person in question is subject or by which it or any of its property is bound.

                                        3
<Page>

          "APPLICABLE MARGIN" means, with respect to the Eurodollar Rate and the
Alternate Base Rate, 1.00% per annum.

          "ASSET COVERAGE TEST" means, as of any date of determination, the
Borrower's "senior securities representing indebtedness" (as defined in
Section 18(g) of the Investment Company Act) have "asset coverage" (as defined
in Section 18(h) of the Investment Company Act) of at least 300% (computed on
such date of determination regardless of whether or not dividends or
distributions are being made on such date, or whether Debt is being incurred on
such date).

          "ASSET PURCHASE AGREEMENT" means the Asset Purchase Agreement entered
into by a Secondary Lender (other than Citibank) concurrently with the
Assignment and Acceptance pursuant to which such Secondary Lender became party
to this Agreement.

          "ASSETS" means a collective reference to all items which would be
classified as an "asset" on the balance sheet of the Borrower in accordance with
GAAP.

          "ASSET VALUE" means, as of any day of determination (i) in respect of
Cash, the amount of such Cash, and (ii) in respect of any other Asset, the Value
of such Asset computed in the manner as such Value is required to be computed by
the Borrower in accordance with the Prospectus and in accordance with Applicable
Law, including without limitation the Investment Company Act; PROVIDED, that the
Asset Value of any Asset shall be net of the Borrower's liabilities relating
thereto, including without limitation all of the Borrower's obligations to pay
any unpaid portion of the purchase price thereof; PROVIDED, FURTHER, that for
any Asset for which independent reliable market quotations (which may consist of
only an independent dealer quotation) are not available (or which is not
otherwise valued for the Borrower by an independent recognized pricing source),
the Asset Value of such Asset shall be deemed zero for purposes of this
definition.

          "ASSIGNEE RATE" means in respect of any Advance by a Secondary Lender
or acquired by a Lender (other than the Conduit Lender) for any Settlement
Period an interest rate per annum equal to the sum of the Applicable Margin plus
the Eurodollar Rate for such Settlement Period; PROVIDED, HOWEVER, that in case
of:

               (i)    any Settlement Period on or prior to the first day of
          which the applicable Lender (other than the Conduit Lender) or the
          applicable Secondary Lender shall have notified the Agent that the
          introduction of or any change in or in the interpretation of any law
          or regulation makes it unlawful, or any central bank or other
          governmental authority asserts that it is unlawful, for such Lender or
          such Secondary Lender to fund such Advance at the Assignee Rate set
          forth above (and such Lender or such Secondary Lender shall not have
          subsequently notified the Agent that such circumstances no longer
          exist),

               (ii)   any Settlement Period of one to (and including) 27 days,

               (iii)  any Settlement Period as to which the Agent receives
          notice after 12:00 noon (New York City time) on the second Business
          Day preceding the first

                                        4
<Page>

          day of such Settlement Period, that such Advance will not be funded by
          the Conduit Lender through the issuance of promissory notes, or

               (iv)   any Settlement Period for which the aggregate principal
          amount of all outstanding Advances is less than $1,000,000,

solely with respect to the affected Lender's or Secondary Lender's pro rata
share of such Advances in the case of CLAUSE (i) above, but with respect to the
aggregate principal amount of such Advance in the case of CLAUSES (ii) through
(iv) above, the "Assignee Rate" for such Settlement Period shall be an interest
rate per annum equal to the Alternate Base Rate in effect on the first day of
such Settlement Period.

          "ASSIGNMENT AND ACCEPTANCE" means the Assignment and Acceptance, in
substantially the form of EXHIBIT C hereto, entered into by a Secondary Lender,
any Eligible Assignee and the Agent, and, if required by the terms of
SECTION 9.06(b), the Borrower, pursuant to which such Eligible Assignee may
become a party to this Agreement.

          "AUTHORITY" means any governmental or quasi-governmental authority
(including without limitation the National Association of Securities Dealers,
the stock exchanges, the SEC and any accounting board or authority (whether or
not a part of government) which is responsible for the establishment or
interpretation of national or international accounting principals, in each case
whether foreign or domestic), whether executive, legislative, judicial,
administrative or other, or any combination thereof, including, without
limitation, any Federal, state, territorial, county, municipal or other
government or governmental or quasi-governmental agency, arbitrator, board,
body, branch, bureau, commission, corporation, court, department,
instrumentality, master, mediator, panel, referee, system or other political
unit or subdivision or other entity of any of the foregoing, whether domestic or
foreign, having the force of law.

          "AUTHORIZED OFFICER" means the president, the executive vice
president, the senior vice president, vice president, treasurer, assistant
treasurer or any other duly authorized officer of the Borrower; PROVIDED, that
the Agent shall have received a manually signed certificate of the Secretary of
the Borrower as to the incumbency of, and bearing a manual specimen signature
of, such duly authorized officer.

          "AUTHORIZED SIGNATORY" means any Authorized Officer or any duly
authorized employee of ING Investments, LLC, PROVIDED, that the Agent shall have
received a manually signed certificate of the Secretary of the Borrower as to
the incumbency of, and bearing a specimen signature of, such duly authorized
person or employee.

          "BASE RATE" means the rate of interest from time to time announced
publicly by Citibank at its Principal Office as its base rate. The Base Rate is
a reference rate and does not necessarily represent the lowest or best rate
actually charged to any customer of Citibank.

          "BENEFIT ARRANGEMENT" means at any time an employee benefit plan
within the meaning of Section 3(3) of ERISA which is subject to the provisions
of Title I of ERISA and is not a Plan or a Multiemployer Plan and which is
maintained or otherwise contributed to by any member of the ERISA Group.

                                        5
<Page>

          "BOND ASSET" means any Asset that is a direct interest in a
non-governmental bond obligation.

          "BORROWER" has the meaning assigned to such term in the introduction
to this Agreement.

          "BORROWER INFORMATION" has the meaning assigned to such term in
SECTION 9.09(c).

          "BORROWER OBLIGATIONS" means all indebtedness, whether absolute, fixed
or contingent, at any time or from time to time owing by the Borrower to any
Secured Party under or in connection with this Agreement or any other Program
Document, including without limitation, all amounts payable by the Borrower in
respect of the Advances, with interest thereon, and the amounts payable under
SECTIONS 2.05, 2.06, 2.07, 2.08, 2.09, 2.11, 2.12, 2.13, 7.04(b), 9.03 and 9.04
of this Agreement.

          "BORROWER REPRESENTATIVES" has the meaning assigned to such term in
SECTION 9.09(b).

          "BORROWER'S ACCOUNT" means the special account (account number
5568-37-00, ABA No. 011-000-028) of the Borrower maintained with the Custodian,
or such other account as the Borrower shall from time to time designate in
writing to the Agent.

          "BORROWING BASE" means on the date any determination thereof is made,
an amount equal to (i) the aggregate Adjusted Asset Value of all Eligible
Collateral as of such date of determination MINUS (ii) the Borrowing Base Excess
Amount as of such date of determination.

          "BORROWING BASE ELIGIBLE ASSET" means Cash, any Eligible Loan Asset,
any Eligible Credit-Linked Note, any Eligible Bond Asset, an Eligible Commercial
Paper Note, Eligible Money Market Funds and any Eligible Government Security
which the Borrower is permitted to purchase in accordance with the Investment
Policies and Restrictions which are free and clear of all Adverse Claims;
PROVIDED that such Asset does not constitute (i) a Derivative Transaction,
Margin Stock, an Equity Security, a Non-OECD Asset or a Foreign Currency Asset,
(ii) an Asset which is the subject of a reverse repurchase agreement, dollar
roll, securities lending transaction or other Derivatives Transaction (other
than Derivatives Transactions entered into solely to protect against interest
rate risk which have not been entered into for speculative purposes), including,
without limitation, any cash or other Asset maintained in a segregated account
with the Custodian relating to any outstanding reverse repurchase agreement
entered into by the Borrower; or (iii) an Asset held by a sub-custodian of the
Custodian which is not located in the United States.

          "BORROWING BASE EXCESS AMOUNT" means as of any date any determination
thereof is made, an amount equal to the sum (without duplication) of:

          (i)     the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral (other than Cash and Eligible Government
          Securities, but including Eligible Commercial Paper Notes and Eligible
          Money Market Funds) issued or

                                        6
<Page>

          Guaranteed by or owing from any Person (together with all Affiliates
          of such Person), exceeds five percent (5%) of the aggregate Adjusted
          Asset Value of all Eligible Collateral;

PLUS      (ii)    the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral issued or Guaranteed by or owing from one or more
          Persons in a single Industry Class, exceeds twenty percent (20%) of
          the aggregate Adjusted Asset Value of all Eligible Collateral;

PLUS      (iii)   the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitute Foreign Assets exceeds
          twenty-five percent (25%) of the aggregate Adjusted Asset Value of all
          Eligible Collateral;

PLUS      (iv)    the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitute Foreign Assets relating to
          Obligors in any single OECD Country (other than the United States)
          exceeds ten percent (10%) of the aggregate Adjusted Asset Value of all
          Eligible Collateral;

PLUS      (v)     the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitutes Distressed Loan Assets or
          Distressed Bond Assets exceeds ten percent (10%) of the aggregate
          Adjusted Asset Value of all Eligible Collateral;

PLUS      (vi)    the amount by which the aggregate Adjusted Asset Value of all
          Loan Assets which constitute Eligible Collateral which constitute
          participation interests purchased or otherwise acquired from any
          Selling Institution (together with all Affiliates of such Selling
          Institution), exceeds ten percent (10%) of the aggregate Adjusted
          Asset Value of all Eligible Collateral;

PLUS      (vii)   the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitutes Unsecured Loan Assets exceeds
          ten percent (10%) of the aggregate Adjusted Asset Value of all
          Eligible Collateral;

PLUS      (viii)  the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitutes Loan Assets in respect of which
          the interest payable on the principal amount thereof is not calculated
          by reference to a Floating Rate, exceeds ten percent (10%) of the
          aggregate Adjusted Asset Value of all Eligible Collateral;

PLUS      (ix)    the aggregate maximum unused commitments of the Borrower to
          fund advances or make extensions of credit under the Loan Documents
          relating to the Pledged Collateral;

PLUS      (x)     the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitute Eligible Credit-Linked Notes
          exceeds ten percent (10%) of the aggregate Adjusted Asset Value of all
          Eligible Collateral; and

                                        7
<Page>

PLUS      (xi)    the amount by which the aggregate Adjusted Asset Value of all
          Eligible Collateral which constitute Class E Bond Assets or Class F
          Bond Assets exceeds twenty percent (20%) of the aggregate Adjusted
          Asset Value of all Eligible Collateral.

          "BORROWING BASE TEST" means as of any date of determination that the
Borrowing Base shall be equal to or greater than the Credits Outstanding.

          "BORROWING DATE" has the meaning assigned to such term in
SECTION 2.02.

          "BUSINESS DAY" means any day on which (i) banks are not authorized or
required to close in New York, New York or the New York Stock Exchange is not
authorized or required to close, and (ii) if this definition of "Business Day"
is utilized in connection with a Eurodollar Rate Advance, dealings in dollar
deposits are carried out in the London interbank market.

          "CASH" means a demand deposit of United States Dollars immediately
available on the day in question in an account maintained by the Custodian and
in respect of which all actions have been taken under this Agreement and the
Control Agreement to create and perfect in the Agent, for the benefit of the
Secured Parties, a first-priority perfected security interest.

          "CITIBANK" means Citibank, N.A. and its successors.

          "CLASS A BOND ASSET" means, as of any date of determination, a
Borrowing Base Eligible Asset (i) that is a Bond Asset related to corporate bond
obligations and (ii) in respect of which such corporate bond obligations are
rated as of such date of determination no less than "BBB-" from S&P and "Baa3"
from Moody's, or which, if rated only by S&P or Moody's, shall be rated no less
than "BBB-" from S&P or "Baa3" from Moody's, or which, if unrated, are in the
reasonable judgment of the Adviser of equivalent credit quality.

          "CLASS B BOND ASSET" means, as of any date of determination, a
Borrowing Base Eligible Asset (i) that is a Bond Asset related to corporate bond
obligations, (ii) that is not a Class A Bond Asset and (iii) in respect of which
such corporate bond obligations are rated as of such date of determination no
less than "BB-" from S&P and "Ba3" from Moody's, or which, if rated only by S&P
or Moody's, shall be rated no less than "BB-" from S&P or "Ba3" from Moody's, or
which, if unrated, are in the reasonable judgment of the Adviser of equivalent
credit quality.

          "CLASS C BOND ASSET" means, as of any date of determination, a
Borrowing Base Eligible Asset (i) that is a Bond Asset related to corporate bond
obligations, (ii) that is not a Class A Bond Asset or Class B Bond Asset and
(iii) in respect of which such corporate bond obligations are rated as of such
date of determination no less than "B" from S&P and "B2" from Moody's, or which,
if rated only by S&P or Moody's, shall be rated no less than "B" from S&P or
"B2" from Moody's, or which, if unrated, are in the reasonable judgment of the
Adviser of equivalent credit quality.

          "CLASS D BOND ASSET" means, as of any date of determination, a
Borrowing Base Eligible Asset (i) that is a Bond Asset related to corporate bond
obligations, (ii) that is not a

                                        8
<Page>

Class A Bond Asset, Class B Bond Asset or Class C Bond Asset and (iii) in
respect of which such corporate bond obligations are rated as of such date of
determination no less than "B-" from S&P and "B3" from Moody's, or which, if
rated only by S&P or Moody's, shall be rated no less than "B-" from S&P or "B3"
from Moody's, or which, if unrated, are in the reasonable judgment of the
Adviser of equivalent credit quality.

          "CLASS E BOND ASSET" means, as of any date of determination, a
Borrowing Base Eligible Asset (i) that is a Bond Asset related to corporate bond
obligations, (ii) that is not a Class A Bond Asset, Class B Bond Asset, Class C
Bond Asset or Class D Bond Asset and (iii) in respect of which such corporate
bond obligations are rated as of such date of determination no less than "CCC"
from S&P and "Caa2" from Moody's, or which, if rated only by S&P or Moody's,
shall be rated no less than "CCC" from S&P or "Caa2" from Moody's, or which, if
unrated, are in the reasonable judgment of the Adviser of equivalent credit
quality.

          "CLASS F BOND ASSET" means, as of any date of determination, a
Borrowing Base Eligible Asset (i) that is a Bond Asset related to corporate bond
obligations and (ii) is either (a) a Distressed Bond Asset or in respect of
which such corporate bond obligations are rated as of such date of determination
less than "CCC" from S&P or "Caa2" from Moody's, or which, if unrated, are in
the reasonable judgment of the Adviser of equivalent credit quality or (b)
unrated by S&P or Moody's and the Adviser has assigned no other equivalent
rating thereto.

          "CLASS A LOAN ASSET" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Loan Asset, (ii) is not a
Distressed Loan Asset, and (iii) has an Asset Value which is ninety percent
(90%) or more of its par value as of such date of determination.

          "CLASS B LOAN ASSET" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Loan Asset, (ii) is not a
Distressed Loan Asset, and (iii) has an Asset Value which is less than ninety
percent (90%) of its par value as of such date of determination.

          "CLASS C LOAN ASSET" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Distressed Loan Asset, and (ii) has
an Asset Value which is ninety percent (90%) or more of its par value as of such
date of determination.

          "CLASS D LOAN ASSET" means as of any date of determination, a
Borrowing Base Eligible Asset which (i) is a Distressed Loan Asset, and (ii) has
an Asset Value which is less than ninety percent (90%) of its par value as of
such date of determination.

          "CLOSING DATE" means the first date on which the conditions precedent
specified in Section 3.01 shall have been fully satisfied.

          "CODE" means the Internal Revenue Code of 1986, as amended from time
to time, or any successor statute.

          "COLLATERAL ACCOUNT" means, collectively, Account Number 556-837-00,
ABA Number 011-00002 and Account Number 379-26-342, ABA Number 011-00002,
established by the Borrower at State Street Bank and Trust Company.

                                        9
<Page>

          "COMPLIANCE CERTIFICATION DATE" has the meaning assigned to such term
in SECTION 2.05(b).

          "CONDUIT LENDER" means CRC Funding, LLC, together with its successors
and assigns that constitute special purpose entities that issue promissory notes
or other debt securities.

          "CONTROL AGREEMENT" means the Control Agreement, dated as of the date
hereof among the Borrower, the Agent and the Custodian, as the same may from
time to time be amended, supplemented, waived or modified.

          "CP RATE" for each day during a Settlement Period for any Advance
means the per annum rate equivalent to the weighted average of the per annum
rates paid or payable by the Conduit Lender from time to time as interest on or
otherwise (by means of interest rate hedges or otherwise) in respect of those
promissory notes issued by the Conduit Lender that are allocated, in whole or in
part, by the Agent (on behalf of the Conduit Lender) to fund the making or
maintenance of such Advance on such day during such Settlement Period as
determined by the Agent (on behalf of the Conduit Lender) and reported to the
Borrower, which rates shall reflect and give effect to the commissions of
placement agents and dealers in respect of such promissory notes, to the extent
such commissions are allocated, in whole or in part, to such promissory notes by
the Agent on behalf of the Conduit Lender; PROVIDED, HOWEVER, that if any
component of such rate is a discount rate, in calculating the "CP Rate" for such
day the Agent shall for such component use the rate resulting from converting
such discount rate to an interest bearing equivalent rate per annum.

          "CREDITS OUTSTANDING" means at any time a determination thereof is
made, an amount equal to the sum of (i) the outstanding principal amount of all
Advances, PLUS (ii) the Yield that would accrue on the aggregate outstanding
principal amount of the Advances through the sixty (60) day period following
such date of determination, computed by reference to the Assignee Rate based
upon the applicable Eurodollar Rates plus the Applicable Margin for a thirty
(30) day period in effect as of the time of determination, plus (iii) the
Aggregate Custodian's Advance Amount plus (iv) the sum of (a) the aggregate
outstanding principal balance of all advances and other extensions of credit and
(b) any unpaid and past due interest, fees or other obligations, in each case,
under the Existing 1998 Credit Agreement.

          "CUSTODIAL AGREEMENT" means the Custodian and Investment Accounting
Agreement, dated as of November 1, 2001 by and among the Borrower, one or more
other funds that are advised by the Adviser (or any Affiliate thereof) and the
Custodian, as amended by a First Amendment to Custodian and Investment
Accounting Agreement dated as of March 1, 2002 and as the same may from time to
time be amended, restated, supplemented, waived or modified as permitted under
the Program Documents.

          "CUSTODIAN" means State Street Bank and Trust Company, as custodian
under the Custodial Agreement, and as securities intermediary and collateral
agent under the Custodial Agreement and the Control Agreement, and its permitted
successors and assigns.

                                       10
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          "CUSTODIAN'S OVERDRAFT ADVANCES" means any advance of cash, assets or
securities by the Custodian pursuant to or in connection with the Custodial
Agreement.

          "DEBT" means with respect to any Person, at any date, without
duplication, (i) all "senior securities representing indebtedness" (as defined
in Section 18(g) of the Investment Company Act), (ii) all obligations of such
Person for borrowed money, including without limitation, all obligations of such
Person which are evidenced by letters of credit or letter of credit
reimbursement arrangements, (iii) all obligations of such Person evidenced by
bonds, debentures, notes, acceptances or other similar instruments, (iv) all
obligations of such Person to pay the deferred purchase price of property or
services, (v) all obligations of such Person as lessee which are capitalized in
accordance with GAAP, (vi) all Debt of others secured by a Lien on any asset of
such Person, whether or not such Debt is assumed by such Person, (vii) payment
obligations, fixed or contingent, under investment, financial derivative or
similar contracts (other than covered short sales), (viii) all Debt of others
Guaranteed by such Person, and (ix) to the extent not otherwise included, all
items which in accordance with GAAP would be included in determining total
liabilities as shown on the liabilities side of such Person's balance sheet.

          "DEFAULT" means any event which, with the passage of time, the giving
of notice, or both, would constitute an Event of Default.

          "DERIVATIVES TRANSACTION" means any financial futures contract,
option, forward contract, warrant, swap, swaption, collar, floor, cap and any
other agreement, instrument and derivative and other transactions of a similar
nature (whether currency linked, index linked, insurance risk linked, credit
risk linked or otherwise).

          "DETERMINATION DATE" means (i) each Borrowing Date, (ii) each Weekly
Determination Date, (iii) each date any Restricted Payment is made or any Senior
Security is issued, and (iv) during the continuance of a Default or an Event of
Default, each Business Day which the Agent may designate in its sole discretion
as a "Determination Date" (which may be daily).

          "DISTRESSED BOND ASSET" means a Bond Asset (a) the Obligor of which is
the subject of a bankruptcy, insolvency, liquidation or other similar
proceedings, (b) which is in default (unless cured or waived) beyond the
applicable grace period, if any, as to payment of principal or interest or other
amount owing under the instruments or agreements under which it was issued or
otherwise evidenced, or (c) which is rated lower than "Caa2" by Moody's or lower
than "CCC" by S&P or which, if unrated, is in the reasonable judgment of the
Adviser of equivalent credit quality.

          "DISTRESSED LOAN ASSET" means a Loan Asset (i) the Obligor of which is
the subject of a bankruptcy, insolvency, liquidation or other similar
proceedings, (ii) which is in default (unless cured or waived) beyond the
applicable grace period, if any, as to payment of principal or interest or other
amount owing under the applicable Loan Documents, (iii) which is otherwise
classified by the Adviser or the Borrower as "non-performing", (iv) in respect
of which the related Obligor is rated "Caa" or lower by Moody's or "CCC" or
lower by S&P or which, if unrated, is in the reasonable judgment of the Adviser
of equivalent credit quality, (v)

                                       11
<Page>

which is not part of a senior credit facility, or (vi) which is otherwise not
classified as a "Senior Loan" by the Adviser.

          "DOLLARS" and "$" mean lawful money of the United States of America.

          "EDISON CREDIT FACILITY" means that certain Revolving Loan Agreement
dated as of July 16, 1998 by and among the Borrower, the Adviser, Edison Asset
Securitization, L.L.C., as the lender, and General Electric Capital Corporation,
as lender, operating agent and as collateral agent, as amended.

          "ELIGIBLE ASSIGNEE" means Citicorp North America, Inc., Citibank, any
of their respective Affiliates, any Person managed by Citibank, Citicorp North
America, Inc. or any of their respective Affiliates or any other financial or
other institution acceptable to the Agent.

          "ELIGIBLE BOND ASSET" at any time means a Bond Asset: (i) with respect
to which the interest payable on the principal amount thereof by the related
Obligor is payable in cash; (ii) which is not part of an issuance of corporate
debt securities with an original aggregate principal amount as of the
Origination Date of such Bond Asset of less than $100,000,000; and (iii) which
has a scheduled maturity date no later than the thirtieth (30th) anniversary
after the related Origination Date.

          "ELIGIBLE COLLATERAL" means at any time the Pledged Collateral which
constitutes Borrowing Base Eligible Assets.

          "ELIGIBLE COMMERCIAL PAPER NOTE" means a promissory note (i) issued in
the commercial paper market by an obligor having its principal office in the
United States, having a maturity of not more than 270 days and which (a) if
rated by both S&P and Moody's, is rated at least "A-l" by S&P and at least "P-l"
by Moody's, and (b) if rated by S&P or Moody's (but not both), is rated at least
"A-l" by S&P or at least "P-l" by Moody's (ii) custodied with the Custodian or a
sub-custodian pursuant to the Custodian Agreement, (iii) subject to the
Custodian's control in accordance with the Control Agreement, (iv) credited to
the Collateral Account, and (v) in respect of which all actions have been taken
under this Agreement and the Control Agreement to create and perfect in the
Agent, for the benefit of the Secured Parties, a first-priority perfected
security interest.

          "ELIGIBLE CREDIT-LINKED NOTE" means any Asset (i) which references an
asset (the "Referenced Asset") of the type described in either (a) CLAUSES (i)
through (iii) of the definition of "Eligible Bond Asset" or (b) CLAUSES (i)
through (x) of the definition of "Eligible Loan Asset", (ii) in respect of which
(a) under certain credit conditions (which may include failure to pay or
bankruptcy or insolvency of the Obligor in respect of such Referenced Asset),
the Borrower shall be required to accept such Referenced Asset (or a similar
asset) as payment in full, or (b) in the absence of such credit conditions, the
Borrower shall receive periodic interest and principal in full at the maturity
of such Asset, (iii) which is (a) custodied with the Custodian or a
sub-custodian pursuant to the Custodian Agreement, (b) subject to the
Custodian's control in accordance with the Control Agreement, and (c) credited
to the Collateral Account, and (iv) in respect of which all actions have been
taken under this Agreement and the Control Agreement to

                                       12
<Page>

create and perfect in the Agent, for the benefit of the Secured Parties, a
first-priority perfected security interest.

          "ELIGIBLE GOVERNMENT SECURITIES" means all "Government Securities" (as
defined in the Investment Company Act and which for the purposes hereof shall
include any securities issued or guaranteed as to principal and interest by an
agency of the government of the United States) held in an account maintained by
the Custodian and in respect of which all actions have been taken under this
Agreement and the Control Agreement to create and perfect in the Agent, for the
benefit of the Secured Parties, a first-priority perfected security interest.

          "ELIGIBLE LOAN ASSET" at any time means a Loan Asset: (i) with respect
to which the interest payable on the principal amount thereof by the related
Obligor is payable in cash; (ii) in respect of which the Borrower's interest is
not a subparticipation; (iii) which has a scheduled final maturity date no later
than the tenth (10th) anniversary after the related Origination Date; (iv) which
is part of a senior credit facility, with respect to which such Loan Asset is
not by its terms subordinated (pursuant to contractual provisions or otherwise)
to the prior payment of any other liabilities or any equity interests of the
related Obligor; (v) which is part of a syndicated credit facility where the sum
of the aggregate revolving loan commitment amount plus the aggregate outstanding
principal amount of all loans under such facility on the Origination Date of
such Loan Asset is at least equal to $100,000,000; (vi) which relates to Loan
Documents in which the Borrower's interest (direct or participating) in the
aggregate outstanding principal amount of all loans thereunder is no greater
than thirty-three and one-third percent (33.33%); (vii) in respect of which the
related Loan Documents are not subject to any confidentiality arrangement which
would preclude the Agent from reviewing such Loan Documents; (viii) in which the
Borrower's interest in all collateral security therefor and principal and
interest payments thereunder is no less than pro rata and pari passu with all
other lenders thereunder or participants therein, as the case may be; (ix) in
respect of which the credit rating of the related Transaction Agent or its
controlling Affiliate is no less than "A-" from S&P or "A3" from Moody's; (x) in
respect of which, if the Borrower's interest therein is that of a participant,
the credit rating of the related Selling Institution is no less than "A-" from
S&P and "A3" from Moody's; and (xi) the pledge of which under Article VII of
this Agreement, would not conflict with or constitute a default under or be
prohibited by any anti-assignment or other provisions contained in the related
Loan Documents, except for anti-assignment provisions rendered ineffective by
applicable law.

          "ELIGIBLE MONEY MARKET FUNDS" means shares of money market, mutual or
similar funds rated at least AAA by S&P and Aaa by Moody's and held in an
account maintained by the Custodian and in respect of which all actions have
been taken under this Agreement and the Control Agreement to create and perfect
in the Agent, for the benefit of the Secured Parties, a first-priority perfected
security interest.

          "E-MAIL REPORT" has the meaning assigned to such term in SECTION 9.15.

          "EQUITY SECURITIES" means common and preferred stock, warrants,
membership interests or partnership interests and securities that are
convertible into common or preferred stock, membership interests or partnership
interests, including without limitation common stock

                                       13
<Page>

purchase warrants and rights, equity interests in trusts, partnerships, limited
liability companies, joint ventures or similar enterprises.

          "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and rulings issued
thereunder.

          "ERISA GROUP" means the Borrower and all members of a controlled group
of corporations and all trades or businesses (whether or not incorporated) under
common control which, together with the Borrower, are treated as a single
employer under Section 414(b), (c), (m) or (n) of the Code.

          "EUROCURRENCY LIABILITIES" has the meaning assigned to such term in
Regulation D of the Board of Governors of the Federal Reserve System, as in
effect from time to time.

          "EURODOLLAR ADDITIONAL YIELD" means additional Yield on the
outstanding principal of each Advance during the Settlement Period in respect of
such Advance in respect of which Yield is computed by reference to the
Eurodollar Rate, for such Settlement Period, at a rate per annum equal at all
times during such Settlement Period to the remainder obtained by subtracting (i)
the Eurodollar Rate for such Settlement Period from (ii) the rate obtained by
dividing such Eurodollar Rate referred to in CLAUSE (i) above by that percentage
equal to one-hundred percent (100%) minus the Eurodollar Rate Reserve Percentage
of the applicable Lender (other than the Conduit Lender) or Secondary Lender, as
the case may be, for such Settlement Period.

          "EURODOLLAR RATE" means, for any Advance for any Settlement Period, an
interest rate per annum equal to the rate per annum at which deposits in Dollars
are offered by the principal office of Citibank in London, England to prime
banks in the London interbank market at 11:00 A.M. (London time) two (2)
Business Days before the first day of such Settlement Period in an amount
substantially equal to the outstanding principal amount of such Advance on such
first day and for a period equal to such Settlement Period.

          "EURODOLLAR RATE ADVANCE" means an Advance the Yield on which is
computed with reference to the Eurodollar Rate.

          "EURODOLLAR RATE RESERVE PERCENTAGE" for any Settlement Period for any
Eurodollar Rate Advance means the reserve percentage applicable during such
Settlement Period under regulations issued from time to time by the Board of
Governors of the Federal Reserve System (or any successor) (or if more than one
such percentage shall be applicable, the daily average of such percentages for
those days in such Settlement Period during which any such percentage shall be
so applicable) for determining the maximum reserve requirement (including,
without limitation, any emergency, supplemental or other marginal reserve
requirement) for any applicable Lender (other than the Conduit Lender) or
Secondary Lender with respect to liabilities or assets consisting of or
including Eurocurrency Liabilities (or any other category of liabilities that
includes deposits by reference to which the interest rate on Eurocurrency
Liabilities is determined) having a term comparable to such Settlement Period.

                                       14
<Page>

          "EVENT OF DEFAULT" means any of the events, acts or occurrences set
forth in SECTION 6.01.

          "EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the SEC thereunder, all as from time to time in
effect, or any successor law, rules or regulations, and any reference to any
statutory or regulatory provision shall be deemed to be a reference to any
successor statutory or regulatory provision.

          "EXISTING 1998 CREDIT AGREEMENT" means that certain Second Amended and
Restated Credit Agreement, dated as of September 2, 1998, by and among the
Borrower (formerly known as Pilgrim America Prime Rate Trust), the financial
institutions from time to time party thereto and Bank of America, N.A. (formerly
known as Bank of America National Trust and Savings Association), as Syndication
Agent, State Street Bank and Trust Company, as Administrative Agent, Deutsche
Bank AG, as Documentation Agent, and Commerzbank AG, as Co-Agent, as the same
may be amended, restated, supplemented or otherwise modified from time to time.

          "FACILITY" has the meaning assigned to such term in SECTION 9.09(b).

          "FEDERAL FUNDS RATE" means, for any period, a fluctuating interest
rate per annum equal for each day during such period to the weighted average of
the rates on overnight Federal funds transactions with members of the Federal
Reserve System arranged by Federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York, or, if such rate is not so published for any
day which is a Business Day, the average of the quotations for such day on such
transactions received by Citibank from three Federal funds brokers of recognized
standing selected by it.

          "FEE LETTER" means that certain letter agreement dated the date hereof
between the Borrower and the Agent, as the same may from time to time be
amended, supplemented, waived or modified.

          "FLOATING RATE" means an interest rate calculated by reference to the
prime rate, the London interbank offered rate, the certificate of deposit rate,
the federal funds rate or any other per annum rate commonly referred to in the
United States banking industry as a "floating rate."

          "FOREIGN CURRENCY ASSET" means any Asset which is denominated or
payable in a currency other than Dollars.

          "FOREIGN ASSET" means any Loan Asset or Bond Asset, as applicable, the
Obligor of which is organized under the laws of any OECD Country (other than the
United States of America).

          "GAAP" means generally accepted accounting principles in the United
States, in effect from time to time, consistently applied.

                                       15
<Page>

          "GOVERNMENTAL AUTHORIZATIONS" means all franchises, permits, licenses,
approvals, consents and other authorizations of all Authorities.

          "GOVERNMENTAL FILINGS" means all filings, including franchise and
similar tax filings, and the payment of all fees, assessments, interests and
penalties associated with such filing with all Authorities.

          "GUARANTEE" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt or other
obligation of any other Person and, without limiting the generality of the
foregoing, any obligation, direct or indirect, contingent or otherwise, of such
Person (i) to purchase or pay (or advance or supply funds for the purchase or
payment of) such Debt or other obligation (whether arising by virtue of
partnership arrangements, or by agreement to keep-well, to purchase assets,
goods, securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (ii) entered into for the purpose of
assuring in any other manner the obligee of such Debt or other obligation of the
payment thereof or to protect such obligee against loss in respect thereof (in
whole or in part); PROVIDED that the term "Guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business. The
term "Guarantee" used as a verb has a corresponding meaning.

          "INDUSTRY CLASS" means, for purposes of computing the Borrowing Base,
any industry class set forth on SCHEDULE IV hereto, as such SCHEDULE IV may be
amended and supplemented from time to time in accordance with this Agreement.

          "INTERCREDITOR AGREEMENT" means that certain Intercreditor and
Collateral Agency Agreement dated as of July 16, 2003, by and among the
Borrower, the Agent, State Street Bank and Trust Company, as agent for the
secured parties under the Existing 1998 Credit Agreement, and State Street Bank
and Trust Company, as information agent.

          "INVESTMENT COMPANY ACT" means the Investment Company Act of 1940, as
amended, and the rules and regulations of the SEC thereunder, as modified or
interpreted by orders of the SEC, or other interpretative releases or letters
issued by the SEC or its staff, all as from time to time in effect, or any
successor law, rules or regulations, and any reference to any statutory or
regulatory provision shall be deemed to be a reference to any successor
statutory or regulatory provision.

          "INVESTMENT POLICIES AND RESTRICTIONS" means the provisions dealing
with investment objectives, policies, distributions, investment restrictions,
tender offers, repurchases, leverage and diversification status as set forth in
the Prospectus in effect on the Closing Date or as modified in accordance with
SECTION 5.02(i).

          "INVESTOR REPORT" means the Investor Report of the Borrower
substantially in the form of Schedule I hereto.

          "LAW" means any action, code, consent decree, constitution, decree,
directive, enactment, finding, guideline, law, injunction, interpretation,
judgment, order, ordinance, policy statement, proclamation, promulgation,
regulation, requirement, rule, rule of law, rule of public

                                       16
<Page>

policy, settlement agreement, statute, or writ, of any Authority, or any
particular section, part or provision thereof.

          "LENDERS" means the Conduit Lender, together with all Persons which
acquire or are obligated to acquire any interest in any Advance from the Conduit
Lender under an Asset Purchase Agreement or in the case of Citibank, under any
similar arrangement.

          "LENDER TERMINATION DATE" means the date which is the earlier to occur
of (i) one (1) Business Day prior to the Secondary Lender Stated Expiration
Date, and (ii) the date on which the Total Commitment is reduced to zero or
terminated pursuant to the terms hereof, including, without limitation, pursuant
to SECTION 2.10 or SECTION 6.01.

          "LETTER AGREEMENTS" means, collectively, the Administrator Letter
Agreement and the Adviser Letter Agreement.

          "LIEN" means any mortgage, pledge, hypothecation, assignment, deposit
arrangement, encumbrance, lien or security interest (statutory or other), or
preference, priority or other security agreement or preferential arrangement, or
other claim or encumbrance of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
financing lease having substantially the same economic effect as any of the
foregoing.

          "LIQUIDATION FEE" means, in respect of any Advance for any Settlement
Period which is funded by the Conduit Lender during which the principal on such
Advance is repaid by the Borrower in whole or in part prior to the end of said
Settlement Period, the amount, if any, by which (i) the additional Yield
(calculated without taking into account any Liquidation Fee or any shortened
duration of such Settlement Period) which would have accrued during such
Settlement Period on the reduction of the outstanding principal amount of such
Advance relating to such Settlement Period had such reductions remained as
outstanding principal, exceeds (ii) that income, if any, received by the Conduit
Lender's investing the proceeds of such reductions of principal.

          "LOAN ASSET" means any Asset that is a direct or participation or
subparticipation interest in or assignment or novation of a loan or other
extension of credit (other than a Bond Asset).

          "LOAN DOCUMENTS" means with respect to any Loan Asset, each loan
agreement, promissory note, collateral security agreement, participation
certificate, guarantee and any other agreement or document evidencing, securing,
governing or executed in connection with such Loan Asset, including without
limitation, the agreements and instruments in respect of which the Borrower
acquired such Loan Asset.

          "MARGIN STOCK" has the meaning assigned to such term in Regulation U.

          "MATERIAL ADVERSE EFFECT" means a (i) material adverse effect on the
ability of the Borrower, the Adviser or the Administrator to perform its
obligations under this Agreement or the Control Agreement or to perform any
material obligation under any other Program Document

                                       17
<Page>

to which it is a party or any Loan Document, (ii) a material adverse effect on
any Secured Party's right, title and interest in the Pledged Collateral or on
the rights and remedies of any Secured Party under any Program Document, (iii) a
material adverse effect on the validity or enforceability of this Agreement or
any other Program Document to which the Borrower, the Adviser or the
Administrator is a party or any Loan Document, (iv) a material adverse effect on
the business, financial condition, operations, Assets or properties of the
Borrower, the Adviser or the Administrator, (v) a material Adverse Claim on any
of the Assets of the Borrower, or (vi) a Default or Event of Default.

          "MATURITY DATE" means (i) with respect to any Advance funded by a
Lender, the Lender Termination Date (or if such day is not a Business Day, the
Business Day immediately preceding such date), and (ii) with respect to any
Advance made by a Secondary Lender, the Secondary Lender Termination Date (or if
such day is not a Business Day, the Business Day immediately preceding such
date).

          "MOODY'S" means Moody's Investors Service, Inc., together with its
successors.

          "MULTIEMPLOYER PLAN" means an employee pension benefit plan within the
meaning of Section 4001(a)(3) of ERISA.

          "NON-OECD ASSET" means any Asset issued or guaranteed by any Person
organized outside of any OECD Country and, in the case of any Loan Asset or Bond
Asset, the Obligor of which is organized outside of any OECD Country.

          "NOTICE OF BORROWING" has the meaning assigned to such term in
SECTION 2.02.

          "NOTICE OF EXCLUSIVE CONTROL" has the meaning assigned to such term in
the Control Agreement.

          "OBLIGOR" means (i) in respect of any Loan Asset, the Person primarily
obligated under the related Loan Documents to repay the loan or extension of
credit which is the subject of such Loan Asset and (ii) in respect of any Bond
Asset, the issuer thereof and any other Person primarily obligated to repay the
bond obligations thereunder.

          "OECD COUNTRY" means any country which is a member of the Organization
for Economic Cooperation and Development and which has a sovereign credit rating
for "foreign currency" of at least "AA-" and "Aa3" from S&P and Moody's,
respectively.

          "ORIGINATION DATE" means (i) in respect of any Loan Asset, the initial
date on which the proceeds of the loan or other extension of credit which is the
subject of such Loan Asset was advanced to the Obligor under the related Loan
Documents and (ii) in respect of any Bond Asset, the initial date on which the
proceeds of the issuance of such securities which is the subject of such Bond
Asset was advanced to the Obligor thereof.

          "OTHER TAXES" has the meaning assigned to such term in
SECTION 9.03(b).

          "PARENT" means ING Groep N.V., together with its successors.

                                       18
<Page>

          "PERCENTAGE" of any Secondary Lender means, (i) with respect to
Citibank, the percentage set forth on the signature page to this Agreement, or
such amount as reduced by any Assignment and Acceptance entered into with an
Eligible Assignee, or (ii) with respect to a Secondary Lender that has entered
into an Assignment and Acceptance, the amount set forth therein as such
Secondary Lender's Percentage, or such amount as reduced by an Assignment and
Acceptance entered into between such Secondary Lender and an Eligible Assignee.

          "PERMITTED DEBT" means (i) Debt arising under this Agreement or the
other Program Documents to the Secured Parties, (ii) Debt in favor of the
Custodian relating to Custodian's Overdraft Advances incurred in the ordinary
course of the Borrower's business, which are not overdue and which do not exceed
the amount permitted by SECTION 5.02(o), (iii) fee and expense obligations to
the Custodian and other similar agents which are providing services in respect
of the Borrower's Assets arising in the ordinary course of the Borrower's
business which are not overdue for a period in excess of thirty (30) days, (iv)
Debt (other than Debt for borrowed money) arising in connection with
transactions in the ordinary course of the Borrower's business in connection
with its purchasing of securities, Derivatives Transactions or dollar rolls to
the extent such transactions are permitted under the Investment Company Act and
the Investment Policies and Restrictions, (v) obligations of the Borrower to
fund future extensions of credit under the Loan Documents relating to its Loan
Assets which do not exceed twenty percent (20%) of the aggregate Asset Value of
the Borrower's Assets and which meet the Borrower's diversification requirements
set forth in the Prospectus which are not overdue, (vi) Debt representing
accrued expenses and current trade account payables incurred in the ordinary
course of the Borrower's business which are not overdue for a period of more
than thirty (30) days or which are being diligently contested in good faith,
(vii) Debt in respect of judgments or awards that have been in force for less
than the applicable period for taking an appeal so long as such judgments or
awards do not constitute an Event of Default and so long as execution is not
levied thereunder or in respect of which the Borrower (A) shall at the time in
good faith be diligently prosecuting an appeal or proceeding for review and in
respect of which a stay of execution shall have been obtained pending such
appeal or review, or (B) shall have obtained an unsecured performance bond in
respect of such judgment or award, and (viii) Debt arising in connection with
reverse repurchase agreements which are permitted under the Investment Company
Act and the Investment Policies and Restrictions, and which have been entered
into in the ordinary course of the Borrower's business, (ix) on the Closing
Date, Debt created under the Edison Credit Facility, all of which Debt shall be
repaid with the initial Advance made pursuant to this Agreement and (x) Debt
arising under the Existing 1998 Credit Agreement in an aggregate outstanding
principal amount not to exceed $90,000,000.

          "PERMITTED LIENS" means (i) Liens of any Secured Party created by or
pursuant to this Agreement or the Control Agreement, (ii) Liens of the Custodian
securing the Custodian's Overdraft Advances to the extent such Custodian's
Overdraft Advances do not exceed the amount permitted by SECTION 5.02(o), (iii)
Liens of the Custodian which are by the terms of the Control Agreement expressly
subordinated to the payment of the Borrower Obligations, (iv) Liens (other than
non-possessory Liens which pursuant to Applicable Law are, or may be, entitled
to take priority (in whole or in part) over prior, perfected liens and security
interests) with respect to taxes, assessments and other governmental charges or
levies for amounts not yet due or which are being contested in good faith by
appropriate proceedings diligently conducted

                                       19
<Page>

and with respect to which adequate reserves have been set aside in accordance
with GAAP, provided that enforcement of such Liens is stayed pending such
contest, (v) Liens securing Debt permitted under clause (x) of the definition of
Permitted Debt, (vi) Liens incidental to the conduct of the Borrower's business
securing the performance of fee and expense obligations to the Custodian and
other similar agents which are providing services in respect of the Borrower's
Assets arising in the ordinary course of the Borrower's business which are not
overdue for a period in excess of thirty (30) days, and (vii) Liens in respect
of Debt permitted under clauses (iv) and (viii) of the definition of Permitted
Debt.

          "PERMITTED SENIOR SECURITIES" means "senior securities" within the
meaning of the Investment Company Act which constitute Advances under this
Agreement, notes or similar instruments issued as of the Closing Date in favor
of the lenders under the Existing 1998 Credit Agreement, Derivatives
Transactions, repurchase transactions, reverse repurchase transactions,
preferred shares (to the extent the Borrower shall be in compliance with the
terms of SECTION 5.01(e)(xii) in respect thereof) or commitments of the Borrower
to fund future advances or other extensions of credit under any Loan Document,
to the extent the issuance of any such senior security by the Borrower is not in
contravention of the Investment Company Act or the Investment Policies and
Restrictions.

          "PERSON" means an individual or a corporation (including a business
trust), partnership, trust, incorporated or unincorporated association, joint
stock company, limited liability company, government (or an agency or political
subdivision thereof) or other entity of any kind.

          "PLAN" means an employee pension benefit plan (other than a
Multiemployer Plan) which is covered by Title IV of ERISA or subject to the
minimum funding standards under Section 412 of the Code.

          "PLEDGED COLLATERAL" shall have the meaning assigned to such term in
SECTION 7.01.

          "POST-DEFAULT RATE" means in respect of all amounts payable to any
Secured Party under any Program Document not paid when due (whether at stated
maturity, by acceleration or otherwise), including, without limitation, the
principal and Yield on any Advance not paid when due, a rate per annum during
the period commencing on the due date until such amount is paid in full equal to
the Base Rate as in effect from time to time plus two percent (2.00%).

          "PRINCIPAL OFFICE" means the principal office of Citibank presently
located at 399 Park Avenue, New York, New York or at such other location as
Citibank shall designate in writing to the Borrower.

          "PRIVATE AUTHORIZATIONS" means all franchises, permits, licenses,
approvals, consents and other authorizations of all Persons (other than
Authorities) including, without limitation, those with respect to trademarks,
service marks, trade names, copyrights, computer software programs, technical
and other know-how.

                                       20
<Page>

          "PROCEEDS" shall have, with reference to any asset or property, the
meaning assigned to it under the UCC and, in any event, shall include, but not
be limited to, any and all amounts from time to time paid or payable under or in
connection with such asset or property.

          "PRODUCT INFORMATION" shall have the meaning assigned to such term in
SECTION 9.09(b).

          "PROGRAM DOCUMENTS" means this Agreement, the Advance Notes, if any,
the Letter Agreements, the Asset Purchase Agreements, the Advisory Agreement,
the Administration Agreement, the Control Agreement, the Custodial Agreement,
the Intercreditor Agreement, the Fee Letter, the Loan Documents and the other
agreements, documents and instruments entered into or delivered in connection
herewith or therewith.

          "PROGRAM TERMINATION DATE" means the later to occur of (i) the
Secondary Lender Termination Date, and (ii) the date that all Borrower
Obligations have been finally paid in full; PROVIDED, HOWEVER, that if any
payment in respect of any Borrower Obligation made to any Secured Party must be
rescinded or returned for any reason whatsoever (including the insolvency or
bankruptcy of the Borrower) such Borrower Obligation shall be deemed to be
reinstated as though such payment had not been made and the Program Termination
Date shall be deemed to have not occurred.

          "PROSPECTUS" means with respect to the Borrower, the prospectus dated
July 1, 2003 filed with the SEC as a part of the Borrower's registration
statement on Form N-2, as amended (or any successor SEC form), and shall
include, without limitation, the related statement of additional information, if
any, included in such registration statement, and all supplements, amendments
and modifications thereto as of the Closing Date, and as further supplemented,
amended or modified in accordance with Applicable Law, including, without
limitation, the Securities Act and the Investment Company Act.

          "REGISTER" shall have the meaning assigned to such term in
SECTION 9.06(f).

          "REGULATION T" means Regulation T of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

          "REGULATION U" means Regulation U of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

          "REGULATION X" means Regulation X of the Board of Governors of the
Federal Reserve System, as in effect from time to time.

          "REQUESTED AMOUNT" shall have the meaning assigned to such term in
SECTION 2.02(a).

          "RESTRICTED PAYMENTS" means (i) the declaration of any distributions
or dividends (other than distributions payable solely in shares of beneficial
interest in the Borrower) on, or the payment on account of, or the setting apart
of assets for the purchase, redemption, retirement or other acquisition of, any
shares of beneficial interests in the Borrower, including, without

                                       21
<Page>

limitation, all common and preferred shares, whether now or hereafter
outstanding, either directly or indirectly, whether in cash, property or in
obligations of the Borrower, and (ii) the payment of fees and expenses to the
Adviser or the Administrator or any Affiliate of the Adviser or the
Administrator, as applicable, as compensation for the provision of managerial,
administrative services or otherwise.

          "S&P" means Standard & Poor's Ratings Group, together with its
successors.

          "SEC" means the Securities and Exchange Commission or any other
governmental authority of the United States of America at the time
administrating the Securities Act, the Investment Company Act or the Exchange
Act.

          "SECONDARY LENDER COMMITMENT" means (i) with respect to each Secondary
Lender party to this Agreement as of the Closing Date, the amount set forth on
the signature page to this Agreement, as such amount shall be adjusted by any
Assignment and Acceptance entered into between such Secondary Lender and an
Eligible Assignee in accordance with and subject to SECTION 9.06(b), or (ii)
with respect to a Secondary Lender that has entered into an Assignment and
Acceptance, the amount set forth therein as such Secondary Lender's "Secondary
Lender Commitment", in each case as such amount may be reduced by an Assignment
and Acceptance entered into between such Secondary Lender and an Eligible
Assignee in accordance with and subject to SECTION 9.06(b), and as may be
further reduced (or terminated) pursuant to the next sentence. Any reduction (or
termination) of the Total Commitment pursuant to the terms of this Agreement
shall reduce ratably (or terminate) each Secondary Lender's Secondary Lender
Commitment. References to the unused portion of any Secondary Lender's Secondary
Lender Commitment shall mean, at any time, such Secondary Lender's Secondary
Lender Commitment then in effect, minus the outstanding principal amount of the
Advances funded by such Secondary Lender.

          "SECONDARY LENDER STATED EXPIRATION DATE" means July 13, 2004;
PROVIDED that prior to such date (or the date so extended pursuant to this
proviso), upon the Borrower written request to the Agent, which request shall be
received by the Agent not more than sixty (60) days nor less than thirty (30)
days prior to the then current Secondary Lender Stated Expiration Date, one or
more Secondary Lenders having 100% of the Total Commitment may, in their sole
discretion, consent, which consent shall be given no less than twenty (20) days
prior to the then current Secondary Lender Stated Expiration Date (the date any
such consent is given, the "Extension Date"), to the extension of the Secondary
Lender Stated Expiration Date to the date occurring 364 days after such
Extension Date; PROVIDED, HOWEVER, that any failure of any Secondary Lender to
respond to the Borrower's request for such extension shall be deemed a denial of
such request by such Secondary Lender.

          "SECONDARY LENDER TERMINATION DATE" means the earlier of (i) the
Secondary Lender Stated Expiration Date, and (ii) the date the Total Commitment
shall terminate pursuant to SECTION 2.10 or SECTION 6.01.

          "SECONDARY LENDERS" means Citibank and each Eligible Assignee that
becomes a party to this Agreement pursuant to SECTION 9.06.

                                       22
<Page>

          "SECURED PARTIES" means the Agent, the Lenders, the Secondary Lenders
and their respective successors and assigns.

          "SECURED PARTY REPRESENTATIVES" shall have the meaning assigned to
such term in SECTION 9.09(c).

          "SECURITIES ACT" means the Securities Act of 1933, as amended, and the
rules and regulations of the SEC thereunder, all as from time to time in effect,
or any successor law, rules or regulations, and any reference to any statutory
or regulatory provisions shall be deemed to be a reference to any successor
statutory or regulatory provision.

          "SELLING INSTITUTION" means, in respect of any Loan Asset which
constitutes a participation interest, the Person which has granted or sold to
the Borrower a participation interest in the loan or other extension of credit
which is the subject of such Loan Asset.

          "SETTLEMENT DATE" means the date which is two (2) Business Days after
the end of each Settlement Period; provided, that, for purposes of the payment
of Yield, with respect to any Settlement Period for which Yield is computed by
reference to the Eurodollar Rate, the Settlement Date shall be the last day of
the Settlement Period.

          "SETTLEMENT PERIOD" means in respect of any Advance:

          (a)  in the case of any Settlement Period in respect of which Yield in
respect of such Advance is computed by reference to the CP Rate, the period
beginning on the date such Advance was made and ending on the last day of the
calendar month in which such Advance was made and, unless the Conduit Lender
shall have notified the Agent and the Borrower that such Advance will not
continue to be funded by the Conduit Lender through the issuance of commercial
paper (in which case such Advance shall be automatically continued at the end of
the then current Settlement Period as an Advance in respect of which Yield shall
be computed by reference to the Alternate Base Rate), thereafter each successive
period commencing on the first day of each calendar month during the term of
this Agreement and ending on the last day of such calendar month during the term
of this Agreement; PROVIDED, HOWEVER, that in the case of any Settlement Period
for any Advance which commences before the Maturity Date for such Advance and
would otherwise end on a date occurring after such Maturity Date, such
Settlement Period shall end on such Maturity Date and the duration of each
Settlement Period which commences on or after the Maturity Date for such Advance
may be any period (including, without limitation, a period of one day) as shall
be selected from time to time by the Agent;

          (b)  in the case of any Settlement Period in respect of which Yield in
respect of such Advance is computed by reference to the Eurodollar Rate, the
period beginning on the date such Advance was made and ending on the last day of
the calendar month in which such Advance was made and thereafter each successive
period commencing on the first day of each calendar month during the term of
this Agreement and ending on the last day of such calendar month during the term
of this Agreement; PROVIDED, HOWEVER, that any Settlement Period which is other
than the monthly Settlement Period shall be of such duration as shall be
selected by the Agent; and

                                       23
<Page>

          (c)  in the case of any Settlement Period in respect of which Yield is
computed by reference to the Alternate Base Rate, such Settlement Period shall
be of such duration as shall be selected by the Agent.

          "SPECIFIED LOAN DOCUMENTS" shall have the meaning assigned to such
term in the Control Agreement.

          "TAXES" shall have the meaning assigned to such term in
SECTION 9.03(a).

          "TOTAL COMMITMENT" means $325,000,000 as such amount may be reduced
pursuant to SECTIONS 2.10 or 9.01. References to the unused portion of the Total
Commitment shall mean, at any time, the Total Commitment then in effect, minus
the outstanding principal amount of the Advances.

          "TRANSACTION AGENT" means a commercial bank, insurance company,
finance company or other financial institution that is acting as agent or
trustee under the Loan Documents relating to any Loan Asset.

          "UCC" means the Uniform Commercial Code, as from time to time in
effect in the applicable jurisdictions.

          "UNSECURED LOAN ASSETS" means Loan Assets which are not fully secured
under the related Loan Documents by a first-priority perfected Lien on assets or
properties of the related Obligor with value as reasonably determined by the
Adviser at the time of the Borrower's purchase of such Loan Asset in reliance
upon appraisals, financial statements or market valuation techniques, in an
amount no less than the outstanding debt of such Obligor under the related Loan
Documents.

          "VALUE" shall have the meaning assigned to such term in
Section 2(a)(41) of the Investment Company Act.

          "WEEKLY DETERMINATION DATE" means the last Business Day of each
calendar week.

          "WEEKLY PORTFOLIO REPORT" shall have the meaning assigned to such term
in SECTION 5.01(e)(ix).

          "YIELD" means for each Advance for each Settlement Period:

               (i)    for each day during such Settlement Period to the extent
          such Advance will be funded or maintained on such day by the Conduit
          Lender through the issuance of promissory notes,

                                     CPR x P + LF
                                     -------
                                       360

                                       24
<Page>

               (ii)   for each day during such Settlement Period to the extent
          such Advance will be funded or maintained on such day by the Conduit
          Lender through the sale of a participation, or by a Secondary Lender
          or a Lender (other than the Conduit Lender),

                                     AR x P + LF
                                     -----
                                      360

          where:

               AR       =  the Assignee Rate for such Advance for such
                        Settlement Period

               P        =  the outstanding principal amount of such Advance on
                        such day

               CPR      =  the CP Rate for such Advance on such day

               LF       =  the Liquidation Fee, if any, for such Advance for
                        such Settlement Period (expressed as a daily amount);

PROVIDED, FURTHER, that Yield for any Advance shall not be considered paid by
any distribution to the extent that at any time all or a portion of such
distribution is rescinded or must otherwise be returned for any reason.

     SECTION 1.02.    RULES OF CONSTRUCTION.

          For all purposes of this Agreement, except as otherwise expressly
provided or unless the context otherwise requires (i) singular words shall
connote the plural as well as the singular, and vice versa (except as
indicated), as may be appropriate, (ii) the words "herein," "hereof and
"hereunder" and other words of similar import used in this Agreement refer to
this Agreement as a whole and not to any particular appendix, article, schedule,
section, paragraph, clause, exhibit or other subdivision, (iii) the headings,
subheadings and table of contents set forth in this Agreement are solely for
convenience of reference and shall not constitute a part of this Agreement nor
shall they affect the meaning, construction or effect of any provision hereof,
(iv) references in this Agreement to "including" shall mean including without
limiting the generality of any description preceding such term, and for purposes
hereof the rule of ejusdem generis shall not be applicable to limit a general
statement, followed by or referable to an enumeration of specific matters, to
matters similar to those specifically mentioned, and (v) each of the parties to
this Agreement and its counsel have reviewed and revised, or requested revisions
to, this Agreement, and the usual rule of construction that any ambiguities are
to be resolved against the drafting party shall be inapplicable in the
construction and interpretation of this Agreement.

     SECTION 1.03.    COMPUTATION OF TIME PERIODS.

                                       25
<Page>

          Unless otherwise stated in this Agreement, in the computation of a
period of time from a specified date to a later specified date, the word "from"
means "from and including" and the words "to" and "until" both mean "to but
excluding".

                                   ARTICLE II
                            ADVANCES TO THE BORROWER

     SECTION 2.01.    ADVANCE FACILITY.

          On the terms and conditions hereinafter set forth, including without
limitation, SECTIONS 3.01 and 3.02, the Conduit Lender may, in its sole
discretion, make Advances to the Borrower on any Borrowing Date from the date
hereof to the Lender Termination Date. On the terms and conditions hereinafter
set forth, including without limitation, SECTIONS 3.01 and 3.02 and during the
period from the date hereof to the Secondary Lender Termination Date if the
Conduit Lender has declined to make an Advance, the Secondary Lenders shall make
Advances to the Borrower, ratably in accordance with their respective Secondary
Lender Commitments. Under no circumstances shall the Conduit Lender or any
Secondary Lender be obligated to make any such Advance, to the extent that after
giving effect to the making of such Advance the aggregate principal amount of
all outstanding Advances would exceed the Total Commitment.

     SECTION 2.02.    MAKING OF ADVANCES.

          (a)  The Borrower shall give the Agent written notice (which notice
     shall be irrevocable and effective only upon receipt by the Agent) of each
     request for an Advance (each such request a "NOTICE OF BORROWING") not
     later than 12:00 noon (New York City time) on the day which is two (2)
     Business Days prior to the proposed borrowing date, which notice shall
     specify (i) the proposed borrowing date therefor (each such date, a
     "BORROWING DATE"), and (ii) the aggregate principal amount of the proposed
     borrowing (the "REQUESTED AMOUNT"). Any such Notice of Borrowing shall be
     substantially in the form of EXHIBIT B hereto, dated the date such request
     is being made, signed by an Authorized Signatory and otherwise
     appropriately completed. The Requested Amount specified in any Notice of
     Borrowing shall be at least $1,000,000 and in integral multiples of
     $1,000,000 in excess thereof. The Borrower shall not request more than two
     (2) borrowings in any calendar week.

          (b)  During the period prior to the Lender Termination Date, the
     Conduit Lender shall promptly notify the Agent whether it has determined to
     make a proposed Advance, and the Agent shall promptly thereafter notify the
     Borrower whether the Conduit Lender has determined to make such Advance. If
     the Conduit Lender has declined to make a proposed Advance, the Agent shall
     promptly send notice of the proposed borrowing to all of the Secondary
     Lenders concurrently by telecopier, telex or cable specifying the Borrowing
     Date for such borrowing, each Secondary Lender's Percentage multiplied by
     the Requested Amount and whether the Yield for such Advance is calculated
     based on the Eurodollar Rate or the Alternate Base Rate. On each Borrowing
     Date, the Conduit Lender or the Secondary Lenders shall, subject to the
     terms and conditions of this Agreement, make available to the Borrower at
     the Borrower's

                                       26
<Page>

     Account Advances in an amount equal to the Requested Amount in immediately
     available funds. To the extent not covered by SECTION 2.08, the Borrower
     shall indemnify the Conduit Lender, each Secondary Lender and the Agent
     against any loss or expense incurred by them as a result of any failure by
     the Borrower to accept any Advance requested in a Notice of Borrowing or as
     a result of the failure of the Borrower to receive any Advance requested in
     a Notice of Borrowing as a result of the failure of any condition precedent
     to the making of such Advance to be satisfied, including, without
     limitation, any loss or expense incurred by reason of the liquidation or
     reemployment of funds acquired or requested to fund such Advance.

     SECTION 2.03.    NOTELESS AGREEMENT; EVIDENCE OF INDEBTEDNESS.

          (a)  Each Lender and each Secondary Lender shall maintain in
     accordance with its usual practice an account or accounts evidencing the
     indebtedness of the Borrower to such Lender or such Secondary Lender, as
     applicable, resulting from each Advance made by such Lender or such
     Secondary Lender, as applicable, from time to time, including the amounts
     of principal and Yield thereon and paid to such Lender or Secondary Lender,
     as applicable, from time to time hereunder.

          (b)  The Agent shall maintain accounts in which it will record (i) the
     amount of each Advance made hereunder and the Settlement Period with
     respect thereto, (ii) the amount of any principal and Yield due and payable
     or to become due and payable from the Borrower to each Lender and each
     Secondary Lender hereunder, and (iii) the amount of any sum received by the
     Agent hereunder from the Borrower and each Lender's and each Secondary
     Lender's share thereof.

          (c)  The entries maintained in the accounts maintained pursuant to
     CLAUSES (a) and (b) of this SECTION 2.03 shall be rebuttable presumptive
     evidence of the existence and amounts of the Borrower Obligations therein
     recorded (absent manifest error); PROVIDED, HOWEVER, that the failure of
     the Agent, any Lender or any Secondary Lender to maintain such accounts or
     any error therein shall not in any manner affect the obligation of the
     Borrower to repay the Borrower Obligations in accordance with their terms.

          (d)  The Conduit Lender and any Secondary Lender may request that its
     Advances be evidenced by an Advance Note. In such event, the Borrower shall
     (as soon as reasonably practicable) prepare, execute and deliver to such
     Conduit Lender or Secondary Lender, as applicable, an Advance Note payable
     to the order of such Conduit Lender or Secondary Lender, as applicable.
     Thereafter, the Advances evidenced by such Advance Note and interest
     thereon shall at all times (including after any assignment pursuant to
     SECTION 9.06) be represented by one or more Advance Notes payable to the
     order of the payee named therein or any assignee pursuant to SECTION 9.06,
     except to the extent that any such Conduit Lender, Secondary Lender or
     assignee subsequently returns to the Borrower any such Advance Note for
     cancellation and requests that such Advances once again be evidenced as
     described in CLAUSES (a) and (b) of this SECTION 2.03 above. In connection
     with any assignment pursuant to SECTION 9.06, if such assigning Secondary
     Lender shall have an Advance Note issued to it, such assigning Secondary
     Lender shall promptly return its Advance Note to the Borrower marked
     "cancelled".

                                       27
<Page>

     SECTION 2.04.    MATURITY OF THE ADVANCES.

          The principal amount of, and the accrued and unpaid Yield on each
outstanding Advance shall be due and payable by the Borrower on the Maturity
Date for such Advance.

     SECTION 2.05.    PREPAYMENT OF THE ADVANCES.

          (a)  The Borrower shall have the right at any time and from time to
     time, upon not less than one (1) Business Day's prior written or telephonic
     notice (in the case of telephonic notice, promptly confirmed in writing) to
     the Agent specifying the date and amount of such prepayment, to prepay
     (without any premium or penalty, except for any Liquidation Fee or amount
     payable under SECTION 2.08) all or a portion of the outstanding Advances,
     together with unpaid Yield on all Advances that are paid in full on such
     date of prepayment, on a Business Day; PROVIDED, that any such prepayment,
     if a partial prepayment, shall be at least $1,000,000 and in integral
     multiples of $100,000 in excess thereof (or, in the case of any prepayment
     required under SECTION 2.05(b), at least $10,000 and in integral multiples
     of $10,000 in excess thereof).

          (b)  If on any Determination Date the Borrower is not in full
     compliance with the Borrowing Base Test, the Borrower shall on the next
     succeeding Business Day after such Determination Date (each such date, a
     "COMPLIANCE CERTIFICATION DATE"), (I) notify the Agent of such failure to
     comply and the amount of any prepayment required to be made, or additional
     Borrowing Base Eligible Assets required to be pledged, under this CLAUSE
     (b), and (II) prepay Advances (together with Yield thereon) and/or pledge
     to the Agent additional Borrowing Base Eligible Assets in an amount
     necessary to cause the Borrower to be in full compliance with the Borrowing
     Base Test on such Compliance Certification Date; PROVIDED, HOWEVER, that to
     the extent the Borrower does not have sufficient available funds and/or
     additional Borrowing Base Eligible Assets to pledge to the Agent to fully
     cure such compliance shortfall on such Compliance Certification Date, then
     the Borrower shall (i) on such Compliance Certification Date prepay
     outstanding Advances in the amount of its available funds and pledge any
     Borrowing Base Eligible Assets to the Agent, if applicable; (ii) no later
     than the close of business on the twelfth (12th) Business Day following
     such Determination Date either (A) acquire and pledge to the Agent under
     this Agreement and the Control Agreement additional Borrowing Base Eligible
     Assets having an Adjusted Asset Value at least sufficient to cause the
     Borrowing Base to be at least equal to the product of (x) 1.05 and (y) the
     Credits Outstanding as determined on such Compliance Certification Date, or
     (B) prepay Advances in a principal amount (and pay the Yield thereon) at
     least sufficient to cause the Borrowing Base to be at least equal to the
     product of (x) 1.05 and (y) the Credits Outstanding as determined on such
     Compliance Certification Date; and (iii) no later than the close of
     business on such Compliance Certification Date, deliver to the Agent a
     certificate, signed by an Authorized Signatory of the Borrower, that (1)
     certifies the amount of the compliance shortfall, (2) specifies whether the
     Borrower shall either (x) prepay the Advances in accordance with CLAUSE (B)
     above, or (y) acquire additional Borrowing Base Eligible Assets in
     accordance with CLAUSE (A) above and specifies the identity and Adjusted
     Asset Value of the Borrowing Base Eligible Assets for which the Borrower
     has entered into corrective trades

                                       28
<Page>

     in order to satisfy the requirements of CLAUSE (A) of this SECTION 2.05(b),
     and (3) certifies that the requirements of this SECTION 2.05(b) shall be
     satisfied on or prior to the twelfth (12th) Business Day following such
     Determination Date.

          (c) The amount of each prepayment under this SECTION 2.05 shall be
     applied ratably to the Advances of each Lender and each Secondary Lender in
     the order in which such Advances were made by such Lender or Secondary
     Lender.

     SECTION 2.06.    YIELD.

          The Borrower hereby agrees to pay the Yield computed with reference to
the principal amount of each Advance outstanding from time to time. Yield
accruing in respect of any Advance for any Settlement Period shall be due and
payable on the Settlement Date immediately succeeding such Settlement Period and
as required by SECTION 2.05. It is the intention of the parties hereto that the
Yield on the Advances shall not exceed the maximum rate permissible under
applicable law. Accordingly, anything herein or in any Advance Note to the
contrary notwithstanding, in the event any Yield is charged to, collected from
or received from or on behalf of the Borrower by the Lenders or the Secondary
Lenders pursuant hereto or thereto in excess of such maximum lawful rate, then
the excess of such payment over that maximum shall be applied first to the
payment of amounts then due and owing by the Borrower to the Secured Parties
under the Program Documents (other than in respect of principal and Yield on
Advances), then to the reduction of the outstanding principal balance of the
Advances then due, and then any excess amount to be returned to the Borrower.

     SECTION 2.07.    INCREASED COSTS.

          (a)  If, due to either (i) the introduction of or any change (other
     than any change by way of imposition or increase of reserve requirements
     reflected in the Eurodollar Rate Reserve Percentage) in or in the
     interpretation of any Applicable Law or (ii) the compliance with any
     directive or guideline issued by, or request from, any central bank or
     other Authority (whether or not having the force of law), there shall be
     any increase in the cost to any Affected Person of agreeing to make or
     making, funding or maintaining Eurodollar Rate Advances to the Borrower,
     then the Borrower from time to time shall, as promptly as practicable upon
     written demand by such Affected Person pay to the Agent for the account of
     such Affected Person additional amounts sufficient to compensate such
     Affected Person for such increased cost; PROVIDED, HOWEVER, that no
     additional amounts shall be required under this SECTION 2.07 with respect
     to (i) income or profits taxes (or franchise taxes imposed in lieu
     thereof), (ii) Taxes or Other Taxes in effect on the date that such
     Affected Person became a party to this Agreement or otherwise became
     committed to purchase or acquire any interest in any Advances (whether by
     assignment, participation or otherwise), except to the extent that such
     Affected Person's assignor or predecessor was entitled to such additional
     amounts, and (iii) Taxes to the extent avoidable had such Person complied
     with the provisions of SECTION 9.03(f). In determining such amount, such
     Affected Person may in good faith use any reasonable averaging and
     attribution methods, consistent with the averaging and attribution methods
     generally used by such Affected Person in determining amounts of this type
     with respect to other borrowers. Each such Affected Person shall, together
     with

                                       29
<Page>

     its written demand therefor, deliver to the Borrower and the Agent a
     certificate setting forth in reasonable detail the amount of such increased
     cost and the basis for the calculation of such amount, which certificate
     shall be conclusive and binding for all purposes, absent manifest error.

          (b)  If an Affected Person determines that the compliance with (i) any
     Applicable Law or (ii) any directive or guideline issued by, or request
     from, any central bank or other Authority (whether or not having the force
     of law), in either case, affects or would affect the amount of capital
     required or expected to be maintained by such Affected Person and that the
     amount of such capital is increased by or based upon the existence of such
     Affected Person's commitment under the Program Documents or upon such
     Affected Person's making, funding or maintaining Advances, then, as
     promptly as practicable upon written demand of such Affected Person (with a
     copy of such demand to the Agent), the Borrower shall pay to the Agent for
     the account of such Affected Person, from time to time as specified by such
     Affected Person, additional amounts sufficient to compensate such Affected
     Person in light of the circumstances. Each such Affected Person shall,
     together with its written demand therefore, deliver to the Borrower and the
     certificate setting forth in reasonable detail such amounts and the basis
     for the calculation of such amounts, which certificate shall be conclusive
     and binding for all purposes, absent manifest error.

          (c)  Upon the occurrence of any event giving rise to the Borrower's
     obligation to pay additional amounts to any Affected Person pursuant to
     SECTIONS 2.07(a), 2.07(b) or 9.03, such Affected Person will, if requested
     by the Borrower, use reasonable efforts (subject to overall policy
     considerations of such Affected Person) to designate a different lending
     office; provided, however, that such designation is made on such terms that
     such Affected Person and its lending office suffer no significant economic,
     legal or regulatory disadvantage, with the object of avoiding future
     consequence of the event giving rise to the operation of any such Section.
     If such additional amounts are not eliminated by any such designation and
     such Affected Person does not waive payment of such additional amounts, the
     Agent, may at its sole discretion within sixty (60) days, recommend a
     replacement Affected Person not so affected. If after the sixty (60) day
     period described in the preceding sentence a replacement for such Affected
     Person has not been procured, the Borrower may propose a replacement for
     such Affected Person and, upon approval of the Agent (which approval shall
     not be unreasonably withheld or delayed), such Affected Person shall assign
     its interests under the applicable Program Documents to such replacement
     entity. The parties hereby agree that unless and until the Affected Person
     to be replaced (i) is paid in full for all amounts due and owing hereunder
     and under any other Program Document, and (ii) enters into assignment
     documents with the replacement entity which are reasonably satisfactory to
     such Affected Person, it shall have no obligation to assign any of its
     rights and interests hereunder. Each such Affected Person agrees to take
     all actions necessary to permit a replacement to succeed to its rights and
     obligations hereunder and under the other Program Documents. The Borrower
     agrees to pay all reasonable expenses incurred by any Affected Person in
     utilizing another lending office of such Affected Person or in assigning
     its interest pursuant to this SECTION 2.07(c).

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     Nothing in this SECTION 2.07(c) shall affect or postpone any of the
     obligations of the Borrower or the rights of any Secured Party.

     SECTION 2.08.    COMPENSATION.

          Without duplication of any amount due by the Borrower in respect of
any Liquidation Fee, the Borrower shall compensate each Affected Person, upon
its written request (which request shall set forth in reasonable detail the
basis for requesting such amounts and the details showing the basis of the
calculation of such amounts), for all reasonable losses, expenses and
liabilities (including, without limitation, any interest paid by such Affected
Person to lenders of funds borrowed by it to make or carry its Eurodollar Rate
Advances and any loss sustained by such Affected Person in connection with the
re-employment of such funds), which such Affected Person may sustain: (i) if for
any reason (other than a default by such Affected Person) a borrowing of any
Eurodollar Rate Advance by the Borrower does not occur on a date specified
therefor in the Notice of Borrowing, (ii) if any prepayment of any of the
Borrower's Eurodollar Rate Advances occurs on a date which is not the last day
of a Settlement Period applicable thereto, (iii) if any prepayment of any of the
Borrower's Eurodollar Rate Advances is not made on any date specified in a
notice of prepayment given by the Borrower, or (iv) as a consequence of any
other default by the Borrower to repay its Eurodollar Rate Advances when
required by the terms of this Agreement.

     SECTION 2.09.    ADDITIONAL YIELD ON EURODOLLAR RATE ADVANCES.

          So long as any Affected Person shall be required under regulations of
the Board of Governors of the Federal Reserve System to maintain reserves with
respect to liabilities or assets consisting of or including Eurocurrency
Liabilities, the Borrower shall pay as promptly as practicable following written
demand therefor to such Affected Person Eurodollar Additional Yield on the
principal amount of each outstanding Advance on each date on which Yield is
payable on such Advance. Such Eurodollar Additional Yield shall be determined on
a reasonable basis by such Affected Person and notified to the Borrower through
the Agent within thirty (30) days after any payment is made with respect to
which such additional Yield is requested. Each such Affected Person shall,
together with the written demand therefor, deliver to the Borrower and the Agent
a certificate setting forth in reasonable detail the amount of such Eurodollar
Additional Yield and the basis for the calculation of such amount, which
certificate shall be conclusive and binding for all purposes, absent manifest
error.

     SECTION 2.10.    TERMINATION OR REDUCTION OF THE TOTAL COMMITMENT.

          (a)  The Borrower may at any time, upon thirty (30) days prior written
     notice to the Agent terminate in whole or reduce in part the unused portion
     of the Total Commitment; PROVIDED, that each such partial reduction of the
     Total Commitment shall be in an amount equal to at least $5,000,000 or an
     integral multiple thereof.

     SECTION 2.11.    RESCISSION OR RETURN OF PAYMENT.

          The Borrower further agrees that, if at any time all or any part of
any payment theretofore made by it to any Secured Party or their designees is or
must be rescinded or returned

                                       31
<Page>

for any reason whatsoever (including, without limitation, the insolvency,
bankruptcy or reorganization of the Borrower or any of its Affiliates), the
obligation of the Borrower to make such payment to such Secured Party shall, for
the purposes of this Agreement, to the extent that such payment is or must be
rescinded or returned, be deemed to have continued in existence and this
Agreement shall continue to be effective or be reinstated, as the case may be,
as to such obligations, all as though such payment had not been made.

     SECTION 2.12.    FEES PAYABLE BY BORROWER.

          The Borrower agrees to pay to the Agent and the Secondary Lenders such
fees as are set forth in the Fee Letter.

     SECTION 2.13.    POST-DEFAULT INTEREST.

          The Borrower hereby promises to pay interest on the unpaid principal
amount of each Advance and any other amount payable by the Borrower hereunder,
in each case, which shall not be paid in full when due, for the period
commencing on the due date thereof until but not including the date the same is
paid in full at the Post-Default Rate. Interest payable at the Post-Default Rate
shall be payable on the Agent's demand.

     SECTION 2.14.    PAYMENTS.

          (a)  All amounts owing and payable by the Borrower to the Agent, any
     Lender or any Secondary Lender, in respect of the Advances or otherwise
     under this Agreement or any other Program Document, including, without
     limitation, the principal amount of outstanding Advances, Yield, fees,
     indemnities, expenses or other amounts payable under the Program Documents,
     shall be paid in Dollars, in immediately available funds on or prior to
     12:00 noon (New York City time) on the date due without counterclaim,
     setoff, deduction, defense, abatement, suspension or deferment to the
     Agent's Account. Any payment paid after 12:00 noon (New York City time) on
     any day shall be deemed to have been made on the next Business Day for all
     purposes of this Agreement.

          (b)  All computations of interest at the Post-Default Rate and all
     computations of Yield, fees and other amounts hereunder shall be made on
     the basis of a year of 360 days for the actual number of days elapsed.
     Whenever any payment or deposit to be made hereunder shall be due on a day
     other than a Business Day, such payment or deposit shall be made on the
     next succeeding Business Day and such extension of time shall be included
     in the computation of such payment or deposit.

          (c)  Upon receipt of funds deposited into the Agent's Account, the
     Agent shall distribute such funds, FIRST to the Lenders and the Secondary
     Lenders on a pro rata basis in accordance with such amounts owed to each
     Lender and Secondary Lender in payment in full of all accrued and unpaid
     Yield owing to the Lenders and Secondary Lenders, SECOND to the Lenders,
     the Secondary Lenders or the Agent, on a pro rata basis in accordance with
     such amounts owed to each such Person in payment of any other fees or other
     amounts owed by the Borrower to the Lenders, the Secondary Lenders and the
     Agent under this Agreement and the other Program Documents (other than in
     respect of

                                       32
<Page>

     the principal amount of the Advances), and THIRD to the payment of the
     principal amount of the Advances owing to such Lenders and Secondary
     Lenders on a pro rata basis in accordance with such amounts owed to each
     such Lender and Secondary Lender.

          (d)  During the continuance of an Event of Default all payments in
     respect of the Borrower Obligations, payable by or on behalf of the
     Borrower, including all Proceeds resulting from the sale or disposition of
     the Pledged Collateral shall be remitted to the Agent's Account and applied
     in accordance with Section 7.03(a).

     SECTION 2.15.    RATABLE PAYMENTS.

          If any Secondary Lender or Lender (other than the Conduit Lender),
whether by setoff, bankers' lien, counterclaim or otherwise, has payment made to
it with respect to any Borrower Obligations owing to it in a greater proportion
than that received by any other Lender or Secondary Lender entitled to receive a
ratable share of such payments, such Lender or Secondary Lender agrees, promptly
upon demand, to purchase for cash without recourse or warranty a portion of the
unpaid Borrower Obligations held by the other Lenders and Secondary Lenders so
that after such purchase each Lender and Secondary Lender will hold its ratable
proportion of such unpaid Borrower Obligations; provided that if all or any
portion of such excess amount is thereafter recovered from such Secondary Lender
or Lender, as the case may be, such purchase shall be rescinded and the purchase
price restored to the extent of such recovery, but without interest.

     SECTION 2.16.    BORROWER'S OBLIGATIONS ABSOLUTE.

          The Borrower's obligations under this Agreement and under the other
Program Documents to which it is a party shall be absolute, unconditional and
irrevocable, and shall be paid strictly in accordance with the terms hereof and
thereof, under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Borrower, the Adviser, the
Administrator or any other Person may have or have had against any Secured Party
or any other Person.

                                   ARTICLE III
                              CONDITIONS PRECEDENT

     SECTION 3.01.    CONDITIONS PRECEDENT TO THE EFFECTIVENESS OF THIS
AGREEMENT.

          The effectiveness of this Agreement and the Conduit Lender's and any
the Secondary Lender's obligations hereunder shall be subject to the conditions
precedent that the Agent shall have received (or waived receipt thereof) on or
before the initial Borrowing Date the following, each (unless otherwise
indicated) in form and substance reasonably satisfactory to the Agent in
sufficient copies for the Conduit Lenders and the Secondary Lenders:

          (a)  each of the Program Documents duly executed and delivered by the
     parties thereto, which shall each be in full force and effect;

                                       33
<Page>

          (b)  the Prospectus, as in effect on the Closing Date;

          (c)  the signed opinions of counsel to the Borrower, the Adviser and
     the Administrator addressed to the Agent, each the Conduit Lender and each
     Secondary Lender as to such matters as the Agent shall have reasonably
     requested;

          (d)  if requested by the Conduit Lender or any Secondary Lender
     pursuant to SECTION 2.03 on or prior to the Closing Date, an Advance Note
     duly executed and completed by the Borrower to the Conduit Lender or such
     Secondary Lender, as applicable;

          (e)  copies of all Governmental Authorizations, material Private
     Authorizations and Governmental Filings, if any, which may be required to
     be made or obtained by the Borrower in connection with the transactions
     contemplated by the Program Documents;

          (f)  a certificate of the Secretary or Assistant Secretary of each of
     the Borrower, the Adviser and the Administrator certifying (i) as to its
     certificate of incorporation or declaration of trust, as applicable and
     by-laws, (ii) solely as to the Borrower, as to the resolutions of its Board
     of Trustees approving this Agreement, the other Program Documents to which
     it is a party and the transactions contemplated hereby and thereby, (iii)
     that its representations and warranties set forth in the Program Documents
     to which it is a party are true and correct, and (iv) the incumbency and
     specimen signature of each of its officers authorized to execute the
     Program Documents to which it is a party;

          (g)  copies of proper financing statements naming the Borrower as
     debtor and the Agent as secured party to be filed under the UCC in all
     jurisdictions that the Agent may deem necessary or desirable in order to
     perfect the Agent's interests in the Pledged Collateral contemplated by
     this Agreement;

          (h)  copies of proper termination financing statements, if any,
     necessary to release all Adverse Claims of any Person in the Assets of the
     Borrower previously granted by the Borrower;

          (i)  completed requests for information, dated on or before the date
     of the initial Borrowing Date, listing all effective financing statements
     filed in the jurisdictions referred to in subsection (g) above that name
     the Borrower (under its present name and any previous name) as debtor,
     together with copies of such other financing statements;

          (j)  a pro-forma Investor Report, which shall evidence compliance with
     the Borrowing Base Test, the Asset Coverage Test and certain other terms of
     the Program Documents after giving effect to the initial borrowing of
     Advances under this Agreement; and

          (k)  the fees, if any, to be received by it on or prior to the Closing
     Date under this Agreement and the Fee Letter.

                                       34
<Page>

     SECTION 3.02.    CONDITIONS PRECEDENT TO ALL ADVANCES.

          The obligation of the Conduit Lenders and the Secondary Lenders to
make any Advance (including the initial Advances) on any Borrowing Date shall be
subject to the fulfillment of the following conditions:

          (a)  each of the representations and warranties of the Borrower, the
     Custodian, the Adviser and the Administrator contained in this Agreement,
     the Letter Agreements and the other Program Documents shall be true and
     correct as of such date and shall continue to be true immediately after
     giving effect to such Advance;

          (b)  no Default or Event of Default shall have occurred and be
     continuing or shall result from the making of such Advance;

          (c)  immediately after giving effect to such Advance the Borrower
     shall be in full compliance with each of the Borrowing Base Test and the
     Asset Coverage Test;

          (d)  immediately after the making of any such Advance, the aggregate
     outstanding principal amount of all Advances shall not exceed the Total
     Commitment; and

          (e)  the Agent shall have received an Investor Report and such other
     instruments, certificates and documents as the Agent shall reasonably
     request.

                                   ARTICLE IV
                         REPRESENTATIONS AND WARRANTIES

     SECTION 4.01.    REPRESENTATIONS AND WARRANTIES OF THE BORROWER.

          The Borrower represents and warrants to each of the Secured Parties on
and as of the Closing Date, each Borrowing Date and each Weekly Determination
Date, as follows:

          (a)  DUE ORGANIZATION. The Borrower is a Massachusetts business trust,
     duly organized, validly existing and in good standing under the laws of the
     Commonwealth of Massachusetts, with full power and authority to own and
     operate its Assets, to conduct the business in which it is now engaged and
     to execute and deliver and perform its obligations under this Agreement and
     the other Program Documents to which it is a party, except where the
     failure to hold such power and authority could not reasonably be expected
     to result in a Material Adverse Effect.

          (b)  DUE QUALIFICATION AND GOOD STANDING. The Borrower is duly
     qualified to do business and is in good standing in each jurisdiction in
     which the nature of its business, assets and properties, including, without
     limitation, the performance of its obligations under this Agreement and the
     other Program Documents to which it is a party, requires such
     qualification, except where the failure to be so qualified or to be in good
     standing could not reasonably be expected to have a Material Adverse
     Effect.

                                       35
<Page>

          (c)  DUE AUTHORIZATION; EXECUTION AND DELIVERY; LEGAL, VALID AND
     BINDING; ENFORCEABILITY. The execution and delivery by the Borrower of, and
     the performance by the Borrower of its obligations under, the Program
     Documents to which it is a party are within its powers and have been duly
     authorized by all requisite action by the Borrower and have been duly
     executed and delivered by the Borrower and constitute the legal, valid and
     binding obligations of the Borrower enforceable against the Borrower in
     accordance with their respective terms, except as enforceability may be
     limited by applicable bankruptcy, insolvency, fraudulent conveyance,
     reorganization, moratorium or similar laws affecting the enforcement of
     creditors' rights generally and by general equitable principles (whether
     enforcement is sought by proceedings in equity or at law).

          (d)  NONCONTRAVENTION. Neither the execution and delivery by the
     Borrower of this Agreement, the other Program Documents to which it is a
     party, nor the consummation of the transactions herein or therein
     contemplated, nor compliance with the terms, conditions and provisions
     hereof or thereof by it, will (i) conflict with, or result in a breach or
     violation of, or constitute a default under its declaration of trust or
     other organizational documents, (ii) conflict with or contravene (A) any
     Applicable Law, (B) any contractual restriction binding on or affecting the
     Borrower or any of its Assets, or (C) any order, writ, judgment, award,
     injunction or decree binding on or affecting the Borrower or any of its
     Assets, (iii) result in a breach or violation of, or constitute a default
     under, or permit the acceleration of any obligation or liability in, or but
     for any requirement of the giving of notice or the passage of time (or
     both) would constitute such a conflict with, breach or violation of, or
     default under, or permit any such acceleration in, any contractual
     obligation or any agreement or document to which it is a party or by which
     it or any of its properties is bound (or to which any such obligation,
     agreement or document relates), or (iv) result in any Adverse Claim upon
     any Asset of the Borrower.

          (e)  GOVERNMENTAL AUTHORIZATIONS; PRIVATE AUTHORIZATIONS; GOVERNMENTAL
     FILINGS. The Borrower has obtained all necessary Governmental
     Authorizations and Private Authorizations, and made all Governmental
     Filings necessary for the execution and delivery by the Borrower of, and
     the performance by the Borrower of its obligations under, this Agreement,
     the other Program Documents to which it is a party and the agreements,
     certificates and instruments contemplated hereby or thereby, except in the
     case of Private Authorizations, where the failure to obtain such Private
     Authorizations could not reasonably be expected to have a Material Adverse
     Effect.

          (f)  SECURITY INTEREST. This Agreement and the Control Agreement and
     the actions required to be taken pursuant to the terms hereof and thereof
     are, and at all times shall be, effective to create and perfect in the
     Agent for the benefit of the Secured Parties a first-priority perfected
     security interest in the Pledged Collateral (subject to the Lien of the
     Custodian securing the Custodian's Overdraft Advances to the extent
     permitted by SECTION 5.02(o) and other Permitted Liens) free and clear of
     all Adverse Claims.

          (g)  BORROWING BASE ELIGIBLE ASSETS, ADVERSE CLAIMS, ETC. The Borrower
     owns each Borrowing Base Eligible Asset free and clear of Adverse Claims;
     and as of the initial Borrowing Date and at all times thereafter, the Agent
     has a first-priority perfected

                                       36
<Page>

     security interest in the Pledged Collateral (subject to the Lien of the
     Custodian securing the Custodian's Overdraft Advances to the extent
     permitted by SECTION 5.02(o) and other Permitted Liens) free and clear of
     all Adverse Claims.

          (h)  NO FINANCING STATEMENT. No effective financing statements or
     other instruments similar in effect covering any Asset of the Borrower are
     on file in any recording office, except those filed in favor of the Agent
     pursuant to this Agreement.

          (i)  PRINCIPAL OFFICE; ORGANIZATION. The Borrower's principal place of
     business and chief executive office is at the addresses referred to in
     SECTION 5.01(d), the Borrower's jurisdiction of organization is the
     Commonwealth of Massachusetts and the Borrower has not transacted any
     business under any name other than "ING Prime Rate Trust".

          (j)  PENDING LITIGATION OR OTHER PROCEEDING. There are no pending or,
     to the best of the Borrower's knowledge, threatened investigations,
     litigation, suits or proceedings involving the Borrower which could
     reasonably be expected to have a Material Adverse Effect.

          (k)  INVESTMENT COMPANY ACT, ETC. The Borrower is and will continue to
     be registered as a diversified, closed-end management investment company as
     such term is used in the Investment Company Act and is in compliance in all
     material respect with the Investment Company Act and the Investment
     Policies and Restrictions (other than with respect to the Borrower's
     minimum "asset coverage" (as defined in and determined pursuant to
     Section 18 of the Investment Company Act) which compliance shall be without
     qualification).

          (1)  INFORMATION AND REPORTS. The Prospectus, each Investor Report,
     each Weekly Portfolio Report, each Notice of Borrowing and all other
     written information, written reports, certificates and written statements
     provided by or on behalf of the Borrower to any Secured Party for purposes
     of or in connection with this Agreement, the other Program Documents to
     which the Borrower is a party or the transactions contemplated hereby or
     thereby to be performed by the Borrower is, and all such information
     hereafter provided by or on behalf of the Borrower to any Secured Party is
     and will be (except for projections and forward looking statements (other
     than any pro forma Investor Report)) true, correct and complete in all
     material respects on the date such information is stated or certified and
     no such information contains, or will contain, any material
     misrepresentation or any omission to state therein matters necessary to
     make the statements made therein not misleading under the circumstances in
     which they were made or delivered as of the time when made or delivered.

          (m)  APPLICABLE LAW. The Borrower is in full compliance with all
     Applicable Law, including, without limitation, the Securities Act and the
     Investment Company Act, including the rules and regulations promulgated
     thereunder, except where the failure to so comply could not give rise to a
     reasonable possibility of a Material Adverse Effect (other than with
     respect to the Borrower's minimum "asset coverage" (as defined in and

                                       37
<Page>

     determined pursuant to Section 18 of the Investment Company Act), which
     compliance shall be without qualification).

          (n)  ERISA. The Borrower is not nor has during the past five (5) years
     been a member of an ERISA Group and does not have nor during the past five
     (5) years had any liability or obligation with respect to any Plan,
     Multiemployer Plan or Benefit Arrangement; provided, however, that the
     Borrower may incur liabilities or obligations under a plan or arrangement
     in the form of (i) the Form of Retirement Plan For Each Closed End Fund or
     (ii) the Form of Amended and Restated Deferred Compensation Agreement.

          (o)  NO DEFAULT OR EVENT OF DEFAULT. No Default or Event of Default
     has occurred and is continuing and on each Borrowing Date each of the
     conditions precedent to the making of Advances set forth in Section 3.02
     have been fully satisfied.

          (p)  BORROWING BASE TEST; ASSET COVERAGE TEST, ETC. The Borrowing Base
     Test and the Asset Coverage Test are fully satisfied and will be fully
     satisfied and immediately after the making of each Advance; provided, that
     if on any date this representation is made (other than a Borrowing Date)
     the Borrower is in full compliance with the requirements set forth in
     SECTION 2.05(b), the Borrower shall be deemed to be in compliance with this
     CLAUSE (p) to the extent it relates to the Borrowing Base Test as of such
     date.

          (q)  INTERNAL REVENUE CODE. The Borrower is qualified, and intends to
     continue to qualify, as a "regulated investment company" within the meaning
     of the Code, and as such its income is not, and will not be, subject to tax
     at the corporate level under the Code.

          (r)  TAXES. The Borrower has filed all United States Federal income
     tax returns and all other material tax returns which are required to be
     filed by it, if any, and has paid all material taxes due pursuant to such
     returns, if any, or pursuant to any assessment received by the Borrower,
     except for any taxes or assessments which are being contested in good faith
     by appropriate proceedings and with respect thereto adequate reserves have
     been established in accordance with GAAP.

          (s)  FINANCIAL CONDITION. The statement of assets and liabilities of
     the Borrower as at February 28, 2002, certified by KPMG LLP, certified
     public accountants, fairly present in conformity with GAAP the financial
     position of the Borrower at such date and since such date there has been no
     material adverse change in the business, financial condition or results of
     operations of the Borrower.

          (t)  REGULATIONS T, U AND X. Neither the making of any Advance nor the
     use of proceeds thereof will violate the provisions of Regulation U or
     Regulation X. The Borrower's use of the proceeds of the Advances will not
     violate Regulation T.

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<Page>

                                    ARTICLE V
                                    COVENANTS

     SECTION 5.01.    AFFIRMATIVE COVENANTS OF THE BORROWER.

          The Borrower covenants and agrees that it shall from the date hereof
until the Program Termination Date:

          (a)  COMPLIANCE WITH AGREEMENTS, LAWS, ETC. (i) Duly observe, comply
     with and conform to all requirements of Applicable Law relative to the
     conduct of its business or to its Assets, including without limitation the
     Investment Company Act, (ii) preserve and keep in full force and effect the
     legal existence of the Borrower and the rights, privileges, qualifications
     and franchises of the Borrower, (iii) comply in all material respects with
     the terms and conditions of each Program Document to which it is a party,
     and (iv) obtain, maintain and keep in full force and effect all
     Governmental Authorizations, Private Authorizations and Governmental
     Filings which are necessary or appropriate to properly carry out its
     business and the transactions contemplated to be performed by the Borrower
     under this Agreement and the other Program Documents to which it is a
     party, except with respect to clauses (i) through (iv) above where the
     failure to so observe, comply, preserve, keep, obtain, maintain and conform
     could not reasonably be expected to have a Material Adverse Effect (other
     than with respect to the Borrower's minimum "asset coverage" (as defined
     and determined pursuant to Section 18 of the Investment Company Act) which
     compliance shall be without qualification).

          (b)  TAXES. Cause to be computed, paid and discharged when due all
     material taxes, assessments and other governmental charges or levies
     imposed upon it, or upon any income or Assets of the Borrower, prior to the
     day on which penalties are attached thereto, unless and to the extent that
     the same shall be contested in good faith by appropriate proceedings and
     with respect to which adequate reserves have been established on the books
     of the Borrower in accordance with GAAP.

          (c)  FURTHER ASSURANCES. Promptly, at its expense, execute and deliver
     such further instruments and take such further action as is necessary in
     order to (i) establish and protect the rights, interests and remedies
     created, or intended to be created, in favor of the Secured Parties
     including, without limitation, all such actions which are necessary or
     reasonably advisable to maintain and protect the Secured Parties'
     first-priority perfected (subject to the Lien of the Custodian securing the
     Custodian's Overdraft Advances to the extent permitted by Section 5.02(o)
     and other Permitted Liens) security interest in the Pledged Collateral free
     and clear of Adverse Claims, and (ii) enable the Secured Parties to enforce
     their rights and remedies under the Program Documents to which the Borrower
     is a party, including, without limitation, to do all things necessary at
     the reasonable request of the Agent during the continuance of an Event of
     Default to have each Loan Asset and the related Loan Documents assigned to
     the Agent or its designee.

          (d)  CONTINUED EXISTENCE. Keep the Commonwealth of Massachusetts as
     its jurisdiction of organization and keep its principal place of business
     and chief executive office at the address of the Borrower set forth in
     Section 9.02 or, upon thirty (30) days'

                                       39
<Page>

     prior written notice to the Agent, in any other jurisdiction of
     organization or at any other locations in jurisdictions where all actions
     to protect and perfect the Agent's first-priority perfected (subject to the
     Lien of the Custodian securing the Custodian's Overdraft Advances to the
     extent permitted by Section 5.02(o) and other Permitted Liens) security
     interest in the Pledged Collateral have been taken and completed.

          (e)  FINANCIAL STATEMENTS: ACCOUNTANTS' REPORTS; OTHER INFORMATION.
     Provide to the Agent (with enough additional copies for the Conduit Lender
     and each Secondary Lender):

               (i)    as soon as available, and in any event within ninety (90)
          days after the end of each fiscal year of the Borrower, a statement of
          assets and liabilities of the Borrower as at the end of such fiscal
          year, and statements of operations and of changes in net assets of the
          Borrower for such fiscal year, and the Borrower's portfolio of
          investments as of the end of such fiscal year, with an audit report
          thereon issued by KPMG LLP or other independent certified public
          accountants of nationally recognized standing, together with the
          comparable report for the prior fiscal year;

               (ii)   as soon as available, and in any event within sixty (60)
          days after the end of each first semi-annual fiscal period of the
          Borrower, a statement of assets and liabilities of the Borrower as at
          the end of such period, a statement of operations and of changes in
          net assets of the Borrower for such period, and the portfolio of
          investments as of the end of such period, all in reasonable detail and
          stating in comparative form the respective figures for the comparable
          period in the preceding year, prepared in accordance with GAAP,
          consistently applied and all certified (subject to normal year-end
          adjustment) as to fairness of presentation in all material respects by
          an Authorized Officer;

               (iii)  as soon as available, and in any event within sixty (60)
          days after the end of the first and third fiscal quarters of the
          Borrower's fiscal years, a list setting forth each of the senior loan
          assets held by the Borrower and the Value thereof, in each case, as of
          the last day of such quarter;

               (iv)   simultaneously with the delivery of each set of financial
          statements referred to in clauses (i) and (ii) above, a statement of
          an Authorized Officer to the effect that nothing has come to the
          attention of such Authorized Officer to cause him/her to believe that
          any Default or Event of Default existed on the date of such
          statements;

               (v)    as soon as possible, and in any event within three (3)
          Business Days of the Borrower's actual knowledge of the occurrence of
          any Default or Event of Default, a certificate of an Authorized
          Officer setting forth the details thereof and the action which the
          Borrower is taking or proposes to take with respect thereto;

               (vi)   as soon as possible, and in any event within two (2)
          Business Days, after the Borrower has actual knowledge of any failure
          by the Custodian to

                                       40
<Page>

          perform or observe any term, covenant or agreement on its part to be
          performed under the Custodial Agreement which failure gives rise to a
          reasonable possibility of a Material Adverse Effect, written notice
          thereof executed by an Authorized Officer;

               (vii)  promptly upon the mailing thereof to the shareholders of
          the Borrower generally, copies of all financial statements, reports
          and proxy statements so mailed;

               (viii) promptly upon the filing thereof, copies of all
          registration statements (other than the exhibits thereto and any
          registration statements on Form S-8 or its equivalent) and unless
          duplicative of any deliveries to be made under clauses (i) or (ii)
          above, annual and semi-annual reports which the Borrower shall have
          filed with the SEC;

               (ix)   on or before the second Business Day of each week, weekly
          portfolio reports and weekly covenant compliance certificates in
          substantially the form of Schedule II attached hereto (each a "Weekly
          Portfolio Report") as of the Determination Date occurring on the
          Business Day immediately prior thereto (and, if applicable, reflecting
          compliance with the requirements of SECTION 2.05(b) on the
          Determination Date occurring during the immediately preceding calendar
          week), signed by an Authorized Signatory;

               (x)    on or before the tenth (10th) Business Day of each
          calendar month (or during the continuance of a Default or Event of
          Default more frequently as the Agent shall reasonably request (which
          may be daily)), an Investor Report substantially in the form of
          Schedule I hereto, as of the last Business Day of the immediately
          preceding calendar month (or other relevant period if delivered on a
          daily or weekly basis), together with a certificate of an Authorized
          Signatory in substantially the form of Annex A to the Investor Report;

               (xi)   promptly upon its receipt of and contemporaneously with
          its giving of any notice relating to the termination of the Custodial
          Agreement or the Control Agreement, copies of any such notice;

               (xii)  prior to the issuance by the Borrower of any preferred
          shares, notice of such issuance which notice shall include the
          offering materials to be used in connection with the issuance of such
          preferred shares;

               (xiii) prompt notice of any amendment or modification to the
          Investment Policies and Restrictions which notice shall include, in
          reasonable detail, a description of any such change;

               (xiv)  from time to time upon the reasonable request of the
          Agent, copies of a current report identifying the locations of any
          Pledged Collateral maintained by the Borrower or which is in the
          possession of or is maintained in securities

                                       41
<Page>

          accounts with an agent or sub-custodian of the Custodian which report
          shall specify the Pledged Collateral held by each agent or
          sub-custodian; and

               (xv)   from time to time such additional information regarding
          the financial condition or business of the Borrower as the Agent may
          reasonably request.

          (f)  MAINTENANCE OF INSURANCE. Maintain in force with financially
     sound and reputable insurers, policies with respect to its assets and
     property and business against such risks and in such amounts as are usually
     insured against in the same general area in the case of entities engaged in
     similar lines of business and as may be required by the Investment Company
     Act.

          (g)  MAINTENANCE OF BUSINESS. Remain at all times a closed-end
     investment company for the purposes of the Investment Company Act and
     continue to engage in business of the same general type as now conducted by
     the Borrower, and will continue to be a Massachusetts business trust and
     will preserve, renew and keep in full force and effect its existence and
     rights, privileges and franchises necessary or reasonably desirable in the
     normal conduct of business and will at all times remain registered under
     the Investment Company Act.

          (h)  AUDITS. Annually (or more frequently as the Agent, for itself and
     as agent for the Secured Parties may require after the occurrence of and
     during the continuance of a Default or an Event of Default) and at the sole
     cost and expense of the Borrower (i) cause an independent nationally
     recognized accounting firm reasonably satisfactory to the Agent, to enter
     the premises of the Borrower and any Person to whom the Borrower delegates
     all or any portion of its duties under any Program Document to which it is
     a party (including, without limitation, the Adviser and the Administrator)
     and examine and audit the books, records and accounts of the Borrower and
     such other Person relating to its business, financial condition, operations
     and the Borrower's and such other Person's performance under the Program
     Documents to which it is a party, (ii) permit such accounting firm to
     discuss the Borrower's and such other Person's affairs and finances with
     the officers, partners, employees and accountants of any of them, (iii)
     cause such accounting firm to provide to the Agent, with a certified report
     in respect of the foregoing, which shall be in form reasonably satisfactory
     to the Agent setting forth the results of such accounting firm's audit of
     the Borrower's performance under the Program Documents as determined
     pursuant to the scope of audit and procedures set forth on Schedule III
     hereto, and (iv) authorize such accounting firm to discuss such affairs,
     finances and performance with representatives of the Agent and their
     designees; provided, that, such examination and audit of information
     provided to the Borrower in connection with any Loan Document (which, for
     the avoidance of doubt, does not include the Loan Documents relating to any
     Eligible Loan Asset) shall be subject to any prohibition set forth in
     written confidentiality agreements entered into by the Borrower with
     respect thereto.

          (i)  ACCESS TO RECORDS. Annually (or more frequently as the Agent, for
     itself and as agent for the Secured Parties may require after the
     occurrence of and during the continuance of a Default or an Event of
     Default) permit the Agent or any Person

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<Page>

     designated by the Agent to, upon reasonable advance notice and during
     normal hours, visit and inspect at reasonable intervals its and any Person
     to which it delegates any of its duties under the Program Documents to
     which it is a party (including, without limitation, the Adviser and the
     Administrator) books, records and accounts relating to its business,
     financial condition, operations, Assets and its performance under the
     Program Documents to which it is a party and to discuss the foregoing with
     its and such Person's officers, partners, employees and accountants, all as
     often as the Agent may reasonably request; provided, that, the Agent shall
     use reasonable efforts to coordinate their inspections; provided, however,
     that if under the terms of any agreement with any Person which is not an
     Affiliate of the Adviser, the Administrator or the Borrower to whom the
     Adviser, the Administrator or the Borrower has delegated any of its duties
     under any Program Document, only the Borrower, the Adviser or the
     Administrator, as the case may be, is permitted to visit and inspect such
     Person's books, records and accounts, it shall at the request of the Agent,
     exercise or cause the applicable Adviser, Administrator or the Borrower, as
     the case may be, to exercise the rights specified in this Section 5.01(i)
     on behalf of such requesting parties, as frequently as the terms of any
     such agreement permit, but in no event less frequently than annually;
     provided, further, that the Agent's and its designees' right to review
     information provided to the Borrower in connection with any Loan Document
     (which, for the avoidance of doubt, does not include the Loan Documents
     relating to any Eligible Loan Asset) shall be subject to the prohibitions
     of any written confidentiality agreements entered into by the Borrower with
     respect thereto, provided, that the Borrower had used reasonable efforts to
     permit the Agent or its designees to review such information by complying
     with any terms of such confidentiality agreement which would permit
     disclosure of confidential information to the third parties.

          (j)  INVESTMENT POLICIES AND RESTRICTIONS. At all times be in
     compliance in all material respects with Investment Policies and
     Restrictions and maintain necessary liquidity to meet its obligations to
     fund future advances or other extensions of credit under the Loan Documents
     relating to its Loan Assets.

          (k)  DEFENSE OF SECURED PARTIES' INTEREST. Warrant and defend each of
     the Secured Parties' right and interest in, to and under the Pledged
     Collateral against all Adverse Claims of all Persons whomsoever.

          (l)  CUSTODY AND CONTROL. At all times cause all Borrowing Base
     Eligible Assets of the Borrower (including all instruments, if any,
     evidencing the same and all Specified Loan Documents) to constitute Pledged
     Collateral and to be (i) custodied with the Custodian or a sub-custodian of
     the Custodian pursuant to the Custodial Agreement, and (ii) subject to the
     Custodian's control and custody in accordance with the Control Agreement;
     provided, that if such Pledged Collateral is a Loan Asset and concurrently
     with any request to register such Loan Asset in the name of the Borrower,
     the Borrower shall deliver instructions to all Selling Institutions,
     Transaction Agents and Obligors related to such Loan Asset requiring that
     any instrument evidencing such Loan Asset be delivered to the Custodian. At
     all times cause all Loan Documents (other than the Specified Loan
     Documents) to be held at the address of the Borrower set forth in
     Section 9.02

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<Page>

     or, such other location of the Borrower in Arizona as the Borrower shall
     designate upon twenty (20) day's prior written notice to the Agent.

          (m)  NOTICE OF LITIGATION OR OTHER PROCEEDINGS. Promptly give notice
     in writing to the Agent of all litigation, arbitration proceedings and
     regulatory proceedings affecting the Borrower or the Assets of the
     Borrower, except such litigation, arbitration proceedings and regulatory
     proceedings which could not reasonably be expected to have a Material
     Adverse Effect.

          (n)  MAINTENANCE OF BOOKS OF RECORD AND ACCOUNT. Keep proper books of
     record and account in which full, true and correct entries shall be made of
     all dealings and transactions in relation to its business and activities in
     accordance with the requirements of the SEC or under the Investment Company
     Act.

          (o)  PROCEEDS OF PLEDGED COLLATERAL. Cause all Proceeds of the Pledged
     Collateral to be remitted to the Collateral Account if a Default or Event
     of Default shall be continuing or would occur as a result of the failure to
     so remit such Proceeds.

          (p)  USE OF PROCEEDS. Use the net proceeds of any Advance made
     hereunder solely for the purpose of (i) purchasing Assets, (ii) refinancing
     Debt under the Edison Credit Facility as of the Closing Date (iii) paying
     principal and Yield in respect of outstanding Advances, or (iv) for general
     corporate purposes.

          (q)  INVESTMENT ADVISER. Except as consented to by the Agent (which
     consent shall not be unreasonably withheld), at all times maintain ING
     Investments, LLC as the Borrower's investment adviser, provided that the
     Agent shall in no event be obligated to consent to any change of the
     Adviser unless such successor investment adviser has entered into a letter
     agreement with the Agent substantially identical to the Adviser Letter
     Agreement. The parties hereto acknowledge, agree and consent to the
     sub-advisory agreements by and among the Adviser and ING Aeltus Investment
     Management, Inc., a Connecticut corporation, on terms as set forth on the
     Prospectus as of the date hereof.

          (r)  ADMINISTRATOR. Except as consented to by the Agent (which consent
     shall not be unreasonably withheld), at all times maintain ING Funds
     Services, LLC as the Borrower's administrator, provided that the Agent
     shall in no event be obligated to consent to any change of the
     Administrator unless such successor administrator has entered into a letter
     agreement with the Agent substantially identical to the Administrator
     Letter Agreement.

     SECTION 5.02.    NEGATIVE COVENANTS OF THE BORROWER. The Borrower covenants
and agrees that from the date hereof until the Lender Termination Date the
Borrower shall not:

          (a)  IMPAIRMENT OF RIGHTS. Enter into any agreement containing any
     provision which would be violated or breached by the performance of its
     obligations under any Program Document to which the Borrower is a party the
     continuation of which could reasonably be expected to have a Material
     Adverse Effect or which could reasonably be expected to result in any
     material liability to a Secured Party.

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<Page>

          (b)  PROSPECTUS AND INVESTMENT POLICIES AND RESTRICTIONS. Purchase any
     Assets or engage in any line of business not contemplated by the Prospectus
     or the Investment Policies and Restrictions.

          (c)  CREATION OF DEBT. Create, assume or suffer to exist any Debt,
     except for Permitted Debt.

          (d)  MERGERS; SALE OF ASSETS. Adopt or carry out any plan of
     liquidation, partial liquidation, reorganization, incorporation,
     recapitalization, merger or consolidation nor sell, transfer or otherwise
     dispose of all or substantially all of its Assets (whether in one
     transaction or a series of related transactions), without the prior written
     consent of the Agent (which consent shall not be unreasonably withheld or
     delayed).

          (e)  ADVANCES AND EXTENSIONS OF CREDIT. Make any advance or other
     extension of credit to any Person except in the ordinary course of the
     Borrower's business and as expressly contemplated by the Investment
     Policies and Restrictions.

          (f)  CUSTODIAL AGREEMENT; INVESTMENT POLICIES AND RESTRICTIONS;
     PROSPECTUS. Without the prior written consent (which consent shall not be
     unreasonably withheld or delayed) of the Agent, (i) cancel or terminate the
     Custodial Agreement or (ii) permit or consent to any material amendment,
     modification or waiver of the Custodial Agreement unless the Borrower has
     delivered to the Agent a copy thereof together with a certificate of an
     Authorized Officer certifying that such amendment, modification or waiver
     could not reasonably be expected to have a Material Adverse Effect, or
     (iii) take any action inconsistent in any material respect with the
     Prospectus or the Investment Policies and Restrictions.

          (g)  AMENDMENTS TO ORGANIZATIONAL DOCUMENTS. Except in connection with
     the issuance of preferred stock, amend, terminate, supplement or otherwise
     modify in any material respect its declaration of trust, by-laws or other
     organizational documents, unless the Borrower has delivered to the Agent a
     copy thereof and a certificate of an Authorized Officer certifying that to
     the actual knowledge of such Authorized Officer such amendment,
     modification or waiver could not reasonably be expected to have a Material
     Adverse Effect.

          (h)  ERISA. Become a member of an ERISA Group or incur any liability
     or obligation with respect to any Plan, Multiemployer Plan or any Benefit
     Arrangement; provided, however, that the Borrower may incur liabilities or
     obligations under a plan or arrangement in the form of (i) the Form of
     Retirement Plan For Each Closed End Fund or (ii) the Form of Amended and
     Restated Deferred Compensation Agreement; provided, further, that the
     Borrower give the Agent at least ten (10) days prior written notice of any
     such amendment to the forms of the plan or agreement that materially
     increases the Borrower's liabilities under the plan or agreement.

          (i)  INVESTMENT POLICIES AND RESTRICTIONS. Without the prior written
     consent (which consent shall not be unreasonably withheld or delayed) of
     the Agent (i) unless required by a change in Applicable Law (including,
     without limitation, the Investment

                                       45
<Page>

     Company Act and the Securities Act) make or permit any material change in
     the Investment Policies and Restrictions, or (ii) make or permit any change
     in any Industry Class used to compute the Borrowing Base.

          (j)  LIENS. Create, assume or suffer to exist any Adverse Claim on any
     Asset now owned or hereafter acquired by it.

          (k)  SENIOR SECURITIES. Issue any "senior securities", as such term is
     defined and used in the Investment Company Act other than Permitted Senior
     Securities.

          (l)  MARGIN REQUIREMENTS. Extend credit to others for the purpose of
     buying or carrying any "margin stock" in such a manner as to violate
     Regulation T, Regulation U or Regulation X or use the proceeds of any
     Advance to purchase or carry Margin Stock or, without limiting the
     foregoing, have more than twenty percent (20%) of its total Assets
     constitute Margin Stock.

          (m)  RESTRICTED PAYMENTS. Make any Restricted Payment (i) if any
     Default or Event of Default shall be continuing or shall result therefrom,
     (ii) if immediately after giving effect to such payment the Borrower will
     not be in full compliance with the Borrowing Base Test and the Asset
     Coverage Test, (iii) at any time after the Agent shall have delivered a
     Notice of Exclusive Control to the Custodian (unless such Notice of
     Exclusive Control has been revoked in writing by the Agent), or (iv) at any
     time after the Maturity Date of the Advances shall have occurred.

          (n)  NAME CHANGE. Change its name (i) without giving the Agent at
     least ten (10) days prior written notice, and (ii) unless all actions
     necessary and reasonably appropriate to protect and perfect the Secured
     Parties' first-priority perfected security interest (subject to any
     Permitted Liens) in the Pledged Collateral have been taken and completed.

          (o)  CUSTODIAN'S OVERDRAFT ADVANCES. Permit the Aggregate Custodian's
     Advance Amount to at any time exceed $50,000,000.

          (p)  NOTICE OF EXCLUSIVE CONTROL; PLEDGED COLLATERAL. After the
     Borrower has received written notice of delivery by the Agent to the
     Custodian of a Notice of Exclusive Control, unless such Notice of Exclusive
     Control is revoked in writing by the Agent, give any instruction to the
     Custodian in respect of any Pledged Collateral without the prior written
     consent of the Agent.

                                   ARTICLE VI
                                EVENTS OF DEFAULT

     SECTION 6.01.    EVENTS OF DEFAULT.

          If any of the following events shall occur and be continuing (each an
"Event of Default"):

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<Page>

          (a)  the Borrower shall fail to make or cause to be made in the manner
     and when due (i) except as expressly provided in SECTION 2.05(b), any
     payment of principal to be made or to be caused to be made by it under this
     Agreement or any of the other Program Documents to which it is a party and
     such failure shall continue for one (1) Business Day, or (ii) any payment
     of interest, fees or other deposit to be made or caused to be made by it
     under this Agreement or any of the other Program Documents to which it is a
     party and such failure shall continue for three (3) Business Days; or

          (b)  the Borrower shall (i) fail to be in compliance with the Asset
     Coverage Test, provided that if an Authorized Officer has certified that
     the Borrower is taking all steps necessary to cause the Borrower to be in
     full compliance with the Asset Coverage Test within ten (10) Business Days
     after the first date of the Borrower's knowledge of such noncompliance,
     such event shall not constitute an Event of Default unless such failure
     shall continue for ten (10) Business Days after such first date, or (ii)
     fail to comply with SECTION 2.05(b), CLAUSES (e)(v), (e)(vi), (g) or (p) of
     SECTION 5.01, SECTION 5.02 or SECTION 9.11; or

          (c)  (i) the Borrower shall fail to perform or observe any other term,
     covenant or agreement on its part to be performed or observed under this
     Agreement or any other Program Document to which it is a party, or (ii) the
     Adviser shall fail to perform any of its obligations under the Adviser
     Letter Agreement, (iii) the Administrator shall fail to perform any of its
     obligations under the Administrator Letter Agreement, or (iv) the Custodian
     shall fail to perform or observe any term, covenant or agreement on its
     part to be performed or observed under the Control Agreement, or (v) the
     Custodian shall fail to perform or observe any term, covenant or agreement
     on its part to be performed under the Custodial Agreement, which in the
     case of this clause (v), could reasonably be expected to have a Material
     Adverse Effect, and such failure described in each of clause (i) through
     (v) above shall continue unremedied for thirty (30) days after such person
     has knowledge, or has received notice, of such failure; or

          (d)  any representation or warranty made or deemed made by the
     Borrower, the Adviser, the Administrator or the Custodian under or in
     connection with this Agreement or any other Program Document or any
     certificate or report delivered by or on behalf of the Borrower, the
     Adviser, the Administrator or the Custodian in connection therewith shall
     have been false or incorrect in any material respect on or as of the date
     made or deemed made or delivered; or

          (e)  the Agent shall for any reason cease to have a valid and
     perfected first-priority security interest in the Pledged Collateral
     (subject to the Lien of the Custodian securing the Custodian's Overdraft
     Advances to the extent permitted by Section 5.02(o) and other Permitted
     Liens) free and clear of all Adverse Claims or the Custodian, as collateral
     agent and/or securities intermediary under the Control Agreement, shall not
     have custody and control, as contemplated by the Control Agreement, of the
     Pledged Collateral; or

          (f)  the Borrower, the Adviser, the Administrator or the Custodian
     shall generally not pay its debts as such debts become due, or shall admit
     in writing its

                                       47
<Page>

     inability to pay its debts generally, or shall make a general assignment
     for the benefit of creditors; or any proceeding shall be instituted by or
     against the Borrower, the Adviser, the Administrator or the Custodian
     seeking to adjudicate it a bankrupt or insolvent, or seeking liquidation,
     winding up, reorganization, arrangement, adjustment, protection, relief, or
     composition of it or its debts under any law relating to bankruptcy,
     insolvency or reorganization or relief of debtors, or seeking the entry of
     an order for relief or the appointment of a receiver, trustee, custodian or
     other similar official for it or for any substantial part of its property
     and, in the case of any such proceeding instituted against it (but not
     instituted by it), either such proceeding shall remain undismissed or
     unstayed for a period of sixty (60) days, or any of the actions sought in
     such proceeding (including an order for relief against, or the appointment
     of a receiver, trustee, custodian or other similar official for, it or for
     any substantial part of its property) shall occur; or the Borrower, the
     Adviser, the Administrator or the Custodian shall take any corporate action
     to authorize any of the actions set forth above in this subsection; or

          (g)  any provision of any Program Document shall cease to be a legal,
     valid and binding obligation of any of the parties purported to be bound
     thereby, enforceable in accordance with its respective terms or the
     Borrower, the Adviser, the Administrator or the Custodian shall so assert
     in writing; or

          (h)  any judgment or order, or any series of judgments or orders,
     shall have been entered against the Borrower, provided that (i) such
     judgments or orders that have not been vacated, discharged, settled, paid
     or satisfied shall aggregate to $1,000,000 or more at any one time
     outstanding (excluding any judgments or orders related to any payment to or
     application by the Borrower that is rescinded or must otherwise be returned
     or paid over as a result of any bankruptcy, insolvency or similar
     proceeding involving any other Person), and (ii) enforcement actions have
     been commenced with respect thereto and have not been dismissed or stayed
     or bonded pending appeal within sixty (60) days of such entry; or

          (i)  either (1) State Street Bank and Trust Company shall at any time
     cease to serve as Custodian under the Custodial Agreement or the Control
     Agreement, unless a successor thereto reasonably satisfactory to the Agent
     shall have assumed the duties of Custodian thereunder and in accordance
     with the terms of the Program Documents, or (2) the Custodian or the
     Borrower shall have given notice of the termination of the Custodial
     Agreement or the Control Agreement; provided, however, that events
     specified in clause (2) above shall not constitute an Event of Default if
     prior to the tenth (10th) Business Day immediately preceding the effective
     date of such termination a successor custodian reasonably satisfactory to
     the Agent shall have been appointed as custodian under the Custodial
     Agreement and shall have assumed the obligations of the Custodian under the
     Custodial Agreement and the Control Agreement and the Agent shall have
     received such certificates and opinions as they shall have reasonably
     requested; or

          (j)  any event or condition shall occur which results in (x) the
     acceleration of the maturity of any Debt of the Borrower which Debt in the
     aggregate is at least $1,000,000 or (y) the acceleration of the maturity of
     the Debt under the Existing 1998

                                       48
<Page>

     Credit Agreement or otherwise enables (or, with the giving of notice or
     lapse of time or both would enable) the holders of such Debt under the
     Existing 1998 Credit Agreement (or any Person acting on behalf of such
     holders) to accelerate the maturity thereof; or

          (k)  any change in Applicable Law (including, without limitation, the
     Investment Company Act and the Securities Act) shall be enacted or
     promulgated which (i) would limit in any material respect the ability of
     the Agent, or any Secured Party to foreclose upon its interest in, or in
     the event of such foreclosure to dispose of, the Pledged Collateral or to
     be granted the security interest in Pledged Collateral as contemplated by
     this Agreement and the Control Agreement, or (ii) unless such changes have
     been consented to in writing by the Agent (which consent shall not be
     unreasonably withheld or delayed), would require any material change to the
     Investment Policies and Restrictions; or

          (l)  the Adviser or the Administrator shall cease to be a wholly owned
     direct or indirect subsidiary of the Parent; or

          (m)  the Advisory Agreement in effect on the Closing Date (or any
     replacement advisory agreement approved of in writing by the Agent), or the
     Administration Agreement in effect on the Closing Date (or any replacement
     administration agreement approved of in writing by the Agent), in either
     case, shall be terminated, amended, waived or otherwise modified if such
     termination, amendment, waiver or other modification would require the
     consent of the Borrower's shareholders under Applicable Law, unless (i) the
     Agent has consented to the same in writing and (ii) (x) in the case of the
     Advisory Agreement, if terminated, a replacement investment advisory
     agreement has been entered into with a successor investment adviser which
     is substantially similar in all material respects to the Advisory Agreement
     in effect prior to any such termination, and (y) in the case of the
     Administration Agreement, if terminated, a replacement administration
     agreement has been entered into with a successor administrator which is
     substantially similar in all material respects to the Administration
     Agreement in effect prior to any such termination; or

          (n)  ING Investments, LLC, any Affiliate of ING Investments, LLC
     organized under the laws of a jurisdiction located in the United States and
     having its primary operations and offices in the United States, or another
     wholly-owned direct or indirect subsidiary of the Parent consented to in
     writing by the Agent, in each case which has executed a letter agreement in
     favor of the Agent on behalf of the Secured Parties substantially identical
     in all material respects to the Adviser Letter Agreement), is not the
     current investment adviser for the Borrower;

          (o)  ING Fund Services, LLC, or any Affiliate of ING Fund Services,
     LLC organized under the laws of a jurisdiction located in the Untied States
     and having its primary operations and offices in the United States, or
     another wholly-owned direct or indirect subsidiary of the Parent consented
     to in writing by the Agent, in each case which has executed a letter
     agreement in favor of the Agent on behalf of the Secured Parties
     substantially identical in all material respects to the Administrator
     Letter Agreement), is not the current administrator for the Borrower;

                                       49
<Page>

          (p)  either of the Adviser or the Administrator shall (i) sell or
     otherwise dispose of all or substantially all of its assets, (ii)
     consolidate with or merge into any other Person unless it is the survivor,
     or (iii) acquire all or substantially all of the assets of another Person,
     unless in each case the Agent has consented to the same in writing; or

          (q)  the ratings issued with respect to the Parent's senior unsecured
     long-term debt securities (without third-party credit enhancement) shall be
     less than BBB- by S&P or less than Baa3 by Moody's or, if no such ratings
     exist from S&P and Moody's, is in the sole judgment of the Agent of less
     than such credit quality;

then, and in any such event, in addition to all rights and remedies specified in
this Agreement, including without limitation, Article VII, and the rights and
remedies of a secured party under Applicable Law including, without limitation
the UCC, the Agent, upon direction of the Conduit Lender, may by notice to the
Borrower, declare the Lender Termination Date and the Secondary Lender
Termination Date to have occurred and declare the outstanding Advances to be due
and payable (in which case the Lender Termination Date, the Secondary Lender
Termination Date and the Maturity Date shall be deemed to have occurred);
provided, that, upon the occurrence of any event (without any requirement for
the passage of time or the giving of notice, or both) described in subsection
(f) of this SECTION 6.01, the Lender Termination Date, the Secondary Lender
Termination Date and the Maturity Date shall be deemed to have automatically
occurred.

                                   ARTICLE VII
                PLEDGE OF PLEDGED COLLATERAL; RIGHTS OF THE AGENT

     SECTION 7.01.    SECURITY INTERESTS.

          In consideration of the Lenders and the Secondary Lenders making and
maintaining the Advances, and as collateral security for the prompt, complete
and unconditional payment and performance of all of the Borrower Obligations,
the Borrower hereby pledges (and in the case of all Pledged Collateral other
than the Loan Assets), hypothecates, assigns, transfers, sets over and delivers
to the Agent for the benefit of the Secured Parties and grants to the Agent for
the benefit of the Secured Parties a continuing Lien upon and security interest
in, all of the Borrower's right, title and interest in, to and under all of the
Borrower's accounts, equipment, fixtures, inventory, investment property,
payment intangibles, goods, chattel paper (both tangible and intangible),
general intangibles, letter-of-credit rights, financial assets, supporting
obligations, commercial tort claims, contract rights, instruments, promissory
notes and documents, together with all books and records, customer lists, credit
files, computer files, programs, printouts and other computer materials and
records related thereto, and all products and proceeds thereof, whether now
owned or existing or hereafter arising or acquired and wheresoever located
(collectively, the "Pledged Collateral"). For the avoidance of doubt, the
Pledged Collateral shall include, but not be limited to, the following assets
and properties of the Borrower:

               (i)    all of the Assets, investments and property from time to
          time credited to the Collateral Account, and all security entitlements
          with respect to the Collateral Account, all Assets held by the
          Custodian as bailee and agent for the

                                       50
<Page>

          Agent pursuant to the Control Agreement and all Loan Assets of the
          Borrower evidenced by, secured by or governed by any Loan Document;

               (ii)   the Collateral Account (together with all other accounts
          in which the distributions referred to in clause (iii) below are
          remitted);

               (iii)  all interest, dividends, stock dividends, stock splits,
          distributions and other money or property of any kind distributed in
          respect of the assets, investments, property and security entitlements
          described in CLAUSE (i) above, including without limitation all
          principal, interest, fees and other payments in respect of such Loan
          Assets;

               (iv)   all rights and remedies of the Borrower under the Loan
          Documents and the Custodial Agreement in respect of the assets,
          investments, property and security entitlements described in CLAUSE
          (i) above;

               (v)    all security interests, liens, collateral, property,
          guaranties, supporting obligations, insurance and other agreements or
          arrangements of whatever character from time to time supporting or
          securing payment of the assets, investments, property and security
          entitlements described in CLAUSE (i) above;

               (vi)   all accounts, contract rights, documents, instruments,
          securities, investment property, chattel paper, general intangibles
          (including payment intangibles), inventory, goods, equipment and all
          other property of every kind and nature, now owned or hereafter
          acquired in respect of the assets, investments, property and security
          entitlements described in CLAUSE (i) above);

               (vii)  all books, records and other information (including,
          without limitation, computer programs, tapes, discs, punch cards, data
          processing software and related property and rights) relating to the
          assets, investments, property and security entitlements described in
          CLAUSE (i) above; and

               (viii) all Proceeds of any and all of the foregoing.

          Notwithstanding the foregoing provisions of this SECTION 7.01, the
     Pledged Collateral shall not include Margin Stock. Terms not otherwise
     defined in this Section 7.01 shall have the meaning set forth in Article 9
     of the UCC.

     SECTION 7.02.    SUBSTITUTION OF COLLATERAL AND RELEASE OF SECURITY
INTEREST.

          (a)  (a) Subject to Section 5.02(p), so long as no Default or Event of
     Default shall have occurred and be continuing or would occur as a
     consequence of such sale, disposition or substitution and the Borrowing
     Base Test will be satisfied immediately following such sale, disposition or
     substitution, the Borrower may originate entitlement orders and
     instructions with respect to the Collateral Account and may sell or dispose
     of

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<Page>

     or substitute Pledged Collateral in accordance with the terms of this
     Agreement and the Control Agreement.

          (b)  On the Program Termination Date the Lien granted under this
     Agreement shall be automatically terminated and released and the Agent at
     the written request of the Borrower shall execute, deliver and file such
     instruments as the Borrower shall reasonably request in order to reassign,
     release or terminate its security interest in the Pledged Collateral. Any
     and all actions under this SECTION 7.02 shall be without any recourse to,
     or representation or warranty by, the Agent or any Secured Party and shall
     be at the sole cost and expense of the Borrower.

     SECTION 7.03.    APPLICATION OF PROCEEDS.

          (a)  After the occurrence and during the continuance of an Event of
     Default, all amounts remitted to the Agent's Account in respect of the
     Borrower Obligations, including without limitation all Proceeds resulting
     from the sale or other disposition of the Pledged Collateral shall be
     applied by the Agent in the following order and priority:

          FIRST, to the payment of all amounts advanced or expended by the Agent
     and all costs and expenses incurred by the Agent in connection with the
     enforcement of the Secured Parties' rights and remedies under the Program
     Documents;

          SECOND, to the extent funds are remaining after the above application,
     to the Lenders and the Secondary Lenders to the payment of all accrued and
     unpaid Yield on all outstanding Advances on a pro-rata basis according to
     the amount of accrued Yield owing to each Lender and each Secondary Lender;

          THIRD, to the extent funds are remaining after the above applications,
     to the Secured Parties to the payment of all fees payable under the Fee
     Letter on a pro rata basis according to the amount of such fees owing to
     each such Secured Party;

          FOURTH, to the extent funds are remaining after the above
     applications, to the Lenders and the Secondary Lenders to the payment of
     the principal amount of each outstanding Advance on a pro-rata basis
     according to the amount of principal owing to each Lender and each
     Secondary Lender;

          FIFTH, to the extent funds are remaining after the above applications,
     to the Secured Parties to the payment of all other amounts payable to the
     Secured Parties pursuant to this Agreement and the other Program Documents
     on a pro rata basis according to the amounts owed to each such Secured
     Party.

     The Agent shall, after the final payment in full of all Advances and the
     occurrence of the Program Termination Date, remit the remaining excess
     Proceeds which it had received from the sale or disposition of the Pledged
     Collateral to the Borrower's Account.

          (b)  For purposes of determining the application to be made of such
     monies and other cash proceeds by the Agent to other Secured Parties
     pursuant to this SECTION 7.03,

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<Page>

     the Agent may rely exclusively upon a certificate or other statement of
     such Secured Party, setting forth in reasonable detail the amount then
     owing to such Secured Party. The Agent shall not be liable for any
     application of funds in accordance with any certificate or direction
     delivered pursuant to this SECTION 7.03; PROVIDED, HOWEVER, that no
     application of funds in accordance with any certificate delivered pursuant
     to this SECTION 7.03 shall be deemed to restrict or limit the right of any
     party to contest with the purported obligee its respective liability in
     respect of the amount set forth in such certificate.

     SECTION 7.04.    RIGHTS AND REMEDIES UPON EVENT OF DEFAULT.

          (a)  The Agent (for itself and on behalf of the other Secured Parties)
     shall have all of the rights and remedies of a secured party under the UCC
     and other Applicable Law. Upon the occurrence and during the continuance of
     an Event of Default, the Agent or its designees may (i) deliver a Notice of
     Exclusive Control to the Custodian; (ii) instruct the Custodian to deliver
     any or all of the Pledged Collateral and any Loan Documents relating to the
     Pledged Collateral to the Agent or its designees and otherwise give all
     instructions and entitlement orders to the Custodian regarding the Pledged
     Collateral; (iii) require the Borrower to terminate the purchase of any
     additional Assets, whereupon the Borrower agrees to cease purchasing
     Assets; (iv) require that the Borrower or the Custodian immediately take
     action to liquidate the Assets to pay amounts due and payable in respect of
     the Borrower Obligations; (v) sell or otherwise dispose of the Pledged
     Collateral, all without judicial process or proceedings; (vi) take control
     of the Proceeds of any such Pledged Collateral; (vii) subject to the
     provisions of the applicable Loan Documents, exercise any consensual or
     voting rights in respect of the Pledged Collateral; (viii) release, make
     extensions, discharges, exchanges or substitutions for, or surrender all or
     any part of the Pledged Collateral; (ix) enforce the Borrower's rights and
     remedies under the Custodial Agreement with respect to the Pledged
     Collateral; (x) institute and prosecute legal and equitable proceedings to
     enforce collection of, or realize upon, any of the Pledged Collateral; (xi)
     require that the Borrower and the Custodian promptly take action to
     liquidate the Pledged Collateral to pay amounts due and payable in respect
     of the Borrower Obligations; (xii) remove from the Borrower's, the
     Adviser's, the Administrator's and their respective agents' place of
     business all books, records and documents relating to the Pledged
     Collateral unless copies thereof shall have been provided to the Agent
     which copies of such books and records shall thereafter be deemed to be
     originals thereof; and/or (xiii) notify all Selling Institutions,
     Transaction Agents and Obligors related to the Loan Assets which constitute
     Pledged Collateral to make payments in respect thereof directly to the
     Agent's Account; (xiv) at the request of the Agent execute all documents
     and agreements which are necessary or appropriate to have the Pledged
     Collateral which constitutes Loan Assets to be assigned to the Agent or its
     designee; and (xv) endorse the name of the Borrower upon any items of
     payment relating to the Pledged Collateral or upon any proof of claim in
     bankruptcy against an account debtor. For purposes of taking the actions
     described in SUBSECTIONS (i) through (xv) of this SECTION 7.04(a) the
     Borrower hereby irrevocably appoints the Agent as its artorney-in-fact
     (which appointment being coupled with an interest is irrevocable while any
     of the Borrower Obligations remain unpaid), with power

                                       53
<Page>

     of substitution, in the name of the Agent or in the name of the Borrower or
     otherwise, for the use and benefit of the Agent, but at the cost and
     expense of the Borrower and with notice to the Borrower.

          (b)  All sums paid or advanced by the Agent in connection with the
     foregoing and all reasonable out-of-pocket costs and expenses (including,
     without limitation, reasonable outside attorneys' fees and expenses)
     incurred in connection therewith, together with interest thereon at the
     Post-Default Rate from the date of payment until repaid in full, shall be
     paid by the Borrower to the Agent on demand and shall constitute and become
     a part of the Borrower Obligations secured hereby.

     SECTION 7.05.    REMEDIES CUMULATIVE.

          Each right, power, and remedy of the Agent and the other Secured
Parties, or any of them, as provided for in this Agreement or in the other
Program Documents or now or hereafter existing at law or in equity or by statute
or otherwise shall be cumulative and concurrent and shall be in addition to
every other right, power, or remedy provided for in this Agreement or in the
other Program Documents or now or hereafter existing at law or in equity or by
statute or otherwise, and the exercise or beginning of the exercise by the Agent
or any other Secured Party of any one or more of such rights, powers, or
remedies shall not preclude the simultaneous or later exercise by such Persons
of any or all such other rights, powers, or remedies.

     SECTION 7.06.    ENFORCEMENT OF REMEDIES UNDER THE CUSTODIAL AGREEMENT AND
LOAN DOCUMENTS.

          The Borrower agrees that it shall (i) during the continuance of a
Default or an Event of Default, upon the request of the Agent (and at the
Borrower's own expense) diligently enforce the rights and remedies under the
Custodial Agreement and at law or equity against the Custodian for any material
breach by the Custodian of any term, covenant or agreement thereunder relating
to or affecting any Pledged Collateral, and (ii) diligently enforce its rights
and remedies under the Loan Documents relating to the Pledged Collateral. The
Borrower shall at all times enforce its rights and remedies under the Custodial
Agreement and the Loan Documents with the same degree of care and diligence that
it would exercise if this Agreement had not been entered into; PROVIDED that
during the continuance of a Default or an Event of Default, the Borrower shall
not, in enforcing such rights and remedies, settle any claim against the
Custodian without the prior written consent of the Agent (which consent shall
not be unreasonably withheld or delayed).

          The Borrower agrees that to the extent not expressly prohibited by the
terms of the related Loan Documents, after the occurrence and during the
continuance of an Event of Default, it shall (i) upon the written request of the
Agent promptly forward to the Agent all information and notices which it
receives under or in connection with the Loan Documents relating to the Pledged
Collateral, and (ii) act and refrain from acting, in respect of any request,
act, decision or vote under the Loan Documents relating to the Pledged
Collateral only in accordance with the direction of the Agent.

                                       54
<Page>

                                  ARTICLE VIII
                                    THE AGENT

     SECTION 8.01.    AUTHORIZATION AND ACTION.

          Each of the Secure Parties hereby irrevocably appoints and authorizes
the Agent to take such action as agent on its behalf and to exercise such powers
under this Agreement and the other Program Documents as are delegated to the
Agent by the terms hereof and thereof, together with such powers as are
reasonably incidental thereto. The Agent shall not have any duties or
responsibilities, except those expressly set forth herein or in the other
Program Documents, or any fiduciary relationship with any Secured Party, and no
implied covenants, functions, responsibilities, duties or obligations or
liabilities on the part of the Agent shall be read into this Agreement or any
other Program Document or otherwise exist for the Agent. As to any matters not
expressly provided for by this Agreement or the other Program Documents, the
Agent shall not be required to exercise any discretion or take any action, but
shall be required to act or to refrain from acting (and shall be fully protected
in so acting or refraining from acting) upon the instructions of the Lenders or
the Secondary Lenders; PROVIDED, HOWEVER, that the Agent shall not be required
to take any action which exposes the Agent to personal liability or which is
contrary to this Agreement, the other Program Documents or Applicable Law. Each
Secured Party agrees that in any instance in which the Program Documents provide
that the Agent's consent may not be unreasonably withheld, provide for the
exercise of the Agent's reasonable discretion, or provide to a similar effect,
it shall not in its instructions to the Agent withhold its consent or exercise
its discretion in an unreasonable manner.

     SECTION 8.02.    DELEGATION OF DUTIES. The Agent may execute any of its
duties under this Agreement and each other Program Document by or through agents
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agent shall not be responsible for the
negligence or misconduct of any agents or attorneys-in-fact selected by it with
reasonable care.

     SECTION 8.03.    AGENT'S RELIANCE, ETC.

          Neither the Agent nor any of its directors, officers, agents or
employees shall be liable for any action taken or omitted to be taken by it or
them under or in connection with this Agreement or any of the other Program
Documents, except for its or their own gross negligence or willful misconduct.
Without limiting the generality of the foregoing, the Agent: (i) may consult
with legal counsel (including counsel for the Borrower, the Adviser or the
Administrator) and independent public accountants and other experts selected by
it and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (ii) makes no warranty or representation to any Lender or any Secondary
Lender and shall not be responsible to any Lender or any Secondary Lender for
any statements, warranties or representations (whether written or oral) made in
or in connection with this Agreement or the other Program Documents; (iii) shall
not have any duty to ascertain or to inquire as to the performance or observance
of any of the terms, covenants or conditions of this Agreement or the other
Program Documents or any Loan Documents on the part of the Borrower, the
Adviser, the Administrator, the Custodian or any other Person or to inspect the
property (including the books and records) of the Borrower, the Adviser or the
Administrator;

                                       55
<Page>

(iv) shall not be responsible to any Lender or any Secondary Lender for the due
execution, legality, validity, enforceability, genuineness, sufficiency or value
of this Agreement, the other Program Documents, any Loan Document or any other
instrument or document furnished pursuant hereto or thereto; and (v) shall incur
no liability under or in respect of this Agreement or any other Program Document
by acting upon any notice, consent, certificate or other instrument or writing
(which may be delivered by telecopier, telegram, cable or telex) believed by it
to be genuine and signed or sent by the proper party or parties.

     SECTION 8.04.    INDEMNIFICATION

          Each of the Secondary Lenders agrees to indemnify and hold the Agent
harmless (to the extent not reimbursed by or on behalf of the Borrower) from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, expenses or disbursements of any kind or
nature whatsoever which may be imposed on, incurred by, or asserted against the
Agent in any way relating to or arising out of this Agreement or any other
Program Document or any action taken or omitted by the Agent under this
Agreement or any other Program Document; PROVIDED, that no Secondary Lender
shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct. Without
limitation of the foregoing, each of the Secondary Lenders agrees to reimburse
the Agent promptly upon demand for any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
administration or enforcement (whether through negotiations, legal proceedings
or otherwise) or legal advice in respect of rights or responsibilities under
this Agreement or the other Program Documents, to the extent that the Agent is
not reimbursed for such expenses by or on behalf of the Borrower. Each Secondary
Lender shall be obligated to pay its Proportionate Share of all amounts payable
to the Agent under this SECTION 8.04. As used in this SECTION 8.04, the term
"Proportionate Share" in respect of any Secondary Lender means the fraction,
expressed as a percentage, the numerator of which is the Secondary Lender
Commitment of such Secondary Lender and the denominator of which is the Total
Commitment.

     SECTION 8.05.    SUCCESSOR AGENT. The Agent may, upon thirty (30) days'
notice to the Borrower, the Conduit Lender and the Secondary Lenders, resign as
Agent. If the Agent shall resign, then the Lenders and the Secondary Lenders
during such thirty (30) day period shall appoint from among the Secondary
Lenders a successor agent. If for any reason a successor agent is not so
appointed and does not accept such appointment during such thirty (30) day
period, the Agent may appoint a successor agent. Any resignation of the Agent
shall be effective upon the appointment of a successor agent pursuant to this
Section 8.05 and the acceptance of such appointment by such successor. After the
effectiveness of any retiring Agent's resignation hereunder as Agent, the
retiring Agent shall be discharged from its duties and obligations hereunder and
under the other Program Documents and the provisions of this Article VIII and
Section 9.04 shall continue in effect for its benefit with respect to any
actions taken or omitted to be taken by it while it was Agent under this
Agreement and under the other Program Documents.

                                   ARTICLE IX
                                  MISCELLANEOUS

                                       56
<Page>

     SECTION 9.01.    NO WAIVER; MODIFICATIONS IN WRITING.

          No failure or delay on the part of any Secured Party in exercising any
right, power or remedy hereunder or with respect to the Advances shall operate
as a waiver thereof, nor shall any single or partial exercise of any such right,
power or remedy preclude any other or further exercise thereof or the exercise
of any other right, power or remedy. The remedies provided for herein are
cumulative and are not exclusive of any remedies that may be available to any
Secured Party at law or in equity. No amendment, modification, supplement,
termination or waiver of this Agreement shall be effective unless the same shall
be in writing and signed by the Borrower, the Agent and the Conduit Lender. Any
waiver of any provision of this Agreement, and any consent to any departure by
the Borrower from the terms of any provision of this Agreement, shall be
effective only in the specific instance and for the specific purpose for which
given. No notice to or demand on the Borrower in any case shall entitle the
Borrower to any other or further notice or demand in similar or other
circumstances.

     SECTION 9.02.    NOTICES, ETC.

          Except where telephonic instructions are authorized herein to be
given, all notices, demands, instructions and other communications required or
permitted to be given to or made upon any party hereto shall be in writing and
shall be personally delivered or sent by registered, certified or express mail,
postage prepaid, or by prepaid telegram (with messenger delivery specified in
the case of a telegram), or by facsimile transmission, or by prepaid courier
service, and shall be deemed to be given for purposes of this Agreement on the
day that such writing is received by the intended recipient thereof. Unless
otherwise specified in a notice sent or delivered in accordance with the
foregoing provisions of this SECTION 9.02. notices, demands, instructions and
other communications in writing shall be given to or made upon the respective
parties hereto at their respective addresses (or to their respective facsimile
numbers) indicated below, and, in the case of telephonic instructions or
notices, by calling the telephone number or numbers indicated for such party
below. For all purposes under this Agreement, delivery of any telephonic or
facsimile notice to the Borrower to the care of the Adviser shall be deemed to
have been delivered to the Borrower.

If to the Conduit Lender:      CRC Funding, LLC
                               c/o Citicorp North America, Inc.
                               450 Mamaroneck Avenue
                               Harrison, New York 10528
                               Attention:   U.S. Securitization
                               Telephone No.:   (914) 899-7122
                               Facsimile No.: (914) 899-7890

 If to the Agent:              Citicorp North America, Inc.
                               U.S. Securitization
                               450 Mamaroneck Avenue
                               Harrison, New York 10528
                               Attention:   U.S. Securitization
                               Telephone No.:   (914) 899-7122

                                       57
<Page>

                               Facsimile No.: (914) 899-7890

If to Citibank:                Citibank, N.A.
                               388 Greenwich Street
                               New York, New York 10013
                               Attention:   Portfolio Management
                               Telephone No.: (212) 816-0777
                               Facsimile No.: (212) 816-0270

If to the Borrower:            ING Prime Rate Trust
                               7337 East Doubletree Ranch Road
                               Scottsdale, AZ 85258
                               Attention:   Dan Norman, Senior Vice
                                            President
                               Telephone No.: (480) 477-2112
                               Facsimile No.: (480) 477-2076

With a copy to:                ING Investments, LLC
                               7337 East Doubletree Ranch Road
                               Scottsdale, AZ 85258
                               Attention: Dan Norman
                               Telephone No.: (480) 477-2112
                               Facsimile No.: (480) 477-2076

     SECTION 9.03.    TAXES.

          (a)  Any and all payments by the Borrower under this Agreement or any
     other Program Document to which it is a party shall be made, in accordance
     with this Agreement, free and clear of and without deduction for any and
     all present or future taxes, levies, imposts, deductions, charges or
     withholdings, and all liabilities with respect thereto, excluding, in the
     case of the Secured Parties, (i) all taxes imposed by the United States
     federal government and (ii) income, profits and franchise taxes imposed on
     it by any taxing Authority in any jurisdiction which asserts jurisdiction
     to impose such taxes on the basis of contacts which the Secured Party in
     question maintains with such jurisdiction other than contacts arising
     solely out of the execution, delivery or performance of the Program
     Documents or the transactions contemplated thereby (all such non-excluded
     taxes, levies, imposts, deductions, charges, withholdings and liabilities
     being hereinafter referred to as "Taxes"). If the Borrower shall be
     required by law to deduct any Taxes from or in respect of any sum payable
     hereunder or under any other Program Document to which it is a party to any
     Secured Party, (i) the sum payable shall be increased as may be necessary
     so that after making all required deductions (including deductions
     applicable to additional sums payable under this SECTION 9.03) such Secured
     Party receives an amount equal to the sum it would have received had no
     such deductions been made, (ii) the Borrower shall make such deductions and
     (iii) the

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<Page>

     Borrower shall pay the full amount deducted to the relevant taxation
     authority or other authority in accordance with Applicable Law.

          (b)  In addition, the Borrower agrees to pay any present or future
     stamp or documentary taxes or any other excise or property taxes, charges
     or similar levies which arise from any payment made by the Borrower
     hereunder or under any other Program Document to which it is a party or
     from the execution, delivery or registration of, or otherwise with respect
     to, this Agreement or under any other Program Document to which it is a
     party (hereinafter referred to as "Other Taxes").

          (c)  The Borrower will indemnify each of the Secured Parties for the
     full amount of Taxes or Other Taxes (including, without limitation, any
     Taxes or Other Taxes imposed by any jurisdiction on amounts payable under
     this SECTION 9.03) paid by any Secured Party in respect of the Borrower and
     any liability (including penalties, interest and expenses) (other than such
     as are the result of such Person's action or failure to take action)
     arising therefrom or with respect thereto, whether or not such Taxes or
     Other Taxes were correctly or legally asserted. This indemnification shall
     be made within thirty (30) days from the date the Secured Party makes
     written demand therefor to the Borrower.

          (d)  Within thirty (30) days after the date of receiving a receipt for
     any payment of Taxes or Other Taxes, the Borrower will furnish to the Agent
     the original or a certified copy of a receipt evidencing payment thereof.

          (e)  With respect to an assignment or appointment of a successor
     agent, the assignee or successor agent (including such that is already a
     party to this Agreement) shall not be entitled to increased amounts or
     Other Taxes pursuant to this SECTION 9.03 in excess of the amount to which
     its transferor or predecessor, as the case may be, was entitled.

          (f)  To the extent legally entitled to do so, each Secured Party and
     participant shall provide to the Borrower and Agent (as applicable) such
     forms or other certifications at such time(s) and in such manner(s) as will
     permit payments to be made under this Agreement without deduction for, or
     at a reduced rate of, withholding taxes.

          (g)  If any Secured Party determines, in its sole discretion, that it
     has actually received or realized any refund or tax, any reduction of, or
     credit against, its tax liabilities or otherwise recovered any amount that
     would not have been received, realized or recovered but for any deduction
     or withholding, or payment of any additional amount, by the Borrower
     pursuant to this SECTION 10.03 or SECTION 2.07, then so long as no Default
     or Event of Default shall have occurred and be continuing, such Secured
     Party shall reimburse the Borrower an amount that the Secured Party shall,
     in its sole discretion, determine is equal to the net benefit after tax,
     and net of all expenses incurred by the Secured Party in connection with
     its receipt or realization of such refund, reduction, credit or recovery;
     provided that nothing in this paragraph (g) shall require any Secured Party
     to make available its tax returns (or any other information relating to its
     taxes which it deems to be confidential). The Borrower shall return such
     amount to the

                                       59
<Page>

     applicable Secured Party in the event that the Secured Party is
     subsequently required to repay such refund of tax or is not entitled to
     such reduction of, or credit against, its tax liabilities.

          (h)  Without prejudice to the survival of any other agreement of the
     Borrower hereunder, the agreement and obligations of the Borrower contained
     in this SECTION 9.03 shall survive the termination of this Agreement and
     the payment in full of principal and Yield hereunder until the expiration
     of all applicable statutes of limitation.

     SECTION 9.04.    COSTS AND EXPENSES; INDEMNIFICATION.

          (a)  The Borrower agrees to promptly pay on written demand all costs
     and expenses (excluding any and all present or future taxes, levies,
     imposts, deductions, charges or withholdings, and all liabilities with
     respect thereto, in each case, now or hereafter imposed, levied, collected,
     withheld or assessed) of each of the Secured Parties in connection with the
     preparation, review, negotiation, reproduction, execution, delivery,
     administration, modification, amendment and enforcement of this Agreement
     and the other Program Documents to which the Borrower is a party,
     including, without limitation, the reasonable fees and disbursements of
     counsel for the Secured Parties with respect thereto and with respect to
     advising the Secured Parties as to their rights, remedies and
     responsibilities under this Agreement and the other Program Documents to
     which the Borrower is a party, UCC filing fees, periodic auditing expenses
     incurred in connection and regulatory costs associated with clauses (h) and
     (i) of SECTION 5.01 and all other fees and expenses.

          (b)  The Borrower agrees to indemnify and hold harmless each Secured
     Party and each of their Affiliates and the respective officers, directors,
     employees, agents, managers of, and any Person controlling any of, the
     foregoing (each, an "Indemnified Party") from and against any and all
     claims, damages, losses, liabilities, obligations, expenses, penalties,
     actions, suits, judgments and disbursements of any kind or nature
     whatsoever, (including, without limitation, the reasonable fees and
     disbursements of counsel), but excluding in all cases any and all present
     or future taxes, levies, imposts, deductions, charges or withholdings, and
     all liabilities with respect thereto, in each case, now or hereafter
     imposed levied, collected, withheld or assessed (collectively the
     "Liabilities") that may be incurred by or asserted or awarded against any
     Indemnified Party, in each case arising out of or in connection with or by
     reason of the execution, delivery, enforcement, performance, administration
     of or otherwise arising out of or incurred in connection with this
     Agreement, any Loan Document or any other Program Document to which the
     Borrower is a party or any transaction contemplated hereby or thereby (and
     regardless of whether or not any such transactions are consummated),
     including, without limitation any such Liability that is incurred or arises
     out of or in connection with, or by reason of any one or more of the
     following: (i) preparation for a defense of, any investigation, litigation
     or proceeding arising out of, related to or in connection with this
     Agreement or any other Program Document or any of the transactions
     contemplated hereby or thereby; (ii) any breach or alleged breach of any
     covenant by the Borrower, the Adviser, the Administrator or the Custodian
     contained in

                                       60
<Page>

     any Program Document; (iii) any representation or warranty made or deemed
     made by the Borrower or the Custodian contained in any Program Document or
     in any certificate, statement or report delivered in connection therewith
     is, or is alleged to be, false or misleading; (iv) any failure by the
     Borrower, the Adviser, the Administrator or the Custodian to comply with
     any Applicable Law or contractual obligation binding upon it; (v) any
     failure to vest, or delay in vesting, in the Secured Parties a
     first-priority perfected (subject to the Lien of the Custodian securing the
     Custodian's Overdraft Advances to the extent permitted by Section 5.02(o)
     and other Permitted Liens) security interest in all of the Pledged
     Collateral; (vi) any action or omission, not expressly authorized by the
     Program Documents, by the Borrower, the Adviser, the Administrator or the
     Custodian, which has the effect of reducing or impairing the Pledged
     Collateral or the rights of the Agent or the Secured Parties with respect
     thereto; (vii) any Default or Event of Default; and (viii) any claim that
     any Secured Party has assumed any obligation or liability of the Borrower
     under any Loan Document or otherwise; and (ix) any transactions related to
     the funding, carrying or repayment of the outstanding principal amount of
     the Advances in connection with the Program Documents; EXCEPT to the extent
     any such Liability is found in a final, non-appealable judgment by a court
     of competent jurisdiction to have resulted from such Indemnified Party's
     gross negligence, bad faith or willful misconduct.

          (c)  Without prejudice to the survival of any other agreement of the
     Borrower hereunder, the agreements and obligations of the Borrower
     contained in this SECTION 9.04 shall survive the termination of this
     Agreement and the payment in full of principal and Yield on the Advances.

     SECTION 9.05.    EXECUTION IN COUNTERPARTS.

          This Agreement may be executed in any number of counterparts and by
different parties hereto on separate counterparts, each of which counterparts,
when so executed and delivered, shall be deemed to be an original and all of
which counterparts, taken together, shall constitute but one and the same
agreement.

     SECTION 9.06.    ASSIGNABILITY.

          (a)  This Agreement and the Conduit Lender's rights and obligations
     herein (including the outstanding Advances) shall be assignable by such
     Conduit Lender to an Eligible Assignee; PROVIDED, that without the prior
     written consent of the Borrower (which consent shall not be unreasonably
     withheld or delayed and which consent shall, in any event, not be required
     if an Event of Default shall have occurred and be continuing) such Conduit
     Lender shall not assign its rights and obligations under this Agreement to
     any Person other than to a U.S. Affiliate of the Agent which is a special
     purpose entity that issues promissory notes. Each such assignor shall
     notify the Agent and the Borrower of any such assignment. Each such
     assignor may, in connection with the assignment or participation, disclose
     to the assignee or participant any information relating to the Borrower,
     including the Pledged Collateral, furnished to such assignor by or on
     behalf of the Borrower or by the Agent; PROVIDED that, prior to any such
     disclosure, the assignee or participant agrees to preserve the
     confidentiality of any confidential information relating to the Borrower
     received by it from any of the foregoing entities. Notwithstanding the

                                       61
<Page>

     foregoing, without the consent of the Borrower, the Conduit Lender may,
     pursuant to an Asset Purchase Agreement or otherwise, sell, assign,
     transfer and convey all or any portion of the Advances maintained by the
     Conduit Lender, together with all rights hereunder and under the Program
     Documents in respect thereof, to any bank or financial institution which is
     also a Secondary Lender.

          (b)  Each Secondary Lender may, with the consent of the Borrower
     (which consent shall not be unreasonably withheld or delayed and which
     consent shall, in any event, not be required if an Event of Default shall
     have occurred and be continuing), assign to any Eligible Assignee or to any
     other Secondary Lender all or a portion of its rights and obligations under
     this Agreement (including, without limitation, all or a portion of its
     Secondary Lender Commitment and the outstanding Advances or interests
     therein owned by it); provided that the Borrower's consent to any such
     assignment shall not be required if the assignee is an existing Secondary
     Lender or a U.S. Affiliate of an existing Secondary Lender. The parties to
     each such assignment shall execute and deliver to the Agent an Assignment
     and Acceptance. Notwithstanding the foregoing, each Secondary Lender may
     assign any of its rights (including, without limitation, rights to payment
     of principal and Yield on the Advances) under this Agreement to any Federal
     Reserve Bank without notice to or consent of the Borrower.

          (c)  The Agent may, with the consent of the Borrower (which consent
     shall not be unreasonably withheld or delayed and which consent shall, in
     any event, not be required if an Event of Default has occurred and is
     continuing), assign this Agreement and its rights and obligations
     hereunder; provided that the Borrower's consent to any such assignment
     shall not be required if the assignee is a U.S. Affiliate of the Agent.

          (d)  The Borrower may not assign its rights or obligations hereunder
     or any interest herein without the prior written consent of the Agent.

          (e)  The Borrower acknowledges and agrees that each Lender's (other
     than the Conduit Lender) and each Secondary Lender's source of funds may
     derive in part from its participants. Accordingly, references in SECTIONS
     2.06, 2.07, 2.08, 2.09, 9.03 and 9.04 and the other terms and provisions of
     this Agreement and the other Program Documents to rates, determinations,
     reserve and capital adequacy requirements, accounting principles, expenses,
     increased costs, reduced receipts and the like as they pertain to the
     Lender and the Secondary Lenders shall be deemed also to include those of
     each of its participants; PROVIDED that no participant shall be entitled to
     any amount under any such Sections or provisions, which is greater than the
     amount the related Lender or Secondary Lender, as the case may be, would
     have been entitled to under any such Sections or provisions if the
     applicable participation had not occurred.

          (f)  The Agent shall maintain at its address specified in SECTION 9.02
     or such other address as the Agent shall designate in writing to the
     Lenders and Secondary Lenders a copy of this Agreement and each signature
     page hereto and each Assignment and Acceptance delivered to and accepted by
     it and a register (the "REGISTER") for the recordation of the names and
     addresses of the Secondary Lenders, their Secondary Lender Commitments,
     effective dates and Secondary Lender Stated Expiration Date, and

                                       62
<Page>

     the aggregate outstanding principal amount of the outstanding Advances made
     by each Secondary Lender under this Agreement. The entries in the Register
     shall be conclusive and binding for all purposes, absent manifest error,
     and the Borrower, the Agent and the Secondary Lenders may treat each Person
     whose name is recorded in the Register as a Secondary Lender hereunder for
     all purposes of this Agreement. The Register shall be available for
     inspection by the Borrower or any Secondary Lender at any reasonable time
     and from time to time upon reasonable prior notice.

     SECTION 9.07.    GOVERNING LAW.

          THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER THE LAWS OF
THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF SAID STATE.

     SECTION 9.08.    SEVERABILITY OF PROVISIONS.

          Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent
of such prohibition or unenforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision
in any other jurisdiction.

     SECTION 9.09.    CONFIDENTIALITY.

          (a)  By accepting delivery of this Agreement, the Borrower agrees not
     to disclose to any person or entity the existence of this Agreement, any
     term sheet related hereto or the Program Documents or the terms hereof or
     thereof (including, without limitation, any specific pricing information
     provided by the Agent, any Secondary Lender or any Lender or the amount or
     terms of any fees payable to the Agent, any Secondary Lender or any Lender
     in connection with the transactions contemplated by the Program Documents),
     the proposal or structure of such transactions, any related structures
     developed by the Agent, any Secondary Lender or any Lender for the
     Borrower, any related analyses, computer models, information or documents,
     any written or oral reports from the Agent, any Secondary Lender or any
     Lender to the Borrower or any related written information or the existence
     or status of any ongoing negotiations between the Borrower and the Agent,
     any Secondary Lender or any Lender concerning the transactions contemplated
     by the Program Documents (collectively, the "Product Information"), except
     (i) to its and its affiliates' officers, directors, employees, agents,
     accountants, legal counsel and other representatives (collectively, the
     "Borrower Representatives") who have a need to know the Product Information
     for the purpose of assisting in the negotiation and completion of the
     transactions contemplated by the Program Documents and who agree to be
     bound by the provisions of this section applicable to the Borrower, or (ii)
     to the extent required by applicable law, regulation, subpoena or other
     legal process. The Borrower will be responsible for any failure of any
     Borrower Representative to comply with the provisions of this section
     applicable to the Borrower.

                                       63
<Page>

          (b)  Neither the Agent, any Secondary Lender nor any Lender will
     disclose to any person or entity the confidential or proprietary
     information of the Borrower furnished to the Agent, any Secondary Lender or
     any Lender in connection with the transactions contemplated by the Program
     Documents (the "Borrower Information"), except (i) to its and its
     affiliates' officers, directors, employees, agents, accountants, legal
     counsel and other representatives (collectively, the "Lender
     Representatives") who have a need to know the Borrower Information for the
     purpose of assisting in the negotiation and completion of the transactions
     contemplated by the Program Documents and who agree to be bound by the
     provisions in this section applicable to the Agent, the Secondary Lenders
     and the Lenders, (ii) to the extent required by applicable law, regulation,
     subpoena or other legal process, (iii) to the extent requested by any
     governmental or regulatory authority having jurisdiction over the Agent,
     any Secondary Lender or any Lender or any Lender Representative, (iv) to
     the rating agencies, or (v) to credit enhancers and dealers and investors
     in respect of promissory notes of any Lender or any Secondary Lender in
     accordance with the customary practices of such Lender or Secondary Lender
     for disclosures to credit enhancers, dealers or investors, as the case may
     be, it being understood that any such disclosure to dealers or investors
     will not identify the Borrower or any of its affiliates by name. The Agent,
     each Secondary Lender and each Lender will be responsible for any failure
     of the Agent, such Secondary Lender, such Lender, or any Lender
     Representative of the Agent, such Secondary Lender or such Lender, as
     applicable, to comply with the provisions of this section applicable
     thereto.

          (c)  Notwithstanding any other provision of this Agreement, each party
     (and each participant pursuant to Section 9.06) (and each employee,
     representative or other agent of such party (or participant)) may disclose
     to any and all persons, without limitation of any kind, the U.S. tax
     treatment and U.S. tax structure of the transactions contemplated by the
     Program Documents and all materials of any kind (including opinions or
     other tax analyses) that are provided to such party relating to such U.S.
     tax treatment and U.S. tax structure, other than any information for which
     nondisclosure is reasonably necessary in order to comply with applicable
     securities laws.

          (d)  Product Information and Borrower Information shall not include,
     however, information that is a matter of general public knowledge or has
     heretofore been or is hereafter published in any source generally available
     to the public other than as a result of a disclosure by any person required
     to keep such information confidential as provided in this section.

          (e)  The obligations of the Borrower, the Agent, each Secondary Lender
     and each Lender under this section shall be in effect from the date of this
     Agreement until three years from the date of this Agreement.

     SECTION 9.10.    MERGER.

          The Program Documents taken as a whole incorporate the entire
agreement between the parties thereto concerning the subject matter thereof. The
Program Documents supersede any prior agreements among the parties relating to
the subject matter thereof.

                                       64
<Page>

     SECTION 9.11.    NO PROCEEDINGS; NO RECOURSE.

          (a)  Each of the parties to this Agreement and each assignee of any
     Advance or any interest therein and each entity which enters into a
     commitment to make Advances to the Borrower hereunder hereby agrees that it
     will not institute against the Conduit Lender any proceeding of the type
     referred to in SECTION 6.01(f) so long as any commercial paper or other
     senior indebtedness issued by the Conduit Lender shall be outstanding or
     there shall not have elapsed one year plus one day since the last day on
     which any such commercial paper or other senior indebtedness shall have
     been outstanding.

          (b)  The obligations of the Conduit Lender under and in connection
     with this Agreement and the other Program Documents are solely the
     obligations of the Conduit Lender. It is expressly agreed that no recourse
     shall be had for the payment of any amount owing in respect of this
     Agreement or any other Program Document or for any other obligation or
     claim arising out of or based upon this Agreement or any other Program
     Document, against any member, stockholder, employee, officer, manager,
     director, organizer or incorporator of the Conduit Lender or against any
     member, stockholder, employee, officer, manager, director, organizer or
     incorporator of any such member, stockholder or manager.

     SECTION 9.12.    SURVIVAL OF REPRESENTATIONS AND WARRANTIES.

          All representations and warranties made hereunder, in the other
Program Documents and in any document, certificate or statement delivered
pursuant hereto or thereto or in connection herewith or therewith shall survive
the execution and delivery of this Agreement and the making of the Advances
hereunder.

     SECTION 9.13.    LOAN DOCUMENTS.

          No obligation or liability of the Borrower is intended to be assumed
by the Agent, or any other Secured Party under or as a result of this Agreement
or the other Program Documents, and the transactions contemplated hereby and
thereby, including, without limitation, under any Loan Document and, to the
maximum extent permitted under provisions of law, the Agent and the other
Secured Parties expressly disclaim any such assumption. If an Event of Default
under SECTION 6.01(f) in respect of the Borrower shall have occurred and is
continuing or the Agent shall have delivered a Notice of Exclusive Control to
the Custodian, and such notice has not been revoked by the Agent, the Borrower
will use its best efforts to obtain and give all necessary consents under all
Loan Documents relating to any Pledged Collateral and execute and deliver all
agreements and documents which are necessary or appropriate in order to enable
the Secured Parties to enforce their rights and remedies hereunder and under the
other Program Documents, including, without limitation, to permit the Pledged
Collateral which constitutes Loan Assets to be assigned to the Agent or its
designees. In addition, the Borrower shall pay all assignment fees which are
required to be paid pursuant to the Loan Documents relating to the Pledged
Collateral in connection with the foregoing. The Agent and the Secured Parties
acknowledge that in order to enforce certain of their remedies in respect of the
Pledged Collateral which constitutes Loan Assets after the occurrence and during
the continuance of an

                                       65
<Page>

Event of Default, certain provisions of the related Loan Documents may need to
be complied with, including provisions requiring the consent of the related
Transaction Agent and/or Obligor.

          The Agent agrees that if it would be prevented from reviewing any Loan
Document relating to an Eligible Loan Asset in connection with the exercise of
its rights under SECTION 5.01(i) or SECTION 7.04, as a result of any
confidentiality agreement entered into by the Borrower in respect thereof, and
if it's review of such Loan Documents would be permitted if it agrees to
maintain the confidentiality of such Loan Documents in accordance with the terms
of such confidentiality agreement (each such confidentiality agreement a
"Subject Confidentiality Agreement"), the Agent hereby agrees to abide by the
terms of such Subject Confidentiality Agreement in respect of such Loan
Documents.

     SECTION 9.14.    SUBMISSION TO JURISDICTION; WAIVERS.

          The Borrower hereby irrevocably and unconditionally:

          (a)  submits for itself and its property in any legal action or
     proceeding relating to this Agreement or the other Program Documents to
     which it is a party, or for recognition and enforcement of any judgment in
     respect thereof, to the non-exclusive general jurisdiction of the courts of
     the State of New York, the courts of the United States of America for the
     Southern District of New York, and the appellate courts of any of them;

          (b)  consents that any such action or proceeding may be brought in any
     of such courts and waives any objection that it may now or hereafter have
     to the venue of any such action or proceeding in any such court or that
     such action or proceeding was brought in an inconvenient court and agrees
     not to plead or claim the same;

          (c)  agrees that service of process in any such action or proceeding
     may be effected by mailing a copy thereof by registered or certified mail
     (or any substantially similar form of mail), postage prepaid, to the
     Borrower at its address set forth in SECTION 9.02 or at such other address
     as may be permitted thereunder;

          (d)  agrees that nothing herein shall affect the right to effect
     service of process in any other manner permitted by law or shall limit the
     right to sue in any other jurisdiction or court; and

          (e)  waives, to the maximum extent not prohibited by law, any right it
     may have to claim or recover in any legal action or proceeding referred to
     in this Section any special, exemplary, punitive or consequential damages.

     SECTION 9.15.    E-MAIL REPORTS.

          Subject to the following terms and conditions, the Borrower may,
unless otherwise notified to the contrary by the Agent, transmit Investor
Reports and Weekly Portfolio Reports to the Agent by electronic mail (each an
"E-Mail Report"). Each E-Mail Report shall be formatted as the Agent may
reasonably designate from time to time. Each E-Mail Report shall

                                       66
<Page>

be sent to the Agent at an electronic mail address designated by the Agent, and
the executed "summary sheet" for each E-Mail Report shall be transmitted via
facsimile transmission to the Agent at the facsimile numbers specified for the
Agent in SECTION 9.02.

     SECTION 9.16.    WAIVER OF JURY TRIAL.

          EACH OF THE PARTIES HERETO HEREBY IRREVOCABLY AND UNCONDITIONALLY
WAIVES TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS
AGREEMENT OR ANY OTHER PROGRAM DOCUMENT OR FOR ANY COUNTERCLAIM THEREIN OR
RELATING THERETO.

     SECTION 9.17.    SEVERAL OBLIGATIONS.

          Except for the commitment of the Secondary Lenders to make Advances if
the Conduit Lender has declined to make an Advance to the extent expressly
required by SECTION 2.02, no Lender or Secondary Lender shall be responsible for
the failure of any other Lender or Secondary Lender to make any Advance or to
perform any obligation on this Agreement or any other Program Document. The
Agent shall not have any liability to the Borrower, any Lender or any Secondary
Lender for the Borrower's, any Lender's, any Secondary Lender's, as the case may
be, performance of, or failure to perform, any of their respective obligations
and duties under this Agreement or any other Program Document.

     SECTION 9.18.    LIMITATION ON LIABILITY.

          No claim may be made by the Borrower or any other Person against the
Agent, any Lender or any Secondary Lender or their respective Affiliates,
directors, officers, employees, attorneys or agents for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any other theory or liability arising out of or related to the transactions
contemplated by this Agreement or any other Program Document, or any act,
omission or event occurring in connection therewith; and the Borrower hereby
waives, releases, and agrees not to sue upon any claim for any such damages,
whether or not accrued and whether or not known or suspected to exist in its
favor. As provided for in Section 1 of Article IX of the Agreement and
Declaration of Trust, made as of December 2, 1987, as amended April 12, 1996,
October 23, 1998, October 20, 2000 and February 20, 2002, of the Borrower (under
which the Borrower is organized as a voluntary association with transferable
shares under the laws of the Commonwealth of Massachusetts), the shareholders,
trustees, officers, employees and other agents of the Borrower shall not
personally be bound by or liable for the matters set forth herein or in any
other Program Document, nor shall resort be had to their private property for
the satisfaction of any obligation or claim hereunder or under any other Program
Document.

                     [REMAINDER OF PAGE INTENTIONALLY BLANK]

                                       67
<Page>

          IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.


                          CRC FUNDING, LLC, as Conduit Lender
                          By: Citicorp North America, Inc., its Attorney-In-Fact


                          By:  /s/ Susan M. Olsen
                             ---------------------------------------------------
                             Name:  Susan M. Olsen
                             Title: Vice President


                          CITICORP NORTH AMERICA, INC., as Agent


                          By:  /s/ Susan M. Olsen
                             ---------------------------------------------------
                             Name:  Susan M. Olsen
                             Title: Vice President


                          CITIBANK, N.A., as Secondary Lender


                          By:  /s/ Susan M. Olsen
                             ---------------------------------------------------
                             Name:  Susan M. Olsen
                             Title: Vice President
                             Percentage: 100%

<Page>

                          ING PRIME RATE TRUST,
                           as Borrower


                          By:  /s/ Daniel A. Norman
                             ---------------------------------------------------
                          Name:    Daniel A. Norman
                          Title:   Senior Vice President

<Page>

                                                                      SCHEDULE I

                             FORM OF INVESTOR REPORT

                                  See Attached

<Page>

                                       BAM

PORTFOLIO DATA WORKSHEET

<Table>
<Caption>
            BAM VERSION                     2.0
- -------------------------------------    ---------
<S>                                      <C>
CUSTOMER NO (#)                                  1 Obtain from Harrison (Madeleine Macintyre).
FACILITY NO (#)                               1691 Obtain from Harrison (Madeleine Macintyre).
REPORT MONTH (#)                                 6 The formula should yield a number between 1 and 12.
REPORT YEAR (#)                               2003 The formula should yield a number like 1997, 1998, etc.
"AS OF" DATE                             6/27/2003 The "as of" date for the Outstanding Capital Balance, etc.
SELLER REPORT/FILE VERSION NO                  2.0 Used to verify what version of the file the customer is using.
</Table>

Dollar Amounts

<Table>
<S>                         <C>                                                      <C>
/ / Thousand (x $1,000)     /X/ Whole Dollars ($1) or Dollars and Cents ($ 1.00)     / / Millions (x $1,000,000)
</Table>

All dollar amounts in this BAMI worksheet must be consistent. E.g., If the
Thousands option is selected above, all dollar amounts will be multiplied by
1,000 when they are transferred into the portfolio database.

           ALL AMOUNTS IN THIS BAM WORKSHEET MUST BE EXPRESSED IN US$

  For Non-US$ denominated Seller Reports use the Seller Report's exchange rate
                          in the formulas entered below

I.  AGINGS DATA

<Table>
<Caption>
                                              ENTER FORMULAS
  ENTER (OR POINT TO) THE AGINGS BUCKET      THAT POINT TO THE
  DESCRIPTIONS USED IN THIS DEAL (E.G.,     DATA IN THE SELLER
    CURRENT, 1-30 DAYS PAST DUE, ETC.)            REPORT.
- -----------------------------------------   ------------------
        AGING BUCKET DESCRIPTION               AGING AMOUNTS
- -----------------------------------------   ------------------
<S>                                         <C>
 1
 2
 3
 4
 5
 6
 7
 8
 9
10
</Table>

                                        1
<Page>

II. REQUIRED DATA ELEMENTS

 Enter formulas to link to the data or calculation results in the Seller Report
                                   worksheet.
        If a line item does not apply to this deal, leave the cell blank.

<Table>
<Caption>
    DESCRIPTION                                        VALUE
    -----------                                        -----
<S>                                                 <C>             <C>
 1  COLLECTIONS - PRINCIPAL ($)                                     Required for all deals.
 2  COLLECTIONS - FINANCE CHARGES ($)                               Applicable only to interest-bearing receivables.
 3  ASSET DILUTIONS ($)
 4  ASSET GROSS WRITE OFFS ($)                                      Required for all deals.
 5  ASSET RECOVERIES ($)                                            Required for all deals.
 6  SALES ($)
 7  AVERAGE MATURITY (DAYS)                                         As used in the calculation of the liquidation yield reserve.
 8  BREAKAGE RESERVE ($)
 9  CAPITAL COVERAGE (%)                                 1530.170%
10  COLLECTION AGENT FEE RESERVE ($)
11  DEFAULT RECEIVABLES ($)
12  DEFAULT RATIO (%)
13  DELINQUENT RECEIVABLES ($)
14  DELINQUENCY RATIO (%)
15  CURRENT LOSS-TO-LIQUIDATION RATIO (%)
16  ROLLING AVERAGE LTL RATIO (%)                                   As defined in the transaction documentation.
                                                                    (3-month/6-month/12-month/etc.)
17  DILUTION RESERVE ($)
18  ELIGIBLE ASSET SHARE (%)                              100.000%
19  LOSS PROTECTION (%)                                  1530.170%  Required for all deals.
20  LOSS RECOURSE ($)                                               { One or the other is required for all deals.
21  LOSS RESERVE ($)                                1,196,561,978   { One or the other is required for all deals.
22  NET ASSET POOL BALANCE ($)                        836,523,312   Required for all deals.
23  OTHER RECOURSE ($)                                              { One or the other may apply, but not both
24  OTHER RESERVES ($)                                              { One or the other may apply, but not both
25  TOTAL CAPITAL OUTSTANDING ($)                      98,000,000   Required for all deals.
26  TOTAL NUMBER OF OBLIGORS (#)
27  YIELD RECOURSE ($)                                              { One or the other may apply, but not both
28  YIELD RESERVE ($)                                               { One or the other may apply, but not both
29  Reserved for Future Use
30  Reserved for Future Use
          OTHER FORMS OF LOSS PROTECTION
31  SUBORDINATED DEBT ($)                                           { One or more may apply
32  LETTERS OF CREDIT ($)                                           { One or more may apply
33  CASH COLLATERAL ($)                                             { One or more may apply
34  SPREAD ACCOUNT ($)                                              { One or more may apply
               RE CREDIT CARD DEALS
35  PORTFOLIO YIELD (%)
36  BASE RATE (%)
</Table>

                                        2
<Page>

<Table>
<S>                                                 <C>             <C>
37  NET LOSS (%)
38  EXCESS SPREAD (%)
39  PAYMENT RATIO (%)
</Table>

III. COMPLIANCE TESTS

<Table>
<Caption>

 ENTER (OR ENTER FORMULAS THAT POINT TO) THE                                              ENTER FORMULAS
    NAMES/DESCRIPTIONS OF THE COMPLIANCE         ENTER (OR POINT TO)   ENTER "MIN" OR   THAT POINT TO THE
 TESTS FOR THIS DEAL. LEAVE BLANKS IF THERE      THE TEST LIMIT FOR    "MAX" FOR EACH   TEST RESULT IN THE
             ARE FEWER THAN TEN.                      EACH TEST.            TEST.         SELLER REPORT.
- ---------------------------------------------   --------------------   --------------   ------------------
              TEST DESCRIPTION                       TEST LIMIT        TYPE (MIN/MAX)       TEST RESULT
- ---------------------------------------------   --------------------   --------------   ------------------
<S>                                                           <C>            <C>                  <C>
 1  Borrowing Base Test (%)                                   100.00%        MIN                   850.590%
 2  Asset Coverage Test (%)                                   300.00%        MIN                  1530.170%
 3
 4
 5
 6
 7
 8
 9
10
</Table>

IV.  OBLIGOR DATA

      Enter FORMULAS that point to this data in the Seller Report worksheet

<Table>
<Caption>
         TEN LARGEST NORMAL OBLIGORS                  BALANCE ($)         LIMIT ($)         EXCESS ($)
- ------------------------------------------------  ------------------   --------------   ------------------
<S>                                                       <C>              <C>              <C>
 1  Nextel Finance Company                                47,993,010       48,465,859
 2  Charter Communications Operating Llc                  34,898,151       48,465,859
 3  Safelite Glass Corp.                                  13,831,998       48,465,859
 4  Mandalay Resort Group                                 13,534,829       48,465,859
 5  Fitness Holdings Worldwide, Inc.                      12,426,857       48,465,859
 6  Dean Foods Company                                    12,370,277       48,465,859
 7  Ford Motor Credit Company                             12,036,408       48,465,859
 8  Lamar Media Corporation                               12,027,504       48,465,859
 9  Metro-Goldwyn-Mayer Studios, Inc.                     12,015,143       48,465,859
10  Riverwood International Corporation                   11,985,936       48,465,859
11                 SUM OF REMAINING NORMAL OBLIGORS ($)
</Table>

      Enter FORMULAS that point to this data in the Seller Report worksheet.

<Table>
<Caption>
              ALL SPECIAL OBLIGORS                    BALANCE ($)         LIMIT ($)         EXCESS ($)
- ------------------------------------------------  ------------------   --------------   ------------------
 <S>                                                  <C>                 <C>               <C>
 1

</Table>

                                        3
<Page>

<Table>
<S>                                                   <C>                 <C>               <C>
 2
 3
 4
 5
 6
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
</Table>

                                        4
<Page>

<Table>
<S>                                                   <C>                 <C>               <C>
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
</Table>

                                        5
<Page>

                                     Annex A
                                       to
                                   Schedule I

                      Investor Report Officer's Certificate

The undersigned, _______________, Authorized Signatory of ING Prime Rate Trust
                (the "Borrower") pursuant to that certain Revolving Credit and
                Security Agreement, dated as of July 16, 2003 among the
                Borrower, CRC Funding, LLC, and Citicorp North America, Inc., as
                agent (the "Agent"), as the same may be amended, modified or
                supplemented from time to time (the "Credit Agreement"), hereby
                certifies that:

1.  The Investor Report furnished herewith to the Agent pursuant to
    SECTION 5.01(e) of the Credit Agreement is true, accurate and complete as of
    the date hereof.

2.  Except as expressly disclosed in writing to the Agent, no event has occurred
    and is continuing which would constitute a Default or an Event of Default.

3.  Except as expressly disclosed in writing to the Agent, as of the date
    hereof, the Borrower is in full compliance with the Borrowing Base Test and
    the Asset Coverage Test.

4.  Capitalized terms used herein and not otherwise defined shall have the
    meaning ascribed to such terms in the Credit Agreement.

          IN WITNESS WHEREOF, the undersigned has duly signed on behalf of the
Borrower as of the date set forth below.

DATED:
      --------------------------------

            ---------------------------------
            Name:
            Title:

<Page>

                                   SCHEDULE II

                         FORM OF WEEKLY PORTFOLIO REPORT

                                  See Attached

<Page>

                                       BAM

PORTFOLIO DATA WORKSHEET

<Table>
<Caption>
            BAM VERSION                     2.0
- -------------------------------------    ---------
<S>                                      <C>
CUSTOMER NO (#)                                  1 Obtain from Harrison (Madeleine Maclntyre).
FACILITY NO (#)                               1691 Obtain from Harrison (Madeleine Maclntyre).
REPORT MONTH (#)                                 6 The formula should yield a number between 1 and 12.
REPORT YEAR (#)                               2003 The formula should yield a number like 1997, 1998, etc.
"AS OF" DATE                             6/27/2003 The "as of" date for the Outstanding Capital Balance, etc.
SELLER REPORT/FILE VERSION NO                  2.0 Used to verify what version of the file the customer is using.
</Table>

Dollar Amounts

<Table>
<S>                         <C>                                                      <C>
/ / Thousands (x $1,000)    /X/ Whole Dollars ($1) or Dollars and Cents ($1.00)      / / Millions (x $1,000,000)
</Table>

All dollar amounts in this BAMI worksheet must be consistent. E.g., If the
THOUSANDS option is selected above, all dollar amounts will be multiplied by
1,000 when they are transferred into the portfolio database.

           ALL AMOUNTS IN THIS BAM WORKSHEET MUST BE EXPRESSED IN US$

  For Non-US$ denominated Seller Reports use the Seller Report's exchange rate
                          in the formulas entered below

I. AGINGS DATA

<Table>
<Caption>
                                              ENTER FORMULAS
  ENTER (OR POINT TO) THE AGINGS BUCKET      THAT POINT TO THE
  DESCRIPTIONS USED IN THIS DEAL (E.G.,     DATA IN THE SELLER
    CURRENT, 1-30 DAYS PAST DUE, ETC.)            REPORT.
- -----------------------------------------   ------------------
        AGING BUCKET DESCRIPTION               AGING AMOUNTS
- -----------------------------------------   ------------------
<S>                                         <C>
 1
 2
 3
 4
 5
 6
 7
 8
 9
10
</Table>

                                        1
<Page>

II. REQUIRED DATA ELEMENTS

 Enter FORMULAS to link to the data or calculation results in the Seller Report
                                   worksheet.
        If a line item does not apply to this deal, leave the cell blank.

<Table>
<Caption>
    DESCRIPTION                                        VALUE
    -----------                                        -----
<S>                                                 <C>             <C>
 1  COLLECTIONS - PRINCIPAL ($)                                     Required for all deals.
 2  COLLECTIONS - FINANCE CHARGES ($)                               Applicable only to interest-bearing receivables.
 3  ASSET DILUTIONS ($)
 4  ASSET GROSS WRITE OFFS ($)                                      Required for all deals.
 5  ASSET RECOVERIES ($)                                            Required for all deals.
 6  SALES ($)
 7  AVERAGE MATURITY (DAYS)                                         As used in the calculation of the squidation yield reserve.
 8  BREAKAGE RESERVE ($)
 9  CAPITAL COVERAGE (%)                                 1530.170%
10  COLLECTION AGENT FEE RESERVE ($)
11  DEFAULT RECEIVABLES ($)
12  DEFAULT RATIO (%)
13  DELINQUENT RECEIVABLES ($)
14  DELINQUENCY RATIO (%)
15  CURRENT LOSS-TO-LIQUIDATION RATIO (%)
16  ROLLING AVERAGE LTL RATIO (%)                                   As defined in the transaction documentation.
                                                                    (3-month/6-month/12-month/etc.)
17  DILUTION RESERVE ($)
18  ELIGIBLE ASSET SHARE (%)                              100.000%
19  LOSS PROTECTION (%)                                  1530.170%  Required for all deals.
20  LOSS RECOURSE ($)                                               { One or the other is required for all deals.
21  LOSS RESERVE ($)                                1,196,561,978   { One or the other is required for all deals.
22  NET ASSET POOL BALANCE ($)                        836,523,312   Required for all deals.
23  OTHER RECOURSE ($)                                              { One or the other may apply, but not both
24  OTHER RESERVES ($)                                              { One or the other may apply, but not both
25  TOTAL CAPITAL OUTSTANDING ($)                      98,000,000   Required for all deals.
26  TOTAL NUMBER OF OBLIGORS (#)
27  YIELD RECOURSE ($)                                              { One or the other may apply, but not both
28  YIELD RESERVE ($)                                               { One or the other may apply, but not both
29  Reserved for Future Use
30  Reserved for Future Use
          OTHER FORMS OF LOSS PROTECTION
31  SUBORDINATED DEBT ($)                                           { One or more may apply
32  LETTERS OF CREDIT ($)                                           { One or more may apply
33  CASH COLLATERAL ($)                                             { One or more may apply
34  SPREAD ACCOUNT ($)                                              { One or more may apply
               RE CREDIT CARD DEALS
35  PORTFOLIO YIELD (%)
36  BASE RATE (%)
</Table>

                                        2
<Page>

<Table>
<S>                                                 <C>             <C>
37  NET LOSS (%)
38  EXCESS SPREAD (%)
39  PAYMENT RATIO (%)
</Table>

III. COMPLIANCE TESTS

<Table>
<Caption>
 ENTER (OR ENTER FORMULAS THAT POINT TO) THE                                              ENTER FORMULAS
    NAMES/DESCRIPTIONS OF THE COMPLIANCE         ENTER (OR POINT TO)   ENTER "MIN" OR   THAT POINT TO THE
 TESTS FOR THIS DEAL. LEAVE BLANKS IF THERE      THE TEST LIMIT FOR    "MAX" FOR EACH   TEST RESULT IN THE
             ARE FEWER THAN TEN.                      EACH TEST.            TEST.         SELLER REPORT.
- ---------------------------------------------   --------------------   --------------   ------------------
              TEST DESCRIPTION                       TEST LIMIT        TYPE (MIN/MAX)       TEST RESULT
- ---------------------------------------------   --------------------   --------------   ------------------
<S>                                                           <C>            <C>                  <C>
 1  Borrowing Base Test (%)                                   100.00%        MIN                   850.590%
 2  Asset Coverage Test (%)                                   300.00%        MIN                  1530.170%
 3
 4
 5
 6
 7
 8
 9
10
</Table>

IV.  OBLIGOR DATA

     Enter FORMULAS that point to this data in the Seller Report worksheet.

<Table>
<Caption>
         TEN LARGEST NORMAL OBLIGORS                  BALANCE ($)         LIMIT ($)         EXCESS ($)
- ------------------------------------------------  ------------------   --------------   ------------------
<S>                                                       <C>              <C>              <C>
 1  Nextel Finance Company                                47,993,010       48,465,859
 2  Charter Communications Operating Llc                  34,898,151       48,465,859
 3  Safelite Glass Corp.                                  13,831,998       48,465,859
 4  Mandalay Resort Group                                 13,534,829       48,465,859
 5  Fitness Holdings Worldwide, Inc.                      12,426,857       48,465,859
 6  Dean Foods Company                                    12,370,277       48,465,859
 7  Ford Motor Credit Company                             12,036,408       48,465,859
 8  Lamar Media Corporation                               12,027,504       48,465,859
 9  Metro-Goldwyn-Mayer Studios, Inc.                     12,015,143       48,465,859
10  Riverwood International Corporation                   11,985,936       48,465,859
11                 SUM OF REMAINING NORMAL OBLIGORS ($)
</Table>

     Enter FORMULAS that point to this data in the Seller Report worksheet.

<Table>
<Caption>
              ALL SPECIAL OBLIGORS                    BALANCE ($)         LIMIT ($)         EXCESS ($)
- ------------------------------------------------  ------------------   --------------   ------------------
 <S>                                                  <C>                 <C>               <C>
 1

</Table>

                                        3
<Page>

<Table>
<S>                                                   <C>                 <C>               <C>
 2
 3
 4
 5
 6
 7
 8
 9
10
11
12
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
28
29
30
31
32
33
34
35
36
37
38
39
40
41
42
43
</Table>

                                        4
<Page>

<Table>
<S>                                                   <C>                 <C>               <C>
44
45
46
47
48
49
50
51
52
53
54
55
56
57
58
59
60
61
62
63
64
65
66
67
68
69
70
71
72
73
74
75
</Table>

                                        5

<Page>

                                     Annex A
                                       to
                                   Schedule II

                  Weekly Portfolio Report Officer's Certificate

     The undersigned, _______________, Authorized Signatory of ING Prime Rate
     Trust (the "Borrower") pursuant to that certain Revolving Credit and
     Security Agreement, dated as of July 16, 2003 among the Borrower, CRC
     Funding, LLC and Citicorp North America, Inc., as agent (the "Agent"), as
     the same may be amended, modified or supplemented from time to time (the
     "Credit Agreement"), hereby certifies that:

          1.   The aggregate outstanding principal balance of Advances as of the
               date hereof is $___________.

          2.   The aggregate Asset Value of the Eligible Collateral as of the
               date hereof is $___________.

          3.   The Borrowing Base as of the date hereof is $_________.

          4.   Except as expressly disclosed in writing to the Agent, no event
               has occurred and is continuing which would constitute a Default
               or an Event of Default.

          5.   The Weekly Portfolio Report to which this certificate is attached
               is true, accurate and complete. (1)

          6.   Except as expressly disclosed in writing to the Agent, as of the
               date hereof, the Borrower is in compliance with the Borrowing
               Base Test and the Asset Coverage Test.

          7.   Capitalized terms used herein and not otherwise defined shall
               have the meaning ascribed to such terms in the Credit Agreement.

- ----------
(1)  Daily reports required during the continuance of a Default or Event of
     Default.

<Page>

               IN WITNESS WHEREOF, the undersigned has duly signed on behalf of
     the Borrower as of the date set forth below.

     DATED:
            -----------------------------


                                         ---------------------------
                                         Name:
                                         Title:

<Page>

                                  SCHEDULE III

                            SCOPE OF AUDIT PROCEDURES

                                  See Attached

<Page>

                        ING Prime Rate Trust (the "Fund")

   Agreed Upon Procedures to be Performed Annually by the External Accountants

Select three Monthly Investor Reports (the "Investor Reports"), including the
Monthly Investor Report corresponding to the Fund's year-end (the "Year-end
Investor Report"). Perform the following procedures for each Investor Report,
except as otherwise specified (captions refer to Investor Report sections):

I. Calculation of the Borrowing Base

          1. Agree the aggregate Asset Value of Borrowing Base Eligible Assets
on the Investor Reports to the Fund's supporting documentation. Agree the
aggregate Asset Value of Borrowing Base Eligible Assets on the Year-end Investor
Report to the total of the portfolio of investments included in the Fund's
audited financial statements.

          2. Agree the aggregate Adjusted Asset Value of Borrowing Base Eligible
Assets.

          3. Agree Aggregate Asset Value of Borrowing Base Eligible Assets to
the total of Input Section II: System Download of the Investor Report.

          4. Agree all Excess Concentrations (Obligor > 5%, Industry > 20%,
Foreign OECD Loan Assets > 25%, Foreign OECD Assets - Single Country > 10%,
Distressed Assets > 10%, Maturity Greater than 10 years > 10%, Unsecured Loan
Assets > 10%, Participation Interests from a single Selling Institution > 10%,
Credit Linked Notes > 10%, Class E or Class F Bond Assets > 20% and Fixed Rate
Loan Assets > 10%) to the total of sections IV: Excess Obligor Concentrations,
V: Excess Industry Concentrations and VI: Other Borrowing Base Excess
Concentrations.

          5. Recalculate the Borrowing Base.

II. Calculation of Credits Outstanding

          1. Recalculate Credits Outstanding (sum of (i) Principal Balance of
Advances - Capital Outstanding, (ii) Custodian Overdrafts Outstanding, and (iii)
Accrued Interest for 60 Days at Assignee Rate).

III. Compliance Tests

          1. Recalculate compliance for the Borrowing Base Test (Borrowing Base
divided by Total Credits Outstanding) and Asset Coverage Test - 40 Act Test (Net
Assets plus Accrued Interest plus Principal Outstanding divided by Accrued
Interest plus Principal Outstanding).

          2. Recalculate compliance of the Remedial Paydown Calculation if the
Borrowing Base Test and Asset Coverage Test fail.

<Page>

          3. Recalculate the Credits Outstanding after Paydown (Pre-Paydown
Credit Outstanding Less Actual Paydown).

IV. Excess Obligor Concentrations

          1. Select ten obligors from this section and agree the obligor names
and the Adjusted Asset Value to the Fund's supporting documentation.

          2. For the selected obligors, recalculate the Obligor Excess
Concentrations, if any.

          3. For the selected obligors, verify that the obligor totals were
properly aggregated by tracing the obligor names to Input Section II: System
Download.

V. Excess Industry Concentration

          1. Select ten industries from this section and agree the industry name
and the Total Adjusted Asset Value per Industry to the Fund's supporting
documentation.

          2. For the selected industries, recalculate the Industry Excess
Concentrations, Obligor/Industry Overlap and Net Industry Concentration, if any.

          3. For the selected industries, verify that the industry totals were
properly aggregated by tracing the industry names to Input Section II: System
Download.

VI. Other Excess Concentrations

          1. Agree the Total Adjusted Asset Value for Approved Foreign Assets,
Foreign Assets relating to obligors in a single OECD country, Distressed Assets,
Unsecured Loan Assets, Fixed Rate Loan Assets, Credit Linked Notes, Class E or
Class F Bond Assets and Selling Institution Participations to the Fund's
supporting documentation. Additionally, select ten Single OECD Countries and
agree the Total Adjusted Asset Value to the Fund's supporting documentation. In
addition, agree the maximum unused commitments to fund future advances to the
Fund's supporting documentation.

          2. Recalculate the Gross Excess Concentrations and Net (with Obligor)
Excess Concentrations for Approved Foreign Assets and Distressed Assets.
Additionally, recalculate the Excess Concentrations, Obligor/Industry Overlap,
Obligor/Distressed Assets Overlap and Net Single Country Concentration for
Single OECD Countries.

          3. For the other concentrations, verify that the industry totals were
properly aggregated by tracing the concentration categories to Input Section II:
System Download.

VII. Input Section II: System Download

<Page>

          1. Select a sample of 25 assets from the file. Agree all information
by obligor to the Fund's supporting documentation.

          2. For the sample selected in step 1, test whether the assets satisfy
the criteria for Borrowing Base Eligible Assets per the Program Documents.

For the sample selected in step 1, agree their market value to the independent
market value pricing source used by the Fund.

<Page>

                                   SCHEDULE IV

                            INDUSTRY CLASSIFICATIONS

Aerospace and Defense
Automobile
Banking
Beverage, Food and Tobacco
Broadcasting
Buildings and Real Estate
Cargo Transport
Chemicals, Plastics, and Rubber
Containers, Packaging, and Glass
Diversified Natural Resources
Diversified/Cong Manufacturing
Diversified/Conglomerate Service
Ecological
Electronics
Farming and Agriculture
Finance
Grocery
Healthcare, Education, Childcare
Home and Office Furnishings
Hotels, Motels, and Gaming
Insurance
Leisure, Amusement, Entertainment
Machinery
Mining, Steel, and Nonprecious Metals
Oil and Gas
Personal Transportation
Personal, Food and Misc Services
Personal/Nondurable Consumer Prod
Printing, Publishing
Retail Stores
Telecommunications
Textiles and Leather
Utilities

<Page>

                                    EXHIBIT A

                             [FORM OF ADVANCE NOTE]

$__________                                                     _________,______

          FOR VALUE RECEIVED, on the Maturity Date (as defined in the Credit
Agreement defined below) of each Advance made by the [Conduit Lender] [Secondary
Lender] the undersigned (the "Borrower") pursuant to the Credit Agreement
(defined below), the Borrower hereby promises to pay to the order of [INSERT
NAME OF CONDUIT LENDER OR SECONDARY LENDER] (together with its successors and
assigns the ["Conduit Lender"] ["Secondary Lender"]) the unpaid principal amount
of each such Advance in immediately available funds and in lawful money of the
United States of America, and to pay Yield on the unpaid balance of said
principal Advance from the Borrowing Date thereof, until the principal amount
thereof shall have been paid in full, in like funds and money as provided in
said Credit Agreement for Advances made by the [Conduit Lender] [Secondary
Lender] and at the maturity thereof. Capitalized terms used in this promissory
note unless otherwise defined herein shall have the meaning assigned to such
terms in the Credit Agreement.

          This promissory note is an Advance Note referred to in the Revolving
Credit and Security Agreement dated as of July 16, 2003 (as from time to time
amended, modified, or supplemented, the "Credit Agreement") among the Borrower,
CRC Funding, LLC, as the Conduit Lender, the financial institutions parties
thereto, and Citicorp North America, Inc., as agent. The date and principal
amount of each Advance made to the Borrower and of each repayment of principal
thereon shall be recorded by the [Conduit Lender] [Secondary Lender] or its
designee on Schedule I attached to this Advance Note, and the aggregate unpaid
principal amount shown on such schedule shall be rebuttable presumptive evidence
of the principal amount owing and unpaid on the Advances made by the |Conduit
Lender] [Secondary Lender]. The failure to record or any error in recording any
such amount on such schedule shall not, however, limit or otherwise affect the
obligations of the Borrower hereunder or under the Credit Agreement to repay the
principal amount of the Advances together with all Yield accrued thereon.

          THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.


                              ING PRIME RATE TRUST


                              By:
                                 ------------------------
                              Name:
                              Title:

<Page>

                                   SCHEDULE I

                                  TO EXHIBIT A

          This Advance Note evidences Advances made by [INSERT NAME OF CONDUIT
LENDER OR SECONDARY LENDER], (the ["Conduit Lender"] ["'Secondary Lender"])
under the Revolving Credit and Security Agreement dated as of July 16, 2003
among ING Prime Rate Trust, as Borrower, CRC Funding, LLC, as the Conduit
Lender, and Citicorp North America, Inc., as agent in the principal amounts and
on the dates set forth below, subject to the payments and prepayments of
principal set forth below:

<Table>
<Caption>
       PRINCIPAL   PRINCIPAL     PRINCIPAL
       AMOUNT      AMOUNT PAID   BALANCE       NOTATION
DATE   ADVANCED    OR PREPAID    OUTSTANDING    BY
- ----   ---------   -----------   -----------   --------
<S>    <C>         <C>           <C>           <C>


</Table>

<Page>

                                    EXHIBIT B

                          [FORM OF NOTICE OF BORROWING]

                              ING PRIME RATE TRUST
                             Two Renaissance Square
                       40 North Central Avenue Suite 1200
                             Phoenix, AZ 85004-4424

Citicorp North America, Inc.,
 as Agent
Citicorp North America, Inc.
450 Mamaroneck Avenue
Harrison, New York  10528

                               NOTICE OF BORROWING

          This Notice of Borrowing is made pursuant to SECTION 2.02 of that
certain Revolving Credit and Security Agreement dated as of July 16, 2003 among
ING Prime Rate Trust, CRC Funding, LLC, Citibank, N.A., and Citicorp North
America, Inc., as Agent (as the same may from time to time be amended,
supplemented, waived or modified, the "Credit Agreement"). Unless otherwise
defined herein, capitalized terms used herein have the meanings assigned to
those terms in the Credit Agreement.

1.   The Borrower hereby requests that on ______________, _____ (the "Borrowing
     Date") it receive Advances under the Credit Agreement in an aggregate
     principal amount of ____________ Dollars ($ ______).

2.   The Borrower hereby gives notice of its request for such Advances to the
     Agent pursuant to SECTION 2.02 of the Credit Agreement, and requests the
     Conduit Lender or the Secondary Lenders, as applicable, remit, or cause to
     be remitted, the proceeds thereof to [the Borrower's Account (as defined in
     the Credit Agreement)] [SPECIFY OTHER ACCOUNT, IF APPLICABLE].

3.   The Borrower certifies that (i) the representations and warranties of the
     Borrower contained or reaffirmed in SECTION 4.01 of the Credit Agreement
     and to the best of the Borrower's knowledge, the representations and
     warranties of the Custodian, the Adviser and the Administrator contained in
     the Program Documents to which each such person is a party, are true and
     correct on and as of the date hereof to the same extent as though made on
     and as of the date hereof (except to the extent such representations and
     warranties expressly relate to any earlier date, which representations and
     warranties shall be true and correct as of such earlier date) and shall
     continue to be true immediately after giving effect to such Advance; (ii)
     no Default or Event of Default has occurred and is continuing under the
     Credit Agreement or will result from the proposed borrowing; (iii) the
     conditions precedent to the making of the proposed Advance set forth in
     SECTION 3.02 of the Credit Agreement have been

<Page>

     fully satisfied; (iv) immediately after giving effect to such Advance, the
     Borrowing Base Test and the Asset Coverage Test will be complied with and
     not more than 20% of its Assets is represented by Margin Stock; and (v)
     immediately after the making of any such Advance, the aggregate outstanding
     principal amount of all Advances shall not exceed the Total Commitment for
     the Borrower.

          IN WITNESS WHEREOF, the undersigned has caused this Notice of
Borrowing to be duly executed on its behalf on this ________ day of ________,
____.


                                                 ING PRIME RATE TRUST


                                                 By:
                                                    -------------------------
                                                 Name:
                                                 Title:

<Page>

                                    EXHIBIT C

                       [FORM OF ASSIGNMENT AND ACCEPTANCE]

                            ASSIGNMENT AND ACCEPTANCE

          Reference is made to the Revolving Credit and Security Agreement dated
as of July 16, 2003 (as amended, supplemented or otherwise modified from time to
time, the "Credit Agreement") among CRC FUNDING, LLC, (together with its
successors and assigns, the "Conduit Lender"), CITIBANK, N.A., as a secondary
lender (together with the other banks and financial institutions from time to
time parties to the Credit Agreement, the "Secondary Lenders"), CITICORP NORTH
AMERICA, INC., as agent (in such capacity, together with its successors and
assigns, the "Agent") and ING PRIME RATE TRUST (together with its permitted
successors and assigns, the "Borrower"). Terms defined in the Credit Agreement
are used herein with the same meaning.

          The "Assignor" and the "Assignee" referred to on Schedule 1 hereto
agree as follows:

1.   As of the Effective Date (as defined below), the Assignor hereby absolutely
     and unconditionally sells and assigns, without recourse, to the Assignee,
     and the Assignee hereby purchases and assumes, without recourse to or
     representation of any kind (except as set forth below) from Assignor, an
     interest in and to the Assignor's rights and obligations under the Credit
     Agreement and under the other Program Documents equal to the percentage
     interest specified on Schedule I hereto, including the Assignor's Secondary
     Lender Commitment and Percentage and the Assignor's portion of the
     outstanding principal amount of the Advances (such rights and obligations
     assigned hereby being the "Assigned Interests"). After giving effect to
     such sale, assignment and assumption, the Assignee's "Secondary Lender
     Commitment" and the Assignee's "Percentage" will be as set forth on
     Schedule I hereto.

2.   The Assignor (i) represents and warrants that immediately prior to the
     Effective Date it is the legal and beneficial owner of the Assigned
     Interest free and clear of any Lien created by the Assignor; (ii) makes no
     representation or warranty and assumes no responsibility with respect to
     any statements, warranties or representations made in or in connection with
     the Program Documents or the execution, legality, validity, enforceability,
     genuineness, sufficiency or value of, or the perfection or priority of any
     lien or security or ownership interest created or purported to be created
     under or in connection with, the Program Documents or any other instrument
     or document furnished pursuant thereto or the condition or value of the
     Assigned Interest, Pledged Collateral, or any interest therein; and (iii)
     makes no representation or warranty and assumes no responsibility with
     respect to the condition (financial or otherwise) of any of the Borrower,
     the Agent, the Custodian, the Adviser, the Administrator or any other
     Person, or the performance or observance by any Person of any of its
     obligations under any Program Document or any instrument or document
     furnished pursuant thereto.

<Page>

3.   The Assignee (i) confirms that it has received a copy of the Credit
     Agreement and the other Program Documents, together with copies of any
     financial statements delivered pursuant to SECTION 5.01 of the Credit
     Agreement and such other documents and information as it has deemed
     appropriate to make its own credit analysis and decision to enter into this
     Assignment and Acceptance; (ii) agrees that it will, independently and
     without reliance upon the Agent, the Assignor, the Conduit Lender or any
     other Secondary Lender and based on such documents and information as it
     shall deem appropriate at the time, continue to make its own credit
     decisions in taking or not taking action under or in connection with any of
     the Program Documents; (iii) confirms that it is an Eligible Assignee; (iv)
     appoints and authorizes the Agent to take such action as agent on its
     behalf and to exercise such powers and discretion under the Program
     Documents as are delegated to the Agent by the terms thereof, together with
     such powers and discretion as are reasonably incidental thereto; (v) agrees
     that it will perform in accordance with their terms all of the obligations
     that by the terms of the Program Documents are required to be performed by
     it as a Secondary Lender; (vi) confirms that the assignment hereunder
     complies with any applicable legal requirements including the Securities
     Act of 1933, as amended; (vii) confirms that such Assignee is a United
     States Person (as defined in Section 7701 (a)(30) of the Internal Revenue
     Code) or that such Assignee shall have provided the Agent with two Internal
     Revenue Service forms W-8ECI (or a successor form) certifying that the
     income from the Assigned Interest is effectively connected with the conduct
     of such Person's trade or business in the United States; and (viii)
     confirms that such Assignee is not a partnership, grantor trust or S
     corporation (as such terms are defined in the Internal Revenue Code).

4.   Following the execution of this Assignment and Acceptance, it will be
     delivered to the Agent for acceptance and recording by the Agent. The
     effective date for this Assignment and Acceptance (the "Effective Date")
     shall be the date of acceptance hereof by the Agent, unless a later
     effective date is specified on Schedule I hereto.

5.   Upon such acceptance and recording by the Agent, as of the Effective Date,
     (i) the Assignee shall be a party to and bound by the provisions of the
     Credit Agreement and, to the extent provided in this Assignment and
     Acceptance, have the rights and obligations of a Secondary Lender
     thereunder and under any other Program Document and (ii) the Assignor
     shall, to the extent provided in this Assignment and Acceptance, relinquish
     its rights and be released from its obligations under the Credit Agreement
     and under any other Program Document.

6.   Upon such acceptance and recording by the Agent, from and after the
     Effective Date, the Agent shall make all payments to be made by it under
     the Credit Agreement in respect of the Assigned Interest to the Assignee.
     The Assignor and Assignee shall make all appropriate adjustments in
     payments under the Credit Agreement and the Assigned Interests for periods
     prior to the Effective Date directly between themselves.

7.   This Assignment and Acceptance shall be governed by, and construed in
     accordance with, the laws of the State of New York.

8.   This Assignment and Acceptance may be executed in any number of
     counterparts and by different parties hereto in separate counterparts, each
     of which when so executed shall be deemed to be an original and all of
     which taken together shall constitute one and the same

<Page>

     agreement. Delivery of an executed counterpart of Schedule I to this
     Assignment and Acceptance by telecopier shall be effective as a delivery of
     a manually executed counterpart of this Assignment and Acceptance.

          IN WITNESS WHEREOF, the Assignor and the Assignee have caused Schedule
I to this Assignment and Acceptance to be executed by their officers thereunto
duly authorized as of the date specified thereon.

<Page>

                                   Schedule I
                                       to
                            Assignment and ACCEPTANCE

Percentage interest
transferred by Assignor:   ___%

Assignee's "Secondary Lender Commitment":    $___

Assignee's "Percentage"    ___%
Assignor:


                                        [INSERT NAME OF ASSIGNOR], as
                                        Assignor,


                                        By:
                                           ---------------------------
                                        Authorized Signatory


Assignee:


                                        [INSERT NAME OF ASSIGNEE], as Assignee


                                        By:
                                           ---------------------------
                                        Authorized Signatory

Accepted, Consented to and
Acknowledged this ____ day of
_________________, ____


CITICORP NORTH AMERICA, INC., as Agent

By:
   ------------------------------
 Vice President

[ING PRIME RATE TRUST

By:
   ------------------------------
 Authorized Signatory](2)

- ----------
(2)   If the Borrower's signature is required.

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(III)(1)
<SEQUENCE>23
<FILENAME>a2138029zex-99_kiii1.txt
<DESCRIPTION>EX 99.(K)(III)(1)
<TEXT>
<Page>

                                                          Exhibit 99.(k)(iii)(1)

                         SIDLEY AUSTIN BROWN & WOOD LLP

      BEIJING                    BANK ONE PLAZA                LOS ANGELES
     BRUSSELS                10 S. DEARBORN STREET               NEW YORK
      CHICAGO               CHICAGO, ILLINOIS 60603           SAN FRANCISCO
      DALLAS                 TELEPHONE 312 853 7000              SHANGHAI
      GENEVA                 FACSIMILE 312 853 7036             SINGAPORE
     HONG KONG                   www.sidley.com                   TOKYO
      LONDON                      FOUNDED 1866               WASHINGTON, D.C.

WRITER'S DIRECT NUMBER                                   WRITER'S E-MAIL ADDRESS
    (312) 853-4151                                         crissler@sidley.com

                                February 3, 2004

BY FEDERAL EXPRESS

To the Parties Identified on the attached
Schedule

          Re:   AMENDMENT NO. 1 TO THE REVOLVING CREDIT AND SECURITY AGREEMENT

Dear Ladies and Gentlemen:

          Enclosed please find one set of the documents executed and/or obtained
in connection with that certain Amendment No. 1 to the Revolving Credit and
Security Agreement, dated as of February 2, 2004, by and among ING Prime Rate
Trust (the "Borrower"), CRC Funding, LLC, as conduit lender (the "Conduit
Lender"), Citibank, N.A., as secondary lender (the "Secondary Lender") and
Citicorp North America, Inc., as agent (the "Agent") under that certain
Revolving Credit and Security Agreement (the "Credit Agreement"), dated as of
July 16, 2003 by and among the Borrower, the Conduit Lender, the Secondary
Lender and the Agent.

          If you have further need of assistance, please feel free to call me at
(312) 853-4151.

                                                       Sincerely,
                                                       /s/ Christina B. Rissler
                                                       Christina B. Rissler

Enclosures


SIDLEY AUSTIN BROWN & WOOD LLP IS AN ILLINOIS LIMITED LIABILITY PARTNERSHIP
PRACTICING IN AFFILIATION WITH OTHER SIDLEY AUSTIN BROWN & WOOD PARTNERSHIPS

<Page>

                                                                  Execution Copy

                                 AMENDMENT NO. 1

                                       to

                     REVOLVING CREDIT AND SECURITY AGREEMENT

          THIS AMENDMENT NO. 1 TO REVOLVING CREDIT AND SECURITY AGREEMENT (the
"AMENDMENT") is made as of February 2, 2004 by and among ING PRIME RATE TRUST
(the "BORROWER"), CRC FUNDING, LLC, as Conduit Lender (the "LENDER"), CITIBANK,
N.A., as Secondary Lender (the "SECONDARY LENDER"), and CITICORP NORTH AMERICA,
INC., in its capacity as contractual representative (the "AGENT") under that
certain Revolving Credit and Security Agreement dated as of July 16, 2003 by and
among the Borrower, the Lender, the Secondary Lender and the Agent (as amended,
restated, supplemented or otherwise modified, the "CREDIT AGREEMENT"). Defined
terms used herein and not otherwise defined herein shall have the meaning given
to them in the Credit Agreement.

                                   WITNESSETH

          WHEREAS, the Borrower, the Lender, the Secondary Lender and the Agent
are parties to the Credit Agreement; and

          WHEREAS, the Borrower, the Lender, the Secondary Lender and the Agent
have agreed to amend the Credit Agreement on the terms and conditions set forth
herein;

          NOW, THEREFORE, in consideration of the premises set forth above, the
terms and conditions contained herein, and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto have agreed to the following amendment to the Credit Agreement:

          1.   AMENDMENT TO THE CREDIT AGREEMENT. Effective as of February 2,
2004, 2003 (the "Effective Date") and subject to the satisfaction of the
conditions precedent set forth in SECTION 2 below, the Credit Agreement is
hereby amended as follows:

     1.1. The definition of "TOTAL COMMITMENT" now appearing in SECTION 1.01 of
          the Credit Agreement is amended to delete the amount "$325,000,000"
          and to substitute therefor the amount "$435,000,000".

          2.   CONDITIONS OF EFFECTIVENESS. The effectiveness of this Amendment
is subject to the conditions precedent that the Agent shall have received duly
executed originals of (i) an opinion of Dechert LLP, counsel of the Borrower,
(ii) a letter substantially in the form of SCHEDULE I attached hereto from the
Advisor and the Administrator reaffirming their respective Letter Agreement and
acknowledged and agreed to by the Agent and (iii) this Amendment from each of
the Borrower, the Lender, the Secondary Lender and the Agent.

          3.   REPRESENTATIONS AND WARRANTIES OF THE BORROWER.

     3.1. The Borrower hereby represents and warrants that this Amendment and
          the Credit Agreement as previously executed and as amended hereby,
          constitute legal, valid

<Page>

          and binding obligations of the Borrower and are enforceable against
          the Borrower in accordance with their terms (except as enforceability
          may be limited by bankruptcy, insolvency, or similar laws affecting
          the enforcement of creditors' rights generally).

     3.2. Upon the effectiveness of this Amendment and after giving effect
          hereto, the Borrower hereby (i) reaffirms all covenants,
          representations and warranties made in the Credit Agreement as amended
          hereby, and agrees that all such covenants, representations and
          warranties are true and correct in all material respects as of the
          effective date of this Amendment, except for changes in the Schedules
          to the Credit Agreement reflecting events, conditions or transactions
          permitted by or not in violation of the Credit Agreement (unless such
          representation and warranty is made as of a specific date, in which
          case such representation and warranty shall be true and correct in all
          material respects as of such date) and (ii) certifies that no Default
          or Event of Default has occurred and is continuing.

          4.   REFERENCE TO THE EFFECT ON THE CREDIT AGREEMENT.

     4.1. Upon the effectiveness of SECTION 1 hereof, on and after the date
          hereof, each reference in the Credit Agreement (including any
          reference therein to "this Credit Agreement," "hereunder," "hereof,"
          "herein" or words of like import referring thereto) or in any other
          Program Document shall mean and be a reference to the Credit Agreement
          as amended hereby.

     4.2. Except as specifically amended above, the Credit Agreement and all
          other documents, instruments and agreements executed and/or delivered
          in connection therewith, shall remain in full force and effect, and
          are hereby ratified and confirmed.

     4.3. The execution, delivery and effectiveness of this Amendment shall not
          operate as a waiver of any right, power or remedy of the Agent, the
          Lender or the Secondary Lender, nor constitute a waiver of any
          provision of the Credit Agreement or any other documents, instruments
          and agreements executed and/or delivered in connection therewith.

          5.   GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER THE LAWS OF THE STATE OF NEW YORK, AND FOR ALL PURPOSES SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF SAID STATE.

          6.   HEADINGS. Section headings in this Amendment are included herein
for convenience of reference only and shall not constitute a part of this
Amendment for any other purpose.

          7.   COUNTERPARTS. This Amendment may be executed in any number of
counterparts and by different parties hereto on separate counterparts, each of
which counterparts, when so executed and delivered, shall be deemed to be an
original and all of which counterparts, taken together, shall constitute but one
and the same agreement.

                                        2
<Page>

          IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.


                                   ING PRIME RATE TRUST, as Borrower


                                   By: /s/ Daniel A. Norman
                                      -----------------------
                                      Name:   Daniel A. Norman
                                      Title:  Senior Vice President


                                   CRC FUNDING, LLC, as the Lender


                                   By:
                                      -----------------------
                                      Name:
                                      Title:


                                   CITIBANK, N.A., as Secondary Lender


                                   By:
                                      -----------------------
                                      Name:
                                      Title:


                                   CITICORP NORTH AMERICA, INC., as
                                   Agent


                                   By:
                                      -----------------------
                                      Name:
                                      Title:


SIGNATURE PAGE TO AMENDMENT NO. 1 TO REVOLVING CREDIT AND SECURITY AGREEMENT

<Page>

          IN WITNESS WHEREOF, this Amendment has been duly executed as of the
day and year first above written.


                                   ING PRIME RATE TRUST, as Borrower


                                   By:
                                      -----------------------
                                      Name:
                                      Title:


                                   CRC FUNDING, LLC, as the Lender


                                   By: /s/ Susan M. Olsen
                                      -----------------------
                                      Name:            SUSAN M. OLSEN
                                      Title:           Vice President
                                                       Securitization
                                              388 Greenwich Street, 19th Floor
                                                        212-816-0777


                                   CITIBANK, N.A., as Secondary Lender


                                   By: /s/ Susan M. Olsen
                                      -----------------------
                                      Name:            SUSAN M. OLSEN
                                      Title:           Vice President
                                                       Securitization
                                              388 Greenwich Street, 19th Floor
                                                        212-816-0777


                                   CITICORP NORTH AMERICA, INC., as
                                   Agent


                                   By: /s/ Susan M. Olsen
                                      -----------------------
                                      Name:            SUSAN M. OLSEN
                                      Title:           Vice President
                                                       Securitization
                                              388 Greenwich Street, 19th Floor
                                                        212-816-0777

SIGNATURE PAGE TO AMENDMENT NO. 1 TO REVOLVING CREDIT AND SECURITY AGREEMENT

<Page>

                                   SCHEDULE I

                          FORM OF REAFFIRMATION LETTER

          Reference is hereby made to that certain Amendment No. 1 to Revolving
Credit and Security Agreement (the "AMENDMENT") made as of February 2, 2004 by
and among ING Prime Rate Trust (the "BORROWER"), CRC Funding, LLC, as Conduit
Lender (the "LENDER"), Citibank, N.A., as Secondary Lender (the "SECONDARY
LENDER"), and Citicorp North America, Inc., in its capacity as contractual
representative (the "AGENT") under that certain Revolving Credit and Security
Agreement, dated as of July 16, 2003, by and among the Borrower, the Lender, the
Secondary Lender and the Agent (as amended, restated, supplemented or otherwise
modified, the "CREDIT AGREEMENT"). Defined terms used herein and not otherwise
defined herein shall have the meaning given to them in the Credit Agreement.

          Each of the Advisor and the Agent hereby agrees to amend the last
paragraph of the Letter Agreement to which both are parties by adding the
following language thereto:

          "Any such subcontract, delegation or assignment shall not affect the
Advisor's liability for performance of its duties and obligations pursuant to
the terms hereof. Without limiting the generality of the foregoing, any action
taken or omitted to be taken by any Person that has entered into a subcontract
with the Advisor or to whom the Advisor has delegated or assigned any of its
duties shall be deemed to be an action or omission by the Advisor."

          Each of the Advisor and the Administrator hereby acknowledges that all
references to the Credit Agreement in the Letter Agreement to which it is a
party shall mean and be references to such Credit Agreement as amended by the
Amendment. Each of the Advisor and the Administrator hereby reaffirms all of its
obligations under the Letter Agreement to which it is a party, which Letter
Agreement remains in full force and effect before and after giving effect to the
amendment described in the Amendment and the amendment described herein as so
amended hereby, if applicable, and such Letter Agreement is hereby ratified and
confirmed.


                                        ING INVESTMENTS, LLC, as Advisor


                                        By:
                                           -----------------------
                                           Name:
                                           Title:


                                        ING FUNDS SERVICES, LLC, as the
                                        Administrator


                                        By:
                                           -----------------------
                                           Name:
                                           Title:

SIGNATURE PAGE TO REAFFIRMATION OF LETTER AGREEMENTS

<Page>

Acknowledged and agreed to
this ___ day of February, 2004 by,


CITICORP NORTH AMERICA, INC., as Agent


By:
   ---------------------------
        Name:
        Title:

SIGNATURE PAGE TO REAFFIRMATION OF LETTER AGREEMENTS

<Page>

[ING FUNDS LOGO]

     Reference is hereby made to that certain Amendment No. 1 to Revolving
Credit and Security Agreement (the "AMENDMENT") made as of February 2, 2004 by
and among ING Prime Rate Trust (the "BORROWER"), CRC Funding, LLC, as Conduit
Lender (the "LENDER"). Citibank, N.A., as Secondary Lender (the "SECONDARY
LENDER"), and Citicorp North America, Inc., in its capacity as contractual
representative (the "AGENT") under that certain Revolving Credit and Security
Agreement, dated as of July 16, 2003, by and among the Borrower, the Lender, the
Secondary Lender and the Agent (as amended, restated, supplemented or otherwise
modified, the "CREDIT AGREEMENT"). Defined terms used herein and not otherwise
defined herein shall have the meaning given to them in the Credit Agreement.

     Each of the Advisor and the Agent hereby agrees to amend the last paragraph
of the Letter Agreement to which both are parties by adding the following
language thereto:

     "Any such subcontract, delegation or assignment shall not affect the
Advisor's liability for performance of its duties and obligations pursuant to
the terms hereof. Without limiting the generality of the foregoing, any action
taken or omitted to be taken by any Person that has entered into a subcontract
with the Advisor or to whom the Advisor has delegated or assigned any of its
duties shall be deemed to be an action or omission by the Advisor."

     Each of the Advisor and the Administrator hereby acknowledges that all
references to the Credit Agreement in the Letter Agreement to which it is a
party shall mean and be references to such Credit Agreement as amended by the
Amendment. Each of the Advisor and the Administrator hereby reaffirms all of its
obligations under the Letter Agreement to which it is a party, which Letter
Agreement remains in full force and effect before and after giving effect to the
amendment described in the Amendment and the amendment described herein as so
amended hereby, if applicable, and such Letter Agreement is hereby ratified and
confirmed.


ING INVESTMENTS, LLC, as the Advisor    ING FUNDS SERVICES, LLC, as the
                                        Administrator


By: /s/ Daniel A. Norman                By: /s/ Rob Naka
    --------------------------------        ----------------------------
Name:  Daniel A. Norman                 Name:  Rob Naka
Title: Senior Vice President            Title: Senior Vice President


       7337 East Doubletree Ranch Road      Tel: 480.477.3000
       Scottsdale, AZ 85258-2034            Fax: 480.477.2700
       www.ingfunds.com

<Page>

Acknowledged and agreed to
this 2nd day of February, 2004 by,


CITICORP NORTH AMERICA, INC., as Agent


By:  /s/ Susan M. Olsen
    ----------------------------
      Name:           SUSAN M. OLSEN
      Title:          Vice President
                      Securitization
             388 Greenwich Street, 19th Floor
                       212-816-0777

SIGNATURE PAGE TO REAFFIRMATION OF LETTER AGREEMENTS

<Page>

[ING FUNDS LOGO]

                             SECRETARY'S CERTIFICATE

     The undersigned hereby certifies that he is the duly elected and acting
Vice President and Assistant Secretary of ING Investments, LLC, an Arizona
limited liability company, and does further certify that:

     1.   ING Investments, LLC is the investment adviser for ING Prime Rate
          Trust, a Massachusetts business trust (the "Trust").

     2.   In connection with the execution of, and entering into, by the Trust
          of that certain Amendment No. 1 to the Revolving Credit and Security
          Agreement by and among the Trust, CRC Funding, LLC, Citibank, N.A.,
          and Citicorp North America, Inc., ING Investments, LLC has executed
          that certain Reaffirmation Letter in the form set forth as Schedule I
          to said Amendment No. 1.

     3.   The execution of the Reaffirmation Letter by ING Investments, LLC has
          been duly authorized by all requisite limited liability company action
          of ING Investments, LLC, the officer who executed such Reaffirmation
          Letter is a duly elected and authorized officer of ING Investments,
          LLC, and, once executed by such officer, the provisions of the
          Reaffirmation Letter shall be binding and enforceable against ING
          Investments, LLC in accordance with its terms.

     4.   ING Investments, LLC has the requisite power and authority to execute,
          deliver and perform its obligations under the Reaffirmation Letter.
          Such execution, delivery and performance:

          (i)   have been duly authorized by all necessary and proper limited
                liability company action on the part of ING Investments, LLC;

          (ii)  do not violate any provision of the Certificate of Formation or
                the Operating Agreement of ING Investments, LLC;

          (iii) will not violate any law or regulation of the State of Arizona
                or of the United States of America applicable to ING
                Investments, LLC;

          (iv)  will not violate any order of any court applicable to ING
                Investments, LLC; and

          (v)   will not violate, or require the termination of, or require the
                approval or consent of any Person under the terms of any
                indenture, mortgage, deed of


     7337 East Doubletree Ranch Road   Tel: 480.477.3000   ING Investments, LLC
     Scottsdale, AZ 85258-2034         Fax: 480.477.2700
     www.ingfunds.com

<Page>

                trust, loan agreement or any other material agreement to which
                ING Investments, LLC is a party or by which ING Investments, LLC
                or any of its properties may be bound.

     IN WITNESS WHEREOF, the undersigned has executed this Secretary's
Certificate this 2nd day of February, 2004.


                                     /s/ William H. Rivoir III
                                     -----------------------------------------
                                     William H. Rivoir III
                                     Vice President and Assistant Secretary

                                        2
<Page>

                    CERTIFICATE OF INCUMBENCY OF OFFICERS OF
                             ING FUNDS SERVICES, LLC


     The undersigned, William H. Rivoir III, hereby certifies that (i) he is the
duly elected, qualified and acting Senior Vice President and Secretary for ING
Funds Services, LLC, and (ii) the person named below has been duly elected, has
duly qualified, and this day is an officer of ING Funds Services, LLC, holding
the office set opposite his name, the signature set opposite his name is his
genuine signature, and he has the authority to execute documents on behalf of
ING Funds Services, LLC.

<Table>
<Caption>
     NAME                     TITLE                  SIGNATURE
     ----                     -----                  ---------
     <S>              <C>                           <C>
     Rob Naka         Senior Vice President         /s/ Rob Naka
                                                    ------------
</Table>

     IN WITNESS WHEREOF, the undersigned has executed this Certificate on the
30th day of January, 2004.


                                     /s/ William H. Rivoir III
                                     ----------------------------------------
                                     William H. Rivoir III
                                     Senior Vice President and Secretary

<Page>

[DECHERT LLP LOGO]

BOSTON

BRUSSELS

FRANKFURT

HARRISBURG

HARTFORD

LONDON

LUXEMBOURG

NEW YORK

NEWPORT BEACH

PALO ALTO

PARIS

PHILADELPHIA

PRINCETON

SAN FRANCISCO

WASHINGTON

February 2, 2004

CRC Funding, LLC
   as Conduit Lender
Citibank, N.A.,
   as Secondary Lender
Citicorp North America, INC.,
   as Agent, and the
Persons who are from time to time
   Lenders under the Revolving Credit and
   Security Agreement
c/o Citicorp North America, INC.
   450 Mamaraneck Avenue
   Harrison, New York 10528

          Re:  ING Prime Rate Trust

Ladies and Gentlemen:

          We have acted as special counsel to ING Prime Rate Trust, a
Massachusetts business trust, in connection with that certain Amendment No. 1
made as of February 2, 2004 to that certain Revolving Credit and Security
Agreement dated as of July 16, 2003 by and among ING Prime Rate Trust, CRC
Funding, LLC, as Conduit Lender, Citibank, N.A., as Secondary Lender, and
Citicorp North America, Inc., in its capacity as contractual representative (the
"Amendment"). Capitalized terms used herein, but not otherwise defined herein,
shall have the meanings ascribed to such terms in the Credit Agreement, as
amended. This opinion is delivered to you at our clients' request pursuant to
Section 2(i) of the Amendment.

               In rendering the opinions set forth herein, we have examined:

               1.   the Borrower's Agreement and Declaration of Trust, Bylaws
                    and certificates of good standing received from The
                    Commonwealth of Massachusetts and the State of Arizona;

               2.   the Borrower's Prospectus and Statement of Additional
                    Information;

               3.   resolutions of the Executive Committee of the Board of
                    Trustees of the Borrower with respect to the transactions
                    referred to herein; and

               4.   such other agreements, instruments and documents as we have
                    deemed necessary or appropriate to enable us to render the
                    opinions expressed below.


LAW OFFICES OF DECHERT LLP

30 ROCKEFELLER PLAZA - NEW YORK, NY 10112-2200 + TEL: 212.698.3500
- - FAX: 212.698.3599 - www.dechert.com

<Page>

                                        2

     Additionally, we have examined originals or copies, certified to our
satisfaction, of such certificates of public officials and officers and
representatives of the Borrower and we have made such inquiries of officers and
representatives of the Borrower as we have deemed relevant or necessary, as the
basis for the opinions set forth herein. A copy of the certificate received from
the Borrower and relied upon for purposes of the determination of matters of
fact for this opinion are attached hereto as EXHIBIT A.

     In rendering the opinions expressed below, we have, with your consent,
assumed that the signatures of Persons signing all documents in connection with
which this opinion is rendered are genuine (other than Persons signing on behalf
of the Borrower), all documents submitted to us as originals or duplicate
originals are authentic and all documents submitted to us as copies, whether
certified or not, conform to authentic original documents. Additionally, we
have, with your consent, assumed and relied upon, the following:

     a.   the accuracy and completeness of all certificates and other
statements, documents and records reviewed by us, and the accuracy and
completeness of all representations, warranties, schedules and exhibits
contained in the Credit Agreement and Amendment, with respect to the factual
matters set forth therein;

     b.   all parties to the documents reviewed by us (other than the Borrower,
with respect to whom we render our opinions herein) are duly organized, validly
existing and in good standing under the laws of all jurisdictions where they are
conducting their businesses or otherwise required to be so qualified, and have
full power and authority to execute, deliver and perform their duties under such
documents and all such documents have been duly authorized, executed and
delivered by such parties and are enforceable against such parties in accordance
with their respective terms;

     Whenever our opinion with respect to the existence or absence of facts is
indicated to be based on our knowledge or awareness, we are referring to the
actual present knowledge of the particular Dechert LLP attorneys who have
represented the Borrower in connection with the Amendment. Except as expressly
set forth herein, we have not undertaken any independent investigation,
examination or inquiry to determine the existence or absence of any facts (and
have not caused the review of any court file or indices) and no inference as to
our knowledge concerning any facts should be drawn as a result of the limited
representation undertaken by us.

     Based upon the foregoing and subject to the qualifications stated herein,
we are of the opinion that:

     1.   Based on a certificate received from the Secretary of The Commonwealth
of Massachusetts, the Borrower is a business trust duly authorized to exercise
in The Commonwealth of Massachusetts all of the powers recited in Borrower's
Declaration of Trust and to transact business in Massachusetts under the laws of
The Commonwealth of Massachusetts. Based on a certificate received from the
Secretary of the State of Arizona, the Borrower has the authority to transact
business in the State of Arizona. Copies of the certificates referred to in this
paragraph are attached here to as EXHIBIT B.

<Page>

                                        3

     2.   The Borrower has the requisite trust power and authority to own and
encumber its properties and assets and to conduct its business as currently
conducted.

     3.   The Borrower has all requisite trust power and authority to execute
and deliver the Amendment and to perform its obligations under Credit Agreement,
as amended by the Amendment. The Amendment has been duly authorized by the
Borrower and has been duly executed and delivered by a duly authorized officer
of the Borrower. The Amendment and the Credit Agreement as previously executed
and as amended by the Amendment, constitute legal, valid and binding obligations
of the Borrower, enforceable against the Borrower in accordance with their
respective terms.

     The opinions as expressed herein are subject to the following
qualifications:

     A.   The effect of applicable bankruptcy, reorganization, insolvency,
moratorium, receivership, fraudulent conveyance and similar laws relating to or
affecting the rights and remedies of creditors or secured parties.

     B.   To the extent the Credit Agreement and Amendment specify a governing
law, we express no opinion as to whether this choice of law is enforceable.

     C.   Limitations which may arise under general principles of equity
including concepts of materiality, reasonableness, good faith and fair dealing
(regardless of whether considered in a proceeding at law or in equity).

     D.   Limitations upon the availability of specific equitable remedies (such
as injunctive relief and the remedy of specific performance) which may arise
under general principles of equity.

     E.   Limitations on enforceability under certain circumstances of
provisions indemnifying a party against liability for its own wrongful or
negligent acts imposed by public policy relating thereto.

     F.   Limitations regarding enforceability of provisions for indemnification
where such indemnification would be violative of any law, rule or regulation
(including without limitation any federal or state securities law or regulation)
or would be contrary to public policy.

     G.   We express no opinion with respect to: (1) the enforceability of
provisions contained in the Credit Agreement or the Amendment relating to the
effect of laws which may be enacted in the future; (2) the enforceability of
provisions in the Credit Agreement or the Amendment purporting to waive the
effect of applicable laws to the extent such laws do not permit such waiver; or
(3) the effectiveness of any power-of-attorney given under the Credit Agreement,
as amended by the Amendment, which is intended to bind successors and assigns
which have not granted such powers by a power-of-attorney specifically executed
by them.

     H.   Without limiting the generality of the foregoing, we express no
opinion with respect to (1) the accuracy or completeness of any property
descriptions contained in

<Page>

                                        4

the Credit Agreement as amended by the Amendment, or (2) the right of the Agent
or the Lenders to set-off against funds held in any account maintained with the
Agent or the Lenders by the Borrower and which account is designated, or
contains funds that the Agent or the Lenders is aware have been set aside for
special purposes, such as payroll, trust and escrow accounts, or which funds are
subject to special agreement between the Agent or the Lenders and the Borrower
precluding or limiting rights to set-off funds.

     I.   Without limiting the generality of the foregoing, we express no
opinion as to the legality, validity, binding nature or enforceability, of (1)
any self-help provisions; (2) provisions that purport to establish evidentiary
standards; (3) provisions that provide for the enforceability of the remaining
terms and provisions of the Credit Agreement, as amended by the Amendment, in
circumstances in which certain other terms and provisions of the such agreement
are illegal or unenforceable; (4) provisions that provide that certain rights or
obligations are absolute or unconditional; (5) provisions related to waivers of
remedies (or the delay or omission of enforcement of remedies), disclaimers,
liability limitations or limitations on the obligations of the Agent or the
Lenders in circumstances in which a failure of condition or default by the
Borrower is not material; (6) provisions related to releases or waivers of legal
or equitable rights, discharges of defenses, or reimbursement or indemnification
in circumstances in which the person seeking reimbursement or indemnification
has breached its duties under the Credit Agreement, as amended by the Amendment,
or otherwise, or itself has been negligent; (7) provisions which purport to
restrict transfer of title to (or, except for Liens expressly permitted under
the Credit Agreement, further liens on) any property covered by the Credit
Agreement as amended by the Amendment; (8) provisions which restrict access to
or waive legal or equitable remedies or access to courts; (9) provisions which
affect or confer jurisdiction or venue; (10) provisions relating to the payment
or collectibility of legal fees; or (11) provisions which permit any of the
Agent or the Lenders to act in its sole discretion or to be exculpated from
liability for its actions to the extent not permitted by law.

     K.   Except as set forth in the immediately following sentence, our opinion
is limited solely to such matters of law under United States federal law, the
laws of The Commonwealth of Massachusetts and the laws of the State of New York
which in our experience would normally be applicable to the consummation of the
transactions contemplated by the Amendment and the Credit Agreement as
previously executed and as amended by the Amendment, as those laws are in effect
as of the date hereof, and we express no opinion with respect to the laws of any
other state or jurisdiction, including but not limited to, ordinances,
regulations or practices of any county, city or other governmental agency or
body within The Commonwealth of Massachusetts, the State of New York or any
other state or jurisdiction.

     Our opinions set forth in this letter are based upon the facts in existence
and laws in effect on the date hereof and we expressly disclaim any obligation
to update our opinions herein, regardless of whether changes in such facts or
laws come to our attention after the delivery hereof.

<Page>

                                        5

     This opinion is solely for the benefit of the addressees hereof in
connection with the execution and delivery of the Amendment. Notwithstanding
anything in this opinion to the contrary, you may disclose this opinion (i) to
prospective successors and assigns of the addressees hereof as long as such
parties agree to keep this opinion confidential, (ii) to regulatory authorities
having jurisdiction over any of the addressees hereof or their successors and
assigns, (iii) pursuant to valid legal process, and (iv) to any rating agency
which is rating the commercial paper issued by the Conduit Lender, in each case
without prior consent. Otherwise, this opinion may not be relied upon in any
manner by any other person and may not be disclosed, quoted or otherwise
referred to without our prior written consent.

Very truly yours,
Dechert LLP

<Page>

                                                                       EXHIBIT A

<Page>

                        THE COMMONWEALTH OF MASSACHUSETTS
[LOGO]                    SECRETARY OF THE COMMONWEALTH
                    STATE HOUSE, BOSTON, MASSACHUSETTS 02133

WILLIAM FRANCIS GALVIN
   SECRETARY OF THE
     COMMONWEALTH                JANUARY 28,2004

To Whom it May Concern:

     I hereby certify that the trustees of

                              ING PRIME RATE TRUST

a voluntary association with transferable shares, filed a copy of its
Declaration of Trust dated DECEMBER 2, 1987, in this Office on DECEMBER 4, 1987,
pursuant to Chapter 182 of the General Laws of the Commonwealth of
Massachusetts, and that said association has filed the necessary certificates
required to be filed under said Chapter 182 and paid the necessary fees due
thereon; and that said association is at the date of this certificate duly
authorized to exercise in said Commonwealth of Massachusetts all of the powers
recited in said Declaration of Trust, and to transact business in said
Commonwealth of Massachusetts.


[SEAL]                 In testimony of which,
                       I have hereunto affixed the
                       Great Seal of the Commonwealth
                       on the date first above written.

                       /s/ William Francis Galvin
                       Secretary of the Commonwealth

<Page>

                                STATE OF ARIZONA

                                     [SEAL]

                                  Office of the
                             CORPORATION COMMISSION

                          CERTIFICATE OF GOOD STANDING

TO ALL TO WHOM THESE PRESENTS SHALL COME, GREETING:

     I, BRIAN C. McNEIL, EXECUTIVE SECRETARY OF THE ARIZONA CORPORATION
COMMISSION, DO HEREBY CERTIFY THAT

                           ***ING PRIME RATE TRUST***

A FOREIGN BUSINESS TRUST ORGANIZED UNDER THE LAWS OF MASSACHUSETTS DID OBTAIN
AUTHORITY TO TRANSACT BUSINESS IN THE STATE OF ARIZONA ON THE 5TH DAY OF
FEBRUARY 1996.

     I FURTHER CERTIFY THAT ACCORDING TO THE RECORDS OF THE ARIZONA CORPORATION
COMMISSION, AS OF THE DATE SET FORTH HEREUNDER, THE SAID CORPORATION HAS NOT
HAD ITS AUTHORITY REVOKED FOR FAILURE TO COMPLY WITH THE PROVISIONS OF THE
ARIZONA BUSINESS CORPORATION ACT; THAT ITS MOST RECENT ANNUAL REPORT, SUBJECT TO
THE PROVISIONS OF A.R.S. SECTIONS 10-122, 10-123, 10-125 & 10-1622, HAS BEEN
DELIVERED TO THE ARIZONA CORPORATION COMMISSION FOR FILING; AND THAT THE SAID
CORPORATION HAS NOT FILED AN APPLICATION FOR WITHDRAWAL AS OF THE DATE OF THIS
CERTIFICATE.

     THIS CERTIFICATE RELATES ONLY TO THE LEGAL AUTHORITY OF THE ABOVE NAMED
ENTITY AS OF THE DATE ISSUED. THIS CERTIFICATE IS NOT TO BE CONSTRUED AS AN
ENDORSEMENT, RECOMMENDATION, OR NOTICE OF APPROVAL OF THE ENTITY'S CONDITION OR
BUSINESS ACTIVITIES AND PRACTICES.

[SEAL]              IN WITNESS WHEREOF, I HAVE HEREUNTO SET MY HAND AND AFFIXED
                    THE OFFICIAL SEAL OF THE ARIZONA CORPORATION COMMISSION.
                    DONE AT PHOENIX, THE CAPITAL, THIS 22ND DAY OF JANUARY,
                    2004, A. D.

                         /s/ Brian C. McNeil
                         ----------------------------
                         Executive Secretary

                         By /s/ Pam Bedard
                            -------------------------

<Page>

                                                                       EXHIBIT B

<Page>

                    OFFICER'S CLOSING CERTIFICATE OF BORROWER

     In connection with the opinion of Dechert LLP ("Dechert") to be rendered on
the date hereof (the "Opinion") in connection with that certain Amendment No. 1
made as of February 2, 2004 to that certain Revolving Credit and Security
Agreement among ING Prime Rate Trust (the "Borrower"), CRC Funding, LLC,
Citibank, N.A. and Citicorp North America, Inc., dated as of July 16, 2003 (the
"Amendment"), I, William H. Rivoir III, the duly elected Senior Vice President
and Assistant Secretary of the Borrower, hereby certify to Dechert as follows:

     1.   Terms herein with capitalized initial letters and not otherwise
          defined herein shall have the respective meanings ascribed to them in
          the Opinion.

     2.   I am the duly elected and acting Senior Vice President and Assistant
          Secretary of the Borrower.

     3.   The Borrower has the power and authority to own its property and to
          conduct the business in which it is currently engaged.

     4.   The Borrower is registered as a closed-end management investment
          company under the Investment Company Act of 1940. The Borrower's
          registration under the Investment Company Act of 1940 has not been
          withdrawn or suspended, and no proceedings have commenced in which
          withdrawal or suspension of such registration has been sought.

     5.   Attached hereto as EXHIBIT A is a true, correct and complete copy of
          resolutions adopted by the Executive Committee of the Board of
          Trustees of the Borrower as of January 20, 2004 that authorize the
          execution of the Amendment, and such resolutions have not since their
          adoption been in any way modified or rescinded, and are in full force
          and effect on the date hereof.

     6.   The execution, delivery, and performance of the Amendment and the
          Credit Agreement as previously executed and as amended by the
          Amendment, all as provided therein, will not violate, or constitute a
          default under, any requirement of law or contractual obligation of the
          Borrower.

     7.   There is no action, suit or proceeding, or any governmental
          investigation or any arbitration pending or threatened by or against
          the Borrower before any court or arbitrator or any governmental or
          administrative body, agency or official which challenges the validity,
          or seeks to enjoin the performance or consummation, of the Amendment
          or the Credit Agreement as previously executed and as amended by the
          Amendment.

     IN WITNESS WHEREOF, I have signed and delivered this Officer's Certificate
this 2nd day of February, 2004.


                                   /s/ William H. Rivoir III
                                   -------------------------------
                                   William H. Rivoir III

<Page>

                                    EXHIBIT A

EXECUTIVE COMMITTEE RESOLUTIONS AUTHORIZING AMENDMENT

     RESOLVED, that ING Prime Rate Trust (the "Trust") increase the amount that
it may borrow for investment and other purposes, as permitted in the Trust's
prospectus, under its existing credit facility with a commercial paper conduit
sponsored by Citibank to a total of $435 million; and

     FURTHER RESOLVED, that the officers of the Trust are authorized and
directed to negotiate and enter into an amended credit facility agreement with
such commercial paper conduit to implement such increase on substantially the
terms and conditions presented to the Executive Committee at this meeting.

                                        2

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(IV)
<SEQUENCE>24
<FILENAME>a2138029zex-99_kiv.txt
<DESCRIPTION>EX 99.(K)(IV)
<TEXT>
<Page>

                                                              Exhibit 99.(k)(iv)

================================================================================

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

                          Dated as of September 2, 1998

                                      among

                        PILGRIM AMERICA PRIME RATE TRUST


                         BANK OF AMERICA NATIONAL TRUST
                            AND SAVINGS ASSOCIATION,
                              as Syndication Agent,

                      STATE STREET BANK AND TRUST COMPANY,
                            as Administrative Agent,

                                DEUTSCHE BANK AG,
                             as Documentation Agent,

                                       and

                                 COMMERZBANK AG
                                  as Co-Agent,

                                       and

                  THE OTHER FINANCIAL INSTITUTIONS PARTY HERETO

                                   Arranged By

                         BANCAMERICA ROBERTSON STEPHENS

================================================================================

<Page>

                                TABLE OF CONTENTS

<Table>
<Caption>
                                                                            PAGE
<S>                                                                           <C>
ARTICLE I

     DEFINITIONS                                                               2
     1.1   Certain Defined Terms                                               2
     1.2   Other Interpretive Provisions                                      19
     1.3   Fiscal Periods                                                     20

ARTICLE II

     THE CREDITS                                                              21
     2.1   Amounts and Terms of Commitments                                   21
     2.2   Loan Accounts                                                      21
     2.3   Procedure for Committed Borrowing                                  22
     2.4   Conversion and Continuation Elections for Committed Borrowings     23
     2.5   Bid Borrowings                                                     24
     2.6   Procedure for Bid Borrowings                                       25
     2.7   Voluntary Termination or Reduction of Commitments                  28
     2.8   Prepayments                                                        29
     2.9   Repayment                                                          29
     2.10  Interest                                                           29
     2.11  Fees                                                               31
     2.12  Computation of Fees and Interest                                   31
     2.13  Payments by the Company                                            31
     2.14  Payments by the Banks to the Administrative Agent                  32
     2.15  Sharing of Payments, Etc.                                          33
     2.16  Subsequent Bank                                                    34
     2.17  Swing Loans                                                        34
     2.18  Extension of Revolving Termination Date                            35

ARTICLE III

     TAXES, YIELD PROTECTION AND ILLEGALITY                                   36
     3.1   Taxes                                                              36
     3.2   Illegality                                                         37
     3.3   Increased Costs and Reduction of Return                            38
     3.4   Funding Losses                                                     39
     3.5   Inability to Determine Rates                                       40
     3.6   Certificates of Banks                                              40
     3.7   Survival                                                           41

ARTICLE IV

     CONDITIONS PRECEDENT                                                     41
     4.1   Conditions of Initial Loans                                        41
     4.2   Conditions to All Borrowings                                       43
     4.3.  Consequences of Effectiveness, etc.                                43
</Table>

                                        i
<Page>

<Table>
<Caption>
                                                                            PAGE
<S>                                                                           <C>
     4.4.  Reallocation of Loans                                              44
     4.5.  Amounts Outstanding Under the Original Agreement
           Deemed to Be Loans Under This Agreement                            44

ARTICLE V

     REPRESENTATIONS AND WARRANTIES                                           44
     5.1   Existence and Power                                                44
     5.2   Registration of Company and Company's Shares                       45
     5.3   Authorization; No Contravention                                    45
     5.4   Governmental Authorization                                         45
     5.5   Binding Effect                                                     45
     5.6   Litigation                                                         46
     5.7   No Default                                                         46
     5.8   ERISA Compliance                                                   46
     5.9   Use of Proceeds                                                    46
     5.10  Financial Condition                                                46
     5.11  Taxes                                                              47
     5.12  Environmental Matters                                              47
     5.13  No Burdensome Restrictions                                         47
     5.14  Subsidiaries                                                       47
     5.15  Full Disclosure                                                    47
     5.16  Regulations U and X                                                47
     5.17  Investment Policies and Investment Restrictions                    48
     5.18  Advisory Contract                                                  48
     5.19  Compliance with Laws                                               48
     5.20  Tax Status                                                         48
     5.21  Year 2000 Problem                                                  48

ARTICLE VI

     AFFIRMATIVE COVENANTS                                                    48
     6.1   Financial Statements                                               49
     6.2   Notices                                                            50
     6.3   Preservation of Existence, Etc.                                    51
     6.4   Insurance                                                          51
     6.5   Payment of Obligations                                             52
     6.6   Compliance with Laws                                               52
     6.7   Inspection of Property and Books and Records                       52
     6.8   Environmental Laws                                                 52
     6.9   Investment Adviser                                                 52
     6.10  Regulated Investment Company                                       53

ARTICLE VII

     NEGATIVE COVENANTS                                                       53
     7.1   Limitation on Liens                                                53
</Table>

                                       ii
<Page>

<Table>
<Caption>
                                                                            PAGE
<S>                                                                           <C>
     7.2   Consolidations and Mergers                                         53
     7.3   Limitation on Indebtedness                                         54
     7.4   Transactions with Affiliates                                       54
     7.5   Contingent Obligations                                             54
     7.6   Lease Obligations                                                  54
     7.7   Business Activities; Investment Policies                           54
     7.8   Accounting Changes                                                 55
     7.9   Financial Covenants                                                55
     7.10  Change of Custodian or Auditor                                     55
     7.11  Pension Plans                                                      55

ARTICLE VIII

     EVENTS OF DEFAULT                                                        55
     8.1   Event of Default                                                   55
     8.2   Remedies                                                           58
     8.3   Rights Not Exclusive                                               58

ARTICLE IX

     THE AGENTS                                                               59
     9.1   Appointment and Authorization                                      59
     9.2   Delegation of Duties                                               59
     9.3   Liability of Agents                                                59
     9.4   Reliance by Agents                                                 60
     9.5   Notice of Default                                                  60
     9.6   Credit Decision                                                    60
     9.7   Indemnification                                                    61
     9.8   Agent in Individual Capacity                                       61
     9.9   Successor Agent                                                    62
     9.10  Withholding Tax                                                    62
     9.11  Other Agents                                                       64

ARTICLE X

     MISCELLANEOUS                                                            64
     10.1  Amendments and Waivers                                             64
     10.2  Notices                                                            65
     10.3  No Waiver; Cumulative Remedies                                     66
     10.4  Costs and Expenses                                                 66
     10.5  Indemnity                                                          67
     10.6  Payments Set Aside                                                 68
     10.7  Successors and Assigns                                             68
     10.8  Assignments, Participations, etc.                                  68
     10.9  Set-off                                                            71
     10.10 Notification of Addresses, Lending Offices, Etc.                   72
     10.11 Counterparts                                                       72
</Table>

                                       iii
<Page>

<Table>
<Caption>
                                                                            PAGE
<S>                                                                           <C>
     10.12 Severability                                                       72
     10.13 No Third Parties Benefited                                         72
     10.14 Governing Law and Jurisdiction                                     72
     10.15 Waiver of Jury Trial                                               73
     10.16 Entire Agreement                                                   73
     10.18 Continuing Effectiveness, etc.                                     73
     10.19 Facsimile Execution                                                74
</Table>

SCHEDULES

Schedule 2.1   Commitments and Pro Rata Shares
Schedule 7.1   Permitted Liens
Schedule 10.2  Lending Offices; Address for Notice


EXHIBITS

Exhibit A      Form of Notice of Borrowing
Exhibit B      Form of Notice of Conversion/Continuation
Exhibit C      Form of Borrowing Base Certificate
Exhibit D      Form of Legal Opinion of Company's Counsel
Exhibit E      Form of Assignment and Acceptance
Exhibit F      Form of Competitive Bid Request
Exhibit G      Form of Competitive Bid
Exhibit H      Form of Committed Loan Note
Exhibit I      Form of Bid Loan Note
Exhibit J      Form of Swing Loan Note
Exhibit K      Form of Subsequent Bank Supplement
Exhibit L      Form of Security Agreement

                                       iv
<Page>

                  SECOND AMENDED AND RESTATED CREDIT AGREEMENT

     This SECOND AMENDED AND RESTATED CREDIT AGREEMENT is entered into as of
September 2, 1998 by the parties hereto and amends and restates that certain
Amended and Restated Credit Agreement dated as of June 26, 1997, among Pilgrim
America Prime Rate Trust, a Massachusetts business trust (the "COMPANY"), the
several financial institutions from time to time party to this Agreement
(collectively, the "BANKS"; individually, a "BANK"), Bank of America National
Trust and Savings Association, as co-administrative agent and syndication agent
for the Banks and State Street Bank and Trust Company, as co-administrative and
paying agent for the Banks, and Deutsche Bank AG, as co-agent.

     WHEREAS, the Company, certain of the Banks, Bank of America National Trust
and Savings Association, as co-administrative agent and syndication agent for
the Banks, and State Street Bank and Trust Company, as co-administrative and
paying agent for the Banks, have entered into an Amended and Restated Credit
Agreement dated as of June 26, 1997 (the "ORIGINAL AGREEMENT"), which provided
for the Banks to extend Loans to the Company from time to time; and

     WHEREAS, the Company and the Banks desire to amend the Original Agreement
in certain respects, all as more fully hereinafter set forth (the
"REFINANCING");

     NOW, THEREFORE, the parties hereto agree that the Credit Agreement shall be
amended and restated, as of the Refinancing Date, upon satisfaction of the
conditions set forth herein, to state in its entirety as follows:

                                    ARTICLE I

                                   DEFINITIONS

     1.1    CERTAIN DEFINED TERMS. The following terms have the following
meanings:

            "ABSOLUTE RATE" has the meaning specified in subsection
     2.6(b)(ii)(D).

            "ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bids
     setting forth Absolute Rates pursuant to Section 2.6.

            "ABSOLUTE RATE BID LOAN" means a Bid Loan that bears interest at a
     rate determined with reference to the Absolute Rate.

<Page>

            "ATTORNEY COSTS" means and includes all reasonable fees and
     disbursements of any law firm or other external counsel, the allocated cost
     of internal legal services and all reasonable disbursements of internal
     legal counsel.

            "BANK" has the meaning specified in the introductory clause hereto.

            "BANKRUPTCY CODE" means the Federal Bankruptcy Reform Act of 1978
     (11 U.S.C. Section 101, ET SEQ.).

            "BASE RATE" means, for any day, the higher of:

                 (a)   the rate of interest in effect for such day as publicly
            announced from time to time by BofA in San Francisco, California, as
            its "reference rate." (The "reference rate" is a rate set by BofA
            based upon various factors including BofA's costs and desired
            return, general economic conditions and other factors, and is used
            as a reference point for pricing some loans, which may be priced at,
            above, or below such announced rate); or

                 (b)   0.50% per annum above the latest Federal Funds Rate.

            Any change in the reference rate announced by BofA shall take effect
     at the opening of business on the day specified in the public announcement
     of such change.

            "BID BORROWING" means a Borrowing hereunder consisting of one or
     more Bid Loans made to the Company on the same day by one or more Banks.

            "BID LOAN" means a Loan by a Bank to the Company under Section 2.5,
     which may be a LIBOR Bid Loan or an Absolute Rate Bid Loan.

            "BID LOAN LENDER" means, in respect of any Bid Loan, the Bank making
     such Bid Loan to the Company.

            "BID LOAN NOTE" means a promissory note executed by the Company in
     favor of a Bank pursuant to subsection 2.2(b), in substantially the form of
     EXHIBIT I. For the avoidance of doubt, any reference in a Bid Loan Note to
     provisions of this Agreement shall be deemed to mean this Agreement as
     supplemented by the terms of the Competitive Bid accepted by the Company in
     respect of the relevant Bid Loan evidenced by such Bid Loan Note.

                                        4
<Page>

            "BofA" means Bank of America National Trust and Savings Association,
     a national banking association.

            "BORROWING" means a borrowing hereunder, other than Swing Loans,
     consisting of Loans made to the Company on the same day by the Banks under
     Article II, and may be a Committed Borrowing or a Bid Borrowing and, other
     than in the case of Federal Funds Rate Committed Loans, having the same
     Interest Period.

            "BORROWING BASE" has the meaning set forth in subsection 6.1(d).

            "BORROWING BASE CERTIFICATE" means a certificate as defined in
     subsection 6.1(d).

            "BORROWING DATE" means any date on which a Borrowing occurs, which
     shall under no circumstances be prior to the Closing Date.

            "BUSINESS DAY" means any day other than a Saturday, Sunday or other
     day on which commercial banks in Boston, New York or San Francisco are
     authorized or required by law to close and, if the applicable Business Day
     relates to any Offshore Rate Loan, means such a day on which dealings are
     carried on in the applicable offshore dollar interbank market.

            "CAPITAL ADEQUACY REGULATION" means any guideline, request or
     directive of any central bank or other Governmental Authority, or any other
     law, rule or regulation, whether or not having the force of law, in each
     case, regarding capital adequacy of any bank or of any corporation
     controlling a bank.

            "CASH EQUIVALENTS" means, at any time:

                 (a)   any evidence of Indebtedness, maturing not more than one
            year after such time, issued or guaranteed by the United States
            Government;

                 (b)   commercial paper, maturing not more than nine months from
            the date of issue, which is issued by

                       (i)    a corporation (other than an Affiliate of the
                 Company) organized under the laws of any state of the United
                 States or of the  District of Columbia and rated A-l by
                 Standard & Poor's Ratings Group or P-l by Moody's Investors
                 Service, Inc., or

                                        5
<Page>

                       (ii)   any Bank (or its holding company);

                 (c)   any certificate of deposit or bankers' acceptance,
            maturing not more than one year after such time, which is issued by
            either

                       (i)    a commercial banking institution that is a member
                 of the Federal Reserve System and has a combined capital and
                 surplus and undivided profits of not less than $500,000,000,
                 PROVIDED that the deposits offered by such institution are
                 rated at least A-l by Standard & Poor's Ratings Group or P-1 by
                 Moody's Investors Service, Inc., or

                       (ii)   any Bank, or

                 (d)   any repurchase agreement entered into with any Bank (or
            other commercial banking institution of the stature referred to in
            CLAUSE (c)(i)) which

                       (i)    is secured by a fully perfected security interest
                 in any obligation of the type described in any of CLAUSES (a)
                 through (c); and

                       (ii)   has a market value at the time such repurchase
                 agreement is entered into of not less than 100% of the
                 repurchase obligation of such Bank (or other commercial banking
                 institution) thereunder.

            "CHANGE OF CONTROL" means a change of control of the Investment
     Adviser which would constitute an "assignment" within the meaning of the
     Act of the Investment Management Agreement or the Administrative Agreement
     referred to in Section 5.19.

            "CLOSING DATE" means the date on which all conditions precedent set
     forth in Section 4.1 are satisfied or waived by all Banks (or, in the case
     of subsection 4.1(v), waived by the Person entitled to receive such
     payment).

            "CODE" means the Internal Revenue Code of 1986, and regulations
     promulgated thereunder.

            "COLLATERAL AGENT" shall have the meaning assigned to such term in
     ANNEX X to the GE Capital Facility.

            "COMMITMENT", as to each Bank, has the meaning specified in
     Section 2.1.

                                        6
<Page>

            "COMMITTED BORROWING" means a Borrowing hereunder consisting of
     Committed Loans of the same Type made to the Company on the same day by the
     Banks ratably according to their respective Commitments and, in the case of
     Offshore Rate Committed Loans, having the same Interest Periods.

            "COMMITTED LOAN" means a Loan by a Bank to the Company under Section
     2.1, and may be an Offshore Rate Committed Loan or a Federal Funds Rate
     Committed Loan (each, a "TYPE" of Committed Loan).

            "COMMITTED LOAN NOTE" means a promissory note executed by the
     Company in favor of a Bank pursuant to subsection 2.2(b), in substantially
     the form of EXHIBIT H.

            "COMPANY" has the meaning specified in the introductory clause
     hereto.

            "COMPETITIVE BID" means an offer by a Bank to make a Bid Loan in
     accordance with subsection 2.6(c).

            "COMPETITIVE BID REQUEST" has the meaning specified in
     subsection 2.6 (a).

            "CONTINGENT OBLIGATION" means, as to any Person, any direct or
     indirect liability of that Person, whether or not contingent, with or
     without recourse, (a) with respect to any Indebtedness, lease, dividend,
     letter of credit or other obligation (the "primary obligations") of another
     Person (the "primary obligor"), including any obligation of that Person (i)
     to purchase, repurchase or otherwise acquire such primary obligations or
     any security therefor, (ii) to advance or provide funds for the payment or
     discharge of any such primary obligation, or to maintain working capital or
     equity capital of the primary obligor or otherwise to maintain the net
     worth or solvency or any balance sheet item, level of income or financial
     condition of the primary obligor, (iii) to purchase property, securities or
     services primarily for the purpose of assuring the owner of any such
     primary obligation of the ability of the primary obligor to make payment of
     such primary obligation, or (iv) otherwise to assure or hold harmless the
     holder of any such primary obligation against loss in respect thereof
     (each, a "GUARANTY OBLIGATION"); (b) with respect to any Surety Instrument
     issued for the account of that Person or as to which that Person is
     otherwise liable for reimbursement of drawings or payments; (c) to purchase
     any materials, supplies or other property from, or to obtain the services
     of, another Person if the relevant contract or other related document or
     obligation requires that payment for such materials, supplies or other
     property, or for such services,

                                        7
<Page>

     shall be made regardless of whether delivery of such materials, supplies or
     other property is ever made or tendered, or such services are ever
     performed or tendered; or (d) in respect of any Swap Contract. The amount
     of any Contingent Obligation shall, in the case of Guaranty Obligations, be
     deemed equal to the stated or determinable amount of the primary obligation
     in respect of which such Guaranty Obligation is made or, if such Guaranty
     Obligation is specifically limited in amount, the maximum liability in
     respect thereof, or if not stated or if indeterminable, the maximum
     reasonably anticipated liability in respect thereof, and in the case of
     other Contingent Obligations, shall be equal to the maximum reasonably
     anticipated liability in respect thereof.

            "CONTRACTUAL OBLIGATION" means, as to any Person, any provision of
     any security issued by such Person or of any agreement, undertaking,
     contract, indenture, mortgage, deed of trust or other instrument, document
     or agreement to which such Person is a party or by which it or any of its
     property is bound.

            "CONVERSION/CONTINUATION DATE" means any date on which, under
     Section 2.4, the Company (a) converts Committed Loans of one Type to
     another Type, or (b) continues as Committed Loans of the same Type, but
     with a new Interest Period, Committed Loans having Interest Periods
     expiring on such date.

            "CUSTODIAN" shall have the meaning assigned to such term in ANNEX X
     to the GE Capital Facility.

            "CUSTODIAL AGENT" shall have the meaning assigned to such term in
     ANNEX X to the GE Capital Facility.

            "DEFAULT" means any event or circumstance which, with the giving of
     notice, the lapse of time, or both, would (if not cured or otherwise
     remedied during such time) constitute an Event of Default.

            "DEPOSIT ACCOUNT" means account number 37926342 at State Street.

            "DEUTSCHE" means Deutsche Bank AG.

            "DOCUMENTATION AGENT" means Deutsche Bank AG in its capacity as
     documentation agent for the Banks hereunder, and any successor
     documentation agent arising under Section 9.9.

            "DOLLARS", "DOLLARS" and "$" each mean lawful money of the
     United States.

                                        8
<Page>

            "ELIGIBLE ASSIGNEE" means (i) a commercial bank organized or
     licensed under the laws of the United States, or any state thereof, and
     having a combined capital and surplus of at least $100,000,000; (ii) a
     commercial bank organized under the laws of any other country which is a
     member of the Organization for Economic Cooperation and Development (the
     "OECD"), or a political subdivision of any such country, and having a
     combined capital and surplus of at least $100,000,000, provided that such
     bank is acting through a branch or agency located in the United States; and
     (iii) a Person that is primarily engaged in the business of commercial
     banking and that is (A) a Subsidiary of a Bank, (B) a Subsidiary of a
     Person of which a Bank is a Subsidiary, or (C) a Person of which a Bank is
     a Subsidiary; and (iv) any other financial institution (other than an
     investment company) in good standing under the laws of any country which is
     a member of the OECD and which has a combined capital and surplus of at
     least $100,000,000.

            "ENVIRONMENTAL CLAIMS" means all claims, however asserted, by any
     Governmental Authority or other Person alleging potential liability or
     responsibility for violation of any Environmental Law, or for release or
     injury to the environment.

            "ENVIRONMENTAL LAWS" means all federal, state or local laws,
     statutes, common law duties, rules, regulations, ordinances and codes,
     together with all administrative orders, directed duties, requests,
     licenses, authorizations and permits of, and agreements with, any
     Governmental Authorities, in each case relating to environmental, health,
     safety and land use matters.

            "ERISA" means the Employee Retirement Income Security Act of 1974,
     and regulations promulgated thereunder.

            "EURODOLLAR RESERVE PERCENTAGE" has the meaning specified in the
     definition of "Offshore Rate".

            "EVENT OF DEFAULT" means any of the events or circumstances
     specified in Section 8.1.

            "EXCHANGE ACT" means the Securities and Exchange Act of 1934 and
     regulations promulgated thereunder.

            "FDIC" means the Federal Deposit Insurance Corporation, and any
     Governmental Authority succeeding to any of its principal functions.

            "FEDERAL FUNDS RATE" means, for any day, the rate which appears on
     Telerate Page 5, as quoted by Garvin Guy Butler,

                                        9
<Page>

     as of 12:00 noon (in the case of any calculation other than the interest
     rate for Swing Loans) or 9:30 a.m. (in the case of the calculation of the
     interest rate for Swing Loans) New York time as the "Federal Funds Offered
     Rate"; or, if any relevant day such rate is not so published, the rate for
     such day will be the arithmetic mean as determined by the Administrative
     Agent of the rates for the last transaction in overnight Federal funds
     arranged prior to such time (Boston time) on that day by each of three
     leading brokers of Federal funds transactions in New York City selected by
     the Administrative Agent.

            "FEDERAL FUNDS RATE COMMITTED LOAN" means a Committed Loan that
     bears interest based on the Federal Funds Rate.

            "FEE LETTERS" has the meaning specified in subsection 2.11(a).

            "FRB" means the Board of Governors of the Federal Reserve System,
     and any Governmental Authority succeeding to any of its principal
     functions.

            "GAAP" means generally accepted accounting principles set forth in
     the opinions and pronouncements of the Accounting Principles Board and the
     American Institute of Certified Public Accountants and statements and
     pronouncements of the Financial Accounting Standards Board (or agencies
     with similar functions of comparable stature and authority within the U.S.
     accounting profession), which are applicable to the circumstances as of the
     date of the financial statements referred to in subsection 5.10(a) hereof.

            "GE CAPITAL FACILITY" means the Revolving Loan Agreement dated as of
     July 16, 1998 among Pilgrim America Prime Rate Trust, Pilgrim America
     Investments, Inc., Edison Asset Securitization, L.L.C. and General Electric
     Capital Corporation.

            "GOVERNMENTAL AUTHORITY" means any nation or government, any state
     or other political subdivision thereof, any central bank (or similar
     monetary or regulatory authority) thereof, any entity exercising executive,
     legislative, judicial, regulatory or administrative, functions of or
     pertaining to government, and any corporation or other entity owned or
     controlled, through stock or capital ownership or otherwise, by any of the
     foregoing.

            "GUARANTY OBLIGATION" has the meaning specified in the definition of
     "Contingent Obligation."

                                       10
<Page>

            "INDEBTEDNESS" of any Person means, without duplication, (a) all
     indebtedness for borrowed money; (b) all obligations issued, undertaken or
     assumed as the deferred purchase price of property or services (other than
     trade payables entered into in the ordinary course of business on ordinary
     terms); (c) all non-contingent reimbursement or payment obligations with
     respect to Surety Instruments; (d) all obligations evidenced by notes,
     bonds, debentures or similar instruments, including obligations so
     evidenced incurred in connection with the acquisition of property, assets
     or businesses; (e) all indebtedness created or arising under any
     conditional sale or other title retention agreement, or incurred as
     financing, in either case with respect to property acquired by the Person
     (even though the rights and remedies of the seller or bank under such
     agreement in the event of default are limited to repossession or sale of
     such property); (f) all obligations with respect to capital leases; (g) all
     net obligations with respect to Swap Contracts; (h) all indebtedness
     referred to in clauses (a) through (g) above secured by (or for which the
     holder of such Indebtedness has an existing right), property (including
     accounts and contracts rights) owned by such Person, even though such
     Person has not assumed or become liable for the payment of such
     Indebtedness; and (i) all Guaranty Obligations in respect of indebtedness
     or obligations of others of the kinds referred to in clauses (a) through
     (g) above.

            "INDEMNIFIED LIABILITIES" has the meaning specified in Section 10.5.

            "INDEMNIFIED PERSON" has the meaning specified in Section 10.5.

            "INSOLVENCY PROCEEDING" means (a) any case, action or proceeding
     before any court or other Governmental Authority relating to bankruptcy,
     reorganization, insolvency, liquidation, receivership, dissolution,
     winding-up or relief of debtors, or (b) any general assignment for the
     benefit of creditors, composition, marshalling of assets for creditors, or
     other, similar arrangement in respect of its creditors generally or any
     substantial portion of its creditors; undertaken under U.S. Federal, state
     or foreign law, including the Bankruptcy Code.

            "INTEREST PAYMENT DATE" means, as to any Offshore Rate Loan or
     Absolute Rate Bid Loan, the last day of each Interest Period applicable to
     such Loan; as to any Federal Funds Rate Committed Loan, the last Business
     Day of each calendar quarter; and as to any Committed Loan, each date such
     Committed Loan is converted into another Type of

                                       11
<Page>

     Committed Loan; PROVIDED, HOWEVER, that (a) if any Interest Period for an
     Offshore Rate Loan exceeds three months, the date that falls three months
     after the beginning of such Interest Period and after each Interest Payment
     Date thereafter is also an Interest Payment Date, and (b) as to any Bid
     Loan, such intervening dates, if any, prior to the maturity thereof as may
     be specified by the Company and agreed to by the applicable Bid Loan Lender
     in the applicable Competitive Bid shall also be Interest Payment Dates.

            "INTEREST PERIOD" means, (a) as to any Offshore Rate Loan, the
     period commencing on the Borrowing Date of such Loan, or (in the case of
     any Offshore Rate Committed Loan) on the Conversion/Continuation Date on
     which the Loan is converted into or continued as an Offshore Rate Committed
     Loan, and ending on the date one, two, three or six months thereafter as
     selected by the Company in its Notice of Borrowing, Notice of
     Conversion/Continuation or Competitive Bid Request, as the case may be; and
     (b) as to any Absolute Rate Bid Loan, a period of not less than 30 days and
     not more than 180 days as selected by the Company in the applicable
     Competitive Bid Request;

     PROVIDED that:

                       (i)    if any Interest Period would otherwise end on a
            day that is not a Business Day, that Interest Period shall be
            extended to the following Business Day unless, in the case of an
            Offshore Rate Loan, the result of such extension would be to carry
            such Interest Period into another calendar month, in which event
            such Interest Period shall end on the preceding Business Day;

                       (ii)   any Interest Period pertaining to an Offshore Rate
            Loan that begins on the last Business Day of a calendar month (or on
            a day for which there is no numerically corresponding day in the
            calendar month at the end of such Interest Period) shall end on the
            last Business Day of the calendar month at the end of such Interest
            Period; and

                       (iii)  no Interest Period for any Loan shall extend
            beyond the scheduled Maturity Date.

            "INVESTMENT ADVISER" has the meaning specified in Section 6.9.

                                       12
<Page>

            "INVESTMENT POLICIES" means the policies described in the most
     recent prospectus of the Company prior to the date hereof.

            "INVESTMENT RESTRICTIONS" means the restrictions described in the
     most recent prospectus of the Company prior to the date hereof.

            "IRS" means the Internal Revenue Service, and any Governmental
     Authority succeeding to any of its principal functions.

            "LENDER AGENT" shall have the meaning assigned to such term in
     Annex X of the GE Capital Facility.

            "LENDERS" shall have the meaning assigned to such term in ANNEX X to
     the GE Capital Facility.

            "LENDING OFFICE" means, as to any Bank, the office or offices of
     such Bank specified as its "Lending Office" or "Domestic Lending Office" or
     "Offshore Lending Office", as the case may be, on SCHEDULE 10.2, or such
     other office or offices as such Bank may from time to time notify the
     Company and the Administrative Agent.

            "LIBO RATE" means, for any Interest Period with respect to a LIBOR
     Bid Loan or an Offshore Rate Committed Loan, the rate of interest per annum
     determined by the Administrative Agent to be the arithmetic mean (rounded
     upward, if necessary, to the nearest l/16th of 1%) of the rates of interest
     per annum notified to the Administrative Agent by State Street as the rate
     of interest at which dollar deposits in the approximate amount of, in the
     case of LIBOR Bid Loans, the LIBOR Bid Loans to be borrowed in such Bid
     Borrowing, and, in the case of Offshore Rate Committed Loans, the Offshore
     Rate Committed Loan to be made by State Street, and having a maturity
     comparable to such Interest Period, would be offered to State Street by
     major banks in the London interbank market at its request at approximately
     11:00 a.m. (London time) two Business Days prior to the commencement of
     such Interest Period.

            "LIBOR AUCTION" means a solicitation of Competitive Bids setting
     forth a LIBOR Bid Margin pursuant to Section 2.6.

            "LIBOR BID LOAN" means any Bid Loan that bears interest at a rate
     based upon the LIBO Rate.

            "LIBOR BID MARGIN" has the meaning specified in subsection
     2.6(b)(ii)(C).

                                       13
<Page>

            "LIEN" means any security interest, mortgage, deed of trust, pledge,
     hypothecation, assignment, charge or deposit arrangement, segregated asset
     arrangement established in connection with reverse repurchase transactions,
     encumbrance, lien (statutory or other) or preferential arrangement of any
     kind or nature whatsoever in respect of any property (including those
     created by, arising under or evidenced by any conditional sale or other
     title retention agreement, the interest of a lessor under a capital lease,
     any financing lease having substantially the same economic effect as any of
     the foregoing, or the filing of any financing statement naming the owner of
     the asset to which such lien relates as debtor, under the Uniform
     Commercial Code or any comparable law) and any contingent or other
     agreement to provide any of the foregoing, but not including the interest
     of a lessor under an operating lease.

            "LOAN" means an extension of credit by a Bank to the Company under
     Article II, and may be a Committed Loan, a Bid Loan or a Swing Loan.

            "LOAN DOCUMENTS" means this Agreement, any Notes, the Security
     Agreement, the Fee Letters and all other documents delivered to any Agent
     or any Bank in connection herewith and therewith.

            "MAJORITY BANKS" means at any time (a) prior to the Revolving
     Termination Date, Banks then holding more than 50% of the then aggregate
     unpaid principal amount of the Committed Loans, and (b) after the Revolving
     Termination Date, Banks then holding more than 50% of the then aggregate
     unpaid principal amount of the Loans; PROVIDED, HOWEVER, that if at any
     time (i) prior to the Revolving Termination Date, no Committed Loans are
     outstanding, or (ii) after the Revolving Termination Date, no Loans are
     outstanding, Majority Banks shall mean Banks then holding more than 50% of
     the Commitments.

            "MARGIN STOCK" means "margin stock" as such term is defined in
     Regulation T, U or X of the FRB.

            "MASTER COLLATERAL AGENTS" shall have the meaning assigned to such
     term in ANNEX X to the GE Capital Facility.

            "MATERIAL ADVERSE EFFECT" means (a) a material adverse change in, or
     a material adverse effect upon, the business, properties, condition
     (financial or otherwise) or prospects of the Company;  (b) a material
     impairment of the ability of the Company to perform under any Loan Document
     and to avoid any Event of Default; or (c) a material adverse effect upon

                                       14
<Page>

     the legality, validity, binding effect or enforceability against the
     Company of any Loan Document.

            "MATURITY DATE" means the earlier to occur of (a) the date three
     years after the Revolving Termination Date; and (b) the date on which all
     Loans become due and payable (by acceleration or otherwise).

            "1933 ACT" means the Securities Act of 1933 and regulations
     promulgated thereunder.

            "NOTES" means the Committed Loan Notes, the Bid Loan Notes and the
     Swing Loan Note.

            "NOTICE OF BORROWING" means a notice in substantially the form of
     EXHIBIT A.

            "NOTICE OF CONVERSION/CONTINUATION" means a notice in substantially
     the form of EXHIBIT B.

            "OBLIGATIONS" means all advances, debts, liabilities, obligations,
     covenants and duties arising under any Loan Document, owing by the Company
     to any Bank, any Agent, or any Indemnified Person, whether direct or
     indirect (including those acquired by assignment), absolute or contingent,
     due or to become due, now existing or hereafter arising.

            "OFFSHORE RATE" means, for any Interest Period with respect to
     Offshore Rate Committed Loans comprising part of the same Borrowing, the
     rate of interest per annum (rounded upward to the nearest l/100th of 1%)
     determined by the Administrative Agent as follows:

     Offshore Rate =              LIBO Rate
                     ------------------------------------
                     1.00 - Eurodollar Reserve Percentage

     Where,

            "EURODOLLAR RESERVE PERCENTAGE" means for any day for any Interest
            Period the maximum reserve percentage (expressed as a decimal,
            rounded upward to the nearest l/100th of 1%) in effect on such day
            (whether or not applicable to any Bank) under regulations issued
            from time to time by the FRB for determining the maximum reserve
            requirement (including any emergency, supplemental or other marginal
            reserve requirement) with respect to Eurocurrency funding (currently
            referred to as "Eurocurrency liabilities") having a term comparable
            to such Interest Period.

                                       15
<Page>

                 The Offshore Rate shall be adjusted automatically as to all
            Offshore Rate Committed Loans then outstanding as of the effective
            date of any change in the Eurodollar Reserve Percentage.

            "OFFSHORE RATE COMMITTED LOAN" means any Committed Loan that bears
     interest based on the Offshore Rate.

            "OFFSHORE RATE LOAN" means any LIBOR Bid Loan or any Offshore Rate
     Committed Loan.

            "OPERATING AGENT" shall have the meaning assigned to such term in
     ANNEX X to the GE Capital Facility.

            "ORGANIZATION DOCUMENTS" means, for any corporation, the certificate
     or articles of incorporation, the bylaws, any certificate of designation or
     instrument relating to the rights of preferred shareholders of such
     corporation, any shareholder rights agreement, and all applicable
     resolutions of the board of directors (or any committee thereof) of such
     corporation and, for any trust, its trust agreement, bylaws, any
     certificate of designation or instrument relating to the rights of
     preferred shareholders of such trust and all applicable resolutions of the
     board of trustees (or any committee thereof) of such trust.

            "ORIGINAL AGREEMENT" is defined in the first recital to this
     Agreement.

            "ORIGINATING BANK" has the meaning specified in subsection 10.8(d).

            "OTHER TAXES" means any present or future stamp or documentary taxes
     or any other excise or property taxes, charges or similar levies which
     arise from any payment made hereunder or from the execution, delivery or
     registration of, or otherwise with respect to, this Agreement or any other
     Loan Documents.

            "PARTICIPANT" has the meaning specified in subsection 10.8(d).

            "PBGC" means the Pension Benefit Guaranty Corporation, or any
     Governmental Authority succeeding to any of its principal functions under
     ERISA.

            "PENSION PLAN" means a pension plan (as defined in Section 3(2) of
     ERISA) subject to Title IV of ERISA, other than a Multiemployer Plan, with
     respect to which the Company or any ERISA Affiliate may have any liability.

                                       16
<Page>

            "PERMITTED LIENS" has the meaning specified in Section 7.1.

            "PERSON" means, an individual, partnership, corporation, business
     trust, joint stock company, trust, unincorporated association, joint
     venture or Governmental Authority.

            "PLAN" means any "pension plan" or "welfare benefit plan" as such
     terms are defined under ERISA.

            "PRO RATA SHARE" means, as to any Bank at any time, the percentage
     equivalent (expressed as a decimal, rounded to the ninth decimal place) at
     such time of such Bank's Commitment divided by the combined Commitments of
     all Banks.

            "REFINANCING" is defined in the second recital to this Agreement.

            "REFINANCING DATE" means September 2, 1998.

            "REPORTABLE EVENT" means, any of the events set forth in Section
     4043(b) of ERISA or the regulations thereunder, other than any such event
     for which the 30-day notice requirement under ERISA has been waived in
     regulations issued by the PBGC.

            "REQUIREMENT OF LAW" means, as to any Person, any law (statutory or
     common), treaty, rule or regulation or determination of an arbitrator or of
     a Governmental Authority, in each case applicable to or binding upon the
     Person or any of its property or to which the Person or any of its
     property is subject.

            "RESPONSIBLE OFFICER" means the chief executive officer, the
     president, the secretary or the assistant secretary of the Company, or any
     other officer having substantially the same authority and responsibility;
     or, with respect to compliance with financial covenants, the chief
     financial officer, the treasurer, the secretary or the assistant secretary
     of the Company, or any other officer having substantially the same
     authority and responsibility.

            "REVOLVING TERMINATION DATE" means the earlier to occur of:

                 (a)   September 1, 1999, as such date may be extended pursuant
            to Section 2.18; and

                 (b)   the date on which the Commitments terminate in accordance
            with the provisions of this Agreement.

                                       17
<Page>

            "SEC" means the Securities and Exchange Commission, or any
     Governmental Authority succeeding to any of its principal functions.

            "SECURITY AGREEMENT" means a security agreement in the form attached
     as EXHIBIT L.

            "STATE STREET" means State Street Bank and Trust Company, a
     Massachusetts banking corporation.

            "SUBSIDIARY" of a Person means any corporation, association,
     partnership, joint venture or other business entity of which more than 50%
     of the voting stock or other equity interests (in the case of Persons other
     than corporations), is owned or controlled directly or indirectly by the
     Person, or one or more of the Subsidiaries of the Person, or a combination
     thereof. Unless the context otherwise clearly requires, references herein
     to a "Subsidiary" refer to a Subsidiary of the Company.

            "SURETY INSTRUMENTS" means all letters of credit (including standby
     and commercial), bankers' acceptances, bank guaranties, shipside bonds,
     surety bonds and similar instruments.

            "SWAP CONTRACTS" means swap agreements (as such term is defined in
     Section 101 of the Bankruptcy Code) and any other agreements or
     arrangements designed to provide protection against fluctuations in
     interest or currency exchange rates or commodity prices.

            "SWING LOAN" means a Loan by Administrative Agent to the Company
     under Section 2.17.

            "SWING LOAN NOTE" means a promissory note executed by the Company in
     favor of the Administrative Agent pursuant to subsection 2.2(b), in
     substantially the form of EXHIBIT J.

            "SYNDICATION AGENT" means BofA in its capacity as syndication agent
     for the Banks hereunder, and any successor syndication agent arising under
     Section 9.9.

            "TAXES" means any and all present or future taxes, levies, imposts,
     deductions, charges or withholdings, and all liabilities with respect
     thereto arising from any payment made hereunder or from the execution,
     delivery or registration of, or otherwise with respect to, this Agreement
     or any other Loan Document.

            "TOTAL ASSETS" means, an amount equal to the aggregate value of all
     items that would be set forth as assets on a balance sheet of such Company
     on such date, prepared in accordance with the Act and the rules and
     regulations under

                                       18
<Page>

     the Act. The assets of the Company shall be valued in accordance with the
     Act, the rules and regulations under the Act, and the valuation procedures
     set forth in its most recent statement of additional information. Upon the
     written request of the Administrative Agent, the Company shall promptly
     furnish all such information as the Administrative Agent shall reasonably
     request relating to the value of any asset or the assignment of values
     thereto.

            "TOTAL LIABILITIES" means as of any date, the aggregate amount of
     all items that would be set forth as liabilities on a balance sheet of the
     Company on such date in accordance with GAAP.

            "TRUST AGREEMENT" means Agreement and Declaration of Trust of the
     Company dated December 2, 1987, as amended April 12, 1996.

            "TYPE" has the meaning specified in the definition of Committed
     Loan.

            "UNFUNDED PENSION LIABILITY" means the excess of a Plan's benefit
     liabilities under Section 4001(a)(16) of ERISA, over the current value of
     that Plan's assets, determined in accordance with the assumptions used for
     funding the Pension Plan pursuant to Section 412 of the Code for the
     applicable plan year.

            "UNITED STATES" and "U.S." each means the United States of America.

            "WHOLLY-OWNED SUBSIDIARY" means any corporation in which (other than
     directors' qualifying shares required by law) 100% of the capital stock of
     each class having ordinary voting power, and 100% of the capital stock of
     every other class, in each case, at the time as of which any determination
     is being made, is owned, beneficially and of record, by the Company, or by
     one or more of the other Wholly-Owned Subsidiaries, or both.

     1.2    OTHER INTERPRETIVE PROVISIONS.

            (a)  The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.

            (b)  The words "hereof", "herein", "hereunder" and similar words
refer to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to this
Agreement unless otherwise specified.

                                       19
<Page>

            (c)  (i)   The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other writings,
however evidenced.

                 (ii)  The term "including" is not limiting and means "including
without limitation."

                 (iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including"; the
words "to" and "until" each mean "to but excluding", and the word "through"
means "to and including."

            (d)  Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement and any other Loan Document) and other
contractual instruments shall be deemed to include all subsequent amendments,
supplements, restatements and other modifications thereto, but only to the
extent such amendments, supplements, restatements and other modifications are
not prohibited by the terms of any Loan Document, and (ii) references to any
statute or regulation are to be construed as including all statutory and
regulatory provisions consolidating, amending, replacing, supplementing or
interpreting the statute or regulation.

            (e)  The captions and headings of this Agreement are for convenience
of reference only and shall not affect the interpretation of this Agreement.

            (f)  This Agreement and other Loan Documents may use several
different limitations, tests or measurements to regulate the same or similar
matters. All such limitations, tests and measurements are cumulative and shall
each be performed in accordance with their terms. Unless otherwise expressly
provided herein, any reference to any action of any Agent, the Banks or the
Majority Banks by way of consent, approval or waiver shall be deemed modified by
the phrase "in its/their sole discretion."

            (g)  This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Agents, the Company
and the other parties, and are the products of all parties. Accordingly, they
shall not be construed against the Banks or the Agents merely because of the
Agents' or Banks' involvement in their preparation.

     1.3    FISCAL PERIODS.

            Unless the context otherwise clearly requires, all references herein
to "fiscal year" and "fiscal quarter" shall refer to such fiscal periods of the
Company.

                                       20
<Page>

                                   ARTICLE II

                                   THE CREDITS

     2.1    AMOUNTS AND TERMS OF COMMITMENTS.


            Each Bank severally agrees, on the terms and conditions set forth
herein, to make loans to the Company from time to time on any Business Day
during the period from the Refinancing Date to the Revolving Termination Date,
in an aggregate amount not to exceed at any time outstanding the amount set
forth on SCHEDULE 2.1 (as such amount may be reduced under Section 2.7 or as a
result of one or more assignments under Section 10.8, each Bank's "COMMITMENT");
PROVIDED, HOWEVER, that, after giving effect to any Committed Borrowing, the
aggregate principal amount of all outstanding Loans shall not at any time exceed
the lesser of (i) the combined Commitments or (ii) the Borrowing Base. Within
the limits of each Bank's Commitment, and subject to the other terms and
conditions hereof, the Company may borrow under this Section 2.1, prepay under
Section 2.8 and reborrow under this Section 2.1; and PROVIDED FURTHER, that the
Company shall not have Federal Funds Rate Committed Loans outstanding for 30
consecutive days or longer.

     2.2    LOAN ACCOUNTS.

            (a)  The Loans made by each Bank shall be evidenced by one or more
loan accounts or records maintained by such Bank in the ordinary course of
business. The loan accounts or records maintained by the Administrative Agent
and each Bank shall be conclusive absent manifest error of the amount of the
Loans made by the Banks to the Company and the interest and payments thereon.
Any failure so to record or any error in doing so shall not, however, limit or
otherwise affect the obligation of the Company hereunder to pay any amount owing
with respect to the Loans.

            (b)  Upon the request of any Bank made through the Administrative
Agent, the Loans made by such Bank may be evidenced by one or more Notes,
instead of loan accounts. Each such Bank shall endorse on the schedules annexed
to its Notes the date, amount and maturity of each Loan made by it and the
amount of each payment of principal made by the Company with respect thereto.
Each such Bank is irrevocably authorized by the Company to endorse its Notes and
each Bank's record shall be conclusive absent manifest error; PROVIDED, HOWEVER,
that the failure of a Bank to make, or an error in making, a notation thereon
with respect to any Loan shall not limit or otherwise affect the obligations of
the Company hereunder or under any such Note to such Bank. If Notes are
delivered to a Bank, the Committed Loans made by such Bank would be evidenced by
a Committed Loan Note,

                                       21
<Page>

the Bid Loans made by such Bank would be evidenced by a Bid Loan Note and, in
the case of the Administrative Agent, the Swing Loans made by the Administrative
Agent would be evidenced by a Swing Loan Note.

            Promptly following the Refinancing Date, each Bank that is a party
to the Original Agreement shall return to the Company for cancellation any
promissory note issued to it by the Company under the Original Agreement and not
theretofore cancelled.

     2.3    PROCEDURE FOR COMMITTED BORROWING.

            (a)  Each Committed Borrowing shall be made upon the Company's
irrevocable written notice delivered to the Administrative Agent in the form of
a Notice of Borrowing (which notice must be received by the Administrative Agent
prior to 12:00 noon (Boston time) (i) three Business Days prior to the requested
Borrowing Date, in the case of Offshore Rate Committed Loans; and (ii) on the
requested Borrowing Date, in the case of Federal Funds Rate Committed Loans,
specifying:

                       (A)    the amount of the Committed Borrowing, which shall
            be in an aggregate minimum amount of $1,000,000 and multiples of
            $1,000,000;

                       (B)    the requested Borrowing Date, which shall be a
            Business Day;

                       (C)    the Type of Committed Loans comprising the
            Committed Borrowing; and

                       (D)    the duration of the Interest Period applicable to
            any Offshore Rate Committed Loans included in such notice. If the
            Notice of Borrowing fails to specify the duration of the Interest
            Period for any Committed Borrowing comprised of Offshore Rate
            Committed Loans, such Interest Period shall be three months.

            (b)  The Administrative Agent will promptly notify each Bank of its
receipt of any Notice of Borrowing and of the amount of such Bank's Pro Rata
Share of that Committed Borrowing.

            (c)  Each Bank will make the amount of its Pro Rata Share of each
Committed Borrowing available to the Administrative Agent for the account of the
Company at the Administrative Agent's Payment Office by 2:00 p.m. (Boston time)
on the Borrowing Date requested by the Company in funds immediately available to
the Administrative Agent. The proceeds of all such Committed Loans will then be
made available to the Company by the

                                       22
<Page>

                       (C)    the Type of Committed Loans resulting from the
            proposed conversion or continuation; and

                       (D)    other than in the case of conversions into Federal
            Funds Rate Committed Loans, the duration of the requested Interest
            Period.

            (c)  If upon the expiration of any Interest Period applicable to
Offshore Rate Committed Loans, the Company has failed to select timely a new
Interest Period to be applicable to such Offshore Rate Committed Loans, or if
any Default or Event of Default then exists, the Company shall be deemed to have
elected to convert such Offshore Rate Committed Loans into Federal Funds Rate
Committed Loans effective as of the expiration date of such Interest Period.

            (d)  The Administrative Agent will promptly notify each Bank of its
receipt of a Notice of Conversion/Continuation, or, if no timely notice is
provided by the Company, the Administrative Agent will promptly notify each Bank
of the details of any automatic conversion. All conversions and continuations
shall be made ratably according to the respective outstanding principal amounts
of the Committed Loans with respect to which the notice was given held by each
Bank.

            (e)  Unless all the Banks otherwise agree, during the existence of a
Default or Event of Default, the Company may not elect to have a Committed Loan
converted into or continued as an Offshore Rate Committed Loan.

            (f)  After giving effect to any conversion or continuation of
Committed Loans, there may not be more than ten different Interest Periods in
effect in respect of all Offshore Rate Committed Loans and Bid Loans together
then outstanding.

     2.5    BID BORROWINGS. In addition to Committed Borrowings pursuant to
Section 2.3, each Bank severally agrees that the Company may, as set forth in
Section 2.6, from time to time request the Banks prior to the Revolving
Termination Date to submit offers to make Bid Loans to the Company; PROVIDED,
HOWEVER, that the Banks may, but shall have no obligation to, submit such offers
and the Company may, but shall have no obligation to, accept any such offers;
and PROVIDED, FURTHER, that at no time shall (a) the outstanding aggregate
principal amount of all Bid Loans made by all Banks, plus the outstanding
aggregate principal amount of all Committed Loans made by all Banks and Swing
Loans made by the Administrative Agent exceed the combined Commitments or the
Borrowing Base; (b) the outstanding aggregate principal amount of Bid Loans from
any one Bank exceed $100,000,000; (c) the outstanding aggregate principal amount
of Bid Loans made by all Banks exceed 60% of the combined

                                       24
<Page>

Commitments; or (d) the number of Interest Periods for Bid Loans then
outstanding plus the number of Interest Periods for Offshore Rate Committed
Loans then outstanding exceed ten.

     2.6    PROCEDURE FOR BID BORROWINGS.

            (a)  When the Company wishes to request the Banks to submit offers
to make Bid Loans hereunder, it shall transmit to the Banks by telephone call
followed promptly by facsimile transmission a notice in substantially the form
of EXHIBIT F (a "COMPETITIVE BID REQUEST") so as to be received no later than
12:00 noon (Boston time) (x) four Business Days prior to the date of a proposed
Bid Borrowing in the case of a LIBOR Auction, or (y) two Business Days prior to
the date of a proposed Bid Borrowing in the case of an Absolute Rate Auction,
specifying:

                 (i)   the date of such Bid Borrowing, which shall be a Business
     Day;

                 (ii)  the aggregate amount of such Bid Borrowing, which shall
     be a minimum amount of $5,000,000 or in multiples of $1,000,000 in excess
     thereof;

                 (iii) whether the Competitive Bids requested are to be for
     LIBOR Bid Loans or Absolute Rate Bid Loans or both; and

                 (iv)  the duration of the Interest Period applicable thereto,
     subject to the provisions of the definition of "Interest Period" herein.

Subject to subsection 2.6(b), the Company may not request Competitive Bids for
more than three Interest Periods in a single Competitive Bid Request and may not
request Competitive Bids more than once in any period of five Business Days.

            (b)  (i)   Each Bank may at its discretion submit a Competitive Bid
containing an offer or offers to make Bid Loans in response to any Competitive
Bid Request. Each Competitive Bid must comply with the requirements of this
subsection 2.6(b) and must be submitted to the Company by facsimile transmission
at the Company's office for notices set forth on SCHEDULE 10.2 not later than
(1) 9:30 a.m. (Boston time) three Business Days prior to the proposed Borrowing
Date, in the case of a LIBOR Auction or (2) 9:30 a.m. (Boston time) on the
proposed Borrowing Date, in the case of an Absolute Rate Auction.

                 (ii)  Each Competitive Bid shall be in substantially the form
of EXHIBIT G, specifying therein:

                       (A)    the proposed Borrowing Date;

                                       25
<Page>

                       (B)    the principal amount of each Bid Loan for which
            such Competitive Bid is being made, which principal amount (x) may
            be equal to, greater than or less than the Commitment of the quoting
            Bank, (y) must be $5,000,000 or in multiples of $1,000,000 in excess
            thereof, and (z) may not exceed the principal amount of Bid Loans
            for which Competitive Bids were requested;

                       (C)    in case the Company elects a LIBOR Auction, the
            margin above or below the LIBO Rate (the "LIBOR BID MARGIN") offered
            for each such Bid Loan, expressed as a percentage (rounded to the
            nearest l/16th of 1%) to be added to or subtracted from the
            applicable LIBO Rate and the Interest Period applicable thereto;

                       (D)    in case the Company elects an Absolute Rate
            Auction, the rate of interest per annum (rounded upward to the
            nearest l/100th of 1%) (the "ABSOLUTE RATE") offered for each such
            Bid Loan; and

                       (E)    the identity of the quoting Bank.

     A Competitive Bid may contain up to three separate offers by the quoting
     Bank with respect to each Interest Period specified in the related
     Competitive Bid Request.

                 (iii) Any Competitive Bill shall be disregarded if it:

                       (A)    is not substantially in conformity with EXHIBIT G
            or does not specify all of the information required by subsection
            (b)(ii) of this Section;

                       (B)    contains qualifying, conditional or similar
            language;

                       (C)    proposes terms other than or in addition to those
            set forth in the applicable Competitive Bid Request; or

                       (D)    arrives after the time set forth in subsection
            (b)(i) of this Section.

                 (iv)  Notwithstanding anything to the contrary contained in
     this subsection 2.6(b), a Competitive Bid by any Bank may contain, and will
     not be disregarded if it does contain, a restriction on the use of proceeds
     thereof.

            (c)  Any subsequent Competitive Bid by a Bank that amends, modifies
or is otherwise inconsistent with a previous

                                       26
<Page>

Competitive Bid shall be disregarded by the Company unless subsequent
Competitive Bid is submitted solely to correct a manifest error in such former
Competitive Bid and only if received within the times set forth in subsection
2.6(b). Subject only to the provisions of Sections 3.2, 3.5 and 4.2 hereof and
the provisions of this subsection (c), any Competitive Bid shall be irrevocable
except with the written consent of the Administrative Agent given on the written
instructions of the Company.

            (d)  Not later than 10:30 a.m. (Boston time) three Business Days
prior to the proposed Borrowing Date, in the case of a LIBOR Auction, or 10:30
a.m. (Boston time) on the proposed Borrowing Date, in the case of an Absolute
Rate Auction, the Company shall notify the Banks of its acceptance or non-
acceptance of the offers so notified to it pursuant to subsection 2.6(b). The
Company shall be under no obligation to accept any offer and may choose to
reject all offers. In the case of acceptance, such notice shall specify the
aggregate principal amount of offers for each Interest Period that is accepted.
The Company may accept any Competitive Bid in whole or in part; PROVIDED that:

                 (i)   the aggregate principal amount of each Bid Borrowing may
     not exceed the applicable amount set forth in the related Competitive Bid
     Request;

                 (ii)  the principal amount of each Bid Borrowing must be
     $5,000,000 or in any multiple of $1,000,000 in excess thereof;

                 (iii) acceptance of offers may only be made on the basis of
     ascending (i.e., from the lowest effective yield to the highest) LIBOR Bid
     Margins or Absolute Rates within each Interest Period, as the case may be;
     and

                 (iv)  the Company may not accept any offer that is described in
     subsection 2.6(b)(iii) or that otherwise fails to comply with the
     requirements of this Agreement.

            (e)  If offers are made by two or more Banks with the same LIBOR Bid
Margins or Absolute Rates, as the case may be, for a greater aggregate principal
amount than the amount in respect of which such offers are accepted for the
related Interest Period, the principal amount of Bid Loans in respect of which
such offers are accepted shall be allocated by the Administrative Agent among
such Banks as nearly as possible (in such multiples, not less than $1,000,000,
as the Company may deem appropriate) in proportion to the aggregate principal
amounts of such offers. Determination by the Company of the amounts of Bid Loans
shall be conclusive in the absence of manifest error.

                                       27
<Page>

            (f)  (i)   The Company will promptly notify each Bank having
submitted a Competitive Bid if its offer has been accepted and, if its offer has
been accepted, of the amount of the Bid Loan or Bid Loans to be made by it on
the date of the Bid Borrowing. The Company shall also notify the Administrative
Agent of the Bid Loan or Bid Loans to be made.

                 (ii)  Each Bank, which has received notice pursuant to
subsection 2.6(f)(i) that its Competitive Bid has been accepted, shall make the
amounts of such Bid Loans available to the Administrative Agent for the account
of the Company at the Administrative Agent's Payment Office, by 2:00 p.m.
(Boston time) on such date of Bid Borrowing, in funds immediately available to
the Administrative Agent for the account of the Company at the Administrative
Agent's Payment Office.

                 (iii) Promptly following each Bid Borrowing, the Company shall
notify each Bank of the ranges of bids submitted and the highest and lowest Bids
accepted for each Interest Period requested by the Company and the aggregate
amount borrowed pursuant to such Bid Borrowing.

            (g)  If, on or prior to the proposed Borrowing Date, the Commitments
have not been terminated and if, on such proposed Borrowing Date all applicable
conditions to funding referenced in Sections 3.2, 3.5 and 4.2 hereof are
satisfied, the Bank or Banks whose offers the Company has accepted will fund
each Bid Loan so accepted. Nothing in this Section 2.6 shall be construed as a
right of first offer in favor of the Banks or to otherwise limit the ability of
the Company to request and accept credit facilities from any Person (including
any of the Banks), provided that no Default or Event of Default would otherwise
arise or exist as a result of the Company executing, delivering or performing
under such credit facilities.

     2.7    VOLUNTARY TERMINATION OR REDUCTION OF COMMITMENTS. The Company may,
upon not less than five Business Days' prior notice to the Administrative Agent,
terminate the Commitments, or permanently reduce the Commitments by an aggregate
minimum amount of $5,000,000 or a multiple of $1,000,000 in excess thereof;
UNLESS, after giving effect thereto and to any prepayments of Committed Loans
made on the effective date thereof, the then outstanding principal amount of the
Loans would exceed the amount of the combined Commitments then in effect. Once
reduced in accordance with this Section, the Commitments may not be increased.
Any reduction of the Commitments shall be applied to each Bank according to its
Pro Rata Share. All accrued facility fees to, but not including the effective
date of any reduction or termination of Commitments, shall be paid on the
effective date of such reduction or termination.

                                       28
<Page>

     2.8    PREPAYMENTS.

            (a)  If at any time the outstanding principal amount of the Loans
plus other liabilities (as determined in the calculation of the Borrowing Base)
shall exceed the then-current Borrowing Base, the Company shall immediately
prepay the outstanding principal amount of such Loans or other liabilities in an
amount equal to such excess, together with interest accrued thereon and amounts
required under Section 3.4.

            (b)  Subject to Section 3.4, the Company may, at any time or from
time to time, ratably prepay Committed Loans in whole or in part, in minimum
amounts of $1,000,000 or multiple thereof upon irrevocable notice to the
Administrative Agent not later than 12:00 noon (Boston time) on the date of a
proposed prepayment of Federal Funds Rate Committed Loans and three Business
Days prior to the date of a proposed prepayment of Offshore Rate Committed
Loans. Such notice of prepayment shall specify the date and amount of such
prepayment and the Type(s) of Committed Loans to be prepaid. The Administrative
Agent will promptly notify each Bank of its receipt of any such notice, and of
such Bank's Pro Rata Share of such prepayment. If such notice is given by the
Company, the Company shall make such prepayment and the payment amount specified
in such notice shall be due and payable on the date specified therein, together
with accrued interest to each such date on the amount prepaid and any amounts
required pursuant to Section 3.4.

            (c)  Bid Loans may not be voluntarily prepaid.

     2.9    REPAYMENT.

            (a)  All Loans which are outstanding on the Revolving Termination
Date shall be repaid in twelve substantially equal quarterly installments. Such
installments shall be payable at quarterly intervals after the Revolving
Termination Date, commencing on a date one quarter after the Revolving
Termination Date and continuing until the Maturity Date; PROVIDED that, in any
event, all Loans shall be due and payable in full on the Maturity Date.

            (b)  The Company shall repay each Bid Loan on the last day of the
relevant Interest Period.

     2.10   INTEREST.

            (a)  Each Committed Loan shall bear interest on the outstanding
principal amount thereof from the applicable Borrowing Date at a rate per annum
equal to the Offshore Rate or the Federal Funds Rate, as the case may be (and
subject to the Company's right to convert to other Types of Committed Loans

                                       29
<Page>

under Section 2.4), PLUS the Applicable Margin. Each Bid Loan shall bear
interest on the outstanding principal amount thereof from the relevant Borrowing
Date at a rate per annum equal to the LIBO Rate plus (or minus) the LIBOR Bid
Margin, or at the Absolute Rate, as the case may be.

            (b)  Interest on each Loan shall be paid in arrears on each Interest
Payment Date. Interest shall also be paid on the date of any prepayment of
Committed Loans under Section 2.8 for the portion of the Loans so prepaid and
upon payment (including prepayment) in full thereof and, during the existence of
any Event of Default, interest shall be paid on demand of the Administrative
Agent at the request or with the consent of the Majority Banks.

            (c)  Notwithstanding subsection (a) of this Section, while any Event
of Default exists or after acceleration, the Company shall pay interest (after
as well as before entry of judgment thereon to the extent permitted by law) on
the principal amount of all outstanding Loans, at a rate per annum equal to the
Base Rate PLUS 2% plus the Applicable Margin per annum; PROVIDED, HOWEVER, that,
until the expiration of any Interest Period applicable to any Offshore Rate Loan
outstanding on the date of occurrence of such Event of Default or acceleration,
the principal amount of such Loan shall, during the continuation of such Event
of Default or after acceleration, bear interest at a rate per annum equal to the
rate which would otherwise be applicable with respect to such Loans PLUS 2%.

            (d)  Anything herein to the contrary notwithstanding, the
obligations of the Company to any Bank hereunder shall be subject to the
limitation that payments of interest shall not be required for any period for
which interest is computed hereunder, to the extent (but only to the extent)
that contracting for or receiving such payment by such Bank would be contrary to
the provisions of any law applicable to such Bank limiting the highest rate of
interest that may be lawfully contracted for, charged or received by such Bank,
and in such event the Company shall pay such Bank interest at the highest rate
permitted by applicable law.

                                       30
<Page>

     2.11   FEES.

            (a)  ARRANGEMENT AND AGENCY FEES. The Company shall pay (i) an
agency fee to the Administrative Agent for its own account, as required by the
letter agreement between the Company and the Administrative Agent dated
September 2, 1998; and (ii) fees to the Arranger and the Syndication Agent for
the Arranger's and the Syndication Agent's own account, as required by the
letter agreement between the Company and the Arranger dated September 2, 1998.
The letters referred to in this subsection 2.11(a) are hereinafter referred to
as the "FEE LETTERS".

            (b)  FACILITY FEES. The Company shall pay to the Administrative
Agent for the account of each Bank a facility fee on the average daily amount of
such Bank's Commitment (whether or not used), computed on a quarterly basis in
arrears on the last Business Day of each calendar quarter, equal to 0.10% per
annum. Such facility fee shall accrue from the Closing Date to the Maturity Date
and shall be due and payable quarterly in arrears on the last Business Day of
each March, June, September and December commencing on September 30, 1998, to
the Maturity Date, with the final payment to be made on the Maturity Date;
PROVIDED that, in connection with any reduction or termination of Commitments
under Section 2.7, the accrued facility fee calculated for the period ending on
such date shall also be paid on the date of such reduction or termination, with
the following quarterly payment being calculated on the basis of the period from
such reduction or termination date to such quarterly payment date. The facility
fees provided in this subsection shall accrue at all times after the
above-mentioned commencement date, including at any time during which one or
more conditions in Article IV are not met.

     2.12   COMPUTATION OF FEES AND INTEREST.

            (a)  All computations of fees and interest shall be made on the
basis of a 360-day year and actual days elapsed. Interest and fees shall accrue
during each period during which interest or such fees are computed from the
first day thereof to the last day thereof.

            (b)  Each determination of an interest rate by the Administrative
Agent shall be conclusive and binding on the Company and the Banks in the
absence of manifest error.

     2.13   PAYMENTS BY THE COMPANY.

            (a)  All payments to be made by the Company shall be made without
set-off, recoupment or counterclaim. Except as otherwise expressly provided
herein, all payments by the Company shall be made to the Administrative Agent
for the account of the

                                       31
<Page>

Banks at the Administrative Agent's Payment Office, and shall be made in dollars
and in immediately available funds, no later than 2:00 p.m. (Boston time) on the
date specified herein. The Administrative Agent will promptly distribute to each
Bank its applicable share as provided herein of such payment in like funds as
received. Any payment received by the Administrative Agent later than 2:00 p.m.
(Boston time) shall be deemed to have been received on the following Business
Day and any applicable interest or fee shall continue to accrue.

            (b)  Subject to the provisions set forth in the definition of
"Interest Period" herein, whenever any payment is due on a day other than a
Business Day, such payment shall be made on the following Business Day, and such
extension of time shall in such case be included in the computation of interest
or fees, as the case may be.

            (c)  Unless the Administrative Agent receives notice from the
Company prior to the date on which any payment is due to the Banks that the
Company will not make such payment in full as and when required, the
Administrative Agent may assume that the Company has made such payment in full
to the Administrative Agent on such date in immediately available funds and the
Administrative Agent may (but shall not be so required), in reliance upon such
assumption, distribute to each Bank on such due date an amount equal to the
amount then due such Bank. If and to the extent the Company has not made such
payment in full to the Administrative Agent, each Bank shall repay to the
Administrative Agent on demand such amount distributed to such Bank, together
with interest thereon at the Federal Funds Rate for each day from the date such
amount is distributed to such Bank until the date repaid.

     2.14   PAYMENTS BY THE BANKS TO THE ADMINISTRATIVE AGENT.

            (a)  Unless the Administrative Agent receives notice from a Bank on
or prior to the Closing Date or, with respect to any Borrowing after the Closing
Date, at least one Business Day prior to the date of such Borrowing, that such
Bank will not make available as and when required hereunder to the
Administrative Agent for the account of the Company the amount of that Bank's
Bid Loan or its Pro Rata Share of a Committed Borrowing, as the case may be, the
Administrative Agent may assume that each Bank has made such amount available to
the Administrative Agent in immediately available funds on the Borrowing Date
and the Administrative Agent may (but shall not be so required), in reliance
upon such assumption, make available to the Company on such date a corresponding
amount. If and to the extent any Bank shall not have made its full amount
available to the Administrative Agent in immediately available funds and the
Administrative Agent in such circumstances has made available to

                                       32
<Page>

the Company such amount, that Bank shall on the Business Day following such
Borrowing Date make such amount available to the Administrative Agent, together
with interest at the Federal Funds Rate for each day during such period. A
notice of the Administrative Agent submitted to any Bank with respect to amounts
owing under this subsection (a) shall be conclusive, absent manifest error. If
such amount is so made available, such payment to the Administrative Agent shall
constitute such Bank's Loan on the date of Borrowing for all purposes of this
Agreement. If such amount is not made available to the Administrative Agent on
the Business Day following the Borrowing Date, the Administrative Agent will
notify the Company of such failure to fund and, upon demand by the
Administrative Agent, the Company shall pay such amount to the Administrative
Agent for the Administrative Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per annum equal to
the interest rate applicable at the time to the Loans comprising such Borrowing.

            (b)  The failure of any Bank to make any Loan on any Borrowing Date
shall not relieve any other Bank of any obligation hereunder to make a Loan on
such Borrowing Date, but no Bank shall be responsible for the failure of any
other Bank to make a Loan to be made by such other Bank on any Borrowing Date.

     2.15   SHARING OF PAYMENTS, ETC. If, other than as expressly provided
elsewhere herein, any Bank shall obtain on account of the Committed Loans made
by it any payment (whether voluntary, involuntary, through the exercise of any
right of set-off, or otherwise) in excess of its Pro Rata Share, such Bank shall
immediately (a) notify the Administrative Agent of such fact, and (b) purchase
from the other Banks such participations in the Committed Loans made by them as
shall be necessary to cause such purchasing Bank to share the excess payment pro
rata with each of them; PROVIDED, HOWEVER, that if all or any portion of such
excess payment is thereafter recovered from the purchasing Bank, such purchase
shall to that extent be rescinded and each other Bank shall repay to the
purchasing Bank the purchase price paid therefor, together with an amount equal
to such paying Bank's ratable share (according to the proportion of (i) the
amount of such paying Bank's required repayment to (ii) the total amount so
recovered from the purchasing Bank) of any interest or other amount paid or
payable by the purchasing Bank in respect of the total amount so recovered. The
Company agrees that any Bank so purchasing a participation from another Bank
may, to the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off, but subject to Section 10.9) with respect to
such participation as fully as if such Bank were the direct creditor of the
Company in the amount of such participation. The Administrative Agent will keep
records (which shall be conclusive and binding in the absence of manifest error)

                                       33
<Page>

of participations purchased under this Section and will in each case notify the
Banks following any such purchases or repayments.

     2.16   SUBSEQUENT BANK. Upon the agreement of the Company and the
Syndication Agent, one or more additional Banks ("SUBSEQUENT BANKS") may be
added to this Agreement at any time pursuant to the terms of a Subsequent Bank
Supplement substantially in the Form of EXHIBIT K hereto. Upon the addition of
such Subsequent Bank(s), the aggregate of the Commitments shall be increased to
up to $300,000,000 and each Bank's Pro Rata Share of the aggregate Commitments
shall be amended accordingly. The Subsequent Banks shall purchase and the
existing Banks shall sell such assignments of existing Loans as may be necessary
to cause the outstanding Loans of each Borrowing to equal the appropriate Pro
Rata Share.

     The addition of such Subsequent Banks is further conditioned upon the
payment by the Company of any amount sufficient to compensate the existing Banks
for any cost related to breakage of existing Interest Periods or to compensate
the Subsequent Banks for the cost of funding existing Loans for the remainder of
the existing Interest Periods.

     The Company agrees to deliver such Notes and other documentation as may be
necessary to evidence its obligation to the Banks after the addition of the
Subsequent Banks hereunder and under the other various Loan Documents.

     2.17   SWING LOANS.

            (a)  MAKING OF SWING LOANS. The Administrative Agent may elect in
its sole discretion to make loans of a Federal Funds Rate Loan Type (the "SWING
LOAN(S)") to the Company solely for the Administrative Agent's own account from
time to time on or after the Closing Date and prior to the Revolving Termination
Date up to an aggregate principal amount at any one time outstanding not to
exceed $50,000,000; PROVIDED, HOWEVER, that after giving effect to any Swing
Loan, the aggregate principal amount of all outstanding Loans shall not exceed
the lesser of (i) the combined Commitments or (ii) the Borrowing Base. The
Administrative Agent may make Swing Loans (subject to the conditions precedent
set forth in SECTION 4.2), PROVIDED that the Administrative Agent received
notice no later than 2:00 p.m. (Boston time) either (i) by facsimile
transmission of a Notice of borrowing in writing or (ii) by telephone notice
from a Responsible Officer for funding of a Swing Loan on the Business Day on
which such Swing Loan is requested to be made. The Administrative Agent shall
not make any Swing Loan after the Administrative Agent becomes aware that one or
more of the

                                       34
<Page>

conditions precedent contained in SECTION 4.2 is not satisfied until such
conditions have been satisfied or waived.

            (b)  LOAN REQUESTS FOR SWING LOANS. If the Company shall request by
telephone notice and obtain a Swing Loan, it shall deliver promptly by facsimile
transmission to the Administrative Agent and the Administrative Agent a Notice
of Borrowing signed by a Responsible Officer confirming such telephone notice
for a Swing Loan. If the information contained in any such Notice of borrowing
differs in any material respect from the action taken by the Administrative
Agent, the records of the Administrative Agent shall govern, absent manifest
error.

            (c)  REPAYMENT OF SWING LOANS. Each outstanding Swing Loan shall be
payable on the Business Day next following the day the Swing Loan was made, with
interest at the rate applicable to Federal Funds Rate Loans accrued thereon, and
shall be subject to all the terms and conditions applicable to Loans, except
that all interest thereon shall be payable to the Administrative Agent solely
for its own account. On the due date for such Swing Loan, unless the Company
delivers or has previously delivered to the Administrative Agent a notice of its
intention to repay and does repay the Swing Loan prior to 12:00 noon (Boston
time), such Swing Loan shall automatically convert to a Federal Funds Rate Loan
under this Agreement, and each Bank (other than the Administrative Agent),
shall, absent the gross negligence or willful misconduct of the Administrative
Agent in making such Swing Loan, irrevocably and unconditionally purchase from
the Administrative Agent, without recourse or warranty, an undivided interest
and participation in such Swing Loan in an amount equal to such Bank's Pro Rata
Share and promptly pay such amount to the Administrative Agent in immediately
available funds (which payment shall be due by 2:00 p.m. (Boston time) on such
day if the Administrative Agent requests payment therefor prior to 12:00 noon
(Boston time) on such day; otherwise such payment shall be due by 2:00 p.m.
(Boston time) on the first Business Day after the Administrative Agent requests
the same). Such payment shall be made by the other Banks whether or not an Event
of Default or a Default is then continuing or any other condition precedent set
forth in SECTION 4.2 is then met and whether or not the Company has then
requested a Loan in such amount. If such amount is not in fact paid to the
Administrative Agent by any Bank, the Administrative Agent shall be entitled to
recover such amount on demand from such Bank, together with accrued interest
thereon from the due date therefor (if made prior to 2:00 p.m., Boston time) on
any Business Day until the date such amount is paid to the Administrative Agent
by such Bank, at the Federal Funds Rate. The failure of any Bank to pay such
amount to the Administrative Agent shall not relieve any other Bank of its
obligation to the Administrative Agent hereunder.

                                       35
<Page>

            (c)  If the Company shall be required by law to deduct or withhold
any Taxes or Other Taxes from or in respect of any sum payable hereunder to any
Bank or Agent, then:

                 (i)   the sum payable shall be increased as necessary so that
     after making all required deductions and withholdings (including deductions
     and withholdings applicable to additional sums payable under this Section)
     such Bank or Agent, as the case may be, receives an amount equal to the sum
     it would have received had no such deductions or withholdings been made;

                 (ii)  the Company shall make such deductions and withholdings;

                 (iii) the Company shall pay the full amount deducted or
     withheld to the relevant taxing authority or other authority in accordance
     with applicable law; and

                 (iv)  the Company shall also pay to each Bank or any Agent for
     the account of such Bank, at the time interest is paid, all additional
     amounts which the respective Bank specifies as necessary to preserve the
     after-tax yield the Bank would have received if such Taxes or Other Taxes
     had not been imposed.

            (d)  Within 30 days after the date of any payment by the Company of
Taxes or Other Taxes, the Company shall furnish the Administrative Agent the
original or a certified copy of a receipt evidencing payment thereof, or other
evidence of payment reasonably satisfactory to the Administrative Agent.

            (e)  If the Company is required to pay additional amounts to any
Bank or Agent pursuant to subsection (c) of this Section, then such Bank shall
use reasonable efforts (consistent with legal and regulatory restrictions) to
change the jurisdiction of its Lending Office so as to eliminate any such
additional payment by the Company which may thereafter accrue, if such change in
the judgment of such Bank is not otherwise disadvantageous to such Bank.

     3.2    ILLEGALITY.

            (a)  If any Bank determines that the introduction of any Requirement
of Law, or any change in any Requirement of Law, or in the interpretation or
administration of any Requirement of Law, has made it unlawful, or that any
central bank or other Governmental Authority has asserted that it is unlawful,
for any Bank or its applicable Lending Office to make Offshore Rate Loans, then,
on notice thereof by the Bank to the Company through the Administrative Agent,
any obligation of that Bank to make

                                       37
<Page>

Offshore Rate Loans (including in respect of any LIBOR Bid Loan as to which the
Company has accepted such Bank's Competitive Bid, but as to which the Borrowing
Date has not arrived) shall be suspended until the Bank notifies the
Administrative Agent and the Company that the circumstances giving rise to such
determination no longer exist.

            (b)  If a Bank determines that it is unlawful to maintain any
Offshore Rate Loan, the Company shall, upon its receipt of notice of such fact
and demand from such Bank (with a copy to the Administrative Agent), prepay in
full such Offshore Rate Loans of that Bank then outstanding, together with
interest accrued thereon and amounts required under Section 3.4, either on the
last day of the Interest Period thereof, if the Bank may lawfully continue to
maintain such Offshore Rate Loans to such day, or immediately, if the Bank may
not lawfully continue to maintain such Offshore Rate Loan. If the Company is
required to so prepay any Offshore Rate Committed Loan, then concurrently with
such prepayment, the Company shall borrow from the affected Bank, in the amount
of such repayment, a Federal Funds Rate Committed Loan.

            (c)  If the obligation of any Bank to make or maintain Offshore Rate
Committed Loans has been so terminated or suspended, the Company may elect, by
giving notice to the Bank through the Administrative Agent that all Loans which
would otherwise be made by the Bank as Offshore Rate Committed Loans shall be
instead Federal Funds Rate Committed Loans.

            (d)  Before giving any notice to the Administrative Agent under this
Section, the affected Bank shall designate a different Lending Office with
respect to its Offshore Rate Loans if such designation will avoid the need for
giving such notice or making such demand and will not, in the judgment of the
Bank, be illegal or otherwise disadvantageous to the Bank.

     3.3    INCREASED COSTS AND REDUCTION OF RETURN.

            (a)  If any Bank determines that, due to either (i) the introduction
of or any change (other than any change by way of imposition of or increase in
reserve requirements included in the calculation of the Offshore Rate) in or in
the interpretation of any law or regulation or (ii) the compliance by that Bank
with any guideline or request from any central bank or other Governmental
Authority (whether or not having the force of law), there shall be any increase
in the cost to such Bank of agreeing to make or making, funding or maintaining
any Offshore Rate Loans, then the Company shall be liable for, and shall from
time to time, upon demand (with a copy of such demand to be sent to the
Administrative Agent), pay to the Administrative Agent for

                                       38
<Page>

the account of such Bank, additional amounts as are sufficient to compensate
such Bank for such increased costs.

            (b)  If any Bank shall have determined that (i) the introduction of
any Capital Adequacy Regulation, (ii) any change in any Capital Adequacy
Regulation, (iii) any change in the interpretation or administration of any
Capital Adequacy Regulation by any central bank or other Governmental Authority
charged with the interpretation or administration thereof, or (iv) compliance by
the Bank (or its Lending Office) or any corporation controlling the Bank with
any Capital Adequacy Regulation, affects or would affect the amount of capital
required or expected to be maintained by the Bank or any corporation
controlling the Bank and (taking into consideration such Bank's or such
corporation's policies with respect to capital adequacy and such Bank's desired
return on capital) determines that the amount of such capital is increased as a
consequence of its Commitment, Loans, credits or obligations under this
Agreement above what such Bank or corporation would have been required to
maintain but for the occurrence of such circumstances, then, upon demand of such
Bank to the Company through the Administrative Agent, the Company shall pay to
the Bank, from time to time as specified by the Bank, additional amounts
sufficient to compensate the Bank for such increase.

            (c)  No Bank shall be entitled to compensation under this
Section 3.3 for any costs incurred or reduction suffered with respect to any
date that it has such costs unless it shall have notified the Company that it
will demand compensation for such costs or reductions under paragraph (a) or (b)
above, as applicable, not more than 120 days after the later of (i) such date
and (ii) the date on which it shall have become aware of such costs or
reductions; provided, however, that the Company shall not be responsible for any
amount in excess of its allocated share of such cost incurred or reductions
suffered by the Company.

     3.4    FUNDING LOSSES. The Company shall reimburse each Bank and hold each
Bank harmless from any loss or expense (other than lost profits) which the Bank
may sustain or incur as a consequence of:

            (a)  the failure of the Company to make on a timely basis any
payment of principal of any Offshore Rate Loan;

            (b)  the failure of the Company to borrow a Loan or continue or
convert a Committed Loan after the Company has given (or is deemed to have
given) a Notice of Borrowing or a Notice of Conversion/Continuation;

                                       39
<Page>

            (c)  the failure of the Company to make any prepayment of any
Committed Loan in accordance with any notice delivered under Section 2.8;

            (d)  the prepayment (including pursuant to Section 2.8) or other
payment (including after acceleration thereof) of any Offshore Rate Loan, or
Absolute Rate Bid Loan on a day that is not the last day of the relevant
Interest Period; or

            (e)  the automatic conversion under Section 2.4 of any Offshore Rate
Committed Loan to a Federal Funds Rate Committed Loan on a day that is not the
last day of the relevant Interest Period;

including any such loss or expense arising from the liquidation or reemployment
of funds obtained by it to maintain its Offshore Rate Loans or from fees payable
to terminate the deposits from which such funds were obtained. For purposes of
calculating amounts payable by the Company to the Banks under this Section and
under subsection 3.3(a), each Offshore Rate Loan made by a Bank (and each
related reserve, special deposit or similar requirement) shall be conclusively
deemed to have been funded at the LIBO Rate used in determining the Offshore
Rate for such Offshore Rate Loan by a matching deposit or other borrowing in the
interbank eurodollar market for a comparable amount and for a comparable period,
whether or not such Offshore Rate Loan is in fact so funded.

     3.5    INABILITY TO DETERMINE RATES. If the Administrative Agent or the
Majority Banks determine that for any reason adequate and reasonable means do
not exist for determining the LIBO Rate for any requested Interest Period with
respect to a proposed Offshore Rate Loan, or that the LIBO Rate applicable
pursuant to subsection 2.10 (a) for any requested Interest Period with respect
to a proposed Offshore Rate Loan does not adequately and fairly reflect the cost
to the Banks of funding such Loan, the Administrative Agent will promptly so
notify the Company and each Bank. Thereafter, the obligation of the Banks to
make or maintain Offshore Rate Loans hereunder shall be suspended until the
Administrative Agent, upon the instruction of the Majority Banks, revokes such
notice in writing. Upon receipt of such notice, the Company may revoke any
Notice of Borrowing or Notice of Conversion/Continuation then submitted by it.
If the Company does not revoke such Notice, the Banks shall make, convert or
continue the Committed Loans, as proposed by the Company, in the amount
specified in the applicable notice submitted by the Company, but such Committed
Loans shall be made, converted into or continued as Federal Funds Rate Committed
Loans.

     3.6    CERTIFICATES OF BANKS. Any Bank claiming reimbursement or
compensation under this Article III shall deliver to the

                                       40
<Page>

Company (with a copy to the Administrative Agent) a certificate setting forth in
reasonable detail the amount payable to the Bank hereunder and the Bank's
calculations thereof and such certificate shall be conclusive and binding on the
Company in the absence of manifest error.

     3.7    SURVIVAL. The agreements and obligations of the Company in this
Article III shall survive the payment of all other Obligations.

                                   ARTICLE IV

                              CONDITIONS PRECEDENT

     4.1    CONDITIONS OF INITIAL LOANS. This Agreement shall become effective
on the Refinancing Date. The occurrence of the Refinancing shall be subject to
the prior or concurrent satisfaction of each of the following conditions
precedent:

            (a)  DOCUMENTATION. Receipt by the Administrative Agent on or before
the Refinancing Date of (i) evidence, in form and substance satisfactory to the
Administrative Agent, that the GE Capital Facility shall have closed and (ii)
all of the following, in form and substance satisfactory to the Administrative
Agent and each Bank, and in sufficient copies for the Administrative Agent and
each Bank:

                 (i)    CREDIT AGREEMENT. This Agreement executed by each party
     thereto;

                 (ii)   RESOLUTIONS; INCUMBENCY.

                        (A)    Copies of the resolutions of the board of
            trustees of the Company authorizing the transactions contemplated
            hereby, certified as of the Refinancing Date by the Secretary or an
            Assistant Secretary of the Company and

                        (B)    A certificate of the Secretary or Assistant
            Secretary of the Company certifying the names and true signatures of
            the officers of the Company authorized to execute, deliver and
            perform, as applicable, this Agreement, and all other Loan Documents
            to be delivered by it hereunder;

                 (iii)  ORGANIZATION DOCUMENTS; GOOD STANDING. Each of the
     following documents:

                        (A)    to the extent not previously delivered to the
            Syndication Agent, any amendment to the Trust

                                       41
<Page>

            Agreement, certified by the Secretary or Assistant Secretary of the
            Company as of the initial Borrowing Date; and

                        (B)    a good standing certificate from the Company
            issued by the Secretary of State of the Commonwealth of
            Massachusetts.

                 (iv)   SECURITY AGREEMENT. The Security Agreement duly executed
     by the parties thereto, together with evidence, satisfactory to the
     Administrative Agent, that all filings and other actions reasonably
     intended to perfect the Administrative Agent's Lien on any collateral
     granted under the Security Agreement have been duly made and done and are
     in full force and effect and together with certified copies of the
     Intercreditor Agreement and Custody Agreement referred to therein.

                 (v)    LEGAL OPINION. An opinion of Dechert Price & Rhoads,
     counsel to the Company, addressed to the Agents and the Banks,
     substantially in the form of EXHIBIT D;

                 (vi)   PAYMENT OF FEES. Evidence of payment by the Company of
     all accrued and unpaid fees, costs and expenses to the extent then due and
     payable on the Refinancing Date, together with Attorney Costs of BofA to
     the extent invoiced prior to or on the Refinancing Date; including any such
     costs, fees and expenses arising under or referenced in Sections 2.11 and
     10.4;

                 (vii)  CERTIFICATE. A certificate signed by a Responsible
     Officer, dated as of the Refinancing Date, stating that:

                        (A)    the representations and warranties contained in
            Article V are true and correct on and as of such date, as though
            made on and as of such date;

                        (B)    no Default or Event of Default exists; and

                        (C)    there has occurred since February 28, 1998, no
            event or circumstance that has resulted or could reasonably be
            expected to result in a Material Adverse Effect; and

                 (viii) OTHER DOCUMENTS. Such other approvals, opinions,
     documents or materials as the Agent or any Bank may request.

                                       42
<Page>

     4.2    CONDITIONS TO ALL BORROWINGS. The obligation of each Bank to make
any Committed Loan to be made by it (other than the reimbursement of a Swing
Loan pursuant to Section 2.17), or any Bid Loan as to which the Company has
accepted the relevant Competitive Bid (including its initial Loan) or of State
Street to make any Swing Loan, is subject to the satisfaction of the following
conditions precedent on the relevant Borrowing Date:

            (a)  NOTICE OF BORROWING. As to any Committed Loan, the
Administrative Agent shall have received (with a copy for each Bank) a Notice of
Borrowing;

            (b)  CONTINUATION OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties in Article V shall be true and correct on and as
of such Borrowing Date with the same effect as if made on and as of such
Borrowing Date (except to the extent such representations and warranties
expressly refer to an earlier date, in which case they shall be true and correct
as of such earlier date);

            (c)  NO EXISTING DEFAULT. No Default or Event of Default shall exist
or shall result from such Borrowing; and

            (d)  BORROWING BASE CERTIFICATE. The Administrative Agent shall have
received a Borrowing Base Certificate giving effect to the proposed Loan dated
within two Business Days of such Loan.

Each Notice of Borrowing and Competitive Bid Request submitted by the Company
hereunder shall constitute a representation and warranty by the Company
hereunder, as of the date of each such notice or request and as of each
Borrowing Date, that the conditions in Section 4.2 are satisfied.

     SECTION 4.3. CONSEQUENCES OF EFFECTIVENESS, ETC. On the Refinancing Date
the Original Agreement shall be automatically amended and restated to read as
set forth herein. On and after the Refinancing Date the rights and obligations
of the parties hereto shall be governed by this Agreement; PROVIDED that rights
and obligations of the parties hereto with respect to the period prior to the
Refinancing Date shall continue to be governed by the provisions of the Original
Agreement. On the Refinancing Date, the Pro Rata Share of each Bank shall
immediately become the percentage set forth opposite the name of such Bank on
SCHEDULE 2.1. With effect from and including the Refinancing Date, each Person
listed on the signature pages hereof that is not a party to the Original
Agreement shall become a party to this Agreement. Any Bank that is a party to
the Original Agreement whose Pro Rata Share becomes 0% on the occurrence of the
Refinancing shall, upon the occurrence thereof and the reallocation of Loans
pursuant to SECTION 4.4, cease to be a Bank

                                       43
<Page>

party to this Agreement, and all accrued fees and other amounts payable under
the Original Agreement for the account of such Bank shall be due and payable on
such date; PROVIDED that the provisions of SECTIONS 3.1, 3.3, 3.4, 10.4 and 10.5
shall continue to inure to the benefit of each such Bank.

     SECTION 4.4. REALLOCATION OF LOANS. On the occurrence of the Refinancing,
(a) each Bank that, as a result of the adjustment of the Pro Rata Shares, is to
have a greater principal amount of Loans outstanding than such Bank had
outstanding immediately prior to the occurrence of the Refinancing shall, if
requested by the Administrative Agent, deliver to the Administrative Agent
immediately available funds to cover such Loans (and the Administrative Agent
shall, to the extent of the funds so received and the funds received from any
Banks that are not parties to the Original Agreement, disburse funds to each
Bank that, as a result of such adjustment of the Pro Rata Shares, is to have a
lesser principal amount outstanding than such Bank had outstanding under the
Original Agreement), and (b) immediately prior to the Refinancing each Bank that
is not a party to the Original Agreement shall deliver to the Administrative
Agent immediately available funds to cover its Loans that will equal such Bank's
Pro Rata Share of the aggregate principal amount outstanding under this
Agreement immediately after the occurrence of the Refinancing.

     SECTION 4.5. AMOUNTS OUTSTANDING UNDER THE ORIGINAL AGREEMENT DEEMED TO BE
LOANS UNDER THIS AGREEMENT. The principal amounts of Loans owing under the
Original Agreement as at the Refinancing Date to each Bank that is a party
thereto (as reallocated pursuant to this Agreement) shall be deemed to be Loans
made by that Bank hereunder.

                                    ARTICLE V

                         REPRESENTATIONS AND WARRANTIES

     The Company represents and warrants to each Agent and each Bank that:

     5.1    EXISTENCE AND POWER. The Company:

            (a)  is a business trust duly organized, validly existing and in
good standing under the laws of Massachusetts;

            (b)  has the power and authority and all governmental licenses,
authorizations, consents and approvals to own its assets, carry on its business
and to execute, deliver, and perform its obligations under the Loan Documents;

                                       44
<Page>

            (c)  is duly qualified and is licensed and in good standing under
the laws of each jurisdiction where its ownership, lease or operation of
property or the conduct of its business requires such qualification or license;
and

            (d)  is in compliance with all Requirements of Law; except, in each
case referred to in clause (c) or clause (d), to the extent that the failure to
do so could not reasonably be expected to have a Material Adverse Effect.

     5.2    REGISTRATION OF COMPANY AND COMPANY'S SHARES. The Company is a
registered investment company under the Act and has registered the sale of its
shares under the 1933 Act and the Act.

     5.3    AUTHORIZATION; NO CONTRAVENTION. The execution, delivery and
performance by the Company of this Agreement and each other Loan Document to
which the Company is party, have been duly authorized by all necessary corporate
action, and do not and will not:

            (a)  contravene the terms of any of the Company's Organization
Documents;

            (b)  conflict with or result in any breach or contravention of, or
the creation of any Lien under, any document evidencing any Contractual
Obligation to which the Company is a party or any order, injunction, writ or
decree of any Governmental Authority to which the Company or its property is
subject;

            (c)  violate any Requirement of Law; or

            (d)  violate the Investment Policies or Investment Restrictions.

     5.4    GOVERNMENTAL AUTHORIZATION. No approval, consent, exemption,
authorization, or other action by, or notice to, or filing with, any
Governmental Authority is necessary or required in connection with the
execution, delivery or performance by, or enforcement against, the Company or
any of its Subsidiaries of this Agreement or any other Loan Document.

     5.5    BINDING EFFECT. This Agreement and each other Loan Document to which
the Company is a party constitute the legal, valid and binding obligations of
the Company enforceable against the Company in accordance with their respective
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, or similar laws affecting the enforcement of creditors' rights
generally or by equitable principles relating to enforceability.

                                       45
<Page>

     5.6    LITIGATION. There are no actions, suits, proceedings, labor
controversies, claims or disputes pending, or to the best knowledge of the
Company, threatened or contemplated, at law, in equity, in arbitration or before
any Governmental Authority, against the Company or any of its properties which:

            (a)  purport to affect or pertain to this Agreement or any other
Loan Document, or any of the transactions contemplated hereby or thereby; or

            (b)  if determined adversely to the Company, would reasonably be
expected to have a Material Adverse Effect. No injunction, writ, temporary
restraining order or any order of any nature has been issued by any court or
other Governmental Authority purporting to enjoin or restrain the execution,
delivery or performance of this Agreement or any other Loan Document, or
directing that the transactions provided for herein or therein not be
consummated as herein or therein provided.

     5.7    NO DEFAULT. No Default or Event of Default exists or would result
from the incurring of any Obligations by the Company. As of the Closing Date,
the Company is not in default under or with respect to any Contractual
Obligation in any respect which, individually or together with all such
defaults, could reasonably be expected to have a Material Adverse Effect, or
that would, if such default had occurred after the Closing Date, create an Event
of Default under subsection 8.1(e).

     5.8    ERISA COMPLIANCE.

            The Company has not established or maintained, nor is it liable
under any Plan.

     5.9    USE OF PROCEEDS. The proceeds of the Loans are to be used to provide
liquidity for one or more of the following: (i) periodic tender offers for the
repurchase of the Company's shares, (ii) to fund general working capital needs
and (iii) to fund obligations with respect to unfunded loans or revolving credit
commitments. The Company may also use the proceeds of the Loans to leverage the
Company's portfolio to enhance yield.

     5.10   FINANCIAL CONDITION.

            (a)  The audited financial statements of the Company dated
February 28, 1998, and the related statements of income or operations, equity
and cash flows for the period ended on such date:

                 (i)   were prepared in conformity with GAAP consistently
     applied throughout the period covered thereby, except as otherwise
     expressly noted therein;

                                       46
<Page>

                 (ii)  fairly present the financial condition of the Company as
     of the date thereof and results of operations for the period covered
     thereby; and

                 (iii) show all material indebtedness and other liabilities,
     direct or contingent of the Company as of the date thereof, including
     liabilities for taxes, material commitments and Contingent Obligations.

            (b)  Since February 28, 1998, there has been no Material Adverse
Effect.

     5.11   TAXES. The Company has filed all Federal and other material tax
returns and reports required to be filed, and has paid all Federal and other
material taxes, assessments, fees and other governmental charges levied or
imposed upon it or its properties, income or assets otherwise due and payable,
except those which are being contested in good faith by appropriate proceedings
and for which adequate reserves have been provided in accordance with GAAP.
There is no proposed tax assessment against the Company that would, if made,
have a Material Adverse Effect.

     5.12   ENVIRONMENTAL MATTERS. Environmental Laws and Environmental Claims
could not, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect.

     5.13   NO BURDENSOME RESTRICTIONS. The Company is not a party to or bound
by any Contractual Obligation, or subject to any restriction in any Organization
Document, or any Requirement of Law, which could reasonably be expected to have
a Material Adverse Effect.

     5.14   SUBSIDIARIES. The Company has no Subsidiaries.

     5.15   FULL DISCLOSURE. None of the representations or warranties made by
the Company in the Loan Documents as of the date such representations and
warranties are made or deemed made, and none of the statements contained in any
exhibit, report, statement or certificate furnished by or on behalf of the
Company in connection with the Loan Documents (including the offering and
disclosure materials delivered by or on behalf of the Company to the Banks prior
to the Closing Date), contains any untrue statement of a material fact or omits
any material fact required to be stated therein or necessary to make the
statements made therein, in light of the circumstances under which they are
made, not misleading as of the time when made or delivered.

     5.16   REGULATIONS U AND X. The Company is not engaged in the business of
extending credit for the purpose of purchasing or carrying margin stock, and no
proceeds of any Loans will be used

                                       47
<Page>

by the Company for a purpose which violates, or would be inconsistent with, FRB
Regulation U or X. Terms for which meanings are provided in F.R.S. Board
Regulation U or X or any regulations substituted therefore, as from time to time
in effect, are used in this Section with such meanings.

     5.17   INVESTMENT POLICIES AND INVESTMENT RESTRICTIONS. The Company is in
compliance with all of the Investment Policies and Investment Restrictions.

     5.18   ADVISORY CONTRACT. The Company's Amended and Restated Investment
Management Agreement with the Investment Adviser dated April 7, 1997, as further
amended August 7, 1998 and Administrative Agreement with Pilgrim America Group,
Inc., dated April 7, 1997, are in the form delivered to the Agents and the
Banks.

     5.19   COMPLIANCE WITH LAWS. The Company is in compliance with all
applicable laws and regulations (including the Act and all regulations
thereunder), and all applicable ordinances, decrees, requirements, orders and
judgments of, and all of the material terms of any applicable licenses and
permits issued by, any governmental body, agency or official to the extent that
non-compliance would be reasonably likely to have a Material Adverse Effect.
The Company has received no notice of any action to be taken by the SEC with
respect to the Company that would be materially adverse to the Company's
financial condition or operations. The SEC has not made any request for any
information from the Company since April 1995 other than information that is
routine and/or periodic in nature.

     5.20   TAX STATUS. The Company has taken all steps reasonably necessary to
maintain its status as a regulated investment company under the Code.

     5.21   YEAR 2000 PROBLEM. The Company has reviewed the areas within its
business and operations which could be adversely affected by, and has developed
or is developing a program to address on a timely basis, the "Year 2000 Problem"
(that is, the risk that computer applications used by the Company may be unable
to recognize and perform properly date-sensitive functions involving certain
dates prior to and any date after December 31, 1999). Based on such review and
program, the Company reasonably believes that the "Year 2000 Problem" will not
have a Material Adverse Effect.

                                   ARTICLE VI

                              AFFIRMATIVE COVENANTS

                                       48
<Page>

     So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

     6.1    FINANCIAL STATEMENTS. The Company shall deliver to each Bank and
each Agent:

            (a)  As soon as available and in any event within 60 days after each
     of its Fiscal Years, a copy of its annual audited Statement of Assets and
     Liabilities, including a statement of investments, prepared in conformity
     with GAAP and certified by an independent certified public accountant who,
     in the commercially reasonable judgment of the Majority Banks, shall be
     satisfactory to the Majority Banks, together with a certificate from such
     accountant (i) acknowledging to the Banks such accountant's understanding
     that the Banks are relying on such Statement of Assets and Liabilities,
     (ii) containing a computation of, and showing compliance with, the
     financial ratios contained in SECTION 7.9 and (iii) to the effect that, in
     making the examination necessary for the signing of such Statement of
     Assets and Liabilities, such accountant has not become aware of any Event
     of Default or Default that has occurred and is continuing, or if such
     accountant has become aware of any such event, describing it and the steps,
     if any, being taken to cure it;

            (b)  Within 60 days after the end of the first six months of its
     Fiscal Year, a copy of its published semi annual report and asset
     statement, prepared in conformity with GAAP;

            (c)  (i)   Within 15 days following the filing thereof, (i) any
     preliminary proxy materials filed with the SEC, (ii) at least annually
     within 60 days after the end of each fiscal year of the Company, copies of
     its current annual report, except that if its Investment Policies are
     changed materially (including any change in its ability to borrow
     hereunder), copies of any revised prospectus (or a prospectus supplement)
     marked to show changes from the prospectus (or prospectus supplement) and
     statement of additional information most recently delivered to the Banks
     reflecting any such changes shall be provided to the Banks within 15 days
     after the same become available, and (iii) within 15 days of the filing
     thereof, any registration statement filed with the SEC;

            (d)  Within 5 days after the end of each month, (i) a certificate
     substantially in the form of EXHIBIT C ("BORROWING BASE CERTIFICATE")
     setting forth its (A) borrowing base (as calculated in the manner
     contemplated by

                                       49
<Page>

     the form of Borrowing Base Certificate) ("BORROWING BASE") and (B) Asset
     Coverage as of the last day of such month and (ii) a certificate signed by
     a Responsible Officer certifying that, to the best of such Person's
     knowledge, no Event of Default has occurred and is continuing or, if an
     Event of Default has occurred and is continuing, the steps being taken to
     remedy the same;

            (e)  Within 15 days after the last day of each fiscal quarter, a
     list of assets held by the Company as of such day and, within 60 days after
     the last day of each fiscal quarter, an opinion Meenan, McDevitt & Company
     or such other Person as shall be reasonably acceptable to the Majority
     Banks as to the fairness of the values assigned by the Company to the
     assets held by the Company as of such day; and

            (f)  Promptly, such additional information regarding the business,
     financial or corporate affairs of the Company as the Syndication Agent, at
     the request of any Bank, may from time to time request.

     6.2    NOTICES. The Company shall promptly notify each Agent and each Bank:

            (a)  of the occurrence of any Default or Event of Default, and of
the occurrence or existence of any event or circumstance that foreseeably will
become a Default or Event of Default;

            (b)  of any matter that has resulted or may reasonably be expected
to result in a Material Adverse Effect, including (i) breach or non-performance
of, or any default under, a Contractual Obligation of the Company; (ii) any
dispute, litigation, investigation, proceeding or suspension between the Company
and any Governmental Authority; or (iii) the commencement of, or any material
development in, any litigation or proceeding affecting the Company; including
pursuant to any applicable Environmental Laws;

            (c)  the scheduling of consideration by the board of trustees of the
Company of a change in the Investment Adviser, administrator, custodian or
independent accountant, or the appointment of any sub-adviser of any Person
acting in a similar capacity to the Investment Adviser; PROVIDED that a mailing
to shareholders with respect to any of the foregoing shall not be deemed to be
sufficient notice hereunder;

            (d)  of any material change in accounting policies or financial
reporting practices by the Company; and

                                       50
<Page>

            (e)  of any change in the name of the Company.

            Without limiting any of the foregoing provisions of this Section
6.2, the Company will promptly notify the Administrative Agent and each Bank of
(and, to the extent possible, give the Administrative Agent and each Bank at
least ten days' prior written notice of) any contribution failure sufficient to
give rise to a Lien under Section 302(f) of ERISA.

            Each notice under this Section shall, be accompanied by a written
statement by a Responsible Officer setting forth details of the occurrence
referred to therein, and stating what action the Company proposes to take with
respect thereto and at what time. Each notice under this subsection 6.2(a) shall
describe with particularity any and all clauses or provisions of this Agreement
or other Loan Document that have been (or foreseeably will be) breached or
violated.

     6.3    PRESERVATION OF EXISTENCE, ETC. The Company shall:

            (a)  preserve and maintain in full force and effect its existence
and good standing under the laws of its state of organization;

            (b)  preserve and maintain in full force and effect all governmental
rights, privileges, qualifications, permits, licenses and franchises necessary
or desirable in the normal conduct of its business;

            (c)  use reasonable efforts, in the ordinary course of business, to
preserve its business organization and goodwill; and

            (d)  preserve or renew all of its registered patents, trademarks,
trade names and service marks, the non-preservation of which could reasonably be
expected to have a Material Adverse Effect.

     6.4    INSURANCE. The Company will maintain or cause to be maintained with
responsible insurance companies insurance with respect to its properties and
business to the extent required under applicable law, including such fidelity
bond coverage as shall be required by Rule 17g-l promulgated under the Act or
any successor provision, (b) errors and omissions, and director and officer
liability insurance, and (c) other insurance against such casualties and
contingencies, and, with respect to CLAUSES (b) and (c) hereof, of such types
and in such amounts as are substantially similar to the coverages maintained by
the Company as of the date of this Agreement, and the Company will, upon request
of the Administrative Agent, furnish to each Bank at reasonable intervals a
certificate of a Responsible Officer

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<Page>

setting forth the nature and extent of all insurance maintained by Company in
accordance with this Section.

     6.5    PAYMENT OF OBLIGATIONS. The Company shall pay and discharge as the
same shall become due and payable, all its obligations and liabilities,
including:

            (a)  all tax liabilities, assessments and governmental charges or
levies upon it or its properties or assets, unless the same are being contested
in good faith by appropriate proceedings and adequate reserves in accordance
with GAAP are being maintained by the Company;

            (b)  all lawful claims which, if unpaid, would by law become a Lien
upon its property; and

            (c)  all Indebtedness, as and when due and payable, but subject to
any subordination provisions contained in any instrument or agreement evidencing
such Indebtedness.

     6.6    COMPLIANCE WITH LAWS. The Company shall comply, in all material
respects with all Requirements of Law of any Governmental Authority having
jurisdiction over it or its business, such compliance to include compliance in
all material respects with the Act, the 1933 Act and the Exchange Act.

     6.7    INSPECTION OF PROPERTY AND BOOKS AND RECORDS. The Company shall
maintain proper books of record and account, in which full, true and correct
entries in conformity with GAAP consistently applied shall be made of all
financial transactions and matters involving the assets and business of the
Company. The Company shall permit representatives and independent contractors of
any Agent or Bank to visit and inspect any of its properties, to examine its
organizational, financial and operating records, and make copies thereof or
abstracts therefrom, and to discuss its affairs, finances and accounts with its
directors, officers, and independent public accountants, all at the expense of
the Company and at such reasonable times during normal business hours and as
often as may be reasonably desired, upon reasonable advance notice to the
Company; PROVIDED, HOWEVER, when an Event of Default exists any Agent or Bank
may do any of the foregoing at the expense of the Company at any time during
normal business hours and without advance notice.

     6.8    ENVIRONMENTAL LAWS. The Company shall comply with all Environmental
Laws.

     6.9    INVESTMENT ADVISER. The Company, to the extent permitted by
applicable law, (a) shall at all times maintain Pilgrim America Investments,
Inc. as its investment adviser (the "INVESTMENT ADVISER"), or (b) if the
contract by which such

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<Page>

Investment Adviser is retained by the Company is terminated pursuant to or by
reason of the operation of the Act, the Company's trustees or shareholders or
any action taken by the SEC, the Investment Adviser shall continue to serve as
the Company's investment adviser, with or without a fee, and a successor
investment adviser shall thereafter be approved, within 120 days of such
termination, in the manner provided by the Act and with the consent of the
Majority Banks.

     6.10   REGULATED INVESTMENT COMPANY. The Company will at all times maintain
its status as a "regulated investment company" under the Code and a "registered
investment company" under the Act.

                                   ARTICLE VII

                               NEGATIVE COVENANTS

     So long as any Bank shall have any Commitment hereunder, or any Loan or
other Obligation shall remain unpaid or unsatisfied, unless the Majority Banks
waive compliance in writing:

     7.1    LIMITATION ON LIENS. The Company shall not directly or indirectly,
make, create, incur, assume or suffer to exist any Lien upon or with respect to
any part of its property, whether now owned or hereafter acquired, other than
the following ("PERMITTED LIENS"):

            (a)  any Lien existing on property of the Company on the Closing
Date and set forth in SCHEDULE 7.1 securing Indebtedness outstanding on such
date or otherwise described in SCHEDULE 7.1;

            (b)  any Lien deemed to have been created under any Loan Document;

            (c)  Liens for taxes, fees, assessments or other governmental
charges which are not delinquent or remain payable without penalty, provided
that no notice of lien has been filed or recorded under the Code;

            (d)  Liens consisting of judgment or judicial attachment liens,
provided that the enforcement of such Liens is effectively stayed and all such
Liens in the aggregate at any time outstanding for the Company do not exceed
$1,000,000.

     7.2    CONSOLIDATIONS AND MERGERS. The Company shall not merge, consolidate
with or into, or convey, transfer, lease or otherwise dispose of (whether in one
transaction or in a series of transactions) all or substantially all of its
assets (whether now owned or hereafter acquired) to or in favor of any Person.

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<Page>

     7.3    LIMITATION ON INDEBTEDNESS. The Company shall not create, incur,
assume, suffer to exist, or otherwise become or remain directly or indirectly
liable with respect to, any Indebtedness or any preferred shares, except:

            (a)  Indebtedness incurred pursuant to this Agreement;

            (b)  Indebtedness incurred pursuant to the GE Capital Facility;

            (c)  Indebtedness consisting of Contingent Obligations permitted
pursuant to Section 7.5;

            (d)  Deferred taxes; and

            (e)  Obligations to Persons who provide services to the Company in
the ordinary course of business as an investment company and similar trade
obligations incurred in the ordinary course of business.

     7.4    TRANSACTIONS WITH AFFILIATES. Except for fees payable to the
Investment Adviser, the Company shall not, enter into any transaction with any
Affiliate of the Company, except upon fair and reasonable terms no less
favorable to the Company than would be obtained in a comparable arm's-length
transaction with a Person not an Affiliate of the Company or such Subsidiary;
PROVIDED that any such transaction must be made in substantial compliance with
Section 17 of the Act or an exemption therefrom.

     7.5    CONTINGENT OBLIGATIONS. The Company shall not create, incur, assume
or suffer to exist any Contingent Obligations except endorsements for collection
or deposit in the ordinary course of business.

     7.6    LEASE OBLIGATIONS. The Company shall not create or suffer to exist
any obligations for the payment of rent for any property under lease or
agreement to lease.

     7.7    BUSINESS ACTIVITIES; INVESTMENT POLICIES. The Company shall not
engage in any business activity, except as a diversified closed-end management
investment company and such activities as may be incidental or related thereto.
In addition to, and not in limitation of the foregoing, the Company will not
become an open-end management investment company under the Act without the prior
written consent of the Banks. The Company will not violate any of the Investment
Policies or Investment Restrictions. The Company will not amend, rescind, modify
or otherwise change any of the Investment Policies or Investment Restrictions
without written notice to the Banks and a written determination by the Majority
Banks, that such change will not

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<Page>

result in a fundamental change in the credit quality of the Company.

     7.8    ACCOUNTING CHANGES. The Company shall not make any significant
change in accounting treatment or reporting practices, except as required by
GAAP, or change the fiscal year of the Company.

     7.9    FINANCIAL COVENANTS. The Company shall not permit:

            (a)  its Asset Coverage to be less than 300% at any time;

            (b)  the five largest investments of the Company (including as one
investment multiple investments in one Person or one Person and its Subsidiaries
and Affiliates) to exceed 25% of the Total Assets of the Company; or

            (c)  the sum at any time of the unused portion of Commitments plus
Cash Equivalent Investments to be an amount less than the sum of unfunded
Indebtedness of the Company.

     7.10   CHANGE OF CUSTODIAN OR AUDITOR. The Company shall promptly provide
written notice to the Banks of any change in its custodian or auditor.

     7.11   PENSION PLANS. The Company shall not enter into, or incur any
liability relating to, any Plan.

                                  ARTICLE VIII

                                EVENTS OF DEFAULT

     8.1    EVENT OF DEFAULT. Any of the following shall constitute an "EVENT OF
DEFAULT":

            (a)  NON-PAYMENT. The Company fails to pay, (i) when and as required
to be paid herein, any amount of principal of any Loan (ii) within two days
after the same becomes due, any amount of interest on any Bid Loan, or (iii)
within five days after the same becomes due, any other interest, fee or any
other amount payable hereunder or under any other Loan Document; or

            (b)  REPRESENTATION OR WARRANTY. Any representation or warranty by
the Company made or deemed made herein, in any other Loan Document, or which is
contained in any certificate, document or financial or other statement by the
Company or any Responsible Officer, furnished at any time under this Agreement,
or in or under any other Loan Document, is incorrect in any material respect on
or as of the date made or deemed made; or

                                       55
<Page>

            (c)  SPECIFIC DEFAULTS. The Company fails to perform or observe any
term, covenant or agreement contained in Article VII; or

            (d)  OTHER DEFAULTS. The Company fails to perform or observe any
other term or covenant contained in this Agreement or any other Loan Document,
and such default shall continue unremedied for a period of 20 days after the
date upon which written notice thereof is given to the Company by any Agent or
Bank; or

            (e)  CROSS-DEFAULT. (A) A default or breach shall occur under the GE
Capital Facility, and such default or breach (i) involves the failure to make
any payment when due in respect of the GE Capital Facility or (ii) causes, or
permits the Lender Agent, the Operating Agent, the Collateral Agent or any
Lender to cause, Debt, under or with respect to the GE Capital Facility, to
become due prior to its stated maturity or prior to its regularly scheduled
dates of payment, regardless of whether such right is exercised or (B) the
Company (i) fails to make any payment in respect of any Indebtedness or
Contingent Obligation having an aggregate principal amount (including undrawn
committed or available amounts and including amounts owing to all creditors
under any combined or syndicated credit arrangement) of more than $1,000,000
when due (whether by scheduled maturity, required prepayment, acceleration,
demand, or otherwise) and such failure continues after the applicable grace or
notice period, if any, specified in the relevant document on the date of such
failure; or (ii) fails to perform or observe any other condition or covenant, or
any other event shall occur or condition exist, under any agreement or
instrument relating to any such Indebtedness or Contingent Obligation, and such
failure continues after the applicable grace or notice period, if any, specified
in the relevant document on the date of such failure if the effect of such
failure, event or condition is to cause, or to permit the holder or holders of
such Indebtedness or beneficiary or beneficiaries of such Indebtedness (or a
trustee or agent on behalf of such holder or holders or beneficiary or
beneficiaries) to cause such Indebtedness to be declared to be due and payable
prior to its stated maturity, or such Contingent Obligation to become payable or
cash collateral in respect thereof to be demanded; or

            (f)  INSOLVENCY; VOLUNTARY PROCEEDINGS. The Company (i) ceases or
fails to be solvent, or generally fails to pay, or admits in writing its
inability to pay, its debts as they become due, subject to applicable grace
periods, if any, whether at stated maturity or otherwise; (ii) voluntarily
ceases to conduct its business in the ordinary course; (iii) commences any
Insolvency Proceeding with respect to itself; or (iv) takes any action to
effectuate or authorize any of the foregoing; or

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<Page>

            (g)  INVOLUNTARY PROCEEDINGS. (i) Any involuntary Insolvency
Proceeding is commenced or filed against the Company, or any writ, judgment,
warrant of attachment, execution or similar process, is issued or levied against
a substantial part of the Company's properties, and any such proceeding or
petition shall not be dismissed, or such writ, judgment, warrant of attachment,
execution or similar process shall not be released, vacated or fully bonded
within 60 days after commencement, filing or levy; (ii) the Company admits the
material allegations of a petition against it in any Insolvency Proceeding, or
an order for relief (or similar order under non-U.S. law) is ordered in any
Insolvency Proceeding; or (iii) the Company acquiesces in the appointment of a
receiver, trustee, custodian, conservator, liquidator, mortgagee in possession
(or agent therefor), or other similar Person for itself or a substantial portion
of its property or business; or

            (h)  MONETARY JUDGMENTS. One or more non-interlocutory judgments,
non-interlocutory orders, decrees or arbitration awards is entered against the
Company involving in the aggregate a liability (to the extent not covered by
independent third-party insurance as to which the insurer does not dispute
coverage) as to any single or related series of transactions, incidents or
conditions, of $1,000,000 or more, and the same shall remain unsatisfied,
unvacated and unstayed pending appeal for a period of 10 days after the entry
thereof; or

            (i)  NON-MONETARY JUDGMENTS. Any non-monetary judgment, order or
decree is entered against the Company which does or would reasonably be expected
to have a Material Adverse Effect, and there shall be any period of 10
consecutive days during which a stay of enforcement of such judgment or order,
by reason of a pending appeal or otherwise, shall not be in effect; or

            (j)  CHANGE OF CONTROL. There occurs any Change of Control; or

            (k)  INVESTMENT POLICIES. The Company shall violate or take any
action that would result in a violation of any of its Investment Policies or
Investment Restrictions, except for violations or the taking of such actions
that would not in the determination of the Majority Banks result in a
fundamental change in the credit quality of the Company; or

            (l)  INVESTMENT ADVISER. Pilgrim America Investments, Inc. shall no
longer be the Investment Adviser; or

            (m)  SECURITY AGREEMENT. The Security Agreement or any provision
thereof shall cease to be in full force and effect, or shall cease to give the
Collateral Agent the Liens, rights,

                                       57
<Page>

powers and privileges purported to be created thereby, or the Company shall
default in the due performance or observance of any term, covenant or agreement
on its part to be performed or observed pursuant to the Security Agreement; or

            (n)  CHANGE IN CUSTODIAN OR AUDITOR. The Company shall change its
custodian or auditor, and the Majority Banks determine in writing such change
has resulted in a fundamental change in the credit quality of the Company.

            (o)  MATERIAL ADVERSE EFFECT. A Material Adverse Effect shall have
occurred and be continuing.

     8.2    REMEDIES. If any Event of Default occurs, the Administrative Agent
shall, at the request of, or may, with the consent of, the Majority Banks:

            (a)  declare the Commitment of each Bank to make Committed Loans to
be terminated, whereupon such Commitments shall be terminated;

            (b)  declare the unpaid principal amount of all outstanding Loans,
all interest accrued and unpaid thereon, and all other amounts owing or payable
hereunder or under any other Loan Document to be immediately due and payable,
without presentment, demand, protest or other notice of any kind, all of which
are hereby expressly waived by the Company; and

            (c)  exercise on behalf of itself and the Banks all rights and
remedies available to it and the Banks under the Loan Documents or applicable
law;

PROVIDED, HOWEVER, that upon the occurrence of any event specified in subsection
(f) or (g) of Section 8.1 (in the case of clause (i) of subsection (g) upon the
expiration of the 60-day period mentioned therein), the obligation of each Bank
to make Loans shall automatically terminate and the unpaid principal amount of
all outstanding Loans and all interest and other amounts as aforesaid shall
automatically become due and payable without further act of the Administrative
Agent or any Bank.

     8.3    RIGHTS NOT EXCLUSIVE. The rights provided for in this Agreement and
the other Loan Documents are cumulative and are not exclusive of any other
rights, powers, privileges or remedies provided by law or in equity, or under
any other instrument, document or agreement now existing or hereafter arising.

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<Page>

                                   ARTICLE IX

                                   THE AGENTS

     9.1    APPOINTMENT AND AUTHORIZATION. Each Bank hereby appoints, designates
and authorizes each Agent to take such action on its behalf under the provisions
of this Agreement and each other Loan Document and to exercise such powers and
perform such duties as are expressly delegated to it by the terms of this
Agreement or any other Loan Document, together with such powers as are
reasonably incidental thereto. Notwithstanding any provision to the contrary
contained elsewhere in this Agreement or in any other Loan Document, none of the
Agents shall have any duties or responsibilities, except those expressly set
forth herein or in each other Loan Document, nor shall any of the Agents have or
be deemed to have any fiduciary relationship with any Bank, and no implied
covenants, functions, responsibilities, duties, obligations or liabilities shall
be read into this Agreement or any other Loan Document or otherwise exist
against any of the Agents.

     9.2    DELEGATION OF DUTIES. The Agents may execute any of their duties
under this Agreement or any other Loan Document by or through agents, employees
or attorneys-in-fact and shall be entitled to advice of counsel concerning all
matters pertaining to such duties. The Agents shall not be responsible for the
negligence or misconduct of any agent or attorney-in-fact that it selects with
reasonable care.

     9.3    LIABILITY OF AGENTS. None of the Agent-Related Persons shall (i) be
liable for any action taken or omitted to be taken by any of them under or in
connection with this Agreement or any other Loan Document or the transactions
contemplated hereby (except for its own gross negligence or willful misconduct),
or (ii) be responsible in any manner to any of the Banks for any recital,
statement, representation or warranty made by the Company or any Affiliate of
the Company, or any officer thereof, contained in this Agreement or in any other
Loan Document, or in any certificate, report, statement or other document
referred to or provided for in, or received by any Agent under or in connection
with, this Agreement or any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or any other Loan
Document, or for any failure of the Company or any other party to any Loan
Document to perform its obligations hereunder or thereunder. No Agent-Related
Person shall be under any obligation to any Bank to ascertain or to inquire as
to the observance or performance of any of the agreements contained in, or
conditions of, this Agreement or any other Loan Document, or to inspect the
properties, books or records of the Company or any of the Company's Subsidiaries
or Affiliates.

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<Page>

     9.4    RELIANCE BY AGENTS. Each Agent shall be entitled to rely, and shall
be fully protected in relying, upon any writing, resolution, notice, consent,
certificate, affidavit, letter, telegram, facsimile, telex or telephone message,
statement or other document or conversation believed by it to be genuine and
correct and to have been signed, sent or made by the proper Person or Persons,
and upon advice and statements of legal counsel (including counsel to the
Company), independent accountants and other experts selected by such Agent. Each
Agent shall be fully justified in failing or refusing to take any action under
this Agreement or any other Loan Document unless it shall first receive such
advice or concurrence of the Majority Banks as it deems appropriate and, if it
so requests, it shall first be indemnified to its satisfaction by the Banks
against any and all liability and expense which may be incurred by it by reason
of taking or continuing to take any such action. Each Agent shall in all cases
be fully protected in acting, or in refraining from acting, under this Agreement
or any other Loan Document in accordance with a request or consent of the
Majority Banks and such request and any action taken or failure to act pursuant
thereto shall be binding upon all of the Banks.

     9.5    NOTICE OF DEFAULT. None of the Agents shall be deemed to have
knowledge or notice of the occurrence of any Default or Event of Default, except
with respect to defaults in the payment of principal, interest and fees required
to be paid to such Agent for the account of the Banks, unless such Agent shall
have received written notice from a Bank or the Company referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." Each Agent will notify the Banks as soon as is
reasonably practicable of its receipt of any such notice. The Administrative
Agent shall take such action with respect to such Default or Event of Default as
may be requested by the Majority Banks in accordance with Article VIII;
PROVIDED, HOWEVER, that unless and until the Administrative Agent has received
any such request, the Administrative Agent may (but shall not be obligated to)
take such action, or refrain from taking such action, with respect to such
Default or Event of Default as it shall deem advisable or in the best interest
of the Banks.

     9.6    CREDIT DECISION. Each Bank acknowledges that none of the
Agent-Related Persons has made any representation or warranty to it, and that no
act by any Agent hereinafter taken, including any review of the affairs of the
Company, shall be deemed to constitute any representation or warranty by any
Agent-Related Person to any Bank. Each Bank represents to the Agents that it
has, independently and without reliance upon any Agent-Related Person and based
on such documents and information as it has deemed appropriate, made its own
appraisal of and investigation into the business, prospects, operations,
property, financial and

                                       60
<Page>

other condition and creditworthiness of the Company, and all applicable bank
regulatory laws relating to the transactions contemplated hereby, and made its
own decision to enter into this Agreement and to extend credit to the Company
hereunder. Each Bank also represents that it will, independently and without
reliance upon any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit analysis, appraisals and decisions in taking or not taking action under
this Agreement and the other Loan Documents, and to make such investigations as
it deems necessary to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of the Company.
Except for notices, reports and other documents expressly herein required to be
furnished to the Banks by the Agent, such Agent shall not have any duty or
responsibility to provide any Bank with any credit or other information
concerning the business, prospects, operations, property, financial and other
condition or creditworthiness of the Company which may come into the possession
of any of the Agent-Related Persons.

     9.7    INDEMNIFICATION. Whether or not the transactions contemplated hereby
are consummated, the Banks shall indemnify upon demand the Agent-Related Persons
(to the extent not reimbursed by or on behalf of the Company and without
limiting the obligation of the Company to do so), pro rata, from and against any
and all Indemnified Liabilities; PROVIDED, HOWEVER, that no Bank shall be liable
for the payment to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence or willful
misconduct. Without limitation of the foregoing, each Bank shall reimburse each
Agent upon demand for its ratable share of any costs or out-of-pocket expenses
(including Attorney Costs but without duplication of internal and external
counsel) incurred by such Agent in connection with the preparation, execution,
delivery, administration, modification, amendment or enforcement (whether
through negotiations, legal proceedings or otherwise) of, or legal advice in
respect of rights or responsibilities under, this Agreement, any other Loan
Document (excluding the Fee Letters only to the extent the terms and conditions
of such Fee Letters are not otherwise set forth or addressed herein or in any
other Loan Document), or any document contemplated by or referred to herein, to
the extent that the such Agent is not reimbursed for such expenses by or on
behalf of the Company. The undertaking in this Section shall survive the payment
of all Obligations hereunder and the resignation or replacement of the Agent.

     9.8    AGENT IN INDIVIDUAL CAPACITY. BofA, State Street, Deutsche and their
respective Affiliates may make loans to, issue letters of credit for the account
of, accept deposits from, acquire equity interests in and generally engage in
any kind of

                                       61
<Page>

banking, trust, financial advisory, underwriting or other business with the
Company and its Affiliates as though BofA, State Street and Deutsche were not
Agents hereunder and without notice to or consent of the Banks. The Banks
acknowledge that, pursuant to such activities, BofA, State Street, Deutsche or
their respective Affiliates may receive information regarding the Company or its
Affiliates (including information that may be subject to confidentiality
obligations in favor of the Company) and acknowledge that the Agents shall be
under no obligation to provide such information to them. With respect to its
Loans, BofA, State Street and Deutsche shall have the same rights and powers
under this Agreement as any other Bank and may exercise the same as though it
were not an Agent, and the terms "Bank" and "Banks" include BofA, State Street
and Deutsche in their individual capacity.

     9.9    SUCCESSOR AGENT. Either the Administrative Agent or the Syndication
Agent may, and at the request of the Majority Banks shall, resign as such Agent
upon 30 days' notice to the Banks. If such Agent resigns under this Agreement,
the Majority Banks shall appoint from among the Banks a successor agent for the
Banks which successor agent shall be approved by the Company, which approval
shall not be unreasonably withheld. If no successor agent is appointed prior to
the effective date of the resignation of such Agent, such Agent may appoint,
after consulting with the Banks and the Company, a successor agent from among
the Banks. Upon the acceptance of its appointment as successor agent hereunder,
such successor agent shall succeed to all the rights, powers and duties of such
retiring Agent and the term "Administrative Agent" or "Syndication Agent", as
applicable, shall mean such successor agent and such retiring Agent's
appointment, powers and duties as such Agent shall be terminated. After any such
retiring Agent's resignation hereunder as such Agent, the provisions of this
Article IX and Sections 10.4 and 10.5 shall inure to its benefit as to any
actions taken or omitted to be taken by it while it was such Agent under this
Agreement. If no successor agent has accepted appointment as such Agent by the
date which is 30 days following a retiring Agent's notice of resignation, such
retiring Agent's resignation shall nevertheless thereupon become effective and
the Banks shall perform all of the duties of the Agent hereunder until such
time, if any, as the Majority Banks appoint a successor agent as provided for
above.

     9.10   WITHHOLDING TAX.

            (a)  If any Bank is a "foreign corporation, partnership or trust"
within the meaning of the Code and such Bank claims exemption from, or a
reduction of, U.S. withholding tax under Sections 1441 or 1442 of the Code, such
Bank agrees with and in

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favor of the Company and the Administrative Agent, to deliver to the Company and
the Administrative Agent:

                 (i)   if such Bank claims an exemption from, or a reduction of,
     withholding tax under a United States tax treaty, properly completed IRS
     Forms 1001 and W-8 (or any successor form) before the payment of any
     interest in the first calendar year and before the payment of any interest
     in each third succeeding calendar year during which interest may be paid
     under this Agreement;

                 (ii)  if such Bank claims that interest paid under this
     Agreement is exempt from United States withholding tax because it is
     effectively connected with a United States trade or business of such Bank,
     two properly completed and executed copies of IRS Form 4224 (or any
     successor form) before the payment of any interest is due in the first
     taxable year of such Bank and in each succeeding taxable year of such Bank
     during which interest may be paid under this Agreement, and IRS Form W-9
     (or any successor form); and

                 (iii) such other form or forms as may be required under the
     Code or other laws of the United States as a condition to exemption from,
     or reduction of, United States withholding tax.

            Such Bank agrees to promptly notify the Company and the
Administrative Agent of any change in circumstances which would modify or render
invalid any claimed exemption or reduction.

            (b)  If any Bank claims exemption from, or reduction of, withholding
tax under a United States tax treaty by providing IRS Form 1001 (or any
successor form) and such Bank sells, assigns, grants a participation in, or
otherwise transfers all or part of the Obligations of the Company to such Bank,
such Bank agrees to promptly notify the Company and the Administrative Agent of
the percentage amount in which it is no longer the beneficial owner of
Obligations of the Company to such Bank. To the extent of such percentage
amount, the Company and the Administrative Agent will treat such Bank's IRS Form
1001 (or any successor form) as no longer valid.

            (c)  If any Bank claiming exemption from United States withholding
tax by filing IRS Form 4224 (or any successor form) with the Company and the
Administrative Agent sells, assigns, grants a participation in, or otherwise
transfers all or part of the Obligations of the Company to such Bank, such Bank
agrees to undertake sole responsibility for complying with the withholding tax
requirements imposed by Sections 1441 and 1442 of the Code.

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<Page>

            (d)  If any Bank realizes a reduction in the applicable withholding
tax, the Company and the Administrative Agent may withhold from any interest
payment to such Bank an amount equivalent to the applicable withholding tax
after taking into account such reduction. If the forms or other documentation
required by subsection (a) of this Section are not delivered to the Company and
the Administrative Agent, then the Company and the Administrative Agent may
withhold from any interest payment to such Bank not providing such forms or
other documentation an amount equivalent to the applicable withholding tax.

            (e)  If the IRS or any other Governmental Authority of the United
States or other jurisdiction asserts a claim that the Company and the
Administrative Agent did not properly withhold tax from amounts paid to or for
the account of any Bank (because the appropriate form was not delivered, was not
properly executed, or because such Bank failed to notify the Company and the
Administrative Agent of a change in circumstances which rendered the exemption
from, or reduction of, withholding tax ineffective, or for any other reason)
such Bank shall indemnify the Company and the Administrative Agent fully for all
amounts paid, directly or indirectly, by the Company and the Administrative
Agent as tax or otherwise, including penalties and interest, and including any
taxes imposed by any jurisdiction on the amounts payable to the Company and the
Administrative Agent under this Section, together with all costs and expenses
(including Attorney Costs but without duplication for internal and external
counsel). The obligation of the Banks under this subsection shall survive the
payment of all Obligations and the resignation or replacement of the
Administrative Agent.

     9.11   OTHER AGENTS. None of the Banks identified on the facing page or
signature pages of this Agreement as a "Co-Agent", "Documentation Agent" or
"Co-Administrative Agent" shall have any right, power, obligation, liability,
responsibility or duty under this Agreement other than those applicable to all
Banks as such. Without limiting the foregoing, none of the Banks so identified
as "Co-Agent", "Documentation Agent" or "Co-Administrative Agent" shall have or
be deemed to have any fiduciary relationship with any Bank. Each Bank
acknowledges that it has not relied, and will not rely, on any of the Banks so
identified in deciding to enter into this Agreement or in taking or not taking
action hereunder.

                                    ARTICLE X

                                  MISCELLANEOUS

     10.1   AMENDMENTS AND WAIVERS. No amendment or waiver of any provision of
this Agreement or any other Loan Document, and no

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consent with respect to any departure by the Company therefrom, shall be
effective unless the same shall be in writing and signed by the Majority Banks
(or by the Syndication Agent at the written request of the Majority Banks) and
the Company and acknowledged by the Agents, and then any such waiver and consent
shall be effective only in the specific instance and for the specific purpose
for which given; PROVIDED, HOWEVER, that no such waiver, amendment, or consent
shall, unless in writing and signed by all the Banks and the Company and
acknowledged by the Syndication Agent, do any of the following:

            (a)  increase or extend the Commitment of any Bank (or reinstate any
Commitment terminated pursuant to subsection 8.2(a)) except as provided in
Section 2.16, unless such Bank has consented thereto in writing;

            (b)  postpone or delay any date fixed by this Agreement or any other
Loan Document for any payment of principal, interest, fees or other amounts due
to the Banks (or any of them) hereunder or under any other Loan Document
including, without limitation, any date fixed for a mandatory prepayment or a
mandatory reduction in the aggregate Commitments;

            (c)  reduce the principal of, or the rate of interest specified
herein on any Loan, or (subject to clause (ii) below) any fees or other amounts
payable hereunder or under any other Loan Document;

            (d)  change the percentage of the Commitments or of the aggregate
unpaid principal amount of the Loans which is required for the Banks or any of
them to take any action hereunder;

            (e)  release all or substantially all the collateral securing the
Obligations; or

            (f)  amend this Section, or Sections 2.15, 6.9, 10.7, or any
provision herein providing for consent or other action by all Banks;

and, PROVIDED FURTHER, that (i) no amendment, waiver or consent shall, unless in
writing and signed by an Agent in addition to the Majority Banks or all the
Banks, as the case may be, and the Company, affect the rights or duties of such
Agent under this Agreement or any other Loan Document, and (ii) the Fee Letters
may be amended, or rights or privileges thereunder waived, in a writing executed
by the parties thereto.

     10.2   NOTICES.

            (a)  All notices, requests and other communications shall be in
writing (including, unless the context expressly

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otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Company by facsimile (i) shall be immediately confirmed by a
telephone call to the recipient at the number specified on SCHEDULE 10.2, and
(ii) shall be followed promptly by delivery of a hard copy original thereof) and
mailed, faxed or delivered, to the address or facsimile number specified for
notices on SCHEDULE 10.2; or, as directed to the Company or the applicable
Agent, to such other address as shall be designated by such party in a written
notice to the other parties, and as directed to any other party, at such other
address as shall be designated by such party in a written notice to the Company
and such Agent.

            (b)  All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when delivered for
overnight (next-day) delivery, or transmitted in legible form by facsimile
machine, respectively, or if mailed, upon the third Business Day after the date
deposited into the U.S. mail, or if delivered, upon delivery; except that
notices pursuant to Article II or IX shall not be effective until actually
received by the Administrative Agent.

            (c)  Any agreement of the Agents and the Banks herein to receive
certain notices by telephone or facsimile is solely for the convenience and at
the request of the Company. The Agents and the Banks shall be entitled to rely
on the authority of any Person purporting to be a Person authorized by the
Company to give such notice and the Agents and the Banks shall not have any
liability to the Company or other Person on account of any action taken or not
taken by the Agents or the Banks in reliance upon such telephonic or facsimile
notice. The obligation of the Company to repay the Loans shall not be affected
in any way or to any extent by any failure by the Agents and the Banks to
receive written confirmation of any telephonic or facsimile notice or the
receipt by the Agents and the Banks of a confirmation which is at variance with
the terms understood by the Agents and the Banks to be contained in the
telephonic or facsimile notice.

     10.3   NO WAIVER; CUMULATIVE REMEDIES. No failure to exercise and no delay
in exercising, on the part of any Agent or Bank, any right, remedy, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any right, remedy, power or privilege hereunder preclude any
other or further exercise thereof or the exercise of any other right, remedy,
power or privilege.

     10.4   COSTS AND EXPENSES. The Company shall:

            (a)  whether or not the transactions contemplated hereby are
consummated, pay or reimburse BofA and State Street (including in its capacity
as an Agent) within five Business Days

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after demand for all costs and expenses incurred by BofA and State Street
(including in its capacity as an Agent) in connection with the development,
preparation, delivery, administration and execution of, and any amendment,
supplement, waiver or modification to (in each case, whether or not
consummated), this Agreement, any Loan Document and any other documents prepared
in connection herewith or therewith, and the consummation of the transactions
contemplated hereby and thereby, including reasonable Attorney Costs (but
without duplication for internal and external counsel) incurred by BofA and
State Street (including in its capacity as an Agent) with respect thereto; and

            (b)  pay or reimburse each Agent, the Arranger and each Bank within
five Business Days after demand (subject to subsection 4.1(a)(v)) for all costs
and expenses (including Attorney Costs but without duplication for internal and
external counsel) incurred by them in connection with the enforcement, attempted
enforcement, or preservation of any rights or remedies under this Agreement or
any other Loan Document during the existence of an Event of Default or after
acceleration of the Loans (including in connection with any "workout" or
restructuring regarding the Loans, and including in any Insolvency Proceeding or
appellate proceeding).

     10.5   INDEMNITY. Whether or not the transactions contemplated hereby are
consummated, the Company shall indemnify and hold the Agent-Related Persons, and
each Bank and each of its respective officers, directors, employees, counsel,
agents and attorneys-in-fact (each, an "INDEMNIFIED PERSON") harmless from and
against any and all liabilities, obligations, losses, damages, penalties,
actions, judgments, suits, costs, charges, expenses and disbursements (including
Attorney Costs but without duplication for internal and external counsel) of any
kind or nature whatsoever which may at any time (including at any time following
repayment of the Loans and the termination, resignation or replacement of any
Agent or replacement of any Bank) be imposed on, incurred by or asserted against
any such Person in any way relating to or arising out of this Agreement, any
other Loan Document or any other document contemplated by or referred to herein,
or the transactions contemplated hereby, or any action taken or omitted by any
such Person under or in connection with any of the foregoing, including with
respect to any investigation, litigation or proceeding (including any Insolvency
Proceeding or appellate proceeding) related to or arising out of this Agreement
or any other Loan Document or the Loans or the use of the proceeds thereof,
whether or not any Indemnified Person is a party thereto (all the foregoing,
collectively, the "INDEMNIFIED LIABILITIES"); PROVIDED, that the Company shall
have no obligation hereunder to any Indemnified Person with respect to
Indemnified Liabilities resulting solely from the bad faith, gross negligence or
willful misconduct of such Indemnified Person

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or the reckless disregard by such Indemnified Person of his duties under this
Agreement. The agreements in this Section shall survive payment of all other
Obligations. A Person seeking indemnification from the Company pursuant to this
Agreement shall give prompt notice to the Company of any claim in respect of
which indemnification may be sought and shall provide to the Company a written
affirmation of entitlement to indemnification.

     10.6   PAYMENTS SET ASIDE. To the extent that the Company makes a payment
to an Agent or the Banks, or an Agent or the Banks exercise their right of
set-off, and such payment or the proceeds of such set-off or any part thereof
are subsequently invalidated, declared to be fraudulent or preferential, set
aside or required (including pursuant to any settlement entered into by an Agent
or such Bank in its discretion) to be repaid to a trustee, receiver or any other
party, in connection with any Insolvency Proceeding or otherwise, then (a) to
the extent of such recovery, the obligation or part thereof originally intended
to be satisfied shall be revived and continued in full force and effect as if
such payment had not been made or such set-off had not occurred, and (b) each
Bank severally agrees to pay to such Agent upon demand its pro rata or other
applicable share of any amount so recovered from or repaid by such Agent.

     10.7   SUCCESSORS AND ASSIGNS. The provisions of this Agreement shall be
binding upon and inure to the benefit of the parties hereto and their respective
successors and assigns, except that the Company may not assign or transfer any
of its rights or obligations under this Agreement without the prior written
consent of the Syndication Agent and each Bank.

     10.8   ASSIGNMENTS, PARTICIPATIONS, ETC.

            (a)  Any Bank may, with the written consent of the Company at all
times other than during the existence of an Event of Default and the Syndication
Agent, which consents shall not be unreasonably withheld, at any time assign and
delegate to one or more Eligible Assignees (provided that no written consent of
the Company or the Syndication Agent shall be required in connection with any
assignment and delegation by a Bank to an Eligible Assignee that is an Affiliate
of such Bank) (each an "ASSIGNEE") all, or any ratable part of all, of the
Loans, the Commitment and the other rights and obligations of such Bank
hereunder, in a minimum amount of $5,000,000; PROVIDED, HOWEVER, that the
Company and the Agents may continue to deal solely and directly with such Bank
in connection with the interest so assigned to an Assignee until (i) written
notice of such assignment, together with payment instructions, addresses and
related information with respect to the Assignee, shall have been given to the
Company and the Agents by such Bank and the Assignee; (ii) such Bank and its
Assignee shall have delivered to the Company and the Syndication

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Agent an Assignment and Acceptance in the form of EXHIBIT E ("ASSIGNMENT AND
ACCEPTANCE") and (iii) the assignor Bank or Assignee has paid to the Syndication
Agent and the Administrative Agent a processing fee of $1,500 each except where
the Assignee is an affiliate of the assigning Bank.

            (b)  From and after the date that the Syndication Agent notifies the
assignor Bank that it has received (and provided its consent with respect to) an
executed Assignment and Acceptance and payment of the above-referenced
processing fee, (i) the Assignee thereunder shall be a party hereto and, to the
extent that rights and obligations hereunder have been assigned to it pursuant
to such Assignment and Acceptance, shall have the rights and obligations of a
Bank under the Loan Documents, and (ii) the assignor Bank shall, to the extent
that rights and obligations hereunder and under the other Loan Documents have
been assigned by it pursuant to such Assignment and Acceptance, relinquish its
rights and be released from its obligations under the Loan Documents.

            (c)  Within five Business Days after its receipt of notice by the
Syndication Agent that it has received an executed Assignment and Acceptance and
payment of the processing fee, (and provided that it consents to such assignment
in accordance with subsection 10.8(a)), the Company shall execute and deliver to
the Syndication Agent, new Notes evidencing such Assignee's assigned Loans and
Commitment and, if the assignor Bank has retained a portion of its Loans and its
Commitment, replacement Notes in the principal amount of the Loans retained by
the assignor Bank (such Notes to be in exchange for, but not in payment of, the
Notes held by such Bank). Immediately upon each Assignee's making its processing
fee payment under the Assignment and Acceptance, this Agreement shall be deemed
to be amended to the extent, but only to the extent, necessary to reflect the
addition of the Assignee and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce such
Commitments of the assigning Bank by the amount the Commitment assigned.

            (d)  Any Bank may at any time sell to one or more commercial banks
or other Persons not Affiliates of the Company (a "PARTICIPANT") (other than
investment companies) participating interests in any Loans, the Commitment of
that Bank and the other interests of that Bank (the "Originating Bank")
hereunder and under the other Loan Documents; PROVIDED, HOWEVER, that (i) the
originating Bank's obligations under this Agreement shall remain unchanged, (ii)
the originating Bank shall remain solely responsible for the performance of such
obligations, (iii) the Company and the Agents shall continue to deal solely and
directly with the originating Bank in connection with the originating Bank's
rights and obligations under this Agreement and the other

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Loan Documents, and (iv) no Bank shall transfer or grant any participating
interest under which the Participant has rights to approve any amendment to, or
any consent or waiver with respect to, this Agreement or any other Loan
Document, except to the extent such amendment, consent or waiver would require
unanimous consent of the Banks as described in the first proviso to Section
10.1. In the case of any such participation, the Participant shall be entitled
to the benefit of Sections 3.1, 3.3 and 10.5 as though it were also a Bank
hereunder, but shall not have any rights under this Agreement, or any of the
other Loan Documents, and all amounts payable by the Company hereunder shall be
determined as if such Bank had not sold such participation; except that, if
amounts outstanding under this Agreement are due and unpaid, or shall have been
declared or shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this Agreement to
the same extent as if the amount of its participating interest were owing
directly to it as a Bank under this Agreement.

            (e)  Each Bank agrees to take normal and reasonable precautions and
exercise due care to maintain the confidentiality of all information identified
as "confidential" or "secret" by the Company and provided to it by the Company,
or by an Agent on the Company's behalf, under this Agreement or any other Loan
Document, and neither it nor any of its Affiliates shall use any such
information other than in connection with or in enforcement of this Agreement
and the other Loan Documents; except to the extent such information (i) was or
becomes generally available to the public other than as a result of disclosure
by the Bank, or (ii) was or becomes available on a non-confidential basis from a
source other than the Company, provided that such source is not bound by a
confidentiality agreement with the Company known to the Bank; PROVIDED, HOWEVER,
that any Bank may disclose such information (A) at the request or pursuant to
any requirement of any Governmental Authority to which the Bank is subject or in
connection with an examination of such Bank by any such authority; (B) pursuant
to subpoena or other court process; (C) when required to do so in accordance
with the provisions of any applicable Requirement of Law; (D) to the extent
reasonably required in connection with any litigation or proceeding to which any
Agent, any Bank or their respective Affiliates may be party; (E) to the extent
reasonably required in connection with the exercise of any remedy hereunder or
under any other Loan Document; (F) to such Bank's independent auditors and other
professional advisors; (G) to any Affiliate of such Bank, or to any Participant
or Assignee, actual or potential, provided that such Affiliate, Participant or
Assignee agrees to keep such information confidential to the same extent
required of the Banks hereunder, and (H) as to any Bank, as expressly permitted
under

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the terms of any other document or agreement regarding confidentiality to which
the Company is party or is deemed party with such Bank.

            (f)  Notwithstanding any other provision in this Agreement, any Bank
may at any time create a security interest in, or pledge, all or any portion of
its rights under and interest in this Agreement and any Note held by it in favor
of any Federal Reserve Bank in accordance with Regulation A of the FRB or U.S.
Treasury Regulation 31 CFR Section 203.14, and such Federal Reserve Bank may
enforce such pledge or security interest in any manner permitted under
applicable law.

            (g)  Any Bank may transfer and carry all or A portion of its
Commitment and the Loans at the time held by it at, to or for the account of any
domestic or foreign branch office of such Bank, and such transfer shall not be
deemed an assignment or participation pursuant to this Section 10.8; provided,
however, that such Bank shall not be entitled to receive any amount payable
pursuant to Section 3.3 hereof to the extent that such amount would not have
been payable but for the transfer referred to above; provided, further, that
such Bank shall have delivered to the Syndication Agent revised information with
respect to it as set forth in Section 10.2.

     10.9   SET-OFF. In addition to any rights and remedies of the Banks
provided by law, if an Event of Default exists or the Loans have been
accelerated, each Bank is authorized at any time and from time to time, without
prior notice to the Company, any such notice being waived by the Company to the
fullest extent permitted by law, to set off and apply any and all deposits
(general or special, time or demand, provisional or final) at any time held by,
and other indebtedness at any time owing by, such Bank to or for the credit or
the account of the Company against any and all Obligations owing to such Bank,
now or hereafter existing, irrespective of whether or not any Agent or such Bank
shall have made demand under this Agreement or any Loan Document and although
such Obligations may be contingent or unmatured. Each Bank agrees promptly to
notify the Company and the Agents after any such set-off and application made by
such Bank; PROVIDED, HOWEVER, that the failure to give such notice shall not
affect the validity of such set-off and application.

     Without limiting the foregoing, upon the occurrence and during the
continuance of any Event of Default, the Administrative Agent shall have a right
of set-off with respect to the Deposit Account. To the extent the available cash
in the Deposit Account is insufficient to repay Loans due the Banks, the Company
authorizes the Administrative Agent in its capacity as custodian to dispose of
the Company's assets as selected by the Investment Adviser to the extent
necessary to repay all amounts

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due to the Banks. All payments so received by the Administrative Agent with
respect to the Loans shall be applied first to interest and then to principal.

     10.10  NOTIFICATION OF ADDRESSES, LENDING OFFICES, ETC. Each Bank shall
notify the Agents in writing of any changes in the address to which notices to
the Bank should be directed, of addresses of any Lending Office, of payment
instructions in respect of all payments to be made to it hereunder and of such
other administrative information as the Agents shall reasonably request.

     10.11  COUNTERPARTS. This Agreement may be executed in any number of
separate counterparts, each of which, when so executed, shall be deemed an
original, and all of said counterparts taken together shall be deemed to
constitute but one and the same instrument.

     10.12  SEVERABILITY. The illegality or unenforceability of any provision of
this Agreement or any instrument or agreement required hereunder shall not in
any way affect or impair the legality or enforceability of the remaining
provisions of this Agreement or any instrument or agreement required hereunder.

     10.13  NO THIRD PARTIES BENEFITED. This Agreement is made and entered into
for the sole protection and legal benefit of the Company, the Banks, the Agents
and the Agent-Related Persons, and their permitted successors and assigns, and
no other Person shall be a direct or indirect legal beneficiary of, or have any
direct or indirect cause of action or claim in connection with, this Agreement
or any of the other Loan Documents.

     10.14  GOVERNING LAW AND JURISDICTION.

            (a)  THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS SHALL BE GOVERNED
BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK; PROVIDED
THAT THE AGENTS AND THE BANKS SHALL RETAIN ALL RIGHTS ARISING UNDER FEDERAL LAW.

            (b)  ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT
OR ANY OTHER LOAN DOCUMENT MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK
OR OF THE UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK, AND BY EXECUTION
AND DELIVERY OF THIS AGREEMENT, EACH OF THE COMPANY, THE AGENTS AND THE BANKS
CONSENTS, FOR ITSELF AND IN RESPECT OF ITS PROPERTY, TO THE NONEXCLUSIVE
JURISDICTION OF THOSE COURTS. EACH OF THE COMPANY, THE AGENTS AND THE BANKS
IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY ACTION OR PROCEEDING IN SUCH JURISDICTION IN RESPECT
OF THIS AGREEMENT OR ANY OTHER LOAN

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<Page>

DOCUMENT. THE COMPANY, THE AGENTS AND THE BANKS EACH WAIVE PERSONAL SERVICE OF
ANY SUMMONS, COMPLAINT OR OTHER PROCESS, WHICH MAY BE MADE BY ANY OTHER MEANS
PERMITTED BY NEW YORK LAW.

     10.15  WAIVER OF JURY TRIAL. THE COMPANY, THE BANKS AND THE AGENTS EACH
WAIVE THEIR RESPECTIVE RIGHTS TO A TRIAL BY JURY OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF OR RELATED TO THIS AGREEMENT, THE OTHER LOAN
DOCUMENTS, OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY, IN ANY ACTION,
PROCEEDING OR OTHER LITIGATION OF ANY TYPE BROUGHT BY ANY OF THE PARTIES AGAINST
ANY OTHER PARTY OR ANY AGENT-RELATED PERSON, PARTICIPANT OR ASSIGNEE, WHETHER
WITH RESPECT TO CONTRACT CLAIMS, TORT CLAIMS, OR OTHERWISE. THE COMPANY, THE
BANKS AND THE AGENTS EACH AGREE THAT ANY SUCH CLAIM OR CAUSE OF ACTION SHALL BE
TRIED BY A COURT TRIAL WITHOUT A JURY. WITHOUT LIMITING THE FOREGOING, THE
PARTIES FURTHER AGREE THAT THEIR RESPECTIVE RIGHT TO A TRIAL BY JURY IS WAIVED
BY OPERATION OF THIS SECTION AS TO ANY ACTION, COUNTERCLAIM OR OTHER PROCEEDING
WHICH SEEKS, IN WHOLE OR IN PART, TO CHALLENGE THE VALIDITY OR ENFORCEABILITY OF
THIS AGREEMENT OR THE OTHER LOAN DOCUMENTS OR ANY PROVISION HEREOF OR THEREOF.
THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS OR
MODIFICATIONS TO THIS AGREEMENT AND THE OTHER LOAN DOCUMENTS.

     10.16  ENTIRE AGREEMENT. This Agreement, together with the other Loan
Documents, embodies the entire agreement and understanding among the Company,
the Banks and the Agents, and supersedes all prior or contemporaneous agreements
and understandings of such Persons, verbal or written, relating to the subject
matter hereof and thereof.

     SECTION 10.17     OFFICERS, TRUSTEES AND SHAREHOLDERS OF THE COMPANY NOT
BOUND. Each Bank and Agent agrees that this Agreement has been executed by an
officer of the Company on behalf of the Company and not individually. Each Bank
and Agent agrees that the Obligations of the Company hereunder are not binding
on the officers, trustees or shareholders of the Company, but are only binding
upon the Company and its assets and property. The liability of the officers,
trustees and shareholders of the Company is limited by the Trust Agreement,
which is on file with the Secretary of State of The Commonwealth of
Massachusetts.

     SECTION 10.18     CONTINUING EFFECTIVENESS, ETC. After the Refinancing
Date, all references in the Loan Documents or other similar documents to "Credit
Agreement" or words of like import shall refer to this Agreement. The execution,
delivery and effectiveness of this Agreement shall not, except as expressly
provided herein, operate as a waiver of any right, power or remedy of the Banks
under any of the other Loan Documents, nor constitute a waiver of any provision
of the Loan Documents.

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     SECTION 10.19     FACSIMILE EXECUTION. One or more executed counterparts of
this Agreement or any document or instrument related hereto may be delivered by
facsimile, with the intention that such counterparts have the same effect as an
original executed counterpart hereof or thereof. Any party hereto delivering an
executed counterpart of this Agreement or any related document or instrument by
facsimile, shall promptly provide an original of such executed counterpart to
the Syndication Bank.

                                       74
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed by their proper and duly authorized officers as of the day and
year first above written.


                                          PILGRIM AMERICA PRIME RATE TRUST


                                          By:   /s/ Daniel A. Norman
                                             -----------------------------
                                          Title:    DANIEL A. NORMAN
                                                --------------------------
                                                  SENIOR VICE PRESIDENT

                                       S-1
<Page>

                                          BANK OF AMERICA NATIONAL TRUST
                                          AND SAVINGS ASSOCIATION, as
                                          Syndication Agent


                                          By:   /s/ John G. Hayes
                                             -----------------------------
                                          Title:   JOHN G. HAYES
                                                --------------------------
                                                   VICE PRESIDENT

                                       S-2
<Page>

                                          STATE STREET BANK AND TRUST COMPANY
                                          as Administrative Agent


                                          By:   /s/ [ILLEGIBLE]
                                             -----------------------------
                                          Title:   Vice President
                                                --------------------------

                                       S-3
<Page>

                                          DEUTSCHE BANK A.G., New York
                                          branch, as Documentation Agent


                                          By:   /s/ Peter L. Bassler
                                             -----------------------------
                                          Title:    Peter L. Bassler
                                                --------------------------
                                                     Vice President


                                          By:   /s/ Eckhard Osenberg
                                             -----------------------------
                                          Title:    Eckhard Osenberg
                                                --------------------------
                                                     Vice President

                                       S-4
<Page>

                                          COMMERZBANK A.G., Los Angeles
                                          Branch, as Co-Agent and as a Bank


                                          By:   /s/ Christian Jagenberg
                                             -----------------------------
                                          Title:   Christian Jagenberg
                                                --------------------------
                                                     SVP and Manager


                                          By:   /s/ Steven F. Larsen
                                             -----------------------------
                                          Title:   Steven F. Larsen
                                                --------------------------
                                                     Vice President

                                       S-5
<Page>

                                          BANK OF AMERICA NATIONAL TRUST AND
                                          SAVINGS ASSOCIATION, as a Bank


                                          By:   /s/ John G. Hayes
                                             -----------------------------
                                          Title:   JOHN G. HAYES
                                                --------------------------
                                                   VICE PRESIDENT

                                       S-6
<Page>

                                          STATE STREET BANK AND TRUST
                                          COMPANY, as a Bank


                                          By:   /s/ [ILLEGIBLE]
                                             -----------------------------
                                          Title:   Vice President
                                                --------------------------

                                       S-7
<Page>

                                          DEUTSCHE BANK A.G., New York and/or
                                          Cayman Islands branches, as a Bank


                                          By:   /s/ Peter L. Bassler
                                             -----------------------------
                                          Title:   Peter L. Bassler
                                                --------------------------
                                                    Vice President


                                          By:   /s/ Eckhard Osenberg
                                             -----------------------------
                                          Title:    Eckhard Osenberg
                                                --------------------------
                                                     Vice President

                                       S-8
<Page>

                                          THE DAI-ICHI KANGYO BANK, LTD.,
                                          Chicago Branch, as a Bank


                                          By: /s/ Nobuyasu Fukatsu
                                             --------------------------------
                                          Title: Vice President
                                                -----------------------------
                                          Name: Nobuyasu Fukatsu
                                                -----------------------------

                                       S-9
<Page>

                                          BANK HAPOALIM B.M., as a Bank


                                          By:      /s/ [ILLEGIBLE]
                                             -----------------------------
                                          Title:    Vice President
                                                --------------------------


                                          By:      /s/ [ILLEGIBLE]
                                             -----------------------------
                                          Title:  Vice President and [ILLEGIBLE]
                                                --------------------------------

                                      S-10
<Page>

                                          FIRST UNION NATIONAL BANK,
                                          as a Bank


                                          By:      /s/ [ILLEGIBLE]
                                             -----------------------------
                                          Title:         SVP
                                                --------------------------

                                      S-11
<Page>

                                          BANQUE NATIONALE DE PARIS, as a
                                          Bank


                                          By:  /s/ William Shaheen
                                             -----------------------------
                                          Title:    WILLIAM SHAHEEN
                                                --------------------------
                                                     Vice President


                                               /s/ Laurent Vanderzyppe
                                               -----------------------
                                                 LAURENT VANDERZYPPE
                                                   Vice President

                                      S-12
<Page>

                                  SCHEDULE 2.1

                                   COMMITMENTS
                               AND PRO RATA SHARES

<Table>
<Caption>
                                                       PRO RATA
             BANK                    COMMITMENT         SHARE
             ----                    ----------        --------
<S>                                <C>                  <C>
Bank of America National           $   40,000,000         20%
  Trust and Savings Association

State Street Bank and Trust
  Company                          $   40,000,000         20%

Deutsche Bank AG                   $   25,000,000       12.5%

Commerzbank AG                     $   25,000,000       12.5%

Bank Hapoalim B.M.                 $   20,000,000         10%

Banque Nationale de Paris          $   20,000,000         10%

The Dai-Ichi Kangyo Bank, Ltd.     $   20,000,000         10%

First Union National Bank          $   10,000,000          5%


        TOTAL                      $  200,000,000        100%
</Table>

<Page>

                                  SCHEDULE 7.1

                                 PERMITTED LIENS

1.   Liens in favor of a Custodian pursuant to a Custody Agreement.

2.   Lien arising from the GE Capital Facility.

<Page>

                                  SCHEDULE 10.2

                      OFFSHORE AND DOMESTIC LENDING OFFICES
                            AND ADDRESSES FOR NOTICES

PILGRIM AMERICA PRIME RATE TRUST

Address:   Two Renaissance Square
           40 North Central Avenue
           Suite 1200
           Phoenix, AZ 85004-4424
Attention:   Dan Norman, Senior Vice President
Telephone:   (602) 417-8112
Facsimile:   (602) 417-8327


BANK OF AMERICA NATIONAL TRUST
AND SAVINGS ASSOCIATION,
  as Syndication Agent

Bank of America National Trust
  and Savings Association
Address:   231 South LaSalle Street
           Chicago, IL 60697
Attention:   Dawn Lenza
Telephone:   (312) 828-4184
Facsimile:   (312) 974-9524


STATE STREET BANK AND TRUST COMPANY,
  as Administrative Agent

State Street Bank and Trust Company
Address:   225 Franklin Street
           Mail Code A4N
           Boston, MA 02110
Attention:   David Cox
Telephone:   (617) 985-0973
Facsimile:   (617) 537-5194


DEUTSCHE BANK AG,
  New York and/or
  Cayman Islands Branches,
  as Documentation Agent

Deutsche Bank AG
Address:   31 West 52nd Street
           New York, New York 10019
Attention:   Lynn Sweeney
Telephone:   (212) 474-8613
Facsimile:   (212) 474-7879

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(V)
<SEQUENCE>25
<FILENAME>a2138029zex-99_kv.txt
<DESCRIPTION>EX 99.(K)(V)
<TEXT>
<Page>

                                                               Exhibit 99.(k)(v)

                            AUCTION AGENCY AGREEMENT

        This Auction Agency Agreement (this "Agreement"), dated as of November
16, 2000, is between Pilgrim Prime Rate Trust (the "Trust") and Bankers Trust
Company, a New York banking corporation.

        The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated as Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate (as defined below).

        The Trust desires that Bankers Trust Company perform certain duties as
agent in connection with each Auction of Preferred Shares (in such capacity, the
"Auction Agent"), and as the transfer agent, registrar, dividend paying agent
and redemption agent with respect to the Preferred Shares (in such capacity, the
"Paying Agent"), upon the terms and conditions of this Agreement, and the Trust
hereby appoints Bankers Trust Company as said Auction Agent and Paying Agent in
accordance with those terms and conditions (hereinafter generally referred to as
the "Auction Agent," except in Sections 3 and 4 below).

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Trust and the Auction Agent agree as follows:

I.      DEFINITIONS AND RULES OF CONSTRUCTION.

        1.1.    TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

                Capitalized terms not defined herein shall have the respective
meanings specified in the Certificate.

        1.2.    TERMS DEFINED HEREIN.

                As used herein, the following terms shall have the following
meanings, unless the context otherwise requires:

                (a)     "Agent Member" of any Person shall mean such Person's
agent member of the Securities Depository that will act on behalf of a Bidder.

                (b)     "Auction" shall have the meaning specified in Section
2.1 hereof.

                (c)     "Auction Procedures" shall mean the Auction Procedures
that are set forth in Part II of the Certificate.

                (d)     "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer or employee of its Corporate Trust and Agency
Group designated as an "Authorized Officer" for purposes hereof in a written
communication from the Auction Agent to the Trust.

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                        AUCTION AGENCY AGREEMENT

                (e)     "Broker-Dealer Agreement" shall mean each agreement
between the Auction Agent and a Broker-Dealer substantially in the form attached
hereto as Exhibit A.

                (f)     "Certificate" shall mean the Certificate of Designation
for Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

                (g)     "Holder" shall be a holder of record of one or more
Preferred Shares, listed as such in the share register maintained by the Paying
Agent pursuant to Section 4.6 hereof.

                (h)     "Interest Equivalent" means a yield on a 360-day basis
of a discount basis security which is equal to the yield on an equivalent
interest-bearing security.

                (i)     "Trust Officer" shall mean the Chairman, the President,
each Vice President (whether or not designated by a number or word or words
added before or after the title "Vice President"), the Secretary, the Treasurer,
each Assistant Secretary and each Assistant Treasurer of the Trust and every
other officer or employee of the Trust designated as a "Trust Officer" for
purposes hereof in a notice from the Trust to the Auction Agent.

        1.3.    RULES OF CONSTRUCTION.

                Unless the context or use indicates another or different meaning
or intent, the following rules shall apply to the construction of this
Agreement:

                (a)     Words importing the singular number shall include the
plural number and vice versa.

                (b)     The captions and headings herein are solely for
convenience of reference and shall not constitute a part of this Agreement nor
shall they affect its meaning, construction or effect.

                (c)     The words "hereof," "herein," "hereto," and other words
of similar import refer to this Agreement as a whole.

                (d)     All references herein to a particular time of day shall
be to New York City time.

II.     THE AUCTION.

        2.1.    PURPOSE; INCORPORATION BY REFERENCE OF AUCTION PROCEDURES.

                (a)     The Certificate provides that the Applicable Rate on
shares of each series of Preferred Shares, as the case may be, for each Dividend
Period therefor after the initial Dividend Period shall be the rate per annum
that a commercial bank, trust company or other financial institution appointed
by the Trust advises results from the implementation of the Auction Procedures.
The Board of Trustees of the Trust has adopted a resolution appointing Bankers
Trust Company as Auction Agent for purposes of the Auction Procedures. The
Auction

                                        2
<Page>

Agent hereby accepts such appointment and agrees that, on each Auction Date, it
shall follow the procedures set forth in this Section 2 and the Auction
Procedures for the purpose of determining the Applicable Rate for the Preferred
Shares for the next Dividend Period. Each periodic operation of such procedures
is hereinafter referred to as an "Auction."

                (b)     All of the provisions contained in the Auction
Procedures are incorporated herein by reference in their entirety and shall be
deemed to be a part hereof to the same extent as if such provisions were set
forth fully herein.

        2.2.    PREPARATION FOR EACH AUCTION: MAINTENANCE OF REGISTRY OF
                EXISTING HOLDERS.

                (a)     As of the date hereof, the Trust shall provide the
Auction Agent with a list of the Broker-Dealers previously approved by the
Auction Agent and shall cause to be delivered to the Auction Agent for execution
by the Auction Agent a Broker-Dealer Agreement signed by each such
Broker-Dealer. The Auction Agent shall keep such list current and accurate and
shall indicate thereon, or on a separate list, the identity of each Existing
Holder, if any, whose most recent Order was submitted by a Broker-Dealer on such
list and resulted in such Existing Holder continuing to hold or purchase
Preferred Shares. Not later than five Business Days prior to any Auction Date
for which any change in such list of Broker-Dealers is to be effective, the
Trust shall notify the Auction Agent in writing of such change and, if any such
change is the addition of a Broker-Dealer to such list, the Trust shall cause to
be delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by such Broker-Dealer. The Auction Agent shall
have entered into a Broker-Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.

                (b)     In the event that the Auction Date for any Auction shall
be changed after the Auction Agent shall have given the notice, the Auction
Agent, by such means as the Auction Agent deems practicable, shall give notice
of such change to the Broker-Dealers not later than the earlier of 9:15 A.M. on
the new Auction Date or 9:15 A.M. on the old Auction Date.

                (c)     The provisions contained in Section 4 of Part I of the
Certificate concerning Special Rate Periods and the notification of a Special
Rate Period will be followed by the Trust and, to the extent applicable, the
Auction Agent, and the provisions contained therein are incorporated herein by
reference in their entirety and shall be deemed to be a part of this Agreement
to the same extent as if such provisions were set forth fully herein.

                (d)     (i)     On each Auction Date, the Auction Agent shall
determine the initial dividend rate and the Maximum Rate. If the initial
dividend rate is not quoted on an interest basis but is quoted on a discount
basis, the Auction Agent shall convert the quoted rate to an Interest
Equivalent; or, if the rate obtained by the Auction Agent is not quoted on an
interest or discount basis, the Auction Agent shall convert the quoted rate to
an interest rate after consultation with the Trust as to the method of such
conversion. Not later than 9:30 A.M. on each Auction Date, the Auction Agent
shall notify the Trust and the Broker-Dealers of the initial dividend rate so
determined and of the Maximum Rate.

                        (ii)    If the initial dividend rate is the applicable
"AA" Financial Composite Commercial Paper Rate and such rate is to be based on
rates supplied by Commercial

                                        3
<Page>

Paper Dealers and one or more of the Commercial Paper Dealers shall not provide
a quotation for the determination of the applicable "AA" Financial Composite
Commercial Paper Rate, the Auction Agent immediately shall notify the Trust so
that the Trust can determine whether to select a substitute Commercial Paper
Dealer or substitute Commercial Paper Dealers to provide the quotation or
quotations not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers. The Trust promptly shall advise the Auction Agent of any such
selection. If the Trust does not select any such substitute Commercial Paper
Dealer or substitute Commercial Paper Dealers, then the rates shall be supplied
by the remaining Commercial Paper Dealer or Commercial Paper Dealers.

                (e)     (i)     The Auction Agent shall maintain a current
registry of the Existing Holders of the Preferred Shares for purposes of each
individual Auction. The Trust shall use commercially reasonable efforts to
provide or cause to be provided to the Auction Agent within ten Business Days
following the date of the Closing a list of the initial Existing Holders of
Preferred Shares, and the Broker-Dealer of each such Existing Holder through
which such Existing Holder purchased such shares. The Auction Agent may rely
upon, as evidence of the identities of the Existing Holders, such list, the
results of each Auction and notices from any Existing Holder, the Agent Member
of any Existing Holder or the Broker-Dealer of any Existing Holder with respect
to such Existing or Holder's transfer of any Preferred Shares to another Person.

                        (ii)    In the event of any partial redemption of
Preferred Shares, upon notice by the Trust to the Auction Agent of such partial
redemption, the Auction Agent promptly shall request the Securities Depository
to notify the Auction Agent of the identities of the Agent Members (and the
respective numbers of shares) from the accounts of which shares have been called
for redemption and the person or department at such Agent Member to contact
regarding such redemption. At least two Business Days prior to the Auction
preceding the date of redemption, the Auction Agent shall request each Agent
Member so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose shares are to be redeemed) the number
of Preferred Shares of each such Existing Holder, if any, to be redeemed by the
Trust, provided that the Auction Agent has been furnished with the name and
telephone number of a person or department at such Agent Member from which it is
to request such information. In the absence of receiving any such information
with respect to an Existing Holder, from such Existing Holder's Agent Member or
otherwise, the Auction Agent may continue to treat such Existing Holder as
having ownership of the number of Preferred Shares shown in the Auction Agent's
registry of Existing Holders.

                        (iii)   The Auction Agent shall register a transfer of
the ownership of Preferred Shares from an Existing Holder to another Existing
Holder, or to another Person if permitted by the Trust, only if (A) such
transfer is made pursuant to an Auction or (B) if such transfer is made other
than pursuant to an Auction, the Auction Agent has been notified of such
transfer in writing, in a notice substantially in the form of Exhibit B to the
Broker-Dealer Agreements, by such Existing Holder or by the Agent Member of such
Existing Holder. The Auction Agent is not required to accept any notice of
transfer delivered for an Auction unless it is received by the Auction Agent by
3:00 P.M. on the Business Day next preceding the applicable Auction Date. The
Auction Agent shall rescind a transfer made on the registry of the

                                        4
<Page>

Existing Holders of any Preferred Shares if the Auction Agent has been notified
in writing, in a notice substantially in the form of Exhibit C to the
Broker-Dealer Agreement, by the Agent Member or the Broker-Dealer of any Person
that (i) purchased any Preferred Shares and the seller failed to deliver such
shares or (ii) sold any Preferred Shares and the purchaser failed to make
payment to such Person upon delivery to the purchaser of such shares.

                (f)     The Auction Agent may request that the Broker Dealers,
as set forth in Section 3.2(b) of the Broker-Dealer Agreements, provide the
Auction Agent with a list of their respective customers that such Broker-Dealers
believe are Beneficial Owners of Preferred Shares. The Auction Agent shall keep
confidential any such information and shall not disclose any such information so
provided to any Person other than the relevant Broker-Dealer and the Trust,
provided that the Auction Agent reserves the right to disclose any such
information if it is advised by its counsel that its failure to do so would be
unlawful.

        2.3.    AUCTION SCHEDULE.

                The Auction Agent shall conduct Auctions every Tuesday and
Thursday in accordance with the schedule set forth below. Such schedule may be
changed by the Auction Agent with the consent of the Trust, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice of any such
change to each Broker-Dealer. Such notice shall be received prior to the first
Auction Date on which any such change shall be effective.

<Table>
<Caption>
TIME                            EVENT
- ----                            -----
<S>                             <C>
By 9:30 A.M.                    Auction Agent shall advise the Trust and the
                                Broker-Dealers of the initial dividend rate and
                                the Maximum Rate as set forth in Section
                                2.2(e)(i) hereof.
9:30 A.M. - 1:30 P.M.           Auction Agent shall assemble information
                                communicated to it by Broker-Dealers as provided
                                in Section 3(a) of Part II of the Certificate.
                                Submission deadline is 1:00 P.M.
Not earlier than 1:30 P.M.      Auction Agent shall make determinations pursuant
                                to Section 4(a) of Part II of the Certificate.
By approximately 3:00 P.M.      Auction Agent shall advise the Trust of the
                                results of the Auction as provided in Section
                                4(b) of Part II of the Certificate.
                                Submitted Bids and Submitted Sell Orders will be
                                accepted and rejected in whole or in part and
                                Preferred Shares will be allocated as provided
                                in Section 5 of Part II of the Certificate.
                                Auction Agent shall give notice of the Auction
                                results as set forth in Section 2.4 hereof.
</Table>

        2.4.    NOTICE OF AUCTION RESULTS.

                On each Auction Date, the Auction Agent shall notify
Broker-Dealers of the results of the Auction held on such date by telephone or
through the Auction Agent's Auction Processing System.

                                        5
<Page>

        2.5.    BROKER-DEALERS.

                (a)     Not later than 12:00 noon on each Auction Date, the
Trust shall pay to the Auction Agent in Federal Funds or similar same-day funds
an amount in cash equal to (i) in the case of any Auction Date immediately
preceding a 7-day Dividend Period, the product of (A) a fraction the numerator
of which is the number of days in such Dividend Period (calculated by counting
the first day of such Dividend Period but excluding the last day thereof) and
the denominator of which is 360, times (B) 1/4 of 1%, times (C) $25,000 times
(D) the sum of the aggregate number of outstanding Preferred Shares for which
the Auction is conducted and (ii) in the case of any Special Rate Period, the
amount determined by mutual consent of the Trust and the Broker-Dealers pursuant
to Section 3.5 of the Broker-Dealer Agreements. The Auction Agent shall apply
such moneys as set forth in Section 3.5 of the Broker-Dealer Agreements and
shall thereafter remit to the Trust any remaining funds paid to the Auction
Agent pursuant to this Section 2.5(a).

                (b)     The Trust shall not designate any Person to act as a
Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to
participate in Auctions through any Person other than a Broker-Dealer, without
the prior written approval of the Auction Agent, which approval shall not be
withheld unreasonably. The Trust may designate an Affiliate or Salomon Smith
Barney Inc. to act as a Broker-Dealer.

                (c)     The Auction Agent shall terminate any Broker-Dealer
Agreement as set forth therein if so directed by the Trust.

                (d)     Subject to Section 2.5(b) hereof, the Auction Agent from
time to time shall enter into such Broker-Dealer Agreements as the Trust shall
request.

                (e)     The Auction Agent shall maintain a list of
Broker-Dealers.

        2.6.    OWNERSHIP OF PREFERRED SHARES AND SUBMISSION OF BIDS BY THE
                TRUST AND ITS AFFILIATES.

                Neither the Trust nor any Affiliate of the Trust may submit any
Sell Order or Bid, directly or indirectly, in any Auction, except that an
Affiliate of the Trust that is a Broker-Dealer may submit a Sell Order or Bid on
behalf of a Beneficial Owner or a Potential Beneficial Owner. The Trust shall
notify the Auction Agent if the Trust or, to the best of the Trust's knowledge,
any Affiliate of the Trust becomes a Beneficial Owner of any Preferred Shares.
Any Preferred Shares redeemed, purchased or otherwise acquired (i) by the Trust
shall not be reissued, except in accordance with the requirements of the
Securities Act of 1933, as amended, or (ii) by its Affiliates shall not be
transferred (other than to the Trust). The Auction Agent shall have no duty or
liability with respect to enforcement of this Section 2.6.

        2.7.    ACCESS TO AND MAINTENANCE OF AUCTION RECORDS.

                The Auction Agent shall afford to the Trust, its agents,
independent public accountants and counsel, access at reasonable times during
normal business hours to review and make extracts or copies (at the Trust's sole
cost and expense) of all books, records, documents

                                        6
<Page>

and other information concerning the conduct and results of Auctions, provided
that any such agent, accountant or counsel shall furnish the Auction Agent with
a letter from the Trust requesting that the Auction Agent afford such person
access. The Auction Agent shall maintain records relating to any Auction for a
period of at least two years after such Auction (unless requested by the Trust
to maintain such records for such longer period not in excess of four years,
then for such longer period), and such records, in reasonable detail, shall
accurately and fairly reflect the actions taken by the Auction Agent hereunder.
The Trust agrees to keep confidential any information regarding the customers of
any Broker-Dealer received from the Auction Agent in connection with this
Agreement or any Auction, and shall not disclose such information or permit the
disclosure of such information without the prior written consent of the
applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section
2.7. The Trust reserves the right to disclose any such information if it is
advised by its counsel that its failure to do so would (i) be unlawful or (ii)
expose it to liability, unless the Broker-Dealer shall have offered
indemnification satisfactory to the Trust. Any such agent, accountant or
counsel, before having access to such information, shall agree to keep such
information confidential and not to disclose such information or permit
disclosure of such information without the prior written consent of the
applicable Broker-Dealer, provided that such agent, accountant or counsel may
reserve the right to disclose any such information if it is advised by its
counsel that its failure to do so would (i) be unlawful or (ii) expose it to
liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to such agent, accountant or counsel.

III.    THE AUCTION AGENT AS PAYING AGENT.

        3.1.    THE PAYING AGENT.

                The Board of Trustees of the Trust has adopted another
resolution appointing Bankers Trust Company as auction agent, transfer agent,
dividend paying agent and registrar for the Trust in connection with any
Preferred Shares (in such capacity, the "Paying Agent"). The Paying Agent hereby
accepts such appointment and agrees to act in accordance with its standard
procedures and the provisions of the Certificate which are specified herein with
respect to the Preferred Shares and as set forth in this Section 3.

        3.2.    THE TRUST'S NOTICES TO THE PAYING AGENT.

                Whenever any Preferred Shares are to be redeemed, the Trust
promptly shall deliver to the Paying Agent a Notice of Redemption, which will be
mailed by the Paying Agent to each Holder at least five Business Days prior to
the date such Notice of Redemption is required to be mailed pursuant to the
Certificate. The Paying Agent shall have no responsibility to confirm or verify
the accuracy of any such Notice.

        3.3.    THE TRUST TO PROVIDE FUNDS FOR DIVIDENDS AND REDEMPTIONS.

                (a)     Not later than noon on each Dividend Payment Date, the
Trust shall deposit with the Paying Agent an aggregate amount of Federal Funds
or similar same-day funds equal to the declared dividends to be paid to Holders
on such Dividend Payment Date, and shall

                                        7
<Page>

give the Paying Agent irrevocable instructions to apply such funds to the
payment of such dividends on such Dividend Payment Date.

                (b)     If the Trust shall give a Notice of Redemption, then by
noon of the date fixed for redemption, the Trust shall deposit in trust with the
Paying Agent an aggregate amount of Federal Funds or similar same-day funds
sufficient to redeem such Preferred Shares called for redemption and shall give
the Paying Agent irrevocable instructions and authority to pay the redemption
price to the Holders of Preferred Shares called for redemption upon surrender of
the certificate or certificates therefor.

        3.4.    DISBURSING DIVIDENDS AND REDEMPTION PRICE.

                After receipt of the Federal Funds or similar same-day funds and
instructions from the Trust described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
corresponding Dividend Payment Date, dividends on the Preferred Shares, and (ii)
on any date fixed for redemption, the redemption price of any Preferred Shares
called for redemption. The amount of dividends for any Dividend Period to be
paid by the Paying Agent to Holders will be determined by the Trust as set forth
in Section 2 of Part I of the Certificate. The redemption price to be paid by
the Paying Agent to the Holders of any Preferred Shares called for redemption
will be determined as set forth in Section 3 of Part I of the Certificate. The
Paying Agent shall have no duty to determine the redemption price and may rely
on the amount thereof set forth in a Notice of Redemption.

IV.     THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.

        4.1.    ORIGINAL ISSUE OF STOCK CERTIFICATES.

                On the Date of Original Issue for any share of Preferred Shares,
one certificate for each series of Preferred Shares shall be issued by the Trust
and registered in the name of Cede & Co., as nominee of the Securities
Depository, and countersigned by the Paying Agent.

        4.2.    REGISTRATION OF TRANSFER OR EXCHANGE OF SHARES.

                Except as provided in this Section 4.2, the shares of each
series of Preferred Shares shall be registered solely in the name of the
Securities Depository or its nominee. If the Securities Depository shall give
notice of its intention to resign as such, and if the Trust shall not have
selected a substitute Securities Depository acceptable to the Paying Agent prior
to such resignation, then upon such resignation the shares of each Series of
Preferred Shares, at the Trust's request, may be registered for transfer or
exchange, and new certificates thereupon shall be issued in the name of the
designated transferee or transferees, upon surrender of the old certificate in
form deemed by the Paying Agent to be properly endorsed for transfer with (a)
all necessary endorsers' signatures guaranteed in such manner and form and by
such guarantor as the Paying Agent may reasonably require, (b) such assurances
as the Paying Agent shall deem necessary or appropriate to evidence the
genuineness and effectiveness of each necessary endorsement and (c) satisfactory
evidence of compliance with all applicable laws relating to the collection of
taxes in connection with any registration of transfer or exchange or funds
necessary for the payment of such taxes. If the certificate or certificates for
Preferred Shares are not held by

                                        8
<Page>

the Securities Depository or its nominee, payments upon transfer of shares in an
Auction shall be made in Federal Funds or similar same-day funds to the Auction
Agent against delivery of certificates therefor.

        4.3.    REMOVAL OF LEGEND.

                Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing Preferred Shares shall be accompanied by
an opinion of counsel stating that such legend may be removed and such shares
may be transferred free of the restriction described in such legend, said
opinion to be delivered under cover of a letter from a Trust Officer authorizing
the Paying Agent to remove the legend on the basis of said opinion.

        4.4.    LOST, STOLEN OR DESTROYED STOCK CERTIFICATES.

                The Paying Agent shall issue and register replacement
certificates for certificates represented to have been lost, stolen or
destroyed, upon the fulfillment of such requirements as shall be deemed
appropriate by the Trust and by the Paying Agent, subject at all times to
provisions of law, the Certificate governing such matters and resolutions
adopted by the Trust with respect to lost, stolen or destroyed securities. The
Paying Agent may issue new certificates in exchange for and upon the
cancellation of mutilated certificates. Any request by the Trust to the Paying
Agent to issue a replacement or new certificate pursuant to this Section 4.4
shall be deemed to be a representation and warranty by the Trust to the Paying
Agent that such issuance will comply with provisions of applicable law and the
Certificate and resolutions of the Trust.

        4.5.    DISPOSITION OF CANCELED CERTIFICATES; RECORD RETENTION.

                The Paying Agent shall retain stock certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Securities and Exchange Commission
(the "SEC") for at least two calendar years from the date of such cancellation.
The Paying Agent, upon written request by the Trust, shall afford to the Trust,
its agents and counsel access at reasonable times during normal business hours
to review and make extracts or copies (at the Trust's sole cost and expense) of
such certificates and accompanying documentation. Upon request by the Trust at
any time after the expiration of this two-year period, the Paying Agent shall
deliver to the Trust the canceled certificates and accompanying documentation.
The Trust, at its expense, shall retain such records for a minimum additional
period of at least four calendar years from the date of delivery of the records
to the Trust and shall make such records available during this period at any
time, or from time to time, for reasonable periodic, special, or other
examinations by representatives of the SEC. The Trust also shall undertake to
furnish to the SEC, upon demand, either at its principal office or at any
regional office, complete, correct and current hard copies of any and all such
records. Thereafter, such records shall not be destroyed by the Trust without
the approval of the Paying Agent, which approval shall not be withheld
unreasonably, but will be safely stored for possible future reference.

                                        9
<Page>

        4.6.    STOCK REGISTER.

                The Paying Agent shall maintain the stock register, which shall
contain a list of the Holders, the number of shares held by each Holder and the
address of each Holder. The Paying Agent shall record in the stock register any
change of address of a Holder upon notice by such Holder. In case of any written
request or demand for the inspection of the stock register or any other books of
the Trust in the possession of the Paying Agent, the Paying Agent will notify
the Trust and secure instructions as to permitting or refusing such inspection.
The Paying Agent reserves the right, however, to exhibit the stock register or
other records to any person in case it is advised by its counsel that its
failure to do so would (i) be unlawful or (ii) expose it to liability, unless
the Trust shall have offered indemnification satisfactory to the Paying Agent.

        4.7.    RETURN OF FUNDS.

                Any funds deposited with the Paying Agent by the Trust for any
reason under this Agreement, including for the payment of dividends or the
redemption of Preferred Shares, that remain with the Paying Agent after 12
months shall be repaid to the Trust upon written request by the Trust.

V.      REPRESENTATIONS AND WARRANTIES.

        5.1.    REPRESENTATIONS AND WARRANTIES OF THE TRUST.

                The Trust represents and warrants to the Auction Agent that:

                        (i)     the Trust is duly organized and is validly
existing as a business trust under the laws of the Commonwealth of
Massachusetts, and has full power to execute and deliver this Agreement and to
authorize, create and issue the Preferred Shares;

                        (ii)    the Trust is registered with the SEC under the
Investment Company Act of 1940, as amended, as a closed-end, diversified,
management investment company;

                        (iii)   this Agreement has been duly and validly
authorized, executed and delivered by the Trust and constitutes the legal, valid
and binding obligation of the Trust, enforceable against the Trust in accordance
with its terms, subject as to such enforceability to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equitable principles;

                        (iv)    the form of the certificates evidencing the
Preferred Shares comply with all applicable laws of the Commonwealth of
Massachusetts;

                        (v)     the Preferred Shares have been duly and validly
authorized by the Trust and, upon completion of the initial sale of the
Preferred Shares and receipt of payment therefor, will be validly issued by the
Trust, fully paid and nonassessable;

                        (vi)    at the time of the offering of the Preferred
Shares, the shares offered will be registered under the Securities Act of 1933,
as amended, and no further action by

                                       10
<Page>

or before any governmental body or authority of the United States or of any
state thereof is required in connection with the execution and delivery of this
Agreement or will be required in connection with the issuance of the Preferred
Shares, except such action as required by applicable state securities laws;

                        (vii)   the execution and delivery of this Agreement and
the issuance and delivery of the Preferred Shares do not and will not conflict
with, violate, or result in a breach of the terms, conditions or provisions of,
or constitute a default under, the Trust's Declaration of Trust, as amended, or
the Certificate, any order or decree of any court or public authority having
jurisdiction over the Trust, or any mortgage, indenture, contract, agreement or
undertaking to which the Trust is a party or by which it is bound; and

                        (viii)  no taxes are payable upon or in respect of the
execution of this Agreement or will be payable upon or in respect of the
issuance of the Preferred Shares.

        5.2.    REPRESENTATIONS AND WARRANTIES OF THE AUCTION AGENT.

                The Auction Agent represents and warrants to the Trust that:

                        (i)     the Auction Agent is duly organized and is
validly existing as a banking corporation in good standing under the laws of the
State of New York, and has the corporate power to enter into and perform its
obligations under this Agreement; and

                        (ii)    this Agreement has been duly and validly
authorized, executed and delivered by the Auction Agent and constitutes the
legal, valid and binding obligation of the Auction Agent, enforceable against
the Auction Agent in accordance with its terms, subject as to such
enforceability to bankruptcy, insolvency, reorganization and other laws of
general applicability relating to or affecting creditors' rights and to general
equitable principles.

VI.     THE AUCTION AGENT.

        6.1.    DUTIES AND RESPONSIBILITIES.

                (a)     The Auction Agent is acting solely as agent for the
Trust hereunder and owes no fiduciary duties to any Person except as provided by
this Agreement.

                (b)     The Auction Agent undertakes to perform such duties and
only such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

                (c)     In the absence of bad faith or negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered or omitted
by it or for any error of judgment made by it in the performance of its duties
under this Agreement.

        6.2.    RIGHTS OF THE AUCTION AGENT.

                (a)     The Auction Agent may rely upon, and shall be protected
in acting or refraining from acting upon, any communication authorized hereby
and any written instruction,

                                       11
<Page>

notice, request, direction, consent, report, certificate, share certificate or
other instrument, paper or document reasonably believed by it to be genuine. The
Auction Agent shall not be liable for acting upon any telephone communication
authorized hereby which the Auction Agent reasonably believes in good faith to
have been given by the Trust or by a Broker-Dealer. The Auction Agent may record
telephone communications with the Trust or with the Broker-Dealers or with both.

                (b)     The Auction Agent may consult with counsel of its
choice, and the written advice of such counsel shall be full and complete
authorization and protection in respect of any action taken, suffered or omitted
by it hereunder in good faith and in reasonable reliance thereon.

                (c)     The Auction Agent shall not be required to advance,
expend or risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder. The Auction Agent shall be
under no liability for interest on any money received by it hereunder except as
otherwise agreed in writing with the Trust.

                (d)     The Auction Agent may perform its duties and exercise
its rights hereunder either directly or by or through agents or attorneys.

        6.3.    COMPENSATION, EXPENSES AND INDEMNIFICATION.

                (a)     The Trust shall pay to the Auction Agent from time to
time reasonable compensation for all services rendered by it under this
Agreement and under the Broker-Dealer Agreements as shall be set forth in a
separate writing signed by the Trust and the Auction Agent, subject to
adjustments if the Preferred Shares no longer are held of record by the
Securities Depository or its nominee or if there shall be such other change as
shall increase or decrease materially the Auction Agent's obligations hereunder
or under the Broker-Dealer Agreements.

                (b)     The Trust shall reimburse the Auction Agent upon its
request for all reasonable expenses, disbursements and advances incurred or made
by the Auction Agent in accordance with any provision of this Agreement and of
the Broker-Dealer Agreements (including the reasonable compensation, expenses
and disbursements of its agents and counsel), except any expense, disbursement
or advance attributable to its negligence or bad faith.

                (c)     The Trust shall indemnify the Auction Agent for, and
hold it harmless against, any loss, liability or expense incurred without
negligence or bad faith on the part of the Auction Agent arising out of or in
connection with its agency under this Agreement and under the Broker-Dealer
Agreements, including the costs and expenses of defending itself against any
claim of liability in connection with its exercise or performance of any of its
duties hereunder and thereunder, except such as may result from its negligence
or bad faith.

VII.    MISCELLANEOUS.

        7.1.    TERM OF AGREEMENT.

                (a)     The term of this Agreement is unlimited unless it shall
be terminated as provided in this Section 7.1. The Trust may terminate this
Agreement at any time by so notifying

                                       12
<Page>

the Auction Agent, provided that, if any Preferred Shares remain outstanding,
the Trust shall have entered into an agreement with a successor auction agent.
The Auction Agent may terminate this Agreement upon prior notice to the Trust on
the date specified in such notice, which date shall be no earlier than 60 days
after delivery of such notice. If the Auction Agent terminates this Agreement
while any Preferred Shares remain outstanding, the Trust shall use commercially
reasonable efforts to enter into an agreement with a successor auction agent.

                (b)     Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Trust and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Trust's
representations, warranties, covenants and obligations to the Auction Agent
under Sections 5 and 6.3 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall (i) resign as Auction
Agent under the Broker-Dealer Agreements, (ii) at the Trust's request, deliver
promptly to the Trust copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the request of the Trust,
transfer promptly to the Trust or to any successor auction agent any funds
deposited by the Trust with the Auction Agent (whether in its capacity as
Auction Agent or as Paying Agent) pursuant to this Agreement which have not been
distributed previously by the Auction Agent in accordance with this Agreement.

        7.2.    COMMUNICATIONS.

                Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party at its address or telecopier number set forth below:

           If to the Trust,              Pilgrim Prime Rate Trust
           addressed to:                 7337 E. Doubletree Ranch Road
                                         Scottsdale, Arizona 85258
                                         Attention: Daniel A. Norman
                                         Telecopier No.: (480) 477-2708
                                         Telephone No.:  (480) 477-2112

           If to the Auction Agent,      Bankers Trust Company
           addressed to:                 Corporate Trust and Agency Group
                                         4 Albany Street
                                         New York, NY 10006
                                         Attention: Auction Rate Securities
                                         Telecopier No.: (212) 250-6688
                                         Telephone No.:  (212) 250-6850

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Trust by a Trust Officer and on
behalf of the Auction Agent by an Authorized Officer.

                                       13
<Page>

        7.3.    ENTIRE AGREEMENT.

                This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof, except for agreements
relating to the compensation of the Auction Agent.

        7.4.    BENEFITS.

                Nothing herein, express or implied, shall give to any Person,
other than the Trust, the Auction Agent and their respective successors and
assigns, any benefit of any legal or equitable right, remedy or claim hereunder.

        7.5.    AMENDMENT; WAIVER.

                (a)     This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged. The Trust shall notify the Auction Agent of any change in the
Certificate prior to the effective date of any such change. If any such change
in the Certificate materially increases the Auction Agent's obligations
hereunder, the Trust shall obtain the written consent of the Auction Agent prior
to the effective date of such change.

                (b)     Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.

        7.6.    SUCCESSORS AND ASSIGNS.

                This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of the Trust and the Auction Agent. This Agreement may not be assigned by either
party hereto absent the prior written consent of the other party, which consent
shall not be withheld unreasonably.

        7.7.    SEVERABILITY.

                If any clause, provision or section hereof shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.

        7.8.    EXECUTION IN COUNTERPARTS.

                This Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.

                                       14
<Page>

        7.9.    GOVERNING LAW.

                This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed in said state.

        7.10.   LIMITATION OF LIABILITY.

                The name Pilgrim Prime Rate Trust refers to the Trust and the
Trustees of the Trust, as trustees but not individually or personally, acting
from time to time under the Trust's Agreement and Declaration of Trust dated
December 2, 1987, as amended, which is hereby referred to and a copy of which is
on file at the office of the Secretary of the Commonwealth of Massachusetts and
the principal office of the Trust. The obligations of the Trust entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
of the Trust are made not individually, but in such capacities, and are not
binding upon any of the Trustees, officers, holders of shares of beneficial
interest of the Trust or representatives of the Trustees personally, but bind
only the Trust assets, and all persons dealing with the Trust must look solely
to the Trust property for the enforcement of any claims against the Trust.

                                       15
<Page>

                IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.

                                                PILGRIM PRIME RATE TRUST


                                                /s/ Daniel A. Norman
                                                --------------------------------
                                                By: Daniel A. Norman
                                                Title: Senior Vice President

                                                BANKERS TRUST COMPANY


                                                --------------------------------
                                                By:
                                                Title:

<Page>

                IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be duly executed and delivered by their proper and duly authorized
officers as of the date first above written.

                                                PILGRIM PRIME RATE TRUST


                                                --------------------------------
                                                By: Daniel A. Norman
                                                Title: Senior Vice President

                                                BANKERS TRUST COMPANY

                                                /s/ Jody Sanchez
                                                --------------------------------
                                                By: Jody Sanchez
                                                Title: Associate

<Page>

                             BROKER-DEALER AGREEMENT

        This Broker-Dealer Agreement dated as of November 16, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 16, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and ____________________ (together with its
successors and assigns, "BD").

        The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate of Designation for Preferred
Shares (as defined below).

        The Trust's Certificate provides that the Applicable Rate on shares of
each series of Preferred Shares for each Dividend Period after the initial
Dividend Period shall be equal to the rate per annum that results from an
Auction for Outstanding shares of each Series on the respective Auction Date
therefor next preceding the period from and after the Date of Original Issue to
and including the last day of the initial Dividend Period. The Board of Trustees
of the Trust has adopted a resolution appointing Bankers Trust Company as
Auction Agent for purposes of the Auction Procedures, and pursuant to Section
2.5 of the Auction Agency Agreement, the Trust has requested and directed the
Auction Agent to execute and deliver this Agreement.

        The Auction Procedures require the participation of one or more
Broker-Dealers.

        NOW, THEREFORE, in consideration of the premises and the mutual
covenants contained herein, the Auction Agent and BD agree as follows:

I.      DEFINITIONS AND RULES OF CONSTRUCTION.

        1.1.    TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

        Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

        1.2.    TERMS DEFINED HEREIN.

        As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

                (a)     "Auction" shall have the meaning specified in Section
2.1 of the Auction Agency Agreement.

                (b)     "Auction Procedures" shall mean the Auction Procedures
that are set forth in Part II of the Certificate.

                (c)     "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

                (d)     "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

                (e)     "Broker-Dealer Agreement" shall mean this Agreement and
any substantially similar agreement between the Auction Agent and a
Broker-Dealer.

                (f)     "Certificate" shall mean the Certificate of Designation
for Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

        1.3.    RULES OF CONSTRUCTION.

        Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:

                (a)     Words importing the singular number shall include the
plural number and vice versa.

                (b)     The captions and headings herein are solely for
convenience of reference and shall not constitute a part of this Agreement, nor
shall they affect its meaning, construction or effect.

                (c)     The words "hereof," "herein," "hereto," and other words
of similar import refer to this Agreement as a whole.

                (d)     All references herein to a particular time of day shall
be to New York City time.

II.     NOTIFICATION OF DIVIDEND.

                The provisions contained in Section 4 of Part I of the
        Certificate concerning the notification of a Special Rate Period will be
        followed by the Auction Agent and BD, and the provisions contained
        therein are incorporated herein by reference in their entirety and shall
        be deemed to be a part of this Agreement to the same extent as if such
        provisions were set forth fully herein.

III.    THE AUCTION.

        3.1     Purpose; Incorporation by Reference of Auction Procedures.

                (a)     On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of determining
the Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."

                                        2
<Page>

                (b)     All of the provisions contained in the Auction
Procedures are incorporated herein by reference in their entirety and shall be
deemed to be a part of this Agreement to the same extent as if such provisions
were set forth fully herein.

                (c)     BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

                (d)     BD and other Broker-Dealers may participate in Auctions
for their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

        3.2.    PREPARATION FOR EACH AUCTION.

                (a)     Not later than 9:30 A.M. on each Auction Date for the
Preferred Shares, the Auction Agent shall advise BD by telephone of the
Reference Rate and the Maximum Rate in effect on such Auction Date.

                (b)     The Auction Agent from time to time may request BD to
provide it with a list of the respective customers BD believes are Beneficial
Owners of Preferred Shares. BD shall comply with any such request, and the
Auction Agent shall keep confidential any such information, including
information received as to the identity of Bidders in any Auction, and shall not
disclose any such information so provided to any Person other than the Trust;
and such information shall not be used by the Auction Agent or its officers,
employees, agents or representatives for any purpose other than such purposes as
are described herein. The Auction Agent shall transmit any list of customers BD
believes are Beneficial Owners of Preferred Shares and information related
thereto only to its officers, employees, agents or representatives who need to
know such information for the purposes of acting in accordance with this
Agreement, and the Auction Agent shall prevent the transmission of such
information to others and shall cause its officers, employees, agents and
representatives to abide by the foregoing confidentiality restrictions;
provided, however, that the Auction Agent shall have no responsibility or
liability for the actions of any of its officers, employees, agents or
representatives after they have left the employ of the Auction Agent.

        3.3.    AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

                (a)     The Trust and the Auction Agent shall conduct Auctions
for Preferred Shares in accordance with the schedule set forth below. Such
schedule may be changed at any time by the Auction Agent with the consent of the
Trust, which consent shall not be withheld unreasonably. The Auction Agent shall
give notice of any such change to BD. Such notice shall be received prior to the
first Auction Date on which any such change shall be effective.

                                        3
<Page>

<Table>
<Caption>
TIME                            EVENT
- ----                            -----
<S>                             <C>
By 9:30 A.M.                    Auction Agent shall advise the Trust and the
                                Broker-Dealers of the Reference Rate and the
                                Maximum Rate as set forth in Section 3.2(a)
                                hereof.

9:30 A.M. - 1:30 P.M.           Auction Agent shall assemble information
                                communicated to it by Broker-Dealers as provided
                                in Section 2(a) of Part II of the Certificate.
                                Submission Deadline is 1:00 P.M.

Not earlier than 1:30 P.M.      Auction Agent shall make determinations pursuant
                                to Section 4(a) of Part II of the Certificate.

By approximately 3:00 P.M.      Auction Agent shall advise the Trust of the
                                results of the Auction as provided in Section
                                4(b) of Part II of the Certificate.

                                Submitted Bids and Submitted Sell Orders will be
                                accepted and rejected in whole or in part and
                                Preferred Shares will be allocated as provided
                                in Section 5 of Part II of the Certificate.

                                Auction Agent shall give notice of the Auction
                                results as set forth in Section 3.4(a) hereof.
</Table>

                (b)     BD agrees to maintain a list of Potential Beneficial
Owners and to contact the Potential Beneficial Owners on such list on or prior
to each Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

                (c)     BD shall submit Orders to the Auction Agent in writing
in substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

                (d)     BD shall deliver to the Auction Agent (i) a written
notice, substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

        3.4.    NOTICE OF AUCTION RESULTS.

                (a)     On each Auction Date, the Auction Agent shall notify BD
by telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

                (b)     BD shall notify each Beneficial Owner, Potential
Beneficial Owner, Existing Holder or Potential Holder on whose behalf BD has
submitted an Order, and take such other action as is required of BD.

        If any Beneficial Owner or Existing Holder selling Preferred Shares in
an Auction fails to deliver such shares, the Broker-Dealer of any Person that
was to have purchased Preferred Shares in such Auction may deliver to such
Person a number of whole shares of Preferred Shares that is less than the number
of shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

        3.5.    SERVICE CHARGE TO BE PAID TO BD.

        On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of fixed or variable rate preferred shares with a similar final
maturity or variable rate dividend period, at the commencement of such Special
Rate Period.

                                        5
<Page>

        For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.     THE AUCTION AGENT.

        4.1.    DUTIES AND RESPONSIBILITIES.

                (a)     The Auction Agent is acting solely as agent for the
Trust hereunder and owes no fiduciary duties to any other Person by reason of
this Agreement.

                (b)     The Auction Agent undertakes to perform such duties and
only such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

                (c)     In the absence of bad faith or negligence on its part,
the Auction Agent shall not be liable for any action taken, suffered or, omitted
by it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

        4.2.    RIGHTS OF THE AUCTION AGENT.

                (a)     The Auction Agent may rely upon, and shall be protected
in acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

                (b)     The Auction Agent may consult with counsel of its own
choice, and the advice of such counsel shall be full and complete authorization
and protection in respect of any action taken, suffered or omitted by it
hereunder in good faith and in reliance thereon.

                (c)     The Auction Agent shall not be required to advance,
expend or risk its own funds or otherwise incur or become exposed to financial
liability in the performance of its duties hereunder.

                (d)     The Auction Agent may perform its duties and exercise
its rights hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

        4.3.    AUCTION AGENT'S DISCLAIMER.

        The Auction Agent makes no representation as to the validity or adequacy
of this Agreement or the Preferred Shares.

V.      MISCELLANEOUS.

        5.1.    TERMINATION.

        Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

        5.2.    PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
                SAME-DAY FUNDS.

                (a)     BD is, and shall remain for the term of this Agreement,
a member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).

                (b)     BD represents that it (or if BD does not act as Agent
Member, one of its affiliates) shall make all dividend payments on the Preferred
Shares available in same-day funds on each Dividend Payment Date to customers
that use BD (or its affiliate) as Agent Member.

        5.3.    AGENT MEMBER.

        At the date hereof, BD is a participant of the Securities Depository.

        5.4.    COMMUNICATIONS.

        Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

        If to the Auction Agent,
        addressed to:                Bankers Trust Company
                                     Corporate Trust and Agency Group
                                     Four Albany Street
                                     New, York, NY 10006
                                     Attention: Auction Rate Securities
                                     Telecopier No.: (212) 250-6688
                                     Telephone No.:  (212) 250-6850

                                        7
<Page>

        If to the BD,
        addressed to:                ____________________
                                     ____________________
                                     ____________________
                                     Attention: ___________________
                                     Telecopier No.: (212) ___-____
                                     Telephone No.:  (212) ___-____

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

        5.5.    ENTIRE AGREEMENT.

        This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

        5.6.    BENEFITS.

        Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

        5.7.    AMENDMENT; WAIVER.

                (a)     This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.

                (b)     Failure of either party to this Agreement to exercise
any right or remedy hereunder in the event of a breach of this Agreement by the
other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.

        5.8.    SUCCESSORS AND ASSIGNS.

                (a)     This Agreement shall be binding upon, inure to the
benefit of, and be enforceable by, the respective successors and permitted
assigns of each of BD and the Auction Agent. This Agreement may not be assigned
by either party hereto absent the prior written consent of the other party;
provided, however, that this Agreement may be assigned by the Auction Agent to a
successor Auction Agent selected by the Trust without the consent of BD.

                                        8
<Page>

        5.9.    SEVERABILITY.

        If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

        5.10.   EXECUTION IN COUNTERPARTS.

        This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

        5.11.   GOVERNING LAW.

        This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

        IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                         BANKERS TRUST COMPANY


                                         --------------------------------
                                         By:
                                         Title:


                                         --------------------------------

                                         --------------------------------
                                         By:
                                         Title:

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM
<Table>
<Caption>
SUBMIT TO:                           ISSUE:
- ---------                            -----
<S>                                  <C>
Bankers Trust Company                Pilgrim Prime Rate Trust
Corporate Trust and Agency Group     Auction Rate Cumulative Preferred Shares
Four Albany Street                    ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850
</Table>

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: ___________________

                                BENEFICIAL OWNER

Shares of Series ____ now held       HOLD __________________________
                                     BID at rate of ________________
                                     SELL __________________________

                           POTENTIAL BENEFICIAL OWNER

                                   # of shares of Series ___
                                   BID at rate of ____________ Notes:

        (1)     If submitting more than one Bid for one Bidder, use additional
                Auction Bid Forms.
        (2)     If one or more Bids covering in the aggregate more than the
                number of outstanding shares held by any Beneficial Owner are
                submitted, such bid shall be considered valid in the order of
                priority set forth in the Auction Procedures on the above issue.
        (3)     A Hold or Sell Order may be placed only by a Beneficial Owner
                covering a number of shares not greater than the number of
                shares currently held.
        (4)     Potential Beneficial Owners may make only Bids, each of which
                must specify a rate. If more than one Bid is submitted on behalf
                of any Potential Beneficial Owner, each Bid submitted shall be
                a separate Bid with the rate specified.
        (5)     Bids may contain no more than three figures to the right of the
                decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER
                       ---------------------------
Authorized Signature
                       ---------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

        Re:     Pilgrim Prime Rate Trust
                Auction Rate Cumulative Preferred Shares ("Preferred Shares")

        We are (check one):

/ /     the Existing Holder named below;

/ /     the Broker-Dealer for such Existing Holder; or

/ /     the Agent Member for such Existing Holder.

        We hereby notify you that such Beneficial Owner has transferred shares
of Series ____ Preferred Shares to ________________________.


                                             -------------------------
                                             (Name of Existing Holder)


                                             -------------------------
                                             (Name of Broker-Dealer)


                                             -------------------------
                                             (Name of Agent Member)


                                             By:
                                                ----------------------
                                             Printed Name:
                                             Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

        We are a Broker-Dealer for ___________________ (the "Purchaser"), which
purchased _______________ shares of Series ___ Preferred Shares of Pilgrim
Prime Rate Trust in the Auction held on ________________ from the seller of such
shares.


        We hereby notify you that (check one):

/ /     the Seller failed to deliver such shares to the Purchaser.

/ /     the Purchaser failed to make payment to the Seller upon delivery of such
        shares.


                                  Name:
                                        --------------------------
                                  (Name of Broker-Dealer)


                                  By:
                                      ----------------------------
                                  Printed Name:
                                  Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(V)(1)
<SEQUENCE>26
<FILENAME>a2138029zex-99_kv1.txt
<DESCRIPTION>EX 99.(K)(V)(1)
<TEXT>
<Page>

                                                            Exhibit 99.(k)(v)(1)

                            AUCTION AGENCY AGREEMENT

      This Auction Agency Agreement (this "Agreement"), dated as of November 2,
2000, is between Pilgrim Prime Rate Trust (the "Trust") and Bankers Trust
Company, a New York banking corporation.

      The Trust proposes to issue three series of preferred shares of beneficial
interest (3,600 shares of Series M, 3,600 shares of Series W and 3,600 shares of
Series F), par value $.01 per share, liquidation preference $25,000 per share,
designated as Series M, W and F Auction Rate Cumulative Preferred Shares
(cumulatively, the "Preferred Shares"), pursuant to the Trust's Certificate (as
defined below).

      The Trust desires that Bankers Trust Company perform certain duties as
agent in connection with each Auction of Preferred Shares (in such capacity, the
"Auction Agent"), and as the transfer agent, registrar, dividend paying agent
and redemption agent with respect to the Preferred Shares (in such capacity, the
"Paying Agent"), upon the terms and conditions of this Agreement, and the Trust
hereby appoints Bankers Trust Company as said Auction Agent and Paying Agent in
accordance with those terms and conditions (hereinafter generally referred to as
the "Auction Agent," except in Sections 3 and 4 below).

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Trust and the Auction Agent agree as follows:

I.    DEFINITIONS AND RULES OF CONSTRUCTION.

      1.1.   TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

             Capitalized terms not defined herein shall have the respective
meanings specified in the Certificate.

      1.2.   TERMS DEFINED HEREIN.

             As used herein, the following terms shall have the following
meanings, unless the context otherwise requires:

             (a)   "Agent Member" of any Person shall mean such Person's agent
member of the Securities Depository that will act on behalf of a Bidder.

             (b)   "Auction" shall have the meaning specified in Section 2.1
hereof.

             (c)   "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Certificate.

             (d)   "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer or employee of its Corporate Trust and Agency
Group designated as an "Authorized Officer" for purposes hereof in a written
communication from the Auction Agent to the Trust.

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                        AUCTION AGENCY AGREEMENT

             (e)   "Broker-Dealer Agreement" shall mean each agreement between
the Auction Agent and a Broker-Dealer substantially in the form attached hereto
as Exhibit A.

             (f)   "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

             (g)   "Holder" shall be a holder of record of one or more Preferred
Shares, listed as such in the share register maintained by the Paying Agent
pursuant to Section 4.6 hereof.

             (h)   "Interest Equivalent" means a yield on a 360-day basis of a
discount basis security which is equal to the yield on an equivalent
interest-bearing security.

             (i)   "Trust Officer" shall mean the Chairman, the President, each
Vice President (whether or not designated by a number or word or words added
before or after the title "Vice President"), the Secretary, the Treasurer, each
Assistant Secretary and each Assistant Treasurer of the Trust and every other
officer or employee of the Trust designated as a "Trust Officer" for purposes
hereof in a notice from the Trust to the Auction Agent.

      1.3.   RULES OF CONSTRUCTION.

             Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:

             (a)   Words importing the singular number shall include the plural
number and vice versa.

             (b)   The captions and headings herein are solely for convenience
of reference and shall not constitute a part of this Agreement nor shall they
affect its meaning, construction or effect.

             (c)   The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

             (d)   All references herein to a particular time of day shall be to
New York City time.

II.   THE AUCTION.

      2.1.   PURPOSE; INCORPORATION BY REFERENCE OF AUCTION PROCEDURES.

             (a)   The Certificate provides that the Applicable Rate on shares
of each series of Preferred Shares, as the case may be, for each Dividend Period
therefor after the initial Dividend Period shall be the rate per annum that a
commercial bank, trust company or other financial institution appointed by the
Trust advises results from the implementation of the Auction Procedures. The
Board of Trustees of the Trust has adopted a resolution appointing Bankers Trust
Company as Auction Agent for purposes of the Auction Procedures. The Auction

                                        2
<Page>

Agent hereby accepts such appointment and agrees that, on each Auction Date, it
shall follow the procedures set forth in this Section 2 and the Auction
Procedures for the purpose of determining the Applicable Rate for the Preferred
Shares for the next Dividend Period. Each periodic operation of such procedures
is hereinafter referred to as an "Auction."

             (b)   All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part hereof to the same extent as if such provisions were set forth fully
herein.

      2.2.   PREPARATION FOR EACH AUCTION; MAINTENANCE OF REGISTRY OF EXISTING
             HOLDERS.

             (a)   As of the date hereof, the Trust shall provide the Auction
Agent with a list of the Broker-Dealers previously approved by the Auction Agent
and shall cause to be delivered to the Auction Agent for execution by the
Auction Agent a Broker-Dealer Agreement signed by each such Broker-Dealer. The
Auction Agent shall keep such list current and accurate and shall indicate
thereon, or on a separate list, the identity of each Existing Holder, if any,
whose most recent Order was submitted by a Broker-Dealer on such list and
resulted in such Existing Holder continuing to hold or purchase Preferred
Shares. Not later than five Business Days prior to any Auction Date for which
any change in such list of Broker-Dealers is to be effective, the Trust shall
notify the Auction Agent in writing of such change and, if any such change is
the addition of a Broker-Dealer to such list, the Trust shall cause to be
delivered to the Auction Agent for execution by the Auction Agent a
Broker-Dealer Agreement signed by such Broker-Dealer. The Auction Agent shall
have entered into a Broker-Dealer Agreement with each Broker-Dealer prior to the
participation of any such Broker-Dealer in any Auction.

             (b)   In the event that the Auction Date for any Auction shall be
changed after the Auction Agent shall have given the notice, the Auction Agent,
by such means as the Auction Agent deems practicable, shall give notice of such
change to the Broker-Dealers not later than the earlier of 9:15 A.M. on the new
Auction Date or 9:15 A.M. on the old Auction Date.

             (c)   The provisions contained in Section 4 of Part I of the
Certificate concerning Special Rate Periods and the notification of a Special
Rate Period will be followed by the Trust and, to the extent applicable, the
Auction Agent, and the provisions contained therein are incorporated herein by
reference in their entirety and shall be deemed to be a part of this Agreement
to the same extent as if such provisions were set forth fully herein.

             (d)   (i)    On each Auction Date, the Auction Agent shall
determine the initial dividend rate and the Maximum Rate. If the initial
dividend rate is not quoted on an interest basis but is quoted on a discount
basis, the Auction Agent shall convert the quoted rate to an Interest
Equivalent; or, if the rate obtained by the Auction Agent is not quoted on an
interest or discount basis, the Auction Agent shall convert the quoted rate to
an interest rate after consultation with the Trust as to the method of such
conversion. Not later than 9:30 A.M. on each Auction Date, the Auction Agent
shall notify the Trust and the Broker-Dealers of the initial dividend rate so
determined and of the Maximum Rate.

                   (ii)   If the initial dividend rate is the applicable "AA"
Financial Composite Commercial Paper Rate and such rate is to be based on rates
supplied by Commercial

                                        3
<Page>

Paper Dealers and one or more of the Commercial Paper Dealers shall not provide
a quotation for the determination of the applicable "AA" Financial Composite
Commercial Paper Rate, the Auction Agent immediately shall notify the Trust so
that the Trust can determine whether to select a substitute Commercial Paper
Dealer or substitute Commercial Paper Dealers to provide the quotation or
quotations not being supplied by any Commercial Paper Dealer or Commercial Paper
Dealers. The Trust promptly shall advise the Auction Agent of any such
selection. If the Trust does not select any such substitute Commercial Paper
Dealer or substitute Commercial Paper Dealers, then the rates shall be supplied
by the remaining Commercial Paper Dealer or Commercial Paper Dealers.

             (e)   (i)    The Auction Agent shall maintain a current registry of
the Existing Holders of the Preferred Shares for purposes of each individual
Auction. The Trust shall use commercially reasonable efforts to provide or cause
to be provided to the Auction Agent within ten Business Days following the date
of the Closing a list of the initial Existing Holders of Preferred Shares, and
the Broker-Dealer of each such Existing Holder through which such Existing
Holder purchased such shares. The Auction Agent may rely upon, as evidence of
the identities of the Existing Holders, such list, the results of each Auction
and notices from any Existing Holder, the Agent Member of any Existing Holder or
the Broker-Dealer of any Existing Holder with respect to such Existing or
Holder's transfer of any Preferred Shares to another Person.

                   (ii)   In the event of any partial redemption of Preferred
Shares, upon notice by the Trust to the Auction Agent of such partial
redemption, the Auction Agent promptly shall request the Securities Depository
to notify the Auction Agent of the identities of the Agent Members (and the
respective numbers of shares) from the accounts of which shares have been called
for redemption and the person or department at such Agent Member to contact
regarding such redemption. At least two Business Days prior to the Auction
preceding the date of redemption, the Auction Agent shall request each Agent
Member so identified to disclose to the Auction Agent (upon selection by such
Agent Member of the Existing Holders whose shares are to be redeemed) the number
of Preferred Shares of each such Existing Holder, if any, to be redeemed by the
Trust, provided that the Auction Agent has been furnished with the name and
telephone number of a person or department at such Agent Member from which it is
to request such information. In the absence of receiving any such information
with respect to an Existing Holder, from such Existing Holder's Agent Member or
otherwise, the Auction Agent may continue to treat such Existing Holder as
having ownership of the number of Preferred Shares shown in the Auction Agent's
registry of Existing Holders.

                   (iii)  The Auction Agent shall register a transfer of the
ownership of Preferred Shares from an Existing Holder to another Existing
Holder, or to another Person if permitted by the Trust, only if (A) such
transfer is made pursuant to an Auction or (B) if such transfer is made other
than pursuant to an Auction, the Auction Agent has been notified of such
transfer in writing, in a notice substantially in the form of Exhibit B to the
Broker-Dealer Agreements, by such Existing Holder or by the Agent Member of such
Existing Holder. The Auction Agent is not required to accept any notice of
transfer delivered for an Auction unless it is received by the Auction Agent by
3:00 P.M. on the Business Day next preceding the applicable Auction Date. The
Auction Agent shall rescind a transfer made on the registry of the

                                        4
<Page>

Existing Holders of any Preferred Shares if the Auction Agent has been notified
in writing, in a notice substantially in the form of Exhibit C to the
Broker-Dealer Agreement, by the Agent Member or the Broker-Dealer of any Person
that (i) purchased any Preferred Shares and the seller failed to deliver such
shares or (ii) sold any Preferred Shares and the purchaser failed to make
payment to such Person upon delivery to the purchaser of such shares.

             (f)   The Auction Agent may request that the Broker Dealers, as set
forth in Section 3.2(b) of the Broker-Dealer Agreements, provide the Auction
Agent with a list of their respective customers that such Broker-Dealers believe
are Beneficial Owners of Preferred Shares. The Auction Agent shall keep
confidential any such information and shall not disclose any such information so
provided to any Person other than the relevant Broker-Dealer and the Trust,
provided that the Auction Agent reserves the right to disclose any such
information if it is advised by its counsel that its failure to do so would be
unlawful.

      2.3.   AUCTION SCHEDULE.

             The Auction Agent shall conduct Auctions every Monday, Wednesday,
and Friday in accordance with the schedule set forth below. Such schedule may be
changed by the Auction Agent with the consent of the Trust, which consent shall
not be withheld unreasonably. The Auction Agent shall give notice of any such
change to each Broker-Dealer. Such notice shall be received prior to the first
Auction Date on which any such change shall be effective.

<Table>
<Caption>
TIME                           EVENT
- ----                           -----
<S>                            <C>
By 9:30 A.M.                   Auction Agent shall advise the Trust and the
                               Broker-Dealers of the initial dividend rate and
                               the Maximum Rate as set forth in Section
                               2.2(e)(i) hereof.
9:30 A.M. - 1:30 P.M.          Auction Agent shall assemble information
                               communicated to it by Broker-Dealers as provided
                               in Section 3(a) of Part II of the Certificate.
                               Submission deadline is 1:00 P.M.
Not earlier than 1:30 P.M.     Auction Agent shall make determinations pursuant
                               to Section 4(a) of Part II of the Certificate.
By approximately 3:00 P.M.     Auction Agent shall advise the Trust of the
                               results of the Auction as provided in Section
                               4(b) of Part II of the Certificate.
                               Submitted Bids and Submitted Sell Orders will be
                               accepted and rejected in whole or in part and
                               Preferred Shares will be allocated as provided in
                               Section 5 of Part II of the Certificate. Auction
                               Agent shall give notice of the Auction results as
                               set forth in Section 2.4 hereof.
</Table>

      2.4.   NOTICE OF AUCTION RESULTS.

             On each Auction Date, the Auction Agent shall notify Broker-Dealers
of the results of the Auction held on such date by telephone or through the
Auction Agent's Auction Processing System.

                                        5
<Page>

      2.5.   BROKER-DEALERS.

             (a)   Not later than 12:00 noon on each Auction Date, the Trust
shall pay to the Auction Agent in Federal Funds or similar same-day funds an
amount in cash equal to (i) in the case of any Auction Date immediately
preceding a 7-day Dividend Period, the product of (A) a fraction the numerator
of which is the number of days in such Dividend Period (calculated by counting
the first day of such Dividend Period but excluding the last day thereof) and
the denominator of which is 360, times (B) 1/4 of 1%, times (C) $25,000 times
(D) the sum of the aggregate number of outstanding Preferred Shares for which
the Auction is conducted and (ii) in the case of any Special Rate Period, the
amount determined by mutual consent of the Trust and the Broker-Dealers pursuant
to Section 3.5 of the Broker-Dealer Agreements. The Auction Agent shall apply
such moneys as set forth in Section 3.5 of the Broker-Dealer Agreements and
shall thereafter remit to the Trust any remaining funds paid to the Auction
Agent pursuant to this Section 2.5(a).

             (b)   The Trust shall not designate any Person to act as a
Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to
participate in Auctions through any Person other than a Broker-Dealer, without
the prior written approval of the Auction Agent, which approval shall not be
withheld unreasonably. The Trust may designate an Affiliate or Salomon Smith
Barney Inc. to act as a Broker-Dealer.

             (c)   The Auction Agent shall terminate any Broker-Dealer Agreement
as set forth therein if so directed by the Trust.

             (d)   Subject to Section 2.5(b) hereof, the Auction Agent from time
to time shall enter into such Broker-Dealer Agreements as the Trust shall
request.

             (e)   The Auction Agent shall maintain a list of Broker-Dealers.

      2.6.   OWNERSHIP OF PREFERRED SHARES AND SUBMISSION OF BIDS BY THE TRUST
             AND ITS AFFILIATES.

             Neither the Trust nor any Affiliate of the Trust may submit any
Sell Order or Bid, directly or indirectly, in any Auction, except that an
Affiliate of the Trust that is a Broker-Dealer may submit a Sell Order or Bid on
behalf of a Beneficial Owner or a Potential Beneficial Owner. The Trust shall
notify the Auction Agent if the Trust or, to the best of the Trust's knowledge,
any Affiliate of the Trust becomes a Beneficial Owner of any Preferred Shares.
Any Preferred Shares redeemed, purchased or otherwise acquired (i) by the Trust
shall not be reissued, except in accordance with the requirements of the
Securities Act of 1933, as amended, or (ii) by its Affiliates shall not be
transferred (other than to the Trust). The Auction Agent shall have no duty or
liability with respect to enforcement of this Section 2.6.

      2.7.   ACCESS TO AND MAINTENANCE OF AUCTION RECORDS.

             The Auction Agent shall afford to the Trust, its agents,
independent public accountants and counsel, access at reasonable times during
normal business hours to review and make extracts or copies (at the Trust's sole
cost and expense) of all books, records, documents

                                        6
<Page>

and other information concerning the conduct and results of Auctions, provided
that any such agent, accountant or counsel shall furnish the Auction Agent with
a letter from the Trust requesting that the Auction Agent afford such person
access. The Auction Agent shall maintain records relating to any Auction for a
period of at least two years after such Auction (unless requested by the Trust
to maintain such records for such longer period not in excess of four years,
then for such longer period), and such records, in reasonable detail, shall
accurately and fairly reflect the actions taken by the Auction Agent hereunder.
The Trust agrees to keep confidential any information regarding the customers of
any Broker-Dealer received from the Auction Agent in connection with this
Agreement or any Auction, and shall not disclose such information or permit the
disclosure of such information without the prior written consent of the
applicable Broker-Dealer to anyone except such agent, accountant or counsel
engaged to audit or review the results of Auctions as permitted by this Section
2.7. The Trust reserves the right to disclose any such information if it is
advised by its counsel that its failure to do so would (i) be unlawful or (ii)
expose it to liability, unless the Broker-Dealer shall have offered
indemnification satisfactory to the Trust. Any such agent, accountant or
counsel, before having access to such information, shall agree to keep such
information confidential and not to disclose such information or permit
disclosure of such information without the prior written consent of the
applicable Broker-Dealer, provided that such agent, accountant or counsel may
reserve the right to disclose any such information if it is advised by its
counsel that its failure to do so would (i) be unlawful or (ii) expose it to
liability, unless the Broker-Dealer shall have offered indemnification
satisfactory to such agent, accountant or counsel.

III.  THE AUCTION AGENT AS PAYING AGENT.

      3.1.   THE PAYING AGENT.

             The Board of Trustees of the Trust has adopted another resolution
appointing Bankers Trust Company as auction agent, transfer agent, dividend
paying agent and registrar for the Trust in connection with any Preferred Shares
(in such capacity, the "Paying Agent"). The Paying Agent hereby accepts such
appointment and agrees to act in accordance with its standard procedures and the
provisions of the Certificate which are specified herein with respect to the
Preferred Shares and as set forth in this Section 3.

      3.2.   THE TRUST'S NOTICES TO THE PAYING AGENT.

             Whenever any Preferred Shares are to be redeemed, the Trust
promptly shall deliver to the Paying Agent a Notice of Redemption, which will be
mailed by the Paying Agent to each Holder at least five Business Days prior to
the date such Notice of Redemption is required to be mailed pursuant to the
Certificate. The Paying Agent shall have no responsibility to confirm or verify
the accuracy of any such Notice.

      3.3.   THE TRUST TO PROVIDE FUNDS FOR DIVIDENDS AND REDEMPTIONS.

             (a)   Not later than noon on each Dividend Payment Date, the Trust
shall deposit with the Paying Agent an aggregate amount of Federal Funds or
similar same-day funds equal to the declared dividends to be paid to Holders on
such Dividend Payment Date, and shall

                                        7
<Page>

give the Paying Agent irrevocable instructions to apply such funds to the
payment of such dividends on such Dividend Payment Date.

             (b)   If the Trust shall give a Notice of Redemption, then by noon
of the date fixed for redemption, the Trust shall deposit in trust with the
Paying Agent an aggregate amount of Federal Funds or similar same-day funds
sufficient to redeem such Preferred Shares called for redemption and shall give
the Paying Agent irrevocable instructions and authority to pay the redemption
price to the Holders of Preferred Shares called for redemption upon surrender of
the certificate or certificates therefor.

      3.4.   DISBURSING DIVIDENDS AND REDEMPTION PRICE.

             After receipt of the Federal Funds or similar same-day funds and
instructions from the Trust described in Section 3.3 above, the Paying Agent
shall pay to the Holders (or former Holders) entitled thereto (i) on each
corresponding Dividend Payment Date, dividends on the Preferred Shares, and (ii)
on any date fixed for redemption, the redemption price of any Preferred Shares
called for redemption. The amount of dividends for any Dividend Period to be
paid by the Paying Agent to Holders will be determined by the Trust as set forth
in Section 2 of Part I of the Certificate. The redemption price to be paid by
the Paying Agent to the Holders of any Preferred Shares called for redemption
will be determined as set forth in Section 3 of Part I of the Certificate. The
Paying Agent shall have no duty to determine the redemption price and may rely
on the amount thereof set forth in a Notice of Redemption.

IV.   THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.

      4.1.   ORIGINAL ISSUE OF STOCK CERTIFICATES.

             On the Date of Original Issue for any share of Preferred Shares,
one certificate for each series of Preferred Shares shall be issued by the Trust
and registered in the name of Cede & Co., as nominee of the Securities
Depository, and countersigned by the Paying Agent.

      4.2.   REGISTRATION OF TRANSFER OR EXCHANGE OF SHARES.

             Except as provided in this Section 4.2, the shares of each series
of Preferred Shares shall be registered solely in the name of the Securities
Depository or its nominee. If the Securities Depository shall give notice of its
intention to resign as such, and if the Trust shall not have selected a
substitute Securities Depository acceptable to the Paying Agent prior to such
resignation, then upon such resignation the shares of each Series of Preferred
Shares, at the Trust's request, may be registered for transfer or exchange, and
new certificates thereupon shall be issued in the name of the designated
transferee or transferees, upon surrender of the old certificate in form deemed
by the Paying Agent to be properly endorsed for transfer with (a) all necessary
endorsers' signatures guaranteed in such manner and form and by such guarantor
as the Paying Agent may reasonably require, (b) such assurances as the Paying
Agent shall deem necessary or appropriate to evidence the genuineness and
effectiveness of each necessary endorsement and (c) satisfactory evidence of
compliance with all applicable laws relating to the collection of taxes in
connection with any registration of transfer or exchange or funds necessary for
the payment of such taxes. If the certificate or certificates for Preferred
Shares are not held by

                                        8
<Page>

the Securities Depository or its nominee, payments upon transfer of shares in an
Auction shall be made in Federal Funds or similar same-day funds to the Auction
Agent against delivery of certificates therefor.

      4.3.   REMOVAL OF LEGEND.

             Any request for removal of a legend indicating a restriction on
transfer from a certificate evidencing Preferred Shares shall be accompanied by
an opinion of counsel stating that such legend may be removed and such shares
may be transferred free of the restriction described in such legend, said
opinion to be delivered under cover of a letter from a Trust Officer authorizing
the Paying Agent to remove the legend on the basis of said opinion.

      4.4.   LOST, STOLEN OR DESTROYED STOCK CERTIFICATES.

             The Paying Agent shall issue and register replacement certificates
for certificates represented to have been lost, stolen or destroyed, upon the
fulfillment of such requirements as shall be deemed appropriate by the Trust and
by the Paying Agent, subject at all times to provisions of law, the Certificate
governing such matters and resolutions adopted by the Trust with respect to
lost, stolen or destroyed securities. The Paying Agent may issue new
certificates in exchange for and upon the cancellation of mutilated
certificates. Any request by the Trust to the Paying Agent to issue a
replacement or new certificate pursuant to this Section 4.4 shall be deemed to
be a representation and warranty by the Trust to the Paying Agent that such
issuance will comply with provisions of applicable law and the Certificate and
resolutions of the Trust.

      4.5.   DISPOSITION OF CANCELED CERTIFICATES; RECORD RETENTION.

             The Paying Agent shall retain stock certificates which have been
canceled in transfer or in exchange and accompanying documentation in accordance
with applicable rules and regulations of the Securities and Exchange Commission
(the "SEC") for at least two calendar years from the date of such cancellation.
The Paying Agent, upon written request by the Trust, shall afford to the Trust,
its agents and counsel access at reasonable times during normal business hours
to review and make extracts or copies (at the Trust's sole cost and expense) of
such certificates and accompanying documentation. Upon request by the Trust at
any time after the expiration of this two-year period, the Paying Agent shall
deliver to the Trust the canceled certificates and accompanying documentation.
The Trust, at its expense, shall retain such records for a minimum additional
period of at least four calendar years from the date of delivery of the records
to the Trust and shall make such records available during this period at any
time, or from time to time, for reasonable periodic, special, or other
examinations by representatives of the SEC. The Trust also shall undertake to
furnish to the SEC, upon demand, either at its principal office or at any
regional office, complete, correct and current hard copies of any and all such
records. Thereafter, such records shall not be destroyed by the Trust without
the approval of the Paying Agent, which approval shall not be withheld
unreasonably, but will be safely stored for possible future reference.

                                        9
<Page>

      4.6.   STOCK REGISTER.

             The Paying Agent shall maintain the stock register, which shall
contain a list of the Holders, the number of shares held by each Holder and the
address of each Holder. The Paying Agent shall record in the stock register any
change of address of a Holder upon notice by such Holder. In case of any written
request or demand for the inspection of the stock register or any other books of
the Trust in the possession of the Paying Agent, the Paying Agent will notify
the Trust and secure instructions as to permitting or refusing such inspection.
The Paying Agent reserves the right, however, to exhibit the stock register or
other records to any person in case it is advised by its counsel that its
failure to do so would (i) be unlawful or (ii) expose it to liability, unless
the Trust shall have offered indemnification satisfactory to the Paying Agent.

      4.7.   RETURN OF FUNDS.

             Any funds deposited with the Paying Agent by the Trust for any
reason under this Agreement, including for the payment of dividends or the
redemption of Preferred Shares, that remain with the Paying Agent after 12
months shall be repaid to the Trust upon written request by the Trust.

V.    REPRESENTATIONS AND WARRANTIES.

      5.1.   REPRESENTATIONS AND WARRANTIES OF THE TRUST.

             The Trust represents and warrants to the Auction Agent that:

                   (i)    the Trust is duly organized and is validly existing as
a business trust under the laws of the Commonwealth of Massachusetts, and has
full power to execute and deliver this Agreement and to authorize, create and
issue the Preferred Shares;

                   (ii)   the Trust is registered with the SEC under the
Investment Company Act of 1940, as amended, as a closed-end, diversified,
management investment company;

                   (iii)  this Agreement has been duly and validly authorized,
executed and delivered by the Trust and constitutes the legal, valid and binding
obligation of the Trust, enforceable against the Trust in accordance with its
terms, subject as to such enforceability to bankruptcy, insolvency,
reorganization and other laws of general applicability relating to or affecting
creditors' rights and to general equitable principles;

                   (iv)   the form of the certificates evidencing the Preferred
Shares comply with all applicable laws of the Commonwealth of Massachusetts;

                   (v)    the Preferred Shares have been duly and validly
authorized by the Trust and, upon completion of the initial sale of the
Preferred Shares and receipt of payment therefor, will be validly issued by the
Trust, fully paid and nonassessable;

                   (vi)   at the time of the offering of the Preferred Shares,
the shares offered will be registered under the Securities Act of 1933, as
amended, and no further action by

                                       10
<Page>

or before any governmental body or authority of the United States or of any
state thereof is required in connection with the execution and delivery of this
Agreement or will be required in connection with the issuance of the Preferred
Shares, except such action as required by applicable state securities laws;

                   (vii)  the execution and delivery of this Agreement and the
issuance and delivery of the Preferred Shares do not and will not conflict with,
violate, or result in a breach of the terms, conditions or provisions of, or
constitute a default under, the Trust's Declaration of Trust, as amended, or the
Certificate, any order or decree of any court or public authority having
jurisdiction over the Trust, or any mortgage, indenture, contract, agreement or
undertaking to which the Trust is a party or by which it is bound; and

                   (viii) no taxes are payable upon or in respect of the
execution of this Agreement or will be payable upon or in respect of the
issuance of the Preferred Shares.

      5.2.   REPRESENTATIONS AND WARRANTIES OF THE AUCTION AGENT.

             The Auction Agent represents and warrants to the Trust that:

                   (i)    the Auction Agent is duly organized and is validly
existing as a banking corporation in good standing under the laws of the State
of New York, and has the corporate power to enter into and perform its
obligations under this Agreement; and

                   (ii)   this Agreement has been duly and validly authorized,
executed and delivered by the Auction Agent and constitutes the legal, valid and
binding obligation of the Auction Agent, enforceable against the Auction Agent
in accordance with its terms, subject as to such enforceability to bankruptcy,
insolvency, reorganization and other laws of general applicability relating to
or affecting creditors' rights and to general equitable principles.

VI.   THE AUCTION AGENT.

      6.1.   DUTIES AND RESPONSIBILITIES.

             (a)   The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any Person except as provided by this
Agreement.

             (b)   The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

             (c)   In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or omitted by
it or for any error of judgment made by it in the performance of its duties
under this Agreement.

      6.2.   RIGHTS OF THE AUCTION AGENT.

             (a)   The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized hereby and
any written instruction,

                                       11
<Page>

notice, request, direction, consent, report, certificate, share certificate or
other instrument, paper or document reasonably believed by it to be genuine. The
Auction Agent shall not be liable for acting upon any telephone communication
authorized hereby which the Auction Agent reasonably believes in good faith to
have been given by the Trust or by a Broker-Dealer. The Auction Agent may record
telephone communications with the Trust or with the Broker-Dealers or with both.

             (b)   The Auction Agent may consult with counsel of its choice, and
the written advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reasonable reliance thereon.

             (c)   The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder. The Auction Agent shall be under no
liability for interest on any money received by it hereunder except as otherwise
agreed in writing with the Trust.

             (d)   The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.

      6.3.   COMPENSATION. EXPENSES AND INDEMNIFICATION.

             (a)   The Trust shall pay to the Auction Agent from time to time
reasonable compensation for all services rendered by it under this Agreement and
under the Broker-Dealer Agreements as shall be set forth in a separate writing
signed by the Trust and the Auction Agent, subject to adjustments if the
Preferred Shares no longer are held of record by the Securities Depository or
its nominee or if there shall be such other change as shall increase or decrease
materially the Auction Agent's obligations hereunder or under the Broker-Dealer
Agreements.

             (b)   The Trust shall reimburse the Auction Agent upon its request
for all reasonable expenses, disbursements and advances incurred or made by the
Auction Agent in accordance with any provision of this Agreement and of the
Broker-Dealer Agreements (including the reasonable compensation, expenses and
disbursements of its agents and counsel), except any expense, disbursement or
advance attributable to its negligence or bad faith.

             (c)   The Trust shall indemnify the Auction Agent for, and hold it
harmless against, any loss, liability or expense incurred without negligence or
bad faith on the part of the Auction Agent arising out of or in connection with
its agency under this Agreement and under the Broker-Dealer Agreements,
including the costs and expenses of defending itself against any claim of
liability in connection with its exercise or performance of any of its duties
hereunder and thereunder, except such as may result from its negligence or bad
faith.

VII.  MISCELLANEOUS.

      7.1.   TERM OF AGREEMENT.

             (a)   The term of this Agreement is unlimited unless it shall be
terminated as provided in this Section 7.1. The Trust may terminate this
Agreement at any time by so notifying

                                       12
<Page>

the Auction Agent, provided that, if any Preferred Shares remain outstanding,
the Trust shall have entered into an agreement with a successor auction agent.
The Auction Agent may terminate this Agreement upon prior notice to the Trust on
the date specified in such notice, which date shall be no earlier than 60 days
after delivery of such notice. If the Auction Agent terminates this Agreement
while any Preferred Shares remain outstanding, the Trust shall use commercially
reasonable efforts to enter into an agreement with a successor auction agent.

             (b)   Except as otherwise provided in this Section 7.1(b), the
respective rights and duties of the Trust and the Auction Agent under this
Agreement shall cease upon termination of this Agreement. The Trust's
representations, warranties, covenants and obligations to the Auction Agent
under Sections 5 and 6.3 hereof shall survive the termination hereof. Upon
termination of this Agreement, the Auction Agent shall (i) resign as Auction
Agent under the Broker-Dealer Agreements, (ii) at the Trust's request, deliver
promptly to the Trust copies of all books and records maintained by it in
connection with its duties hereunder, and (iii) at the request of the Trust,
transfer promptly to the Trust or to any successor auction agent any funds
deposited by the Trust with the Auction Agent (whether in its capacity as
Auction Agent or as Paying Agent) pursuant to this Agreement which have not been
distributed previously by the Auction Agent in accordance with this Agreement.

      7.2.   COMMUNICATIONS.

             Except for (i) communications authorized to be made by telephone
pursuant to this Agreement or the Auction Procedures and (ii) communications in
connection with Auctions (other than those expressly required to be in writing),
all notices, requests and other communications to any party hereunder shall be
in writing (including telecopy or similar writing) and shall be given to such
party at its address or telecopier number set forth below:

        If to the Trust,             Pilgrim Prime Rate Trust
        addressed to:                7337 E. Doubletree Ranch Road
                                     Scottsdale, Arizona 85258
                                     Attention: Daniel A. Norman
                                     Telecopier No.: (480) 477-2708
                                     Telephone No.: (480) 477-2112

        If to the Auction Agent,     Bankers Trust Company
        addressed to:                Corporate Trust and Agency Group
                                     4 Albany Street
                                     New York, NY 10006
                                     Attention: Auction Rate Securities
                                     Telecopier No.: (212) 250-6688
                                     Telephone No.: (212) 250-6850

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of the Trust by a Trust Officer and on
behalf of the Auction Agent by an Authorized Officer.

                                       13
<Page>

      7.3.   ENTIRE AGREEMENT.

             This Agreement contains the entire agreement between the parties
relating to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof, except for agreements
relating to the compensation of the Auction Agent.

      7.4.   BENEFITS.

             Nothing herein, express or implied, shall give to any Person, other
than the Trust, the Auction Agent and their respective successors and assigns,
any benefit of any legal or equitable right, remedy or claim hereunder.

      7.5.   AMENDMENT; WAIVER.

             (a)   This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged. The Trust shall notify the Auction Agent of any change in the
Certificate prior to the effective date of any such change. If any such change
in the Certificate materially increases the Auction Agent's obligations
hereunder, the Trust shall obtain the written consent of the Auction Agent prior
to the effective date of such change.

             (b)   Failure of either party hereto to exercise any right or
remedy hereunder in the event of a breach hereof by the other party shall not
constitute a waiver of any such right or remedy with respect to any subsequent
breach.

      7.6.   SUCCESSORS AND ASSIGNS.

             This Agreement shall be binding upon, inure to the benefit of, and
be enforceable by, the respective successors and permitted assigns of each of
the Trust and the Auction Agent. This Agreement may not be assigned by either
party hereto absent the prior written consent of the other party, which consent
shall not be withheld unreasonably.

      7.7.   SEVERABILITY.

             If any clause, provision or section hereof shall be ruled invalid
or unenforceable by any court of competent jurisdiction, the invalidity or
unenforceability of such clause, provision or section shall not affect any of
the remaining clauses, provisions or sections hereof.

      7.8.   EXECUTION IN COUNTERPARTS.

             This Agreement may be executed in several counterparts, each of
which shall be an original and all of which shall constitute but one and the
same instrument.

                                       14
<Page>

      7.9.   GOVERNING LAW.

             This Agreement shall be governed by and construed in accordance
with the laws of the State of New York applicable to agreements made and to be
performed in said state.

      7.10.  LIMITATION OF LIABILITY.

             The name Pilgrim Prime Rate Trust refers to the Trust and the
Trustees of the Trust, as trustees but not individually or personally, acting
from time to time under the Trust's Agreement and Declaration of Trust dated
December 2, 1987, as amended, which is hereby referred to and a copy of which is
on file at the office of the Secretary of the Commonwealth of Massachusetts and
the principal office of the Trust. The obligations of the Trust entered into in
the name or on behalf thereof by any of the Trustees, representatives or agents
of the Trust are made not individually, but in such capacities, and are not
binding upon any of the Trustees, officers, holders of shares of beneficial
interest of the Trust or representatives of the Trustees personally, but bind
only the Trust assets, and all persons dealing with the Trust must look solely
to the Trust property for the enforcement of any claims against the Trust.

                                       15
<Page>

             IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the date first above written.

                                                  PILGRIM PRIME RATE TRUST

                                                  /s/ Daniel A. Norman
                                                  ------------------------------
                                                  By: Daniel. A. Norman
                                                  Title: Senior Vice President

                                                  BANKERS TRUST COMPANY

                                                  ------------------------------
                                                  By:
                                                  Title:

<Page>

             IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed and delivered by their proper and duly authorized officers
as of the date first above written.

                                                  PILGRIM PRIME RATE TRUST

                                                  ------------------------------
                                                  By: Daniel A. Norman
                                                  Title: Senior Vice President

                                                  BANKERS TRUST COMPANY

                                                  /s/ Jody Sanchez
                                                  ------------------------------
                                                  By: Jody Sanchez
                                                  Title: Associate

<Page>

                             BROKER-DEALER AGREEMENT

      This Broker-Dealer Agreement dated as of November 2, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 2, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and ________________________ (together with its
successors and assigns, "BD").

      The Trust proposes to issue three series of preferred shares of beneficial
interest (3,600 shares of Series M, 3,600 shares of Series W and 3,600 shares of
Series F), par value $.01 per share, liquidation preference $25,000 per share,
designated Series M, W and F Auction Rate Cumulative Preferred Shares
(cumulatively, the "Preferred Shares"), pursuant to the Trust's Certificate of
Designation for Preferred Shares (as defined below).

      The Trust's Certificate provides that the Applicable Rate on shares of
each series of Preferred Shares for each Dividend Period after the initial
Dividend Period shall be equal to the rate per annum that results from an
Auction for Outstanding shares of each Series on the respective Auction Date
therefor next preceding the period from and after the Date of Original Issue to
and including the last day of the initial Dividend Period. The Board of Trustees
of the Trust has adopted a resolution appointing Bankers Trust Company as
Auction Agent for purposes of the Auction Procedures, and pursuant to Section
2.5 of the Auction Agency Agreement, the Trust has requested and directed the
Auction Agent to execute and deliver this Agreement.

      The Auction Procedures require the participation of one or more
Broker-Dealers.

      NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.    DEFINITIONS AND RULES OF CONSTRUCTION.

      1.1.   TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

      Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

      1.2.   TERMS DEFINED HEREIN.

      As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

             (a)   "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

             (b)   "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Certificate.

             (c)   "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

             (d)   "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

             (e)   "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

             (f)   "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

      1.3.   RULES OF CONSTRUCTION.

      Unless the context or use indicates another or different meaning or
intent, the following rules shall apply to the construction of this Agreement:

             (a)   Words importing the singular number shall include the plural
number and vice versa.

             (b)   The captions and headings herein are solely for convenience
of reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

             (c)   The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

             (d)   All references herein to a particular time of day shall be to
New York City time.

II.   NOTIFICATION OF DIVIDEND.

             The provisions contained in Section 4 of Part I of the Certificate
      concerning the notification of a Special Rate Period will be followed by
      the Auction Agent and BD, and the provisions contained therein are
      incorporated herein by reference in their entirety and shall be deemed to
      be a part of this Agreement to the same extent as if such provisions were
      set forth fully herein.

III.  THE AUCTION.

      3.1    Purpose; Incorporation by Reference of Auction Procedures.

             (a)   On each Auction Date, the provisions of the Auction
Procedures will be followed by the Auction Agent for the purpose of determining
the Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."

                                        2
<Page>

             (b)   All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

             (c)   BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

             (d)   BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

      3.2.   PREPARATION FOR EACH AUCTION.

             (a)   Not later than 9:30 A.M. on each Auction Date for the
Preferred Shares, the Auction Agent shall advise BD by telephone of the
Reference Rate and the Maximum Rate in effect on such Auction Date.

             (b)   The Auction Agent from time to time may request BD to provide
it with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

      3.3.   AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

             (a)   The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld unreasonably. The Auction Agent shall give
notice of any such change to BD. Such notice shall be received prior to the
first Auction Date on which any such change shall be effective.

                                        3
<Page>

<Table>
<Caption>
TIME                           EVENT
- ----                           -----
<S>                            <C>
By 9:30 A.M.                   Auction Agent shall advise the Trust and the
                               Broker-Dealers of the Reference Rate and the
                               Maximum Rate as set forth in Section 3.2(a)
                               hereof.

9:30 A.M. - 1:30 P.M.          Auction Agent shall assemble information
                               communicated to it by Broker-Dealers as provided
                               in Section 2(a) of Part II of the Certificate.
                               Submission Deadline is 1:00 P.M.

Not earlier than 1:30 P.M.     Auction Agent shall make determinations pursuant
                               to Section 4(a) of Part II of the Certificate.

By approximately 3:00 P.M.     Auction Agent shall advise the Trust of the
                               results of the Auction as provided in Section
                               4(b) of Part II of the Certificate.

                               Submitted Bids and Submitted Sell Orders will be
                               accepted and rejected in whole or in part and
                               Preferred Shares will be allocated as provided in
                               Section 5 of Part II of the Certificate.

                               Auction Agent shall give notice of the Auction
                               results as set forth in Section 3.4(a) hereof.
</Table>

             (b)   BD agrees to maintain a list of Potential Beneficial Owners
and to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

             (c)   BD shall submit Orders to the Auction Agent in writing in
 substantially the form attached hereto as Exhibit A. BD shall submit separate
 Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
 Owner on whose behalf BD is submitting an Order and shall not net or aggregate
 the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
 BD is submitting Orders.

             (d)   BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

      3.4.   NOTICE OF AUCTION RESULTS.

             (a)   On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

             (b)   BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

      If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

      3.5.   SERVICE CHARGE TO BE PAID TO BD.

      On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of fixed or variable rate preferred shares with a similar final
maturity or variable rate dividend period, at the commencement of such Special
Rate Period.

                                        5
<Page>

      For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.   THE AUCTION AGENT.

      4.1.   DUTIES AND RESPONSIBILITIES.

             (a)   The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

             (b)   The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

             (c)   In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

      4.2.   RIGHTS OF THE AUCTION AGENT.

             (a)   The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

             (b)   The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

             (c)   The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

             (d)   The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

      4.3.   AUCTION AGENT'S DISCLAIMER.

      The Auction Agent makes no representation as to the validity or adequacy
of this Agreement or the Preferred Shares.

V.    MISCELLANEOUS.

      5.1.   TERMINATION.

      Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

      5.2.   PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
             SAME-DAY FUNDS.

             (a)   BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).

             (b)   BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

      5.3.   AGENT MEMBER.

      At the date hereof, BD is a participant of the Securities Depository.

      5.4.   COMMUNICATIONS.

      Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

      If to the Auction Agent,
      addressed to:                 Bankers Trust Company
                                    Corporate Trust and Agency Group
                                    Four Albany Street
                                    New, York, NY 10006
                                    Attention: Auction Rate Securities
                                    Telecopier No.: (212) 250-6688
                                    Telephone No.: (212) 250-6850

                                        7
<Page>

      If to the BD,
      addressed to:                 _________________
                                    _________________
                                    _________________

                                    Attention:___________________
                                    Telecopier No.: (212)___-____
                                    Telephone No.: (212)___-____

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

      5.5.   ENTIRE AGREEMENT.

      This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

      5.6.   BENEFITS.

      Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

      5.7.   AMENDMENT; WAIVER.

             (a)   This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.

             (b)   Failure of either party to this Agreement to exercise any
right or remedy hereunder in the event of a breach of this Agreement by the
other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.

      5.8.   SUCCESSORS AND ASSIGNS.

             (a)   This Agreement shall be binding upon, inure to the benefit
of, and be enforceable by, the respective successors and permitted assigns of
each of BD and the Auction Agent. This Agreement may not be assigned by either
party hereto absent the prior written consent of the other party; provided,
however, that this Agreement may be assigned by the Auction Agent to a successor
Auction Agent selected by the Trust without the consent of BD.

                                        8
<Page>

      5.9.   SEVERABILITY.

      If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

      5.10.  EXECUTION IN COUNTERPARTS.

      This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

      5.11.  GOVERNING LAW.

      This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

      IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                                  BANKERS TRUST COMPANY

                                                  ------------------------------
                                                  By:
                                                  Title:


                                                  ------------------------------

                                                  ------------------------------
                                                  By:
                                                  Title:

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

SUBMIT TO:                              ISSUE:

Bankers Trust Company                   Pilgrim Prime Rate Trust
Corporate Trust and Agency Group        Auction Rate Cumulative Preferred Shares
Four Albany Street                        ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.: (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: ___________________

                                BENEFICIAL OWNER

Shares of Series ___ now held              HOLD ____________________________
                                           BID at rate of _________________
                                           SELL ____________________________

                           POTENTIAL BENEFICIAL OWNER

                                        # of shares of Series ___
                                        BID at rate of __________ Notes:

      (1)   If submitting more than one Bid for one Bidder, use additional
            Auction Bid Forms.
      (2)   If one or more Bids covering in the aggregate more than the number
            of outstanding shares held by any Beneficial Owner are submitted,
            such bid shall be considered valid in the order of priority set
            forth in the Auction Procedures on the above issue.
      (3)   A Hold or Sell Order may be placed only by a Beneficial Owner
            covering a number of shares not greater than the number of shares
            currently held.
      (4)   Potential Beneficial Owners may make only Bids, each of which must
            specify a rate. If more than one Bid is submitted on behalf of any
            Potential Beneficial Owner, each Bid submitted shall be a separate
            Bid with the rate specified.
      (5)   Bids may contain no more than three figures to the right of the
            decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER
                     ------------------------------
Authorized Signature
                    -------------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

      Re:   Pilgrim Prime Rate Trust
            Auction Rate Cumulative Preferred Shares ("Preferred Shares")

      We are (check one):

/ /   the Existing Holder named below;

/ /   the Broker-Dealer for such Existing Holder; or

/ /   the Agent Member for such Existing Holder.

      We hereby notify you that such Beneficial Owner has transferred shares of
Series _______ Preferred Shares to _________________________.


                                          -------------------------
                                          (Name of Existing Holder)


                                          -------------------------
                                          (Name of Broker-Dealer)


                                          -------------------------
                                          (Name of Agent Member)


                                          By:
                                             ----------------------
                                          Printed Name:
                                          Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

      We are a Broker-Dealer for ________________ (the "Purchaser"), which
purchased ___________ shares of Series ___ Preferred Shares of Pilgrim Prime
Rate Trust in the Auction held on _________________ from the seller of such
shares.


      We hereby notify you that (check one):

/ /   the Seller failed to deliver such shares to the Purchaser.

/ /   the Purchaser failed to make payment to the Seller upon delivery of
such shares.


                                     Name:
                                          ---------------------------
                                     (Name of Broker-Dealer)


                                     By:
                                        -----------------------------
                                     Printed Name:
                                     Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)
<SEQUENCE>27
<FILENAME>a2138029zex-99_kvi.txt
<DESCRIPTION>EX 99,(K)(VI)
<TEXT>
<Page>

                                                              Exhibit 99.(k)(vi)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 16, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 16, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and UBS Warburg LLC (together with its successors
and assigns, "BD").

     The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate of Designation for Preferred
Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1. TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2. TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

          (a)  "Auction" shall have the meaning specified in Section 2.1 of the
Auction Agency Agreement.

          (b)  "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Certificate.

          (c)  "Authorized Officer" shall mean each Managing Director, Director,
Vice President, Assistant Vice President and Associate of the Auction Agent and
every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

          (d)  "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of this Agreement in a communication to the
Auction Agent.

          (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

          (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3. RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

          (a)  Words importing the singular number shall include the plural
number and vice versa.

          (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

          (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

          (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

          The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1  Purpose; Incorporation by Reference of Auction Procedures.

          (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the

                                        2
<Page>

Preferred Shares, for each Dividend Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."

          (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

          (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

          (d)  BD and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Trust, by notice to BD and all other Broker Dealers,
may prohibit all Broker-Dealers from submitting Bids in Auctions for their own
accounts, provided that Broker-Dealers may continue to submit Hold Orders and
Sell Orders.

     3.2. PREPARATION FOR EACH AUCTION.

          (a)  Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone of the Reference Rate and
the Maximum Rate in effect on such Auction Date.

          (b)  The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3. AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

          (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld

                                        3
<Page>

unreasonably. The Auction Agent shall give notice of any such change to BD. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.

<Table>
<Caption>
TIME                               EVENT
- ----                               -----
<S>                                <C>
By 9:30 A.M.                       Auction Agent shall advise the Trust and the
                                   Broker-Dealers of the Reference Rate and the
                                   Maximum Rate as set forth in Section 3.2(a)
                                   hereof.

9:30 A.M. - 1:30 P.M.              Auction Agent shall assemble information
                                   communicated to it by Broker-Dealers as
                                   provided in Section 2(a) of Part II of the
                                   Certificate. Submission Deadline is 1:00 P.M.

Not earlier than 1:30 P.M.         Auction Agent shall make determinations
                                   pursuant to Section 4(a) of Part II of the
                                   Certificate.

By approximately 3:00 P.M.         Auction Agent shall advise the Trust of the
                                   results of the Auction as provided in Section
                                   4(b) of Part II of the Certificate.

                                   Submitted Bids and Submitted Sell Orders will
                                   be accepted and rejected in whole or in part
                                   and Preferred Shares will be allocated as
                                   provided in Section 5 of Part II of the
                                   Certificate.

                                   Auction Agent shall give notice of the
                                   Auction results as set forth in Section
                                   3.4(a) hereof.
</Table>

          (b)  BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

          (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

          (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4. NOTICE OF AUCTION RESULTS.

          (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

          (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or nondelivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5. SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of

                                        5
<Page>

fixed or variable rate preferred shares with a similar final maturity or
variable rate dividend period, at the commencement of such Special Rate Period.

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1. DUTIES AND RESPONSIBILITIES.

          (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

          (b)  The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Auction Agent.

          (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2. RIGHTS OF THE AUCTION AGENT.

          (a)  The Auction Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any communication authorized by this Agreement
and any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document reasonably
believed by it to be genuine. The Auction Agent shall not be liable for acting
upon any telephone communication authorized by this Agreement which the Auction
Agent reasonably believes in good faith to have been given by the Trust or by
BD. The Auction Agent may record telephone communications with BD.

          (b)  The Auction Agent may consult with counsel of its own choice, and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

          (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

          (d)  The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3. AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1. TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2. PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN SAME-DAY
          FUNDS.

          (a)  BD is, and shall remain for the term of this Agreement, a member
of, or a participant in, the Securities Depository (or an affiliate of such a
member or participant).

          (b)  BD represents that it (or if BD does not act as Agent Member, one
of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3. AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4. COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:                 Bankers Trust Company
                                   Corporate Trust and Agency Group
                                   Four Albany Street
                                   New, York, NY 10006
                                   Attention: Auction Rate Securities
                                   Telecopier No.: (212) 250-6688
                                   Telephone No.: (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:                 UBS Warburg LLC
                                   1285 Avenue of the Americas
                                   New York, NY 10019
                                   Attention: Todd A. Reit
                                   Telecopier No.: (212) 713-4205
                                   Telephone No.: (212) 713-4908

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5. ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6. BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7. AMENDMENT; WAIVER.

          (a)  This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.

          (b)  Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

     5.8. SUCCESSORS AND ASSIGNS.

          (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.  SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10. EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.

     5.11. GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                                    BANKERS TRUST COMPANY

                                                    /s/ Jody Sanchez
                                                    ------------------------
                                                    By: Jody Sanchez
                                                    Title: Associate


                                                    ------------------------

                                                    ------------------------
                                                    By:
                                                    Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                                    BANKERS TRUST COMPANY


                                                    ------------------------
                                                    By:
                                                    Title:


                                                    UBS WARBURG LLC
                                                    --------------------------
                                                    /s/ Todd A. Reit
                                                    --------------------------
                                                    By: Todd A. Reit
                                                    Title: Executive Director

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

SUBMIT TO:                             ISSUE:

Bankers Trust Company                  Pilgrim Prime Rate Trust
Corporate Trust and Agency Group       Auction Rate Cumulative Preferred Shares
Four Albany Street                       ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.: (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: _________________________

                                BENEFICIAL OWNER

Shares of Series ______ now held             HOLD _____________________________
                                             BID at rate of ___________________
                                             SELL _____________________________


                           POTENTIAL BENEFICIAL OWNER

                                         # of shares of Series ___
                                         BID at rate of ____________ Notes:

     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER
                     ------------------------
Authorized Signature
                    -------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:  Pilgrim Prime Rate Trust
          Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series ____ Preferred Shares to ____________________________.


                                            -------------------------
                                            (Name of Existing Holder)


                                            -------------------------
                                            (Name of Broker-Dealer)


                                            -------------------------
                                            (Name of Agent Member)


                                            By:
                                               ----------------------
                                            Printed Name:
                                            Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for _______________________ (the "Purchaser"), which
purchased _________ shares of Series ____ Preferred Shares of Pilgrim Prime Rate
Trust in the Auction held on _______________ from the seller of such shares.


     We hereby notify you that (check one):

/ / the Seller failed to deliver such shares to the Purchaser.

/ / the Purchaser failed to make payment to the Seller upon delivery of such
shares.


                                         Name:
                                              -----------------------
                                         (Name of Broker-Dealer)


                                         By:
                                            -------------------------
                                         Printed Name:
                                         Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(1)
<SEQUENCE>28
<FILENAME>a2138029zex-99_kvi1.txt
<DESCRIPTION>EX 99.(K)(VI)(1)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(1)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 16, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 16, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and Salomon Smith Barney (together with its
successors and assigns, "BD").

     The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate of Designation for Preferred
Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.    TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.    TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

             (a)  "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

             (b)  "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Certificate.

             (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

     This Broker-Dealer Agreement dated as of November 16, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 16, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and SALOMON SMITH BARNEY (together with its
successors and assigns, "BD").

     The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate of Designation for Preferred
Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.    TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.    TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

             (a)  "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

             (b)  "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Certificate.

             (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

             (d)  "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

             (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

             (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3.    RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

             (a)  Words importing the singular number shall include the plural
number and vice versa.

             (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

             (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

             (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

             The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1     Purpose; Incorporation by Reference of Auction Procedures.

             (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the

                                        2
<Page>

Preferred Shares, for each Dividend Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."

             (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

             (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

             (d)  BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

     3.2.    PREPARATION FOR EACH AUCTION.

             (a)  Not later than 9:30 A.M. on each Auction Date for the
Preferred Shares, the Auction Agent shall advise BD by telephone of the
Reference Rate and the Maximum Rate in effect on such Auction Date.

             (b)  The Auction Agent from time to time may request BD to provide
it with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3.    AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

             (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld

                                        3
<Page>

unreasonably. The Auction Agent shall give notice of any such change to BD. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.

<Table>
<Caption>
TIME                                   EVENT
- ----                                   -----
<S>                                    <C>
By 9:30 A.M.                           Auction Agent shall advise the Trust and
                                       the Broker-Dealers of the Reference Rate
                                       and the Maximum Rate as set forth in
                                       Section 3.2(a) hereof.

9:30 A.M. - 1:30 P.M.                  Auction Agent shall assemble information
                                       communicated to it by  Broker-Dealers  as
                                       provided in Section  2(a) of Part II of
                                       the  Certificate. Submission Deadline is
                                       1:00 P.M.

Not earlier than 1:30 P.M.             Auction Agent shall make determinations
                                       pursuant to Section 4(a) of Part II of
                                       the Certificate.

By approximately 3:00 P.M.             Auction Agent shall advise the Trust of
                                       the results of the Auction as provided
                                       in Section 4(b) of Part II of the
                                       Certificate.

                                       Submitted Bids and Submitted Sell Orders
                                       will be accepted and rejected in whole or
                                       in part and Preferred Shares will be
                                       allocated as provided in Section 5 of
                                       Part II of the Certificate.

                                       Auction Agent shall give notice of the
                                       Auction results as set forth in Section
                                       3.4(a) hereof.
</Table>

             (b)  BD agrees to maintain a list of Potential Beneficial Owners
and to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

             (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

             (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4.    NOTICE OF AUCTION RESULTS.

             (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

             (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5.    SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of

                                        5
<Page>

fixed or variable rate preferred shares with a similar final maturity or
variable rate dividend period, at the commencement of such Special Rate Period.

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1.    DUTIES AND RESPONSIBILITIES.

             (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

             (b)  The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

             (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2.    RIGHTS OF THE AUCTION AGENT.

             (a)  The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

             (b)  The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

             (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

             (d)  The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3.    AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1.    TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2.    PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
             SAME-DAY FUNDS.

             (a)  BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).

             (b)  BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3.    AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4.    COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:                     Bankers Trust Company
                                       Corporate Trust and Agency Group
                                       Four Albany Street
                                       New, York, NY 10006
                                       Attention: Auction Rate Securities
                                       Telecopier No.: (212) 250-6688
                                       Telephone No.:  (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:                     Salomon Smith Barney
                                       390 Greenwich Street, 5th floor
                                       New York, NY 10013
                                       Attention: Short-Term Trading Desk
                                       Telecopier No.: (212) 723-7082
                                       Telephone No.:  (212) 723-8809

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5.    ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6.    BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7.    AMENDMENT; WAIVER.

             (a)  This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.

             (b)  Failure of either party to this Agreement to exercise any
right or remedy hereunder in the event of a breach of this Agreement by the
other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.

     5.8.    SUCCESSORS AND ASSIGNS.

             (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.    SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10.   EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.

     5.11.   GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                       BANKERS TRUST COMPANY

                                       /s/ Jody Sanchez
                                       ---------------------
                                       By: Jody Sanchez
                                       Title: Associate


                                       ------------------------

                                       ------------------------
                                       By:
                                       Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                       BANKERS TRUST COMPANY

                                       ---------------------
                                       By:
                                       Title:


                                       ------------------------
                                       /s/  William B. Ogden
                                       ------------------------
                                       By: WILLIAM B. OGDEN
                                       Title: MANAGING DIRECTOR

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

<Table>
<Caption>
SUBMIT TO:                             ISSUE:
- ---------                              -----
<S>                                    <C>
Bankers Trust Company                  Pilgrim Prime Rate Trust
Corporate Trust and Agency Group       Auction Rate Cumulative Preferred Shares
Four Albany Street                       ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850
</Table>

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: _____________________

                                BENEFICIAL OWNER

Shares of Series _______ now held       HOLD _________________________
                                        BID at rate of _______________
                                        SELL _________________________

                           POTENTIAL BENEFICIAL OWNER

                                       # of shares of Series ____
                                       BID at rate of__________ Notes:

     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER
                      ----------------------
Authorized Signature
                    ------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:  Pilgrim Prime Rate Trust
          Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series ____ Preferred Shares to___________________________________.


                                                  -------------------------
                                                  (Name of Existing Holder)


                                                  -----------------------
                                                  (Name of Broker-Dealer)


                                                  ----------------------
                                                  (Name of Agent Member)


                                                  By:
                                                     --------------------
                                                  Printed Name:
                                                  Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                 Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for __________________________ (the "Purchaser"),
which purchased _______ shares of Series ____ Preferred Shares of Pilgrim Prime
Rate Trust in the Auction held on ______________________________ from the seller
of such shares.


     We hereby notify you that (check one):

/ / the Seller failed to deliver such shares to the Purchaser.

/ / the Purchaser failed to make payment to the Seller upon delivery of such
shares.


                                       Name:
                                            ------------------------
                                       (Name of Broker-Dealer)


                                       By:
                                          ---------------------------
                                       Printed Name:
                                       Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(2)
<SEQUENCE>29
<FILENAME>a2138029zex-99_kvi2.txt
<DESCRIPTION>EX 99.(K)(VI)(2)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(2)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 16, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 16, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and Lehman Brothers (together with its successors
and assigns, "BD").

     The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate of Designation for Preferred
Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.    TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.    TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

             (a)  "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

             (b)  "Auction Procedures" shall mean the Auction Procedures that
are set forth in Part II of the Certificate.

             (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

             (d)  "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

             (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

             (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3.    RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

             (a)  Words importing the singular number shall include the plural
number and vice versa.

             (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

             (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

             (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

             The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1     Purpose; Incorporation by Reference of Auction Procedures.

             (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the

                                        2
<Page>

Preferred Shares, for each Dividend Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."

             (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

             (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

             (d)  BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

     3.2.    PREPARATION FOR EACH AUCTION.

             (a)  Not later than 9:30 A.M. on each Auction Date for the
Preferred Shares, the Auction Agent shall advise BD by telephone of the
Reference Rate and the Maximum Rate in effect on such Auction Date.

             (b)  The Auction Agent from time to time may request BD to provide
it with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3.    AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

             (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld

                                        3
<Page>

unreasonably. The Auction Agent shall give notice of any such change to BD. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.

<Table>
<Caption>
TIME                                    EVENT
- ----                                    -----
<S>                                     <C>
By 9:30 A.M.                            Auction Agent shall advise the Trust and
                                        the Broker-Dealers of the Reference
                                        Rate and the Maximum Rate as set forth
                                        in Section 3.2(a) hereof.

9:30 A.M. - 1:30 P.M.                   Auction Agent shall assemble information
                                        communicated to it by Broker-Dealers as
                                        provided in Section 2(a) of Part II of
                                        the Certificate. Submission Deadline is
                                        1:00 P.M.

Not earlier than 1:30 P.M.              Auction Agent shall make determinations
                                        pursuant to Section 4(a) of Part II of
                                        the Certificate.

By approximately 3:00 P.M.              Auction Agent shall advise the Trust of
                                        the results of the Auction as provided
                                        in Section 4(b) of Part II of the
                                        Certificate.

                                        Submitted Bids and Submitted Sell Orders
                                        will be accepted and rejected in whole
                                        or in part and Preferred Shares will be
                                        allocated as provided in Section 5 of
                                        Part II of the Certificate.

                                        Auction Agent shall give notice of the
                                        Auction results as set forth in Section
                                        3.4(a) hereof.
</Table>

             (b)  BD agrees to maintain a list of Potential Beneficial Owners
and to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

             (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

             (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4.    NOTICE OF AUCTION RESULTS.

             (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

             (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5.    SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of

                                        5
<Page>

fixed or variable rate preferred shares with a similar final maturity or
variable rate dividend period, at the commencement of such Special Rate Period.

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1.    DUTIES AND RESPONSIBILITIES.

             (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

             (b)  The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

             (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2.    RIGHTS OF THE AUCTION AGENT.

             (a)  The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

             (b)  The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

             (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

             (d)  The Auction Agent may perform its duties and exercise its
rights hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3.    AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1.    TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2.    PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
             SAME-DAY FUNDS.

             (a)  BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).

             (b)  BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3.    AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4.    COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:                      Bankers Trust Company
                                        Corporate Trust and Agency Group
                                        Four Albany Street
                                        New, York, NY 10006
                                        Attention: Auction Rate Securities
                                        Telecopier No.: (212) 250-6688
                                        Telephone No.:  (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:                      Lehman Brothers
                                        3 World Financial Center, 9th Floor
                                        New York, NY 10285
                                        Attention: Gia Rys
                                        Telecopier No.: (212)526-1491
                                        Telephone No.:  (212)526-8390

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5.    ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6.    BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7.    AMENDMENT: WAIVER.

             (a)  This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except by
a written instrument signed by a duly authorized representative of the party to
be charged.

             (b)  Failure of either party to this Agreement to exercise any
right or remedy hereunder in the event of a breach of this Agreement by the
other party shall not constitute a waiver of any such right or remedy with
respect to any subsequent breach.

     5.8.    SUCCESSORS AND ASSIGNS.

             (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.    SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10.   EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.

     5.11.   GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                        BANKERS TRUST COMPANY


                                        /s/ Jody Sanchez
                                        ----------------------------
                                        By: Jody Sanchez
                                        Title: Associate


                                        ----------------------------

                                        ----------------------------
                                        By:
                                        Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                        BANKERS TRUST COMPANY

                                        /s/ Gia Rys
                                        ----------------------------
                                        By:
                                        Title:


                                        /s/ Gia Rys
                                        ----------------------------

                                        Lehman Brothers
                                        ----------------------------
                                        By: GIA RYS
                                        Title: Vice President

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

SUBMIT TO:                              ISSUE:

Bankers Trust Company                   Pilgrim Prime Rate Trust
Corporate Trust and Agency Group        Auction Rate Cumulative Preferred Shares
Four Albany Street                        ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder:_______________________

                                BENEFICIAL OWNER

Shares of Series ________ now held      HOLD__________________________________
                                        BID at rate of_______________________
                                        SELL__________________________________

                           POTENTIAL BENEFICIAL OWNER

                                        # of shares of Series.______
                                        BID at rate of____________ Notes:


     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER.______________________________
Authorized Signature________________________________

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:  Pilgrim Prime Rate Trust
          Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series ______ Preferred Shares to ____________________________________________.


                                        ----------------------------
                                        (Name of Existing Holder)


                                        ----------------------------
                                        (Name of Broker-Dealer)


                                        ----------------------------
                                        (Name of Agent Member)


                                        By:
                                           -------------------------
                                        Printed Name:
                                        Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                 Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for ___________________________ (the "Purchaser"),
which purchased____________ shares of Series _______ Preferred Shares of Pilgrim
Prime Rate Trust in the Auction held on ______________________ from the seller
of such shares.


     We hereby notify you that (check one):

/ /  the Seller failed to deliver such shares to the Purchaser.

/ /  the Purchaser failed to make payment to the Seller upon delivery of such
shares.



                                        Name:
                                             -----------------------
                                        (Name of Broker-Dealer)


                                        By:
                                           -------------------------
                                        Printed Name:
                                        Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(3)
<SEQUENCE>30
<FILENAME>a2138029zex-99_kvi3.txt
<DESCRIPTION>EX 99.(K)(VI)(3)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(3)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 16, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 16, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and Gruntal & Co., L.L.C. (together with its
successors and assigns, "BD").

     The Trust proposes to issue two series of preferred shares of beneficial
interest (3,600 shares of Series T and 3,600 shares of Series Th), par value
$.01 per share, liquidation preference $25,000 per share, designated Series T
and Th Auction Rate Cumulative Preferred Shares (cumulatively, the "Preferred
Shares"), pursuant to the Trust's Certificate of Designation for Preferred
Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.  TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.  TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

           (a)  "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

           (b)  "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Certificate.

           (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

           (d)  "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

           (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

           (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3.  RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

           (a)  Words importing the singular number shall include the plural
number and vice versa.

           (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

           (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

           (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

           The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1   Purpose; Incorporation by Reference of Auction Procedures.

           (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the

                                        2
<Page>

Preferred Shares, for each Dividend Period. Each periodic operation of such
procedures is hereinafter referred to as an "Auction."

           (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

           (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

           (d)  BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

     3.2.  PREPARATION FOR EACH AUCTION.

           (a)  Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone of the Reference Rate and
the Maximum Rate in effect on such Auction Date.

           (b)  The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3.  AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

           (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld

                                        3
<Page>

unreasonably. The Auction Agent shall give notice of any such change to BD. Such
notice shall be received prior to the first Auction Date on which any such
change shall be effective.

<Table>
<Caption>
TIME                               EVENT
- ----                               -----
<S>                                <C>
By 9:30 A.M.                       Auction Agent shall advise the Trust and the
                                   Broker-Dealers of the Reference Rate and the
                                   Maximum Rate as set forth in Section 3.2(a)
                                   hereof.

9:30 A.M. - 1:30 P.M.              Auction Agent shall assemble information
                                   communicated to it by Broker-Dealers as
                                   provided in Section 2(a) of Part II of the
                                   Certificate. Submission Deadline is 1:00 P.M.

Not earlier than 1:30 P.M.         Auction Agent shall make determinations
                                   pursuant to Section 4(a) of Part II of the
                                   Certificate.

By approximately 3:00 P.M.         Auction Agent shall advise the Trust of the
                                   results of the Auction as provided in Section
                                   4(b) of Part II of the Certificate.

                                   Submitted Bids and Submitted Sell Orders will
                                   be accepted and rejected in whole or in part
                                   and Preferred Shares will be allocated as
                                   provided in Section 5 of Part II of the
                                   Certificate.

                                   Auction Agent shall give notice of the
                                   Auction results as set forth in Section
                                   3.4(a) hereof.
</Table>

           (b)  BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

           (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

           (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4.  NOTICE OF AUCTION RESULTS.

           (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

           (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5.  SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of

                                        5
<Page>

fixed or variable rate preferred shares with a similar final maturity or
variable rate dividend period, at the commencement of such Special Rate Period.

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1.  DUTIES AND RESPONSIBILITIES.

           (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

           (b)  The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

           (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2.  RIGHTS OF THE AUCTION AGENT.

           (a)  The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

           (b)  The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

           (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

           (d)  The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3.  AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1.  TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2.  PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
           SAME-DAY FUNDS.

           (a)  BD is, and shall remain for the term of this Agreement, a member
of, or a participant in, the Securities Depository (or an affiliate of such a
member or participant).

           (b)  BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3.  AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4.  COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:               Bankers Trust Company
                                 Corporate Trust and Agency Group
                                 Four Albany Street
                                 New, York, NY 10006
                                 Attention: Auction Rate Securities
                                 Telecopier No.: (212) 250-6688
                                 Telephone No.:  (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:               Gruntal & Co., L.L.C.
                                 One Liberty Plaza
                                 New York, NY 10006
                                 Attention: Michael McGrath
                                 Telecopier No.: (212) 820-3613
                                 Telephone No.:  (212) 820-3699

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5.  ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6.  BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7.  AMENDMENT; WAIVER.

           (a)  This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.

           (b)  Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

     5.8.  SUCCESSORS AND ASSIGNS.

           (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.  SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10. EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.

     5.11. GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                         BANKERS TRUST COMPANY


                                         /s/ Jody Sanchez
                                         --------------------------
                                         By: Jody Sanchez
                                         Title: Associate


                                         ------------------------------

                                         ------------------------------
                                         By:
                                         Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                         BANKERS TRUST COMPANY


                                         --------------------------
                                         By:
                                         Title:


                                         /s/ Michael McGrath
                                         ------------------------------
                                         Gruntal & Co LLC
                                         ------------------------------
                                         By: Michael McGrath
                                         Title: Managing Director

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

<Table>
<Caption>
SUBMIT TO:                             ISSUE:
- ---------                              -----
<S>                                    <C>
Bankers Trust Company                  Pilgrim Prime Rate Trust
Corporate Trust and Agency Group       Auction Rate Cumulative Preferred Shares
Four Albany Street                       ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850
</Table>

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: ______________________

                                BENEFICIAL OWNER

Shares of Series____ now held              HOLD ________________________________
                                           BID at rate of ______________________
                                           SELL ________________________________

                           POTENTIAL BENEFICIAL OWNER

                                         # of shares of Series _____
                                         BID at rate of ______________ Notes:

     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER _______________________________
Authorized Signature ________________________________

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:  Pilgrim Prime Rate Trust
          Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series _______ Preferred Shares to _______________________________.


                                         -------------------------
                                         (Name of Existing Holder)


                                         -------------------------
                                         (Name of Broker-Dealer)


                                         -------------------------
                                         (Name of Agent Member)


                                         By:
                                            ----------------------
                                         Printed Name:
                                         Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for _________________________ (the "Purchaser"),
which purchased _____________ shares of Series _____ Preferred Shares of Pilgrim
Prime Rate Trust in the Auction held on_____________________ from the seller of
such shares.


     We hereby notify you that (check one):

/ / the Seller failed to deliver such shares to the Purchaser.

/ / the Purchaser failed to make payment to the Seller upon delivery of such
shares.


                                       Name:
                                            -------------------------
                                       (Name of Broker-Dealer)


                                       By:
                                          ---------------------------
                                       Printed Name:
                                       Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(4)
<SEQUENCE>31
<FILENAME>a2138029zex-99_kvi4.txt
<DESCRIPTION>EX 99.(K)(VI)(4)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(4)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 2, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 2, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and PaineWebber Incorporated (together with its
successors and assigns, "BD").

     The Trust proposes to issue three series of preferred shares of beneficial
interest (3,600 shares of Series M, 3,600 shares of Series W and 3,600 shares of
Series F), par value $.01 per share, liquidation preference $25,000 per share,
designated Series M, W and F Auction Rate Cumulative Preferred Shares
(cumulatively, the "Preferred Shares"), pursuant to the Trust's Certificate of
Designation for Preferred Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.  TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.  TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

           (a)  "Auction" shall have the meaning specified in Section 2.1 of the
Auction Agency Agreement.

           (b)  "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Certificate.

           (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

           (d)  "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

           (e)  "Broker-Dealer Agreement" shall mean this Agreement and  any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

           (f)  "Certificate" shall mean the Certificate of Designation  for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3.  RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

           (a)  Words importing the singular number shall include the plural
number and vice versa.

           (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

           (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

           (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

           The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1   Purpose; Incorporation by Reference of Auction Procedures.

           (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."

                                        2
<Page>

           (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

           (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

           (d)  BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

     3.2.  PREPARATION FOR EACH AUCTION.

           (a)  Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone of the Reference Rate and
the Maximum Rate in effect on such Auction Date.

           (b)  The Auction Agent from time to time may request BD to  provide
it with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3.  AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

           (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld unreasonably. The Auction Agent shall give
notice of any such change to BD. Such notice shall be received prior to the
first Auction Date on which any such change shall be effective.

                                        3
<Page>

<Table>
<Caption>
TIME                               EVENT
- ----                               -----
<S>                                <C>
By 9:30 A.M.                       Auction Agent shall advise the Trust and the
                                   Broker-Dealers of the Reference Rate and the
                                   Maximum Rate as set forth in Section 3.2(a)
                                   hereof.

9:30 A.M. - 1:30 P.M.              Auction Agent shall assemble information
                                   communicated to it by Broker-Dealers as
                                   provided in Section 2(a) of Part II of the
                                   Certificate. Submission Deadline is 1:00 P.M.

Not earlier than 1:30 P.M.         Auction Agent shall make determinations
                                   pursuant to Section 4(a) of Part II of the
                                   Certificate.

By approximately 3:00 P.M.         Auction Agent shall advise the Trust of the
                                   results of the Auction as provided in Section
                                   4(b) of Part II of the Certificate.

                                   Submitted Bids and Submitted Sell Orders will
                                   be accepted and rejected in whole or in part
                                   and Preferred Shares will be allocated as
                                   provided in Section 5 of Part II of the
                                   Certificate.

                                   Auction Agent shall give notice of the
                                   Auction results as set forth in Section
                                   3.4(a) hereof.
</Table>

           (b)  BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

           (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

           (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4.  NOTICE OF AUCTION RESULTS.

           (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

           (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5.  SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of fixed or variable rate preferred shares with a similar final
maturity or variable rate dividend period, at the commencement of such Special
Rate Period.

                                        5
<Page>

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1.  DUTIES AND RESPONSIBILITIES.

           (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

           (b)  The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

           (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2.  RIGHTS OF THE AUCTION AGENT.

           (a)  The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

           (b)  The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

           (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

           (d)  The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3.  AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1.  TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2.  PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
SAME-DAY FUNDS.

           (a)  BD is, and shall remain for the term of this Agreement, a member
of, or a participant in, the Securities Depository (or an affiliate of such a
member or participant).

           (b)  BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3.  AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4.  COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:               Bankers Trust Company
                                 Corporate Trust and Agency Group
                                 Four Albany Street
                                 New, York, NY 10006
                                 Attention: Auction Rate Securities
                                 Telecopier No.: (212) 250-6688
                                 Telephone No.:  (212) 250-6850

                                        7
<Page>

     If to the BD,                 PAINEWEBBER INCORPORATED
     addressed to:                 1285 Avenue of the Americas
                                   New York, NY 10019
                                   Attention: Todd A. Reit
                                   Telecopier No.: (212)713 - 4205
                                   Telephone No.:  (212)713 - 4908

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5.  ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6.  BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7.  AMENDMENT; WAIVER.

           (a)  This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.

           (b)  Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

     5.8.  SUCCESSORS AND ASSIGNS.

           (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.  SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10. EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.

     5.11. GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                         BANKERS TRUST COMPANY

                                         /s/ Melissa M. Reynolds
                                         ----------------------
                                         BY: MELISSA M. REYNOLDS
                                         TITLE: VICE PRESIDENT


                                         ----------------------------

                                         ----------------------------
                                         By:
                                         Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                         BANKERS TRUST COMPANY


                                         ----------------------
                                         By:
                                         Title:


                                         PAINEWEBBER INCORPORATED
                                         ----------------------------
                                         /s/ Todd A. Reit
                                         ----------------------------
                                         By: Todd A. Reit
                                         Title: Director

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

SUBMIT TO:                              ISSUE:

Bankers Trust Company                   Pilgrim Prime Rate Trust
Corporate Trust and Agency Group        Auction Rate Cumulative Preferred Shares
Four Albany Street                       ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: ______________________

                                BENEFICIAL OWNER

Shares of Series ____ now held             HOLD ________________________________
                                           BID at rate of _____________________
                                           SELL ________________________________

                           POTENTIAL BENEFICIAL OWNER

                                         # of shares of Series ____
                                         BID at rate of _________ Notes:

     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER ____________________________
Authorized Signature _____________________________

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:   Pilgrim Prime Rate Trust
           Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series ________ Preferred Shares to _____________________________.



                                        -------------------------
                                        (Name of Existing Holder)


                                        -------------------------
                                        (Name of Broker-Dealer)


                                        -------------------------
                                        (Name of Agent Member)


                                        By:
                                           ----------------------
                                        Printed Name:
                                        Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for _____________________________ (the "Purchaser"),
which purchased ____________ shares of Series ______ Preferred Shares of Pilgrim
Prime Rate Trust in the Auction held on ________________________ from the seller
of such shares.

     We hereby notify you that (check one):

/ /  the Seller failed to deliver such shares to the Purchaser.

/ /  the Purchaser failed to make payment to the Seller upon delivery of such
shares.


                                  Name:__________________________
                                  (Name of Broker-Dealer)


                                  By:____________________________
                                  Printed Name:
                                  Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(5)
<SEQUENCE>32
<FILENAME>a2138029zex-99_kvi5.txt
<DESCRIPTION>EX 99.(K)(VI)(5)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(5)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 2, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 2, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and Gruntal & Co., L.L.C. (together with its
successors and assigns, "BD").

     The Trust proposes to issue three series of preferred shares of beneficial
interest (3,600 shares of Series M, 3,600 shares of Series W and 3,600 shares of
Series F), par value $.01 per share, liquidation preference $25,000 per share,
designated Series M, W and F Auction Rate Cumulative Preferred Shares
(cumulatively, the "Preferred Shares"), pursuant to the Trust's Certificate of
Designation for Preferred Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.  TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.  TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

           (a)  "Auction" shall have the meaning specified in Section 2.1 of the
Auction Agency Agreement.

           (b)  "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Certificate.

           (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

           (d)  "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

           (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

           (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3.  RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

           (a)  Words importing the singular number shall include the plural
number and vice versa.

           (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

           (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

           (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

           The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1   Purpose; Incorporation by Reference of Auction Procedures.

           (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."

                                        2
<Page>

           (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

           (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

           (d)  BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

     3.2.  PREPARATION FOR EACH AUCTION.

           (a)  Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone of the Reference Rate and
the Maximum Rate in effect on such Auction Date.

           (b)  The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3.  AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

           (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld unreasonably. The Auction Agent shall give
notice of any such change to BD. Such notice shall be received prior to the
first Auction Date on which any such change shall be effective.

                                        3
<Page>

<Table>
<Caption>
TIME                               EVENT
- ----                               -----
<S>                                <C>
By 9:30 A.M.                       Auction Agent shall advise the Trust and the
                                   Broker-Dealers of the Reference Rate and the
                                   Maximum Rate as set forth in Section 3.2(a)
                                   hereof.

9:30 A.M. - 1:30 P.M.              Auction Agent shall assemble information
                                   communicated to it by Broker-Dealers as
                                   provided in Section 2(a) of Part II of the
                                   Certificate. Submission Deadline is 1:00 P.M.

Not earlier than 1:30 P.M.         Auction Agent shall make determinations
                                   pursuant to Section 4(a) of Part II of the
                                   Certificate.

By approximately 3:00 P.M.         Auction Agent shall advise the Trust of the
                                   results of the Auction as provided in
                                   Section 4(b) of Part II of the Certificate.

                                   Submitted Bids and Submitted Sell Orders will
                                   be accepted and rejected in whole or in part
                                   and Preferred Shares will be allocated as
                                   provided in Section 5 of Part II of the
                                   Certificate.

                                   Auction Agent shall give notice of the
                                   Auction results as set forth in
                                   Section 3.4(a) hereof.
</Table>

           (b)  BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

           (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

           (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4.  NOTICE OF AUCTION RESULTS.

           (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

           (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5.  SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of fixed or variable rate preferred shares with a similar final
maturity or variable rate dividend period, at the commencement of such Special
Rate Period.

                                        5
<Page>

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1.  DUTIES AND RESPONSIBILITIES.

           (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

           (b)  The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

           (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2.  RIGHTS OF THE AUCTION AGENT.

           (a)  The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

           (b)  The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

           (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

           (d)  The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3.  AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1.  TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2.  PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
SAME-DAY FUNDS.

           (a)  BD is, and shall remain for the term of this Agreement, a
member of, or a participant in, the Securities Depository (or an affiliate of
such a member or participant).

           (b)  BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3.  AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4.  COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:               Bankers Trust Company
                                 Corporate Trust and Agency Group
                                 Four Albany Street
                                 New, York, NY 10006
                                 Attention: Auction Rate Securities
                                 Telecopier No.: (212) 250-6688
                                 Telephone  No.: (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:               Gruntal & Co
                                 1 Liberty Plaza
                                 Ny Ny 10006
                                 Attention: Mike McGrath
                                 Telecopier No.: (212) 820-3613
                                 Telephone  No.: (212) 820-3699

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5.  ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6.  BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7.  AMENDMENT; WAIVER.

           (a)  This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.

           (b)  Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

     5.8.  SUCCESSORS AND ASSIGNS.

           (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.  SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10. EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which shall
be an original and all of which shall constitute but one and the same
instrument.

     5.11. GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.


                                         BANKERS TRUST COMPANY

                                         /s/ Melissa M. Reynolds
                                         ----------------------
                                         By: MELISSA M. REYNOLDS
                                         Title: VICE PRESIDENT


                                         -----------------------------

                                         -----------------------------
                                         By:
                                         Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                         BANKERS TRUST COMPANY

                                         -------------------------
                                         By:
                                         Title:


                                         /s/ Michael McGrath
                                         -----------------------------
                                         Gruntal & Co LLC
                                         -----------------------------
                                         By: Michael McGrath
                                         Title: Managing Director

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

SUBMIT TO:                              ISSUE:

Bankers Trust Company                   Pilgrim Prime Rate Trust
Corporate Trust and Agency Group        Auction Rate Cumulative Preferred Shares
Four Albany Street                       ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder: _______________________

                                BENEFICIAL OWNER

Shares of Series ______ now held           HOLD ________________________________
                                           BID at rate of ______________________
                                           SELL ________________________________

                           POTENTIAL BENEFICIAL OWNER

                                         # of shares of Series _____
                                         BID at rate of ___________ Notes:

     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER
                      -------------------------------
Authorized Signature
                      -------------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:  Pilgrim Prime Rate Trust
          Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series ____ Preferred Shares to _______________________________________________.


                                        -------------------------
                                        (Name of Existing Holder)


                                        -------------------------
                                        (Name of Broker-Dealer)


                                        -------------------------
                                        (Name of Agent Member)


                                        By:
                                           ----------------------
                                        Printed Name:
                                        Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for ___________________ (the "Purchaser"), which
purchased _________ shares of Series _______ Preferred Shares of Pilgrim Prime
Rate Trust in the Auction held on _______________________________ from the
seller of such shares.


     We hereby notify you that (check one):

/ /  the Seller failed to deliver such shares to the Purchaser.

/ /  the Purchaser failed to make payment to the Seller upon
delivery of such shares.


                                        Name:
                                             -------------------------
                                        (Name of Broker-Dealer)


                                        By:
                                             -------------------------
                                        Printed Name:
                                        Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(6)
<SEQUENCE>33
<FILENAME>a2138029zex-99_kvi6.txt
<DESCRIPTION>EX 99.(K)(VI)(6)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(6)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of November 2, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of November 2, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and Salomon Smith Barney Inc. (together with its
successors and assigns, "BD").

     The Trust proposes to issue three series of preferred shares of beneficial
interest (3,600 shares of Series M, 3,600 shares of Series W and 3,600 shares of
Series F), par value $.01 per share, liquidation preference $25,000 per share,
designated Series M, W and F Auction Rate Cumulative Preferred Shares
(cumulatively, the "Preferred Shares"), pursuant to the Trust's Certificate of
Designation for Preferred Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1. TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2. TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

          (a)  "Auction" shall have the meaning specified in Section 2.1 of the
Auction Agency Agreement.

          (b)  "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Certificate.

          (c)  "Authorized Officer" shall mean each Managing Director, Director,
Vice President, Assistant Vice President and Associate of the Auction Agent and
every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

          (d)  "BD Officer" shall mean each officer or employee of BD designated
as a "BD Officer" for purposes of this Agreement in a communication to the
Auction Agent.

          (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

          (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3. RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

          (a)  Words importing the singular number shall include the plural
number and vice versa.

          (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

          (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

          (d)  All references herein to a particular time of day shall be to New
York City time.

II.  NOTIFICATION OF DIVIDEND.

          The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1  Purpose; Incorporation by Reference of Auction Procedures.

          (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures is hereinafter referred to as an
"Auction."

                                        2
<Page>

          (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

          (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

          (d)  BD and other Broker-Dealers may participate in Auctions for their
own accounts. However, the Trust, by notice to BD and all other Broker Dealers,
may prohibit all Broker-Dealers from submitting Bids in Auctions for their own
accounts, provided that Broker-Dealers may continue to submit Hold Orders and
Sell Orders.

     3.2. PREPARATION FOR EACH AUCTION.

          (a)  Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone of the Reference Rate and
the Maximum Rate in effect on such Auction Date.

          (b)  The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3. AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

          (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld unreasonably. The Auction Agent shall give
notice of any such change to BD. Such notice shall be received prior to the
first Auction Date on which any such change shall be effective.

                                        3
<Page>

<Table>
<Caption>
TIME                                    EVENT
- ----                                    -----
<S>                                     <C>
By 9:30 A.M.                            Auction Agent shall advise the Trust and
                                        the Broker-Dealers of the Reference
                                        Rate and the Maximum Rate as set forth
                                        in Section 3.2(a) hereof.

9:30 A.M. - 1:30 P.M.                   Auction Agent shall assemble information
                                        communicated to it by Broker-Dealers as
                                        provided in Section 2(a) of Part II of
                                        the Certificate. Submission Deadline is
                                        1:00 P.M.

Not earlier than 1:30 P.M.              Auction Agent shall make determinations
                                        pursuant to Section 4(a) of Part II of
                                        the Certificate.

By approximately 3:00 P.M.              Auction Agent shall advise the Trust of
                                        the results of the Auction as provided
                                        in Section 4(b) of Part II of the
                                        Certificate.

                                        Submitted Bids and Submitted Sell Orders
                                        will be accepted and rejected in whole
                                        or in part and Preferred Shares will be
                                        allocated as provided in Section 5 of
                                        Part II of the Certificate.

                                        Auction Agent shall give notice of the
                                        Auction results as set forth in Section
                                        3.4(a) hereof.
</Table>

          (b)  BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

          (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

          (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4. NOTICE OF AUCTION RESULTS.

          (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

          (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5. SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of fixed or variable rate preferred shares with a similar final
maturity or variable rate dividend period, at the commencement of such Special
Rate Period.

                                        5
<Page>

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1. DUTIES AND RESPONSIBILITIES.

          (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

          (b)  The Auction Agent undertakes to perform such duties and only such
duties as are set forth specifically in this Agreement, and no implied covenants
or obligations shall be read into this Agreement against the Auction Agent.

          (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2. RIGHTS OF THE AUCTION AGENT.

          (a)  The Auction Agent may rely upon, and shall be protected in acting
or refraining from acting upon, any communication authorized by this Agreement
and any written instruction, notice, request, direction, consent, report,
certificate, share certificate or other instrument, paper or document reasonably
believed by it to be genuine. The Auction Agent shall not be liable for acting
upon any telephone communication authorized by this Agreement which the Auction
Agent reasonably believes in good faith to have been given by the Trust or by
BD. The Auction Agent may record telephone communications with BD.

          (b)  The Auction Agent may consult with counsel of its own choice, and
the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

          (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

          (d)  The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3. AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1. TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2. PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN SAME-DAY
FUNDS.

          (a)  BD is, and shall remain for the term of this Agreement, a member
of, or a participant in, the Securities Depository (or an affiliate of such a
member or participant).

          (b)  BD represents that it (or if BD does not act as Agent Member, one
of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3. AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4. COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:                       Bankers Trust Company
                                         Corporate Trust and Agency Group
                                         Four Albany Street
                                         New, York, NY 10006
                                         Attention: Auction Rate Securities
                                         Telecopier No.: (212) 250-6688
                                         Telephone No.:  (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:                       Salomon Smith Barney
                                         390 Greenwich St, 5th Floor
                                         New York, NY 10013
                                         Attention: Short-Term Trading Desk
                                         Telecopier No.: (212) 723-7082
                                         Telephone No.:  (212) 723-8809

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5. ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6. BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7. AMENDMENT; WAIVER.

          (a)  This Agreement shall not be deemed or construed to be
modified, amended, rescinded, canceled or waived, in whole or in part, except
by a written instrument signed by a duly authorized representative of the
party to be charged.

          (b)  Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

     5.8. SUCCESSORS AND ASSIGNS.

          (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.


                                                BANKERS TRUST COMPANY

                                                /s/ Melissa M. Reynolds
                                                ------------------------
                                                By:  MELISSA M. REYNOLDS
                                                Title: VICE PRESIDENT


                                                -------------------------------

                                                -------------------------------
                                                By:
                                                Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                                BANKERS TRUST COMPANY

                                                -------------------------
                                                By:
                                                Title:


                                                Salomon Smith Barney
                                                -----------------------------
                                                /s/ Robert F. Bush
                                                -----------------------------
                                                By: Robert F. Bush, Jr.
                                                Title: Director

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM

SUBMIT TO:                              ISSUE:

Bankers Trust Company                   Pilgrim Prime Rate Trust
Corporate Trust and Agency Group        Auction Rate Cumulative Preferred Shares
Four Albany Street                        ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.: (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder:__________________________

                                BENEFICIAL OWNER

Shares of Series_____now held           HOLD_________________________________
                                        BID at rate of______________________
                                        SELL_________________________________

                           POTENTIAL BENEFICIAL OWNER

                                       # of shares of Series___
                                       BID at rate of___________Notes:

     (1)  If submitting more than one Bid for one Bidder, use additional Auction
          Bid Forms.
     (2)  If one or more Bids covering in the aggregate more than the number of
          outstanding shares held by any Beneficial Owner are submitted, such
          bid shall be considered valid in the order of priority set forth in
          the Auction Procedures on the above issue.
     (3)  A Hold or Sell Order may be placed only by a Beneficial Owner covering
          a number of shares not greater than the number of shares currently
          held.
     (4)  Potential Beneficial Owners may make only Bids, each of which must
          specify a rate. If more than one Bid is submitted on behalf of any
          Potential Beneficial Owner, each Bid submitted shall be a separate Bid
          with the rate specified.
     (5)  Bids may contain no more than three figures to the right of the
          decimal point (.001 of 1%). Fractions will not be accepted.

NAME OF BROKER-DEALER
                     ---------------------------
Authorized Signature
                    ----------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:  Pilgrim Prime Rate Trust
          Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder; or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series___ Preferred Shares to__________________________________________.


                                            --------------------------
                                            (Name of Existing Holder)


                                            --------------------------
                                            (Name of Broker-Dealer)


                                            --------------------------
                                            (Name of Agent Member)


                                            By:
                                               -----------------------
                                            Printed Name:
                                            Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for____________________________________(the
"Purchaser"), which purchased____________shares of Series________Preferred
Shares of Pilgrim Prime Rate Trust in the Auction held
on_______________________________from the seller of such shares.


     We hereby notify you that (check one):

/ /  the Seller failed to deliver such shares to the Purchaser.

/ /  the Purchaser failed to make payment to the Seller upon delivery of such
     shares.


                                         Name:
                                              ----------------------------
                                         (Name of Broker-Dealer)


                                         By:
                                            ------------------------------
                                         Printed Name:
                                         Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VI)(7)
<SEQUENCE>34
<FILENAME>a2138029zex-99_kvi7.txt
<DESCRIPTION>EX 99.(K)(VI)(7)
<TEXT>
<Page>

                                                           Exhibit 99.(k)(vi)(7)

                             BROKER-DEALER AGREEMENT

     This Broker-Dealer Agreement dated as of October 31, 2000, is between
Bankers Trust Company, a New York banking corporation (the "Auction Agent") (not
in its individual capacity, but solely as agent of Pilgrim Prime Rate Trust (the
"Trust"), pursuant to authority granted to it in the Auction Agency Agreement
dated as of October 31, 2000, between the Trust and the Auction Agent (the
"Auction Agency Agreement")) and Lehman Brothers (together with its successors
and assigns, "BD").

     The Trust proposes to issue three series of preferred shares of beneficial
interest (3,600 shares of Series M, 3,600 shares of Series W and 3,600 shares of
Series F), par value $.01 per share, liquidation preference $25,000 per share,
designated Series M, W and F Auction Rate Cumulative Preferred Shares
(cumulatively, the "Preferred Shares"), pursuant to the Trust's Certificate of
Designation for Preferred Shares (as defined below).

     The Trust's Certificate provides that the Applicable Rate on shares of each
series of Preferred Shares for each Dividend Period after the initial Dividend
Period shall be equal to the rate per annum that results from an Auction for
Outstanding shares of each Series on the respective Auction Date therefor next
preceding the period from and after the Date of Original Issue to and including
the last day of the initial Dividend Period. The Board of Trustees of the Trust
has adopted a resolution appointing Bankers Trust Company as Auction Agent for
purposes of the Auction Procedures, and pursuant to Section 2.5 of the Auction
Agency Agreement, the Trust has requested and directed the Auction Agent to
execute and deliver this Agreement.

     The Auction Procedures require the participation of one or more
Broker-Dealers.

     NOW, THEREFORE, in consideration of the premises and the mutual covenants
contained herein, the Auction Agent and BD agree as follows:

I.   DEFINITIONS AND RULES OF CONSTRUCTION.

     1.1.  TERMS DEFINED BY REFERENCE TO THE CERTIFICATE.

     Capitalized terms not defined herein shall have the respective meanings
specified in the Certificate.

     1.2.  TERMS DEFINED HEREIN.

     As used herein, the following terms shall have the following meanings,
unless the context otherwise requires:

           (a)  "Auction" shall have the meaning specified in Section 2.1 of
the Auction Agency Agreement.

           (b)  "Auction Procedures" shall mean the Auction Procedures that are
set forth in Part II of the Certificate.

           (c)  "Authorized Officer" shall mean each Managing Director,
Director, Vice President, Assistant Vice President and Associate of the Auction
Agent and every other officer

<Page>

                                                        PILGRIM PRIME RATE TRUST
                                                         BROKER-DEALER AGREEMENT

or employee of its Corporate Trust and Agency Group designated as an "Authorized
Officer" for purposes of this Agreement in a communication to BD.

           (d)  "BD Officer" shall mean each officer or employee of BD
designated as a "BD Officer" for purposes of this Agreement in a communication
to the Auction Agent.

           (e)  "Broker-Dealer Agreement" shall mean this Agreement and any
substantially similar agreement between the Auction Agent and a Broker-Dealer.

           (f)  "Certificate" shall mean the Certificate of Designation for
Preferred Shares of the Trust dated October 20, 2000 specifying the powers,
preferences and rights of the Preferred Shares.

     1.3.  RULES OF CONSTRUCTION.

     Unless the context or use indicates another or different meaning or intent,
the following rules shall apply to the construction of this Agreement:

           (a)  Words importing the singular number shall include the plural
number and vice versa.

           (b)  The captions and headings herein are solely for convenience of
reference and shall not constitute a part of this Agreement, nor shall they
affect its meaning, construction or effect.

           (c)  The words "hereof," "herein," "hereto," and other words of
similar import refer to this Agreement as a whole.

           (d)  All references herein to a particular time of day shall be to
New York City time.

II.  NOTIFICATION OF DIVIDEND.

           The provisions contained in Section 4 of Part I of the Certificate
     concerning the notification of a Special Rate Period will be followed by
     the Auction Agent and BD, and the provisions contained therein are
     incorporated herein by reference in their entirety and shall be deemed to
     be a part of this Agreement to the same extent as if such provisions were
     set forth fully herein.

III. THE AUCTION.

     3.1   Purpose; Incorporation by Reference of Auction Procedures.

           (a)  On each Auction Date, the provisions of the Auction Procedures
will be followed by the Auction Agent for the purpose of determining the
Applicable Rate for the Preferred Shares, for each Dividend Period. Each
periodic operation of such procedures hereinafter referred to as an "Auction."

                                        2
<Page>

           (b)  All of the provisions contained in the Auction Procedures are
incorporated herein by reference in their entirety and shall be deemed to be a
part of this Agreement to the same extent as if such provisions were set forth
fully herein.

           (c)  BD agrees to act as, and assumes the obligations of and
limitations and restrictions placed upon, a Broker-Dealer under this Agreement.
BD understands that other Persons meeting the requirements specified in the
definition of "Broker-Dealer" contained in Section 19 of Part I of the
Certificate may execute a Broker-Dealer Agreement and participate as
Broker-Dealers in Auctions.

           (d)  BD and other Broker-Dealers may participate in Auctions for
their own accounts. However, the Trust, by notice to BD and all other Broker
Dealers, may prohibit all Broker-Dealers from submitting Bids in Auctions for
their own accounts, provided that Broker-Dealers may continue to submit Hold
Orders and Sell Orders.

     3.2.  PREPARATION FOR EACH AUCTION

           (a)  Not later than 9:30 A.M. on each Auction Date for the Preferred
Shares, the Auction Agent shall advise BD by telephone of the Reference Rate and
the Maximum Rate in effect on such Auction Date.

           (b)  The Auction Agent from time to time may request BD to provide it
with a list of the respective customers BD believes are Beneficial Owners of
Preferred Shares. BD shall comply with any such request, and the Auction Agent
shall keep confidential any such information, including information received as
to the identity of Bidders in any Auction, and shall not disclose any such
information so provided to any Person other than the Trust; and such information
shall not be used by the Auction Agent or its officers, employees, agents or
representatives for any purpose other than such purposes as are described
herein. The Auction Agent shall transmit any list of customers BD believes are
Beneficial Owners of Preferred Shares and information related thereto only to
its officers, employees, agents or representatives who need to know such
information for the purposes of acting in accordance with this Agreement, and
the Auction Agent shall prevent the transmission of such information to others
and shall cause its officers, employees, agents and representatives to abide by
the foregoing confidentiality restrictions; provided, however, that the Auction
Agent shall have no responsibility or liability for the actions of any of its
officers, employees, agents or representatives after they have left the employ
of the Auction Agent.

     3.3.  AUCTION SCHEDULE; METHOD OF SUBMISSION OF ORDERS.

           (a)  The Trust and the Auction Agent shall conduct Auctions for
Preferred Shares in accordance with the schedule set forth below. Such schedule
may be changed at any time by the Auction Agent with the consent of the Trust,
which consent shall not be withheld unreasonably. The Auction Agent shall give
notice of any such change to BD. Such notice shall be received prior to the
first Auction Date on which any such change shall be effective.

                                        3
<Page>

<Table>
<Caption>
TIME                                    EVENT
- ----                                    -----
<S>                                     <C>
By 9:30 A.M.                            Auction Agent shall advise the Trust and
                                        the Broker-Dealers of the Reference
                                        Rate and the Maximum Rate as set forth
                                        in Section 3.2(a) hereof.

9:30 A.M. - 1:30 P.M.                   Auction Agent shall assemble information
                                        communicated to it by Broker-Dealers as
                                        provided in Section 2(a) of Part II of
                                        the Certificate. Submission Deadline is
                                        1:00 P.M.

Not earlier than 1:30 P.M.              Auction Agent shall make determinations
                                        pursuant to Section 4(a) of Part II of
                                        the Certificate.

By approximately 3:00 P.M.              Auction Agent shall advise the Trust of
                                        the results of the Auction as provided
                                        in Section 4(b) of Part II of the
                                        Certificate.

                                        Submitted Bids and Submitted Sell Orders
                                        will be accepted and rejected in whole
                                        or in part and Preferred Shares will be
                                        allocated as provided in Section 5 of
                                        Part II of the Certificate.

                                        Auction Agent shall give notice of the
                                        Auction results as set forth in Section
                                        3.4(a) hereof.
</Table>

           (b)  BD agrees to maintain a list of Potential Beneficial Owners and
to contact the Potential Beneficial Owners on such list on or prior to each
Auction Date for the purposes set forth in Section 2 of Part II of the
Certificate.

           (c)  BD shall submit Orders to the Auction Agent in writing in
substantially the form attached hereto as Exhibit A. BD shall submit separate
Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial
Owner on whose behalf BD is submitting an Order and shall not net or aggregate
the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf
BD is submitting Orders.

           (d)  BD shall deliver to the Auction Agent (i) a written notice,
substantially in the form attached hereto as Exhibit B, of transfers of
Preferred Shares, made through BD by an Existing Holder to another Person other
than pursuant to an Auction, and (ii) a written notice, substantially in the
form attached hereto as Exhibit C, of the failure of Preferred Shares to be
transferred to or by any Person that purchased or sold Preferred Shares through
BD pursuant to an Auction. The Auction Agent is not required to accept any
notice delivered pursuant to the terms of the foregoing sentence with respect to
an Auction unless it is received by the Auction Agent by 3:00 P.M. on the
Business Day next succeeding the applicable Auction Date.

                                        4
<Page>

     3.4.  NOTICE OF AUCTION RESULTS.

           (a)  On each Auction Date, the Auction Agent shall notify BD by
telephone. On the Business Day next succeeding such Auction Date, the Auction
Agent shall notify BD in writing of the disposition of all Orders submitted by
BD in the Auction held on such Auction Date.

           (b)  BD shall notify each Beneficial Owner, Potential Beneficial
Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an
Order, and take such other action as is required of BD.

     If any Beneficial Owner or Existing Holder selling Preferred Shares in an
Auction fails to deliver such shares, the Broker-Dealer of any Person that was
to have purchased Preferred Shares in such Auction may deliver to such Person a
number of whole shares of Preferred Shares that is less than the number of
shares that otherwise was to be purchased by such Person. In such event, the
number of Preferred Shares to be so delivered shall be determined by such
Broker-Dealer. Delivery of such lesser number of shares shall constitute good
delivery. Upon the occurrence of any such failure to deliver shares, such
Broker-Dealer shall deliver to the Auction Agent the notice required by Section
3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b),
any delivery or non-delivery of Preferred Shares which represents any departure
from the results of an Auction, as determined by the Auction Agent, shall be of
no effect unless and until the Auction Agent shall have been notified of such
delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof.
The Auction Agent shall have no duty or liability with respect to enforcement of
this Section 3.4(b).

     3.5.  SERVICE CHARGE TO BE PAID TO BD.

     On the Business Day next succeeding each Auction Date, the Auction Agent
shall pay to BD from moneys received from the Trust an amount equal to: (a) in
the case of any Auction Date immediately preceding a Dividend Period of less
than one year, the product of (i) a fraction the numerator of which is the
number of days in such Dividend Period (calculated by counting the first day of
such Dividend Period but excluding the last day thereof) and the denominator of
which is 360, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of
(A) the aggregate number of Preferred Shares placed by BD in the applicable
Auction that were (x) the subject of a Submitted Bid of a Beneficial Owner
submitted by BD and continued to be held as a result of such submission and (y)
the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD
and were purchased as a result of such submission plus (B) the aggregate number
of Preferred Shares subject to valid Hold Orders (determined in accordance with
Section 2 of Part II of the Certificate) submitted to the Auction Agent by BD
plus (C) the number of Preferred Shares deemed to be subject to Hold Orders by
Beneficial Owners pursuant to Section 2 of Part II of the Certificate that were
acquired by BD for its own account or were acquired by such Beneficial Owners
through BD; and (b) in the case of any Auction Date immediately preceding a
Special Rate Period of one year or longer, that amount as mutually agreed upon
by the Trust and BD, based on the selling concession that would be applicable to
an underwriting of fixed or variable rate preferred shares with a similar final
maturity or variable rate dividend period, at the commencement of such Special
Rate Period.

                                        5
<Page>

     For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any
Beneficial Owner who acquired Preferred Shares through BD transfers those shares
to another Person other than pursuant to an Auction, then the Broker-Dealer for
the shares so transferred shall continue to be BD, provided, however, that if
the transfer was effected by, or if the transferee is, a Broker-Dealer other
than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

IV.  THE AUCTION AGENT.

     4.1.  DUTIES AND RESPONSIBILITIES.

           (a)  The Auction Agent is acting solely as agent for the Trust
hereunder and owes no fiduciary duties to any other Person by reason of this
Agreement.

           (b)  The Auction Agent undertakes to perform such duties and only
such duties as are set forth specifically in this Agreement, and no implied
covenants or obligations shall be read into this Agreement against the Auction
Agent.

           (c)  In the absence of bad faith or negligence on its part, the
Auction Agent shall not be liable for any action taken, suffered or, omitted by
it, or for any error of judgment made by it in the performance of its duties
under this Agreement. The Auction Agent shall not be liable for any error of
judgment made in good faith unless the Auction Agent shall have been negligent
in ascertaining (or failing to ascertain) the pertinent facts.

     4.2.  RIGHTS OF THE AUCTION AGENT.

           (a)  The Auction Agent may rely upon, and shall be protected in
acting or refraining from acting upon, any communication authorized by this
Agreement and any written instruction, notice, request, direction, consent,
report, certificate, share certificate or other instrument, paper or document
reasonably believed by it to be genuine. The Auction Agent shall not be liable
for acting upon any telephone communication authorized by this Agreement which
the Auction Agent reasonably believes in good faith to have been given by the
Trust or by BD. The Auction Agent may record telephone communications with BD.

           (b)  The Auction Agent may consult with counsel of its own choice,
and the advice of such counsel shall be full and complete authorization and
protection in respect of any action taken, suffered or omitted by it hereunder
in good faith and in reliance thereon.

           (c)  The Auction Agent shall not be required to advance, expend or
risk its own funds or otherwise incur or become exposed to financial liability
in the performance of its duties hereunder.

           (d)  The Auction Agent may perform its duties and exercise its rights
hereunder either directly or by or through agents or attorneys.

                                        6
<Page>

     4.3.  AUCTION AGENT'S DISCLAIMER.

     The Auction Agent makes no representation as to the validity or adequacy of
this Agreement or the Preferred Shares.

V.   MISCELLANEOUS.

     5.1.  TERMINATION.

     Any party may terminate this Agreement at any time upon five days' prior
written notice to the other party; provided, however, that if the Broker-Dealer
is Salomon Smith Barney Inc. neither Salomon Smith Barney Inc. nor the Auction
Agent may terminate this Agreement without first obtaining the prior written
consent of the Trust to such termination, which consent shall not be withheld
unreasonably.

     5.2.  PARTICIPANT IN SECURITIES DEPOSITORY; PAYMENT OF DIVIDENDS IN
           SAME-DAY FUNDS.

           (a)  BD is, and shall remain for the term of this Agreement, a member
of, or a participant in, the Securities Depository (or an affiliate of such a
member or participant).

           (b)  BD represents that it (or if BD does not act as Agent Member,
one of its affiliates) shall make all dividend payments on the Preferred Shares
available in same-day funds on each Dividend Payment Date to customers that use
BD (or its affiliate) as Agent Member.

     5.3.  AGENT MEMBER.

     At the date hereof, BD is a participant of the Securities Depository.

     5.4.  COMMUNICATIONS.

     Except for (i) communications authorized to be made by telephone pursuant
to this Agreement or the Auction Procedures and (ii) communications in
connection with the Auctions (other than those expressly required to be in
writing), all notices, requests and other communications to any party hereunder
shall be in writing (including telecopy or similar writing) and shall be given
to such party at its address or telecopier number set forth below:

     If to the Auction Agent,
     addressed to:                    Bankers Trust Company
                                      Corporate Trust and Agency Group
                                      Four Albany Street
                                      New, York, NY 10006
                                      Attention: Auction Rate Securities
                                      Telecopier No.: (212) 250-6688
                                      Telephone No.: (212) 250-6850

                                        7
<Page>

     If to the BD,
     addressed to:                    3 World Financial Center 9th
                                      New York, NY
                                          10285
                                      Attention:  Gia Rys
                                      Telecopier No.: (212) 526-1491
                                      Telephone No.: (212) 526-8390

or such other address or telecopier number as such party hereafter may specify
for such purpose by notice to the other party. Each such notice, request or
communication shall be effective when delivered at the address specified herein.
Communications shall be given on behalf of BD by a BD Officer and on behalf of
the Auction Agent by an Authorized Officer. BD may record telephone
communications with the Auction Agent.

     5.5.  ENTIRE AGREEMENT.

     This Agreement contains the entire agreement between the parties relating
to the subject matter hereof, and there are no other representations,
endorsements, promises, agreements or understandings, oral, written or implied,
between the parties relating to the subject matter hereof.

     5.6.  BENEFITS.

     Nothing in this Agreement, express or implied, shall give to any person,
other than the Trust, the Auction Agent and BD and their respective successors
and assigns, any benefit of any legal or equitable right, remedy or claim under
this Agreement.

     5.7.  AMENDMENT; WAIVER.

           (a)  This Agreement shall not be deemed or construed to be modified,
amended, rescinded, canceled or waived, in whole or in part, except by a written
instrument signed by a duly authorized representative of the party to be
charged.

           (b)  Failure of either party to this Agreement to exercise any right
or remedy hereunder in the event of a breach of this Agreement by the other
party shall not constitute a waiver of any such right or remedy with respect to
any subsequent breach.

     5.8.  SUCCESSORS AND ASSIGNS.

           (a)  This Agreement shall be binding upon, inure to the benefit of,
and be enforceable by, the respective successors and permitted assigns of each
of BD and the Auction Agent. This Agreement may not be assigned by either party
hereto absent the prior written consent of the other party; provided, however,
that this Agreement may be assigned by the Auction Agent to a successor Auction
Agent selected by the Trust without the consent of BD.

                                        8
<Page>

     5.9.  SEVERABILITY.

     If any clause, provision or section of this Agreement shall be ruled
invalid or unenforceable by any court of competent jurisdiction, the invalidity
or unenforceability of such clause, provision or section shall not affect any
remaining clause, provision or section hereof.

     5.10. EXECUTION IN COUNTERPARTS.

     This Agreement may be executed in several counterparts, each of which
shall be an original and all of which shall constitute but one and the same
instrument.

     5.11. GOVERNING LAW.

     This Agreement shall be governed by and construed in accordance with the
laws of the State of New York applicable to agreements made and to be performed
in said state.

                                        9
<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.


                                             BANKERS TRUST COMPANY

                                             /s/ Melissa M. Reynolds
                                             ---------------------------
                                             By:     MELISSA M. REYNOLDS
                                             Title:    VICE PRESIDENT


                                             ------------------------------

                                             ------------------------------
                                             By:
                                             Title:

<Page>

     IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their proper and duly authorized officers as of
the date first above written.

                                             BANKERS-TRUST COMPANY

                                             /s/ Gia Rys
                                             --------------------------
                                             By:
                                             Title:


                                             /s/ Gia Rys
                                             --------------------------
                                             Lehman Brothers
                                             --------------------------
                                             By: Gia Rys
                                             Title: Vice President

<Page>

                                    EXHIBIT A

                              BANKERS TRUST COMPANY
                                AUCTION BID FORM


SUBMIT TO:                              ISSUE:

Bankers Trust Company                   Pilgrim Prime Rate Trust
Corporate Trust and Agency Group        Auction Rate Cumulative Preferred Shares
Four Albany Street                        ("Preferred Shares")
New York, NY 10006
Attention: Auction Rate Securities
Telecopier No.: (212) 250-6688
Telephone No.:  (212) 250-6850

The undersigned Broker-Dealer submits the following Order on behalf of the
Bidder listed below:

Name of Bidder:____________________________

                                BENEFICIAL OWNER

Shares of Series_____now held                HOLD_______________________________
                                             BID at rate of_____________________
                                             SELL_______________________________

                           POTENTIAL BENEFICIAL OWNER

                                           # of shares of Series___
                                           BID at rate of__________ Notes:

           (1)  If submitting more than one Bid for one Bidder, use additional
                Auction Bid Forms.
           (2)  If one or more Bids covering in the aggregate more than the
                number of outstanding shares held by any Beneficial Owner are
                submitted, such bid shall be considered valid in the order of
                priority set forth in the Auction Procedures on the above issue.
           (3)  A Hold or Sell Order may be placed only by a Beneficial Owner
                covering a number of shares not greater than the number of
                shares currently held.
           (4)  Potential Beneficial Owners may make only Bids, each of which
                must specify a rate. If more than one Bid is submitted on behalf
                of any Potential Beneficial Owner, each Bid submitted shall be a
                separate Bid with the rate specified.
           (5)  Bids may contain no more than three figures to the right of the
                decimal point (.001 of 1%). Fractions will not be accepted.


NAME OF BROKER-DEALER
                     -----------------------------
Authorized Signature
                    ------------------------------

<Page>

                                    EXHIBIT B

  (Note: To be used only for transfers made other than pursuant to an Auction)

                                  TRANSFER FORM

     Re:   Pilgrim Prime Rate Trust
           Auction Rate Cumulative Preferred Shares ("Preferred Shares")

     We are (check one):

/ /  the Existing Holder named below;

/ /  the Broker-Dealer for such Existing Holder, or

/ /  the Agent Member for such Existing Holder.

     We hereby notify you that such Beneficial Owner has transferred shares of
Series_____Preferred Shares to_________________________________________________.


                                             -------------------------
                                             (Name of Existing Holder)


                                             -------------------------
                                             (Name of Broker-Dealer)


                                             -------------------------
                                             (Name of Agent Member)


                                             By:
                                                ----------------------
                                             Printed Name:
                                             Title:

<Page>

                                    EXHIBIT C

          (Note: To be used only for failures to deliver or to pay for
                  Preferred Shares sold pursuant to an Auction)


                         NOTICE OF A FAILURE TO DELIVER

     We are a Broker-Dealer for____________________________________(the
"Purchaser"), which purchased________shares of Series_______Preferred Shares of
Pilgrim Prime Rate Trust in the Auction held on_______________________________
from the seller of such shares.


     We hereby notify you that (check one):

/ /  the Seller failed to deliver such shares to the Purchaser.

/ /  the Purchaser failed to make payment to the Seller upon delivery of such
     shares.


                                             Name:
                                                  -----------------------
                                             (Name of Broker-Dealer)


                                             By:
                                                -------------------------
                                             Printed Name:
                                             Title:

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VII)
<SEQUENCE>35
<FILENAME>a2138029zex-99_kvii.txt
<DESCRIPTION>EX 99.(K)(VII)
<TEXT>
<Page>

                                                             Exhibit 99.(k)(vii)

[LOGO]


              BOOK-ENTRY-ONLY AUCTION-RATE/MONEY MARKET PREFERRED
                       AND REMARKETED PREFERRED SECURITIES

                            LETTER OF REPRESENTATIONS
                  [To be Completed by Issuer and Trust Company]

                    Pilgrim Prime Rate Trust
                  ---------------------------------------------
                                [Name of Issuer]

                    Bankers Trust Company
                  ---------------------------------------------
                             [Name of Trust Company]

                                                             November 15, 2000
                                                             -------------------
                                                                   [Date]

Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street 49th Floor
New York, NY 10041-0099

           Re:    Auction Rate Cumulative Preferred Shares:
                ------------------------------------------------------
                  Series T-CUSIP No. 72146W509 and
                ------------------------------------------------------
                  Series Th-CUSIP No. 72146W608
                ------------------------------------------------------
                  [Issue description, including CUSIP number (the "Securities")]

Ladies and Gentlemen:

     This letter sets forth our understanding with respect to certain matters
relating to the Securities. Trust Company shall act as transfer agent,
registrar, dividend disbursing agent, redemption agent or other such agent with
respect to the Securities. The Securities have been issued pursuant to a
prospectus, private placement memorandum, or other such document authorizing the
issuance of the Securities dated November 13, 2000 (the "Document").
    Salomon Smith Barney, Inc.   is distributing the Securities through the
 ["Underwriter/Placement Agent"]
Depository Trust

<Page>

Company ("DTC").

     To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Trust Company make the following representations to DTC:

     1.   Prior to closing on the Securities on November 16, 2000 there shall be
deposited with DTC one or more Security certificates registered in the name of
DTC's nominee, Cede & Co., which represents 100% of the offering value of the
Securities. Said certificate(s) shall remain in DTC's custody as provided in the
Document. If, however, the aggregate principal amount of the Securities exceeds
$400 million, one certificate shall be issued with respect to each $400 million
of principal amount and an additional certificate shall be issued with respect
to any remaining principal amount. Each Security certificate shall bear the
following legend:

          Unless this certificate is presented by an authorized representative
     of The Depository Trust Company, a New York corporation ("DTC"), to Issuer
     or its agent for registration of transfer, exchange, or payment, and any
     certificate issued is registered in the name of Cede & Co. or in such other
     name as is requested by an authorized representative of DTC (and any
     payment is made to Cede & Co. or to such other entity as is requested by an
     authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
     HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
     the registered owner hereof, Cede & Co., has an interest herein.

     2.   Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its participants ("Participants") or to any person having an
interest in the Securities any information contained in the Security
certificate(s); and (b) acknowledges that neither DTC's Participants nor any
person having an interest in the Securities shall be deemed to have notice of
the provisions of the Security certificate(s) by virtue of submission of such
certificate(s) to DTC.

     3.   In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer shall establish a record date for such purposes (with
no provision for revocation of consents or votes by subsequent holders) and
shall send notice of such record date to DTC no fewer than 15 calendar days in
advance of such record date. Notices to DTC pursuant to this Paragraph by
telecopy shall be directed to DTC's Reorganization Department, Proxy Unit at
(212) 855-5181 or (212) 855-5182. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (212) 855-5202. Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:

                                Supervisor, Proxy Unit
                                Reorganization Department
                                The Depository Trust Company
                                55 Water Street 50th Floor
                                New York, NY 10041-0099

                                        2
<Page>

     4.   In the event of a full or partial redemption of the Securities, Issuer
or Trust Company shall send a notice to DTC specifying: (a) the number of
Securities to be redeemed; and (b) the date such notice is to be distributed to
Security holders (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (E.G., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Trust Company
shall forward such notice either in a separate secure transmission for each
CUSIP number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number submitted in
that transmission. (The party sending such notice shall have a method to verify
subsequently the use of such means and the timeliness of such notice.) The
Publication Date shall be no fewer than 30 days nor more man 60 days prior to
the redemption date. Notices to DTC pursuant to this Paragraph by telecopy shall
be directed to DTC's Call Notification Department at (516) 227-4164 or (516)
227-4190. If the party sending the notice does not receive a telecopy receipt
from DTC confirming that the notice has been received, such party shall
telephone (516) 227-4070. Notices to DTC pursuant to this Paragraph, by mail or
by any other means, shall be sent to:

                  Manager, Call Notification Department
                  The Depository Trust Company
                  711 Stewart Avenue
                  Garden City, NY 11530-4719

     5.   In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Trust
Company to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions by telecopy shall be directed
to DTC's Reorganization Department at (212) 855-5488. If the party sending the
notice does not receive a telecopy receipt from DTC confirming that the notice
has been received, such party shall telephone (212) 855-5290. Notices to DTC
pursuant to this Paragraph, by mail or by any other means, shall be sent to:

                  Manager, Reorganization Department
                  Reorganization Window
                  The Depository Trust Company
                  55 Water Street 50th Floor
                  New York, NY 10041-0099

     6.   All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.

     7.   The Document indicates that the dividend rate for the Securities may
vary from time to time. Absent other existing arrangements with DTC, Issuer or
Trust Company shall give DTC notice of each such change in the dividend rate, on
the same day that the new rate is determined, by telephoning DTC's Dividend
Announcement Section at (212) 855-4550, or by telecopy sent to (212) 855-4555.
Such verbal or telecopy notice shall be followed by prompt written confirmation
sent by

                                        3
<Page>

a secure means (E.G., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Agent shall
forward such notice either in a separate secure transmission for each CUSIP
number or in a secure transmission for multiple CUSIP numbers (if applicable)
which includes a manifest or list of each CUSIP number submitted in that
transmission. (The party sending such notice shall have a method to verify
subsequently the use and timeliness of such notice.) Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:

                  Manager, Announcements
                  Dividend Department
                  The Depository Trust Company
                  55 Water Street 25th Floor
                  New York, NY 10041-0099

     8.   The Document indicates that each purchaser of Securities must sign a
purchaser's letter which contains provisions restricting transfer of the
Securities purchased. Issuer and Trust Company acknowledge that as long as Cede
& Co. is the sole record owner of the Securities, Cede & Co. shall be entitled
to all voting rights applicable to the Securities and to receive the full amount
of all dividends, liquidation proceeds, and redemption proceeds payable with
respect to the Securities, even if the credits of Securities to the DTC accounts
of any DTC Participant result from transfers or failures to transfer in
violation of the provisions of the purchaser's letter. Issuer and Trust Company
acknowledge that DTC shall treat any Participant having Securities credited to
its DTC accounts as entitled to the full benefits of ownership of such
Securities. Without limiting the generality of the preceding sentence, Issuer
and Trust Company acknowledge that DTC shall treat any Participant having
Securities credited to its DTC accounts as entitled to receive dividends,
distributions, and voting rights, if any, in respect of Securities and, subject
to Paragraphs 12 and 13, to receive certificates evidencing Securities if such
certificates are to be issued in accordance with Issuer's certificate of
incorporation. (The treatment by DTC of the effects of the crediting by it of
Securities to the accounts of Participants described in the preceding two
sentences shall not affect the rights of Issuer, participants in auctions
relating to the Securities, purchasers, sellers, or holders of Securities
against any Participant.) DTC shall not have any responsibility to ascertain
whether any transfer of Securities is made in accordance with the provisions of
the purchaser's letter.

     9.   Issuer or Trust Company shall provide a written notice of dividend
payment and distribution information to DTC as soon as the information is
available. Issuer or Trust Company shall provide this information to DTC
electronically, as previously arranged by Issuer or Trust Company and DTC, as
soon as the information is available. If electronic transmission has not been
arranged, absent any other arrangements between Issuer or Trust Company and DTC,
such information shall be sent by telecopy to DTC's Dividend Department at
(212) 855-4555 or (212) 855-4556, and receipt of such notices shall be confirmed
by telephoning (212) 855-4550. Notices to DTC pursuant to this Paragraph, by
mail or by any other means, shall be addressed as indicated in Paragraph 7.

                                        4
<Page>

     10.  Dividend payments and distributions shall be received by Cede & Co.,
as nominee of DTC, or its registered assigns, in same-day funds no later than
2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m.
(Eastern Time) on the payment date, dividend and distribution payments due Trust
Company, or at such earlier time as may be required by Trust Company to
guarantee that DTC shall receive payment in same-day funds no later than 2:30
p.m. (Eastern Time) on the payment date. Absent any other arrangements between
Issuer or Trust Company and DTC, such funds shall be wired to the Dividend
Deposit Account number that will be stamped on the signature page hereof at the
time DTC executes this Letter of Representations.

     11.  Issuer or Trust Company shall provide DTC, no later than 12:00 noon
(Eastern Time) on each payment date, automated notification of CUSIP-level
detail. If the circumstances prevent the funds paid to DTC from equaling the
dollar amount associated with the detail payments by 12:00 noon (Eastern Time),
Issuer or Trust Company must provide CUSIP-level reconciliation to DTC no later
than 2:30 p.m. (Eastern Time). Reconciliation must be provided by either
automated means or written format. Such reconciliation notice, if sent by
telecopy, shall be directed to DTC's Dividend Department at (212) 855-4633, and
receipt of such reconciliation notice shall be confirmed by telephoning (212)
855-4430.

     12.  Redemption payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns, in same-day funds no later than 2:30 p.m.
(Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m. (Eastern
Time) on the payment date all such redemption payments due Trust Company, or at
such earlier time as required by Trust Company to guarantee that DTC shall
receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on the
payment date. Absent any other arrangements between Issuer or Trust Company and
DTC, such funds shall be wired to the Redemption Deposit Account number that
will be stamped on the signature page hereof at the time DTC executes this
Letter of Representations.

     13.  Reorganization payments and CUSIP-level detail resulting from
corporate actions (such as tender offers, remarketings, or mergers) shall be
received by Cede & Co., as nominee of DTC, or its registered assigns, in
same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date.
Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment date all such
reorganization payments due Trust Company, or at such earlier time as required
by Trust Company to guarantee that DTC shall receive payment in same-day funds
no later than 2:30 p.m. (Eastern Time) on the payment date. Absent any other
arrangements between Issuer or Trust Company and DTC, such funds shall be wired
to the Reorganization Deposit Account number that will be stamped on the
signature page hereof at the time DTC executes this Letter of Representations.

     14.  DTC may direct Issuer or Trust Company to use any other number or
address as the number or address to which notices or payments may be sent.

     15.  In the event of a redemption acceleration, or any similar transaction
(E.G., tender made and accepted in response to Issuer's or Trust Company's
invitation) necessitating a reduction in the number of Securities outstanding,
or an advance refunding of part of the Securities outstanding DTC, in its
discretion: (a) may request Issuer or Trust Company to issue and authenticate a
new Security certificate; or (b) may make an appropriate notation on the
Security certificate indicating the date and amount of such reduction in the
number of Securities outstanding, except in the case of final

                                        5
<Page>

redemption, in which case the certificate will be presented to Issuer or Trust
Company prior to payment, if required.

     16.  In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trust
Company shall notify DTC of the availability of certificates. In such event,
Issuer or Trust Company shall issue, transfer, and exchange certificates in
appropriate amounts, as required by DTC and others.

     17.  DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Trust Company (at which time DTC will confirm with Issuer or Trust Company
the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request, Issuer and Trust Company shall cooperate fully
with DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.

     18.  Issuer hereby authorizes DTC to provide to Trust Company listings of
Participants' holdings, known as Security Position Listings ("SPLs") with
respect to the Securities from time to time at the request of Trust Company.
Issuer also authorizes DTC, in the event of a partial redemption of Securities,
to provide Trust Company, upon request, with the names of those Participants
whose positions in Securities have been selected for redemption by DTC. DTC will
use its best efforts to notify Trust Company of those Participants whose
positions in Securities have been selected for redemption by DTC. Issuer
authorizes and instructs Trust Company to provide DTC with such signatures,
examples of signatures, and authorizations to act as may be deemed necessary or
appropriate by DTC to permit DTC to discharge its obligations to its
Participants and appropriate regulatory authorities. DTC charges a customary fee
for such SPLs. This authorization, unless revoked by Issuer, shall continue with
respect to the Securities while any Securities are on deposit at DTC, until and
unless Trust Company shall no longer be acting. In such event, Issuer shall
provide DTC with similar evidence, satisfactory to DTC, of the authorization of
any successor thereto so to act. Requests for SPLs shall be directed to the
Proxy Unit of DTC's Reorganization Department at (212) 855-5181 or (212)
855-5182. Receipt of such requests shall be confirmed by telephoning (212)
855-5202. Delivery by mail or by any other means, with respect to such SPL
request, shall be directed to the address indicated in Paragraph 3.

     19.  Nothing herein shall be deemed to require Trust Company to advance
funds on behalf of Issuer.

     20.  This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute but one and the same
instrument.

     21.  This Letter of Representations shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
principles of conflicts of law.

     22.  The sender of each notice delivered to DTC pursuant to this Letter of
Representations is responsible for confirming that such notice was properly
received by DTC.

                                        6
<Page>

     23.  Issuer recognizes that DTC does not in any way undertake to, and shall
not have any responsibility to, monitor or ascertain the compliance of any
transactions in the Securities with the following, as amended from time to time:
(a) any exemptions from registration under the Securities Act of 1933; (b) the
Investment Company Act of 1940; (c) the Employee Retirement Income Security Act
of 1974; (d) the Internal Revenue Code of 1986; (e) any rules of any
self-regulatory organizations (as defined under the Securities Exchange Act of
1934); or (f) any other local, state, or federal laws or regulations thereunder.

     24.  Issuer and Trust Company shall comply with the applicable requirements
stated in DTC's Operational Arrangements, as they may be amended from time to
time. DTC's Operational Arrangements are posted on DTC's website at
"www.DTC.org."

     25.  The following rider(s), attached hereto, are hereby incorporated into
this Letter of Representations:

                                        7
<Page>

NOTES:

A. IF THERE IS A TRUST COMPANY (AS
DEFINED IN THIS LETTER OF
REPRESENTATIONS), TRUST COMPANY, AS
WELL AS ISSUER, MUST SIGN THIS LETTER. IF
THERE IS NO TRUST COMPANY, IN SIGNING
THIS LETTER ISSUER ITSELF UNDERTAKES
TO PERFORM ALL OF THE OBLIGATIONS SET
FORTH HEREIN.

B. SCHEDULE B CONTAINS STATEMENTS THAT
DTC BELIEVES ACCURATELY DESCRIBE DTC,
THE METHOD OF EFFECTING BOOK-ENTRY
TRANSFERS OF SECURITIES DISTRIBUTED
THROUGH DTC, AND CERTAIN RELATED
MATTERS.

                                          Very truly yours,


                                            PILGRIM PRIME RATE TRUST
                                          ----------------------------------
                                                       [Issuer]

                                          By: /s/ James Hennessy
                                             -------------------------------
                                             [Authorized Officer's Signature]
                                             Sr. Executive Vice President

                                          ----------------------------------
                                                     [Trust Company]

                                          By: /s/ Mellisa M. Reynolds
                                             -----------------------------------
                                               [Authorized Officer's Signature]
                                                   MELLISA M. REYNOLDS
                                                      VICE PRESIDENT


    Received and Accepted:
    THE DEPOSITORY TRUST COMPANY


By: /s/ [ILLEGIBLE]
   -----------------------

Funds should be wired to:

The Chase Manhattan Bank
ABA#021 000 021
For credit to a/c Cede & Co.
c/o The Depository Trust Company

[SELECT APPROPRIATE ACCOUNT.]

Dividend Deposit Account # 066-026776
Redemption Deposit Account # 066-027306
Reorganization Deposit Account # 066-027608

  cc:   Underwriter
        Underwriter's Counsel

                                        8
<Page>

                                                                      SCHEDULE A

                      Pilgrim Prime Rate Trust Auction Race

                  Cumulative Preferred Shares (Series T and Th)

                                [Describe Issue]

<Table>
<Caption>
            CUSIP NUMBER       SHARE TOTAL       VALUE ($AMOUNT)
            ------------       -----------       ---------------
            <S>                  <C>             <C>
            72146W509            3,600           $  90,000,000
            72146W608            3,600           $  90,000,000
</Table>

                                        9
<Page>

                                                                      SCHEDULE B

                        SAMPLE OFFERING DOCUMENT LANGUAGE
                       DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
  (Prepared by DTC-bracketed material may be applicable only to certain issues)

     1.   The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities will
be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Security certificate will
be issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. (If, however, the
aggregate principal amount of [any] issue exceeds $400 million, one certificate
will be issued with respect to each $400 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]

     2.   DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC, and the National
Association of Securities Dealers, Inc. Access to the DTC system is also
available to others such as securities brokers and dealers, banks, and trust
companies that clear through or maintain a custodial relationship with a Direct
Participant, either directly or indirectly ("Indirect Participants"). The Rules
applicable to DTC and its Direct and Indirect Participants are on file with the
Securities and Exchange Commission.

     3.   Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Securities, except in the event that use of the book-entry system
for the Securities is discontinued.

                                       10
<Page>

     4.   To facilitate subsequent transfers, all Securities deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other name as may be requested by an authorized
representative of DTC. The deposit of Securities with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities: DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.

     5.   Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. [Beneficial Owners of Securities may wish to
take certain steps to augment transmission to them of notices of significant
events with respect to the Securities, such as redemptions, tenders, defaults,
and proposed amendments to the security documents. Beneficial Owners of
Securities may wish to ascertain that the nominee holding the Securities for
their benefit has agreed to obtain and transmit notices to Beneficial Owners, or
in the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of the notices be provided
directly to them.]

     [6.  Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]

     7.   Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent
or vote with respect to the Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).

     8.   Redemption proceeds, distributions, and dividend payments on the
Securities will be made to Cede & Co., or such other nominee as may be requested
by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipt of funds and corresponding detail
information from Issuer or Agent on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, Agent, or Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividends to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.

                                       11
<Page>

     [9.  A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to [Tender/Remarketing] Agent,
and shall effect delivery of such Securities by causing the Direct Participant
to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities
in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Securities are transferred by Direct
Participants on DTC's records and followed by a book-entry credit of tendered
Securities to [Tender/Remarketing] Agent's DTC account.]

     10.  DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.

     11.  Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.

     12.  The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.

                                       12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(K)(VII)(1)
<SEQUENCE>36
<FILENAME>a2138029zex-99_kvii1.txt
<DESCRIPTION>EX 99.(K)(VII)(1)
<TEXT>
<Page>

                                                          Exhibit 99.(k)(vii)(1)

[LOGO]

              BOOK-ENTRY-ONLY AUCTION-RATE/MONEY MARKET PREFERRED,
                       AND REMARKETED PREFERRED SECURITIES

                            LETTER OF REPRESENTATIONS
                  [To be Completed by Issuer and Trust Company]

                  Pilgrim Prime Rate Trust
              ----------------------------------------------------
                                [Name of Issuer]

                  Bankers Trust Company
              ----------------------------------------------------
                             [Name of Trust Company]

                                                                November 1, 2000
                                                              ------------------
                                                                     [Date]

Attention: General Counsel's Office
THE DEPOSITORY TRUST COMPANY
55 Water Street 49th Floor
New York, NY 10041-0099

          Re:   Auction Rate Cumulative Preferred Shares:
              ------------------------------------------------------------------

                Series M-CUSIP no. 72146W202, Series W-
              ------------------------------------------------------------------

                CUSIP no. 72146W301, Series F-CUSIP no. 72146W400
              ------------------------------------------------------------------
                [Issue description, including CUSIP number (the "Securities")]

Ladies and Gentlemen:

     This letter sets forth our understanding with respect to certain matters
relating to the Securities. Trust Company shall act as transfer agent,
registrar, dividend disbursing agent, redemption agent or other such agent with
respect to the Securities. The Securities have been issued pursuant to a
prospectus, private placement memorandum, or other such document authorizing the
issuance of the Securities dated October 30, 2000 (the "Document").
    Salomon Smith Barney, Inc.   is distributing the Securities through the
 ["Underwriter/Placement Agent"]
Depository Trust

<Page>

Company ("DTC").

     To induce DTC to accept the Securities as eligible for deposit at DTC, and
to act in accordance with its Rules with respect to the Securities, Issuer and
Trust Company make the following representations to DTC:

     1.   Prior to closing on the Securities on November 2, 2000 there shall be
deposited with DTC one or more Security certificates registered in the name of
DTC's nominee, Cede & Co., which represents 100% of the offering value of the
Securities. Said certificate(s) shall remain in DTC's custody as provided in the
Document. If, however, the aggregate principal amount of the Securities exceeds
$400 million, one certificate shall be issued with respect to each $400 million
of principal amount and an additional certificate shall be issued with respect
to any remaining principal amount. Each Security certificate shall bear the
following legend:

          Unless this certificate is presented by an authorized representative
     of The Depository Trust Company, a New York corporation ("DTC"), to Issuer
     or its agent for registration of transfer, exchange, or payment, and any
     certificate issued is registered in the name of Cede & Co. or in such other
     name as is requested by an authorized representative of DTC (and any
     payment is made to Cede & Co. or to such other entity as is requested by an
     authorized representative of DTC), ANY TRANSFER, PLEDGE, OR OTHER USE
     HEREOF FOR VALUE OR OTHERWISE BY OR TO ANY PERSON IS WRONGFUL inasmuch as
     the registered owner hereof, Cede & Co., has an interest herein.

     2.   Issuer: (a) understands that DTC has no obligation to, and will not,
communicate to its participants ("Participants") or to any person having an
interest in the Securities any information contained in the Security
certificate(s); and (b) acknowledges that neither DTC's Participants nor any
person having an interest in the Securities shall be deemed to have notice of
the provisions of the Security certificate(s) by virtue of submission of such
certificate(s) to DTC.

     3.   In the event of any solicitation of consents from or voting by holders
of the Securities, Issuer shall establish a record date for such purposes (with
no provision for revocation of consents or votes by subsequent holders) and
shall send notice of such record date to DTC no fewer than 15 calendar days in
advance of such record date. Notices to DTC pursuant to this Paragraph by
telecopy shall be directed to DTC's Reorganization Department, Proxy Unit at
(212) 855-5181 or (212) 855-5182. If the party sending the notice does not
receive a telecopy receipt from DTC confirming that the notice has been
received, such party shall telephone (212) 855-5202. Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:

                                Supervisor, Proxy Unit
                                Reorganization Department
                                The Depository Trust Company
                                55 Water Street 50th Floor
                                New York, NY 10041-0099

                                        2
<Page>

     4.   In the event of a full or partial redemption of the Securities, Issuer
or Trust Company shall send a notice to DTC specifying: (a) the number of
Securities to be redeemed; and (b) the date such notice is to be distributed to
Security holders (the "Publication Date"). Such notice shall be sent to DTC by a
secure means (E.G., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Trust Company
shall forward such notice either in a separate secure transmission for each
CUSIP number or in a secure transmission for multiple CUSIP numbers (if
applicable) which includes a manifest or list of each CUSIP number submitted in
that transmission. (The party sending such notice shall have a method to verify
subsequently the use of such means and the timeliness of such notice.) The
Publication Date shall be no fewer than 30 days nor more than 60 days prior to
the redemption date. Notices to DTC pursuant to this Paragraph by telecopy shall
be directed to DTC's Call Notification Department at (516) 227-4164 or (516)
227-4190. If the party sending the notice does not receive a telecopy receipt
from DTC confirming that the notice has been received, such party shall
telephone (516) 227-4070. Notices to DTC pursuant to this Paragraph, by mail or
by any other means, shall be sent to:

                                Manager, Call Notification Department
                                The Depository Trust Company
                                711 Stewart Avenue
                                Garden City, NY 11530-4719

     5.   In the event of an invitation to tender the Securities (including
mandatory tenders, exchanges, and capital changes), notice by Issuer or Trust
Company to Security holders specifying the terms of the tender and the
Publication Date of such notice shall be sent to DTC by a secure means in the
manner set forth in the preceding Paragraph. Notices to DTC pursuant to this
Paragraph and notices of other corporate actions by telecopy shall be directed
to DTC's Reorganization Department at (212) 855-5488. If the party sending the
notice does not receive a telecopy receipt from DTC confirming that the notice
has been received, such party shall telephone (212) 855-5290. Notices to DTC
pursuant to this Paragraph, by mail or by any other means, shall be sent to:

                                Manager, Reorganization Department
                                Reorganization Window
                                The Depository Trust Company
                                55 Water Street 50th Floor
                                New York, NY 10041-0099

     6.   All notices and payment advices sent to DTC shall contain the CUSIP
number of the Securities.

     7.   The Document indicates that the dividend rate for the Securities may
vary from time to time. Absent other existing arrangements with DTC, Issuer or
Trust Company shall give DTC notice of each such change in the dividend rate, on
the same day that the new rate is determined, by telephoning DTC's Dividend
Announcement Section at (212) 855-4550, or by telecopy sent to (212) 855-4555.
Such verbal or telecopy notice shall be followed by prompt written confirmation
sent by

                                        3
<Page>

a secure means (E.G., legible telecopy, registered or certified mail, overnight
delivery) in a timely manner designed to assure that such notice is in DTC's
possession no later than the close of business on the business day before or, if
possible, two business days before the Publication Date. Issuer or Agent shall
forward such notice either in a separate secure transmission for each CUSIP
number or in a secure transmission for multiple CUSIP numbers (if applicable)
which includes a manifest or list of each CUSIP number submitted in that
transmission. (The party sending such notice shall have a method to verify
subsequently the use and timeliness of such notice.) Notices to DTC pursuant to
this Paragraph, by mail or by any other means, shall be sent to:

                                Manager, Announcements
                                Dividend Department
                                The Depository Trust Company
                                55 Water Street 25th Floor
                                New York, NY 10041-0099

     8.   The Document indicates that each purchaser of Securities must sign a
purchaser's letter which contains provisions restricting transfer of the
Securities purchased. Issuer and Trust Company acknowledge that as long as Cede
& Co. is the sole record owner of the Securities, Cede & Co. shall be entitled
to all voting rights applicable to the Securities and to receive the full amount
of all dividends, liquidation proceeds, and redemption proceeds payable with
respect to the Securities, even if the credits of Securities to the DTC accounts
of any DTC Participant result from transfers or failures to transfer in
violation of the provisions of the purchaser's letter. Issuer and Trust Company
acknowledge that DTC shall treat any Participant having Securities credited to
its DTC accounts as entitled to the full benefits of ownership of such
Securities. Without limiting the generality of the preceding sentence, Issuer
and Trust Company acknowledge that DTC shall treat any Participant having
Securities credited to its DTC accounts as entitled to receive dividends,
distributions, and voting rights, if any, in respect of Securities and, subject
to Paragraphs 12 and 13, to receive certificates evidencing Securities if such
certificates are to be issued in accordance with Issuer's certificate of
incorporation. (The treatment by DTC of the effects of the crediting by it of
Securities to the accounts of Participants described in the preceding two
sentences shall not affect the rights of Issuer, participants in auctions
relating to the Securities, purchasers, sellers, or holders of Securities
against any Participant.) DTC shall not have any responsibility to ascertain
whether any transfer of Securities is made in accordance with the provisions of
the purchaser's letter.

     9.   Issuer or Trust Company shall provide a written notice of dividend
payment and distribution information to DTC as soon as the information is
available. Issuer or Trust Company shall provide this information to DTC
electronically, as previously arranged by Issuer or Trust Company and DTC, as
soon as the information is available. If electronic transmission has not been
arranged, absent any other arrangements between Issuer or Trust Company and DTC,
such information shall be sent by telecopy to DTC's Dividend Department at (212)
855-4555 or (212) 855-4556, and receipt of such notices shall be confirmed by
telephoning (212) 855-4550. Notices to DTC pursuant to this Paragraph, by mail
or by any other means, shall be addressed as indicated in Paragraph 7.

                                        4
<Page>

     10.  Dividend payments and distributions shall be received by Cede & Co.,
as nominee of DTC, or its registered assigns, in same-day funds no later than
2:30 p.m. (Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m.
(Eastern Time) on the payment date, dividend and distribution payments due Trust
Company, or at such earlier time as may be required by Trust Company to
guarantee that DTC shall receive payment in same-day funds no later than 2:30
p.m. (Eastern Time) on the payment date. Absent any other arrangements between
Issuer or Trust Company and DTC, such funds shall be wired to the Dividend
Deposit Account number that will be stamped on the signature page hereof at the
time DTC executes this Letter of Representations.

     11.  Issuer or Trust Company shall provide DTC, no later than 12:00 noon
(Eastern Time) on each payment date, automated notification of CUSIP-level
detail. If the circumstances prevent the funds paid to DTC from equaling the
dollar amount associated with the detail payments by 12:00 noon (Eastern Time),
Issuer or Trust Company must provide CUSIP-level reconciliation to DTC no later
than 2:30 p.m. (Eastern Time). Reconciliation must be provided by either
automated means or written format. Such reconciliation notice, if sent by
telecopy, shall be directed to DTC's Dividend Department at (212) 855-4633, and
receipt of such reconciliation notice shall be confirmed by telephoning (212)
855-4430.

     12.  Redemption payments shall be received by Cede & Co., as nominee of
DTC, or its registered assigns, in same-day funds no later than 2:30 p.m.
(Eastern Time) on the payment date. Issuer shall remit by 1:00 p.m. (Eastern
Time) on the payment date all such redemption payments due Trust Company, or at
such earlier time as required by Trust Company to guarantee that DTC shall
receive payment in same-day funds no later than 2:30 p.m. (Eastern Time) on the
payment date. Absent any other arrangements between Issuer or Trust Company and
DTC, such funds shall be wired to the Redemption Deposit Account number that
will be stamped on the signature page hereof at the time DTC executes this
Letter of Representations.

     13.  Reorganization payments and CUSIP-level detail resulting from
corporate actions (such as tender offers, remarketings, or mergers) shall be
received by Cede & Co., as nominee of DTC, or its registered assigns, in
same-day funds no later than 2:30 p.m. (Eastern Time) on the payment date.
Issuer shall remit by 1:00 p.m. (Eastern Time) on the payment date all such
reorganization payments due Trust Company, or at such earlier time as required
by Trust Company to guarantee that DTC shall receive payment in same-day funds
no later than 2:30 p.m. (Eastern Time) on the payment date. Absent any other
arrangements between Issuer or Trust Company and DTC, such funds shall be wired
to the Reorganization Deposit Account number that will be stamped on the
signature page hereof at the time DTC executes this Letter of Representations.

     14.  DTC may direct Issuer or Trust Company to use any other number or
address as the number or address to which notices or payments may be sent.

     15.  In the event of a redemption acceleration, or any similar transaction
(E.G., tender made and accepted in response to Issuer's or Trust Company's
invitation) necessitating a reduction in the number of Securities outstanding,
or an advance refunding of part of the Securities outstanding DTC, in its
discretion: (a) may request Issuer or Trust Company to issue and authenticate a
new Security certificate; or (b) may make an appropriate notation on the
Security certificate indicating the date and amount of such reduction in the
number of Securities outstanding, except in the case of final

                                        5
<Page>

redemption, in which case the certificate will be presented to Issuer or Trust
Company prior to payment, if required.

     16.  In the event that Issuer determines that beneficial owners of
Securities shall be able to obtain certificated Securities, Issuer or Trust
Company shall notify DTC of the availability of certificates. In such event,
Issuer or Trust Company shall issue, transfer, and exchange certificates in
appropriate amounts, as required by DTC and others.

     17.  DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Trust Company (at which time DTC will confirm with Issuer or Trust Company
the aggregate principal amount of Securities outstanding). Under such
circumstances, at DTC's request, Issuer and Trust Company shall cooperate fully
with DTC by taking appropriate action to make available one or more separate
certificates evidencing Securities to any DTC Participant having Securities
credited to its DTC accounts.

     18.  Issuer hereby authorizes DTC to provide to Trust Company listings of
Participants' holdings, known as Security Position Listings ("SPLs") with
respect to the Securities from time to time at the request of Trust Company.
Issuer also authorizes DTC, in the event of a partial redemption of Securities,
to provide Trust Company, upon request, with the names of those Participants
whose positions in Securities have been selected for redemption by DTC. DTC will
use its best efforts to notify Trust Company of those Participants whose
positions in Securities have been selected for redemption by DTC. Issuer
authorizes and instructs Trust Company to provide DTC with such signatures,
examples of signatures, and authorizations to act as may be deemed necessary or
appropriate by DTC to permit DTC to discharge its obligations to its
Participants and appropriate regulatory authorities. DTC charges a customary fee
for such SPLs. This authorization, unless revoked by Issuer, shall continue with
respect to the Securities while any Securities are on deposit at DTC, until and
unless Trust Company shall no longer be acting. In such event, Issuer shall
provide DTC with similar evidence, satisfactory to DTC, of the authorization of
any successor thereto so to act. Requests for SPLs shall be directed to the
Proxy Unit of DTC's Reorganization Department at (212) 855-5181 or (212)
855-5182. Receipt of such requests shall be confirmed by telephoning (212)
855-5202. Delivery by mail or by any other means, with respect to such SPL
request, shall be directed to the address indicated in Paragraph 3.

     19.  Nothing herein shall be deemed to require Trust Company to advance
funds on behalf of Issuer.

     20.  This Letter of Representations may be executed in any number of
counterparts, each of which when so executed shall be deemed to be an original,
but all such counterparts together shall constitute but one and the same
instrument.

     21.  This Letter of Representations shall be governed by, and construed in
accordance with, the laws of the State of New York, without giving effect to
principles of conflicts of law.

     22.  The sender of each notice delivered to DTC pursuant to this Letter of
Representations is responsible for confirming that such notice was properly
received by DTC.

                                        6
<Page>

     23.  Issuer recognizes that DTC does not in any way undertake to, and shall
not have any responsibility to, monitor or ascertain the compliance of any
transactions in the Securities with the following, as amended from time to time:
(a) any exemptions from registration under the Securities Act of 1933; (b) the
Investment Company Act of 1940; (c) the Employee Retirement Income Security Act
of 1974; (d) the Internal Revenue Code of 1986; (e) any rules of any
self-regulatory organizations (as defined under the Securities Exchange Act of
1934); or (f) any other local, state, or federal laws or regulations thereunder.

     24.  Issuer and Trust Company shall comply with the applicable requirements
stated in DTC's Operational Arrangements, as they may be amended from time to
time. DTC's Operational Arrangements are posted on DTC's website at
"www.DTC.org."

     25.  The following rider(s), attached hereto, are hereby incorporated into
this Letter of Representations:

________________________________________________________________________________

________________________________________________________________________________

                                        7
<Page>

NOTES:

A. IF THERE IS A TRUST COMPANY (AS
DEFINED IN THIS LETTER OF
REPRESENTATIONS), TRUST COMPANY, AS
WELL AS ISSUER, MUST SIGN THIS LETTER.
IF THERE IS NO TRUST COMPANY, IN
SIGNING THIS LETTER ISSUER ITSELF
UNDERTAKES TO PERFORM ALL OF THE
OBLIGATIONS SET FORTH HEREIN.

B. SCHEDULE B CONTAINS STATEMENTS THAT
DTC BELIEVES ACCURATELY DESCRIBE DTC,
THE METHOD OF EFFECTING BOOK-ENTRY
TRANSFERS OF SECURITIES DISTRIBUTED
THROUGH DTC, AND CERTAIN RELATED
MATTERS.

                                         Very truly yours,


                                           PILGRIM PRIME RATE TRUST
                                         ------------------------------------
                                                     [Issuer]

                                         By: /s/ James M. Hennessy
                                            --------------------------------
                                            [Authorized Officer's Signature]
                                            Sr. Executive vice President

                                            ---------------------------------
                                                     [Trust Company]

                                         By: /s/ Melissa M. Reynolds
                                            ---------------------------------
                                             [Authorized Officer's Signature]

    Received and Accepted:
    THE DEPOSITORY TRUST COMPANY

BY: /s/ [ILLEGIBLE]
   --------------------------

Funds should be wired to:

The Chase Manhattan Bank
ABA #021 000 02l
For credit to a/c Cede & Co.
c/o The Depository Trust Company

[SELECT  APPROPRIATE ACCOUNT.]

Dividend Deposit Account # 066-026776
Redemption Deposit Account # 066-027306
Reorganization Deposit Account # 066-027608

   cc:  Underwriter
        Underwriter's Counsel

                                        8
<Page>

                                                                      SCHEDULE A

                   Pilgrim Prime Rate Trust Auction Rate

                   Cumulative Preferred Shares (Series M, W and F)
                                   [Describe Issue]

<Table>
<Caption>
CUSIP NUMBER       SHARE TOTAL       VALUE ($Amount)
- ------------       -----------       --------------
<S>                   <C>            <C>
72146W202             3,600          $ 90,000,000
72146W301             3,600          $ 90,000,000
72146W400             3,600          $ 90,000,000
</Table>

                                        9
<Page>

                                                                      SCHEDULE B

                        SAMPLE OFFERING DOCUMENT LANGUAGE
                       DESCRIBING BOOK-ENTRY-ONLY ISSUANCE
  (Prepared by DTC-bracketed material may be applicable only to certain issues)

     1.   The Depository Trust Company ("DTC"), New York, NY, will act as
securities depository for the securities (the "Securities"). The Securities will
be issued as fully-registered securities registered in the name of Cede & Co.
(DTC's partnership nominee) or such other name as may be requested by an
authorized representative of DTC. One fully-registered Security certificate will
be issued for [each issue of] the Securities, [each] in the aggregate principal
amount of such issue, and will be deposited with DTC. [If, however, the
aggregate principal amount of [any] issue exceeds $400 million, one certificate
will be issued with respect to each $400 million of principal amount and an
additional certificate will be issued with respect to any remaining principal
amount of such issue.]

     2.   DTC is a limited-purpose trust company organized under the New York
Banking Law, a "banking organization" within the meaning of the New York Banking
Law, a member of the Federal Reserve System, a "clearing corporation" within the
meaning of the New York Uniform Commercial Code, and a "clearing agency"
registered pursuant to the provisions of Section 17A of the Securities Exchange
Act of 1934. DTC holds securities that its participants ("Direct Participants")
deposit with DTC. DTC also facilitates the settlement among Direct Participants
of securities transactions, such as transfers and pledges, in deposited
securities through electronic computerized book-entry changes in Direct
Participants' accounts, thereby eliminating the need for physical movement of
securities certificates. Direct Participants include securities brokers and
dealers, banks, trust companies, clearing corporations, and certain other
organizations. DTC is owned by a number of its Direct Participants and by the
New York Stock Exchange, Inc., the American Stock Exchange LLC, and the
National Association of Securities Dealers, Inc. Access to the DTC system is
also available to others such as securities brokers and dealers, banks, and
trust companies that clear through or maintain a custodial relationship with a
Direct Participant, either directly or indirectly ("Indirect Participants"). The
Rules applicable to DTC and its Direct and Indirect Participants are on file
with the Securities and Exchange Commission.

     3.   Purchases of Securities under the DTC system must be made by or
through Direct Participants, which will receive a credit for the Securities on
DTC's records. The ownership interest of each actual purchaser of each Security
("Beneficial Owner") is in turn to be recorded on the Direct and Indirect
Participants' records. Beneficial Owners will not receive written confirmation
from DTC of their purchase, but Beneficial Owners are expected to receive
written confirmations providing details of the transaction, as well as periodic
statements of their holdings, from the Direct or Indirect Participant through
which the Beneficial Owner entered into the transaction. Transfers of ownership
interests in the Securities are to be accomplished by entries made on the books
of Direct and Indirect Participants acting on behalf of Beneficial Owners.
Beneficial Owners will not receive certificates representing their ownership
interests in Securities, except in the event that use of the book-entry system
for the Securities is discontinued.

                                       10
<Page>

     4.   To facilitate subsequent transfers, all Securities deposited by Direct
Participants with DTC are registered in the name of DTC's partnership nominee,
Cede & Co. or such other name as may be requested by an authorized
representative of DTC. The deposit of Securities with DTC and their registration
in the name of Cede & Co. or such other nominee do not effect any change in
beneficial ownership. DTC has no knowledge of the actual Beneficial Owners of
the Securities; DTC's records reflect only the identity of the Direct
Participants to whose accounts such Securities are credited, which may or may
not be the Beneficial Owners. The Direct and Indirect Participants will remain
responsible for keeping account of their holdings on behalf of their customers.

     5.   Conveyance of notices and other communications by DTC to Direct
Participants, by Direct Participants to Indirect Participants, and by Direct
Participants and Indirect Participants to Beneficial Owners will be governed by
arrangements among them, subject to any statutory or regulatory requirements as
may be in effect from time to time. [Beneficial Owners of Securities may wish to
take certain steps to augment transmission to them of notices of significant
events with respect to the Securities, such as redemptions, tenders, defaults,
and proposed amendments to the security documents. Beneficial Owners of
Securities may wish to ascertain that the nominee holding the Securities for
their benefit has agreed to obtain and transmit notices to Beneficial Owners, or
in the alternative, Beneficial Owners may wish to provide their names and
addresses to the registrar and request that copies of the notices be provided
directly to them.]

     [6.  Redemption notices shall be sent to DTC. If less than all of the
Securities within an issue are being redeemed, DTC's practice is to determine by
lot the amount of the interest of each Direct Participant in such issue to be
redeemed.]

     7.   Neither DTC nor Cede & Co. (nor such other DTC nominee) will consent
or vote with respect to the Securities. Under its usual procedures, DTC mails an
Omnibus Proxy to Issuer as soon as possible after the record date. The Omnibus
Proxy assigns Cede & Co.'s consenting or voting rights to those Direct
Participants to whose accounts the Securities are credited on the record date
(identified in a listing attached to the Omnibus Proxy).

     8.   Redemption proceeds, distributions, and dividend payments on the
Securities will be made to Cede & Co., or such other nominee as may be requested
by an authorized representative of DTC. DTC's practice is to credit Direct
Participants' accounts, upon DTC's receipt of funds and corresponding detail
information from Issuer or Agent on payable date in accordance with their
respective holdings shown on DTC's records. Payments by Participants to
Beneficial Owners will be governed by standing instructions and customary
practices, as is the case with securities held for the accounts of customers in
bearer form or registered in "street name," and will be the responsibility of
such Participant and not of DTC, Agent, or Issuer, subject to any statutory or
regulatory requirements as may be in effect from time to time. Payment of
redemption proceeds, distributions, and dividends to Cede & Co. (or such other
nominee as may be requested by an authorized representative of DTC) is the
responsibility of Issuer or Agent, disbursement of such payments to Direct
Participants shall be the responsibility of DTC, and disbursement of such
payments to the Beneficial Owners shall be the responsibility of Direct and
Indirect Participants.

                                       11
<Page>

     [9.  A Beneficial Owner shall give notice to elect to have its Securities
purchased or tendered, through its Participant, to [Tender/Remarketing] Agent,
and shall effect delivery of such Securities by causing the Direct Participant
to transfer the Participant's interest in the Securities, on DTC's records, to
[Tender/Remarketing] Agent. The requirement for physical delivery of Securities
in connection with an optional tender or a mandatory purchase will be deemed
satisfied when the ownership rights in the Securities are transferred by Direct
Participants on DTC's records and followed by a book-entry credit of tendered
Securities to [Tender/Remarketing] Agent's DTC account.]

     10.  DTC may discontinue providing its services as securities depository
with respect to the Securities at any time by giving reasonable notice to Issuer
or Agent. Under such circumstances, in the event that a successor securities
depository is not obtained, Security certificates are required to be printed and
delivered.

     11.  Issuer may decide to discontinue use of the system of book-entry
transfers through DTC (or a successor securities depository). In that event,
Security certificates will be printed and delivered.

     12.  The information in this section concerning DTC and DTC's book-entry
system has been obtained from sources that Issuer believes to be reliable, but
Issuer takes no responsibility for the accuracy thereof.

                                      12

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(N)(I)
<SEQUENCE>37
<FILENAME>a2138029zex-99_ni.txt
<DESCRIPTION>EX 99.(N)(I)
<TEXT>
<Page>

                                                               Exhibit 99 (n)(i)
June 23, 2004

ING Prime Rate Trust
7337 East Doubletree Ranch Road
Scottsdale, Arizona  85258-2034

Re: ING Prime Rate Trust
    (SEC File Nos. 333-68239, 811-05410)

Dear Ladies and Gentlemen:

We hereby consent to all references to our firm in Post-Effective Amendment
No. 12 to the Registration Statement of ING Prime Rate Trust.  In giving such
consent, however, we do not admit that we are within the category of persons
whose consent is required by Section 7 of the Securities Act of 1933, as
amended, and the rules and regulations thereunder.

Very truly yours,

/s/ Dechert LLP

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(N)(II)
<SEQUENCE>38
<FILENAME>a2138029zex-99_nii.txt
<DESCRIPTION>EX 99.(N)(II)
<TEXT>
<Page>


             CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



The Board of Trustees of ING Prime Rate Trust:

We consent to the use of our report dated April 19, 2004, incorporated herein
by reference and to the reference to our firm under the heading "Financial
Highlights" in the prospectuses and "Independent Auditors" in the statement
of additional information.

                                     /s/ KPMG LLP


Los Angeles, California
June 25, 2004

</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.(R)(I)
<SEQUENCE>39
<FILENAME>a2138029zex-99_ri.txt
<DESCRIPTION>EX 99.(R)(I)
<TEXT>
<Page>

                                                               Exhibit 99.(r)(i)

                                 CODE OF ETHICS

<Page>

<Table>
<S>                                                                                                      <C>
I. STATEMENT OF GENERAL PRINCIPLES                                                                        1

II. DEFINITIONS                                                                                           2

III. GOVERNING LAWS, REGULATIONS AND PROCEDURES                                                           6

IV. CONFIDENTIALITY OF TRANSACTIONS                                                                       7

V. ETHICAL STANDARDS                                                                                      7

   A.   Investment Activities Related to the Funds or Managed Accounts                                    7

   B.   Conflicts                                                                                         8

   C.   Obligation to Comply with Laws and Regulations                                                    8

   D.   Selection of Broker-Dealers                                                                       8

   E.   Supervisory Responsibility                                                                        8

   F.   Accountability                                                                                    9

VI. EXEMPTED TRANSACTIONS                                                                                 9

VII. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES                                                        9

   A.   General                                                                                           9

   B.   Pre-clearance                                                                                    10

   C.   Restrictions on Purchase of Initial Public Offerings                                             11

   D.   Restrictions on Purchase of Limited Offerings                                                    11

   E.   Blackout Periods                                                                                 12

   F.   Ban on Short-Term Trading Profits                                                                12

   G.   Violations of this policy will be subject to Automatic Disgorgement                              12

   H.   Gifts                                                                                            12

   I.   Services as a Director                                                                           12

   J.   Naked Options                                                                                    12

   K.   Short Sales                                                                                      13

   L.   Permitted Exception                                                                              13

VIII. COMPLIANCE PROCEDURES                                                                              13

   A.   Disclosure of Personal Holdings                                                                  13

   B.   Duplicate Trade Confirmation Statements and Account Statements                                   13

   C.   Quarterly Reporting                                                                              13
     1) Access Persons and Advisory Representatives                                                      14
     2) Exclusions                                                                                       14
</Table>

                                        i
<Page>

<Table>
<S>                                                                                                      <C>
     3) Disinterested Directors                                                                          15
     4) All Directors                                                                                    15

   D.   Certification of Compliance with Code of Ethics                                                  15

IX. TRANSACTIONS IN ING FUND SHARES                                                                      15

   A.   Applicability of Article IX                                                                      15

   B.   Compliance with Prospectus                                                                       16

   C.   Transactions required to be through an Approved Plan or Contract                                 16

   D.     30-Day Holding Period for ING Fund Shares.                                                     16

   E.     Pre-clearance of Transactions in ING Fund Shares.                                              17

   F.     Reporting of Transactions in ING Fund Shares                                                   18

   G.     Disinterested Directors /Trustees/Consultants                                                  18

   H.     Questions to Chief Compliance Officer                                                          18

   I.     Review by Chief Compliance Officer                                                             18

   J.     Minimum Sanctions                                                                              18

X. SANCTIONS                                                                                             18

   A.     Generally                                                                                      18

   B.     Procedures                                                                                     19

XI. MISCELLANEOUS PROVISIONS                                                                             19

   A.     Records                                                                                        19

   B.     Confidentiality                                                                                20

   C.     Interpretation of Provisions                                                                   21

   D.     Effect of Violation of this Code                                                               21

XII. EXHIBITS                                                                                            22

EXHIBIT A                                                                                                22

     Procedures to Control the Flow and Use of Material Non-Public Information in Connection
     With Securities Activities                                                                          22
     Reporting Material Non-Public Information To Chief Compliance Officer                               23

EXHIBIT B                                                                                                24

     Designated Persons of ING Investments able to provide pre-clearance                                 24

EXHIBIT C-1                                                                                              25

     SAMPLE LETTER TO BROKERAGE FIRM                                                                     25
     TO ESTABLISH DUPLICATE CONFIRMS AND PERIODIC STATEMENTS                                             25

EXHIBIT C-2                                                                                              26
</Table>

                                       ii
<Page>

<Table>
<S>                                                                                                      <C>
     SAMPLE LETTER TO BROKERAGE FIRM TO ESTABLISH DUPLICATE CONFIRMS AND PERIODIC STATEMENTS             26

EXHIBIT D                                                                                                27

   Annual Certification of Code of Ethics Compliance by all Access Persons, Employees and Directors}     27

EXHIBIT E                                                                                                28

     CERTIFICATION REGARDING EXEMPTION FROM CERTAIN REPORTING REQUIREMENTS OF THE ING CODE OF ETHICS     28

EXHIBIT F                                                                                                30

     INITIAL CERTIFICATION OF CODE OF ETHICS                                                             30
</Table>

                                       iii
<Page>

                                           Code of Ethics Effective June 1, 2004

I. STATEMENT OF GENERAL PRINCIPLES

Each of (i) the ING Funds (sometimes referred to as "Funds"), (ii) ING
Investments, LLC ("ING Investments"), a registered investment adviser under the
Investment Advisers Act of 1940, as amended ("Advisers Act"), which serves as
the investment adviser for the Funds and Managed Accounts, and (vi) ING Funds
Distributor, LLC. ("IFD"), a registered broker-dealer under the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), which serves as the
principal underwriter for the ING Funds (hereinafter, ING Investments, and IFD,
collectively "Fund Affiliates") hereby adopt this Code of Ethics (hereinafter,
"Code"), pursuant to Section 17(j) of the Investment Company Act of 1940, as
amended (the "1940 Act") and Rule 17j-1 promulgated thereunder by the Securities
and Exchange Commission ("SEC").

In general, Rule 17j-1 imposes an obligation on registered investment companies,
investment advisers and principal underwriters to adopt written codes of ethics
covering the securities activities of certain directors, trustees, officers, and
employees. This Code is designed to ensure that: (i) those individuals who have
access to information regarding the portfolio securities activities of
registered investment company clients and other advisory clients, do not
intentionally use information concerning such clients' portfolio securities
activities for his or her personal benefit and to the detriment of such clients
and (ii) Access Persons and Employees of the ING Funds and the Fund Affiliates
do not engage in improper trading of shares of the ING Funds (ING Fund Shares").
A sub-adviser of any Fund (and the sub-adviser's Access Persons and Employees)
shall be subject to this Code unless the boards of directors/trustees of the
Funds ("Boards") have approved a separate code of ethics for that sub-adviser (a
"Sub-Adviser Code"). In reviewing and approving a Sub-Adviser Code, the Boards
shall, in addition to making the findings required by Rule 17j-1, consider
whether the Sub-Adviser Code has provisions reasonably designed to detect and
deter improper trading by Sub-Adviser Employees in shares of the portfolio of
the Fund sub-advised by it. It is not the intention of this Code to prohibit
personal securities activities by Access Persons and Employees, but rather to
prescribe rules designed to prevent actual and apparent conflicts of interest.
While it is not possible to define and prescribe all-inclusive rules addressing
all possible situations in which conflicts may arise, this Code sets forth the
policies of the Funds and Fund Affiliates regarding conduct in those situations
in which conflicts are most likely to develop.

RULE 17j-1(b)(1)-(4) SPECIFICALLY STATES:

It is unlawful for any affiliated person of or principal underwriter for a Fund,
or any affiliated person of an investment adviser of or principal underwriter
for a Fund, in connection with the purchase or sale, directly or indirectly, by
the person of a Security Held or to be Acquired by the Fund:

        (1) To employ any device, scheme or artifice to defraud the Fund;

        (2) To make any untrue statement of a material fact to the Fund or omit
            to state a material fact necessary in order to make the statements
            made to the Fund, in light of the circumstances under which they are
            made, not misleading;

                                        1
<Page>

        (3) To engage in any act, practice or course of business that operates
            or would operate as a fraud or deceit on the Fund; or

        (4) To engage in any manipulative practice with respect to the Fund.

In discharging his or her obligations under the Code, every Access Person and
Employee should adhere to the following general fiduciary principles governing
personal investment activities:

     A. Every Access Person or Employee should at all times scrupulously place
        the interests of the Funds' shareholders and advisory clients ahead of
        his or her own interests with respect to any decision relating to
        personal investments.

     B. No Access Person or Employee should take inappropriate advantage of his
        or her position with a Fund, or with the Fund Affiliates as the case may
        be, by using knowledge of any Fund's or Managed Account's transactions
        to his or her personal profit or advantage.

     C. Every Access Person and Employee should at all times conform to the
        "POLICIES AND PROCEDURES TO CONTROL THE FLOW AND USE OF MATERIAL
        NON-PUBLIC INFORMATION IN CONNECTION WITH SECURITIES ACTIVITIES", a copy
        of which is attached as EXHIBIT A and is incorporated by reference into
        this Code.

II.  DEFINITIONS

This Code defines directors, officers and employees of the Funds and Fund
Affiliates into several categories, and imposes varying requirements by category
appropriate to the sensitivity of the positions included in the category. As
used herein and unless otherwise indicated, the following terms shall have the
meanings set forth below.

     "ACCESS PERSONS": includes:

     (i)  any director, trustee, officer, general partner or Advisory Person of
          the Funds or the Advisers; and

     (ii) any director or officer of IIL who, in the ordinary course of
          business, makes, participates in or obtains information regarding the
          purchase or sale of Securities by the Funds or Managed Accounts, or
          whose functions or duties in the ordinary course of business relate to
          the making of any recommendation to the Funds or Managed Accounts
          regarding the purchase or sale of Securities.

     This definition includes, but is not limited to, the following individuals:
     Portfolio Managers, Investment Personnel, certain Employees in Operations,
     all Employees in Marketing, the Finance department, Information Systems,
     Accounting/Compliance Department, Legal Counsel, Legal Administration and
     Executive Management and their support staff members, as such individuals
     are defined by the Company's Human Resource Department.

                                        2
<Page>

     "ADVISERS": "ING Investments", a registered adviser under the Investment
     Advisers Act of 1940, as amended ("Advisers Act"), which serves as the
     investment adviser for the Funds and Managed Accounts and sub-advisers
     subject to this Code.

     "ADVISORY PERSON": includes any Employee of the Funds or the Advisers (or
     of any company in a control relationship to the Fund or the Advisers) who,
     in connection with his or her regular functions or duties, makes,
     participates in or obtains information regarding the purchase or sale of
     Securities by the Funds or Managed Accounts, or whose functions relate to
     the making of any recommendations with respect to such purchases or sales.
     This term also includes any natural persons in a control relationship with
     the Fund or investment adviser who obtains information concerning
     recommendations made to the Fund regarding the purchase or sale of
     Securities. This definition also includes Shared Employees.

     "ADVISORY REPRESENTATIVES": means any officer or director of the Advisers;
     or any Employee of the Advisers who makes any recommendation, who
     participates in the determination of which recommendation should be made or
     whose functions or duties relate to the determination of which
     recommendation shall be made.

     "AUTOMATIC DISGORGEMENT": Where a violation results from a transaction
     which can be reversed prior to settlement such transaction should be
     reversed, with the cost of the reversal being borne by the Covered Person;
     or if reversal is impractical or impossible, then any profit realized on
     such short-term investment, net of brokerage commissions but before tax
     effect, shall be disgorged to the appropriate Fund, or if no Fund is
     involved then to a charity designated by the relevant Advisers.

     "BEING CONSIDERED FOR PURCHASE OR SALE": means, with respect to any
     security, that a recommendation to purchase or sell such security has been
     made and communicated or, with respect to the person making the
     recommendation, such person seriously considers making such recommendation.

     "BENEFICIAL OWNERSHIP": generally has the same meaning as under Section 16
     of the Exchange Act and Rule 16a-1(a)(2) under the Act, as having or
     sharing, directly or indirectly, through any contract arrangement,
     understanding, relationship, or otherwise, a direct or indirect "pecuniary
     interest" in the security.

          i)   "Pecuniary interest" means the opportunity, directly or
               indirectly, to profit or share in any profit derived from a
               transaction in securities.

          ii)  "Indirect pecuniary interest" includes, but is not limited to:
               (a) a general partner's proportionate interest in portfolio
               securities held by a general or limited partnership; (b) a
               person's right to dividends that is separated or separable from
               the underlying securities (otherwise, a right to dividends alone
               will not constitute a pecuniary interest in securities); (c) a
               person's interest in securities held by a trust; (d) a person's
               right to acquire securities through the exercise or conversion of
               any derivative security, whether or not presently exercisable;
               and (e) a performance-related fee, other than an asset based fee,
               received by any broker, dealer, bank, insurance company,

                                        3
<Page>

               investment company, investment manager, trustee, or person or
               entity performing a similar function, with certain exceptions.

          iii) A person's Beneficial Ownership interest ordinarily extends to
               securities held in the name or for the benefit of (a) a spouse,
               minor children, or significant other, (b) another relative
               resident in the Employee or Access Person's home, or (c) an
               unrelated person in circumstances that suggest a sharing of
               financial interests, such as when the Access Person or Employee
               makes a significant contribution to the financial support of the
               unrelated person (or vice versa) or they share in the profits of
               each other's securities transactions. "Significant others" are
               two people who share the same primary residence, share living
               expenses, and are in a committed relationship in which they
               intend to remain indefinitely. For interpretive purposes, a
               person who resides with the Access Person or Employee and is
               referred to as the "boyfriend" or "girlfriend" of the Access
               Person or Employee would be presumed to be a significant other,
               while a person referred to as the Access Person or Employee's
               "roommate" would not, absent a demonstration to the contrary. Any
               questions about whether a particular person is covered in the
               definition of beneficial ownership should be directed to the
               Chief Compliance Officer.

     IMPORTANT NOTE: Employees and Access Persons are reminded that all
     information about the Funds and the Fund Affiliates which they acquire in
     their capacity as Employees or Access Persons is proprietary and
     confidential to the Funds and the Fund affiliates, and communication of
     this information to friends, family, or any other individual is strictly
     prohibited, regardless of any determination of beneficial ownership under
     this provision.

     "CONTROL": shall have the same meaning as that set forth in Section 2(a)(9)
     of the 1940 Act.

     "COVERED PERSON": means any person subject to the Code, including any
     Access Person, Employee or their Related Persons.

     "DESIGNATED PERSON": means, the Chief Compliance Officer or a member of the
     Chief Compliance Officer's staff appointed as such.

     "DISINTERESTED DIRECTOR": means a director/trustee of the Funds who is not
     an "interested person" of the Funds within the meaning of Section 2(a)(19)
     of the 1940 Act.

     "EMPLOYEE": means any employee of any ING Fund or Fund Affiliate.

     "FUNDS" OR "FUND": means investment companies registered under the 1940 Act
     for which ING Investments serves as the investment adviser. This includes
     both the ING retail funds and the ING variable portfolios.

     ."ING FUNDS": means investment companies registered under the 1940 Act for
     which certain ING entities serve as the investment adviser. This includes
     funds for which ING Investments, LLC., ING Life Insurance Company and
     Annuity Company and Directed Services, Inc serve as the investment adviser.
     It encompasses both the ING retail funds and the ING variable portfolios.

                                        4
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     "ING INSURANCE COMPANY": means insurance companies that are part of ING
     Groep N.V.

     "INVESTMENT PERSONNEL": includes any Advisory Person who makes,
     participates in or obtains information concerning recommendations regarding
     the purchase or sale of Securities by the Funds or Managed Accounts or any
     natural person in a control relationship to the Fund or Advisers who
     obtains information regarding the purchase or sale of Securities by the
     Funds or Managed Accounts and includes the following individuals: all
     Portfolio Managers of the Funds and Managed Accounts, the Portfolio support
     staff and traders who provide information and advice to any such Portfolio
     Managers or who assist in the execution of such Portfolio Managers'
     decisions and all Finance Department staff of the Advisers.

     "MANAGED ACCOUNTS": means any account other than registered investment
     companies.

     "PERSONAL SECURITIES HOLDINGS" OR "PERSONAL SECURITIES TRANSACTIONS":
     means, with respect to any person, any Security Beneficially Owned, or any
     Security purchased or otherwise acquired, or sold or otherwise disposed of
     by such person, including any Security in which such person has, or by
     reason of such transaction acquires or disposes of, any direct or indirect
     Beneficial Ownership in such Security, and any account over which such
     person has discretion; provided, however, that such terms shall not include
     any holding or transaction in a Security held in or effectuated for an
     account over which such person does not have any direct or indirect
     influence and has certified these facts to the Chief Compliance Officer, in
     a manner satisfactory to the Chief Compliance Officer, and updates this
     certification, attached as EXHIBIT E, annually and as long as all holdings
     and transactions in the account are reported in accordance with the
     provisions of ARTICLE VIII.A. (Disclosure of Personal Holdings) and Article
     VIII.B. (Duplicate Trade Confirmation Statements and Account Statements).
     Personal Securities Transactions shall include all Securities or commodity
     interests regardless of the dollar amount of the transaction or whether the
     sale is in response to a tender offer.

     "PORTFOLIO MANAGER": means any Employee of a Fund or the Advisers who is
     entrusted with the direct responsibility and authority to make investment
     decisions affecting a Fund or Managed Account, and who, therefore, may be
     best informed about such Fund's or account's investment plans and
     interests.

     "RELATED PERSONS": persons in whose holdings or transactions an Access
     Person or Employee has a beneficial ownership interest.

     "SECURITY": includes any note, stock, treasury stock, bond, debenture,
     evidence of indebtedness, certificate of interest or participation in any
     profit-sharing agreement, collateral-trust certificate, pre-organization
     certificate or subscription, transferable share, investment contract,
     voting-trust certificate, certificate of deposit for a security, fractional
     undivided interest in oil, gas or other mineral rights, any put, call,
     straddle, option, or privilege on any security (including a certificate of
     deposit) or on any group or index of securities, or any put, call,
     straddle, option or privilege entered into on a national securities
     exchange relating to foreign currency. Securities also includes shares of
     closed-end investment companies, various derivative instruments such as
     ELKs, LEAPs and PERCs, exchange traded funds such as SPDR's, CUBE's, WEB's,
     HOLDR's, iShare's, Viper's and

                                        5
<Page>

     Diamonds, limited partnership interests and private placement common or
     preferred stocks or debt instruments. Commodity interests, which includes
     futures contracts, and options on futures, or any other type of commodity
     interest which trades on any exchange, shall also be included in this
     Code's definition of Security. Commodity interests in agricultural or
     industrial commodities, such as agricultural products or precious metals,
     are not covered under this Code. Security includes any certificate or
     interest, participation in, temporary or interim certificate for, receipt
     for, guarantee of or warrant or right to subscribe to or purchase, or of
     the foregoing.

     Security does not include shares of registered open-end investment
     companies, securities issued by the government of the United States and any
     options or futures thereon, bankers' acceptances, bank certificates of
     deposit and time deposits, commercial paper, repurchase agreements, and
     such other money market instruments as designated by the board of
     directors/trustees of such Fund, Please note that while shares of the ING
     Funds that are open-end funds are not defined as "Securities" under the
     Code, transactions in shares of these Funds are governed by Article IX of
     the Code.

     "SECURITY HELD OR TO BE ACQUIRED" by a Fund or for a Managed Account means:

        1. any Security which, within the most recent fifteen (15) days,

              a.  is or has been held by such Fund or Managed Account, or

              b.  is being or has been considered by such Fund or Managed
                  Account for purchase for such Fund or Managed Account.

        2. any option to purchase or sell, and any security convertible into or
           exchangeable for a Security described in paragraph (a) above.

     "SHARED EMPLOYEE": means any Employee who is a Shared Employee by virtue of
     a Shared Employee arrangement or other writing.

III. GOVERNING LAWS, REGULATIONS AND PROCEDURES

Each Employee shall comply with all laws and regulations relating to the use of
material non-public information. Trading on "inside information" of any sort,
whether obtained in the course of research activities, through a client
relationship or otherwise, is strictly prohibited. All Employees shall comply
strictly with procedures established by the Funds and the Advisers to ensure
compliance with applicable federal and state laws and regulations of
governmental agencies and self-regulatory organizations. Employees shall not
knowingly participate in, assist, or condone any acts in violation of any
statute or regulation governing securities matters, nor any act, which would
violate any provision of this Code or any rules adopted thereunder.

Each Employee having supervisory responsibility shall exercise reasonable
supervision over Employees subject to his or her control with a view to
preventing any violation by such of the provisions of the Code.

                                        6
<Page>

Any Employee encountering evidence that acts in violation of applicable statutes
or regulations or provisions of the Code of Ethics have occurred shall report
such evidence to a Designated Person or the Board of each fund.

Employees must inform the Chief Compliance Officer if they ever become the
subject of external investigations.

IV. CONFIDENTIALITY OF TRANSACTIONS

All information relating to any Fund or Managed Account portfolio or pertaining
to any studies or research activity is confidential until publicly available.
Whenever statistical information or research is supplied to or requested by the
Funds or Managed Accounts, such information must not be disclosed to any persons
other than persons designated by the Designated Person or the Board of the Fund
or the Advisers. If a Fund or Managed Account is considering a particular
purchase or sale of a security, this must not be disclosed except to such duly
authorized persons.

Any Employee authorized to place orders for the purchase or sale of Securities
on behalf of a Fund or Managed Account shall take all steps reasonably necessary
to provide that all brokerage orders for the purchase and sale of Securities for
the account of the Fund or Managed Account, will be so executed as to ensure
that the nature of the transactions shall be kept confidential until the
information is reported to the SEC or each Fund's shareholders or the Managed
Account holders in the normal course of business.

If any Employee or Access Person should obtain information concerning the Fund's
or Managed Account's portfolio (including consideration of acquiring or
recommending any security for such portfolios), whether in the course of such
person's duties or otherwise, such person shall respect the confidential nature
of this information and shall not divulge it to anyone unless it is properly
part of such person's services to the Fund or Managed Account to do so or such
person is specifically authorized to do so by the Designated Person of the Fund
or Managed Account. No Access Person or Employee shall disclose any non-public
information relating to a client's portfolio or transactions or to the
investment recommendations of the Advisers, nor shall any Access Person or
Employee disclose any non-public information relating to the business or
operations of the Funds, Fund Affiliates or Managed Accounts unless properly
authorized to do so.

V. ETHICAL STANDARDS

   A.  INVESTMENT ACTIVITIES RELATED TO THE FUNDS OR MANAGED ACCOUNTS

         All Access Persons, in making any investment recommendations or in
         taking any investment action, shall exercise diligence and
         thoroughness, and shall have a reasonable and adequate basis for any
         such recommendations or actions.

   B.  CONFLICTS

         All Access Persons and Employees shall conduct themselves in a manner
         consistent with the highest ethical standards. They shall avoid any
         action, whether for personal profit or otherwise, that results in an
         actual or potential conflict of interest, with a

                                        7
<Page>

         Fund or Managed Account, or which may otherwise be detrimental to the
         interest of a Fund or Managed Account. Therefore, no Access Person or
         Employee shall undertake independent practice for compensation in
         competition with the Funds or Managed Accounts.

         Every Employee or Access Person of the Funds or Managed Accounts who
         owns beneficially, directly or indirectly, 1/2 of 1% or more of the
         stock of any corporation is required to report such holdings to the
         President of the Funds and the Chief Compliance Officer.

   C.  OBLIGATION TO COMPLY WITH LAWS AND REGULATIONS

         Every Access Person and Employee shall acquire and maintain knowledge
         of, and shall comply strictly with, all applicable federal and state
         laws and all rules and regulations of any governmental agency or
         self-regulatory organization governing such Access Person's activities.
         In addition, every Access Person shall comply strictly with all
         procedures established by the Funds or Fund Affiliates to ensure
         compliance with such laws and regulations. Access Persons shall not
         knowingly participate in, assist or condone any acts in violation of
         any law or regulation governing Securities transactions, nor any act
         that would violate any provision of this Code.

   D.  SELECTION OF BROKER-DEALERS

         Any Employee or Access person having discretion as to the selection of
         broker-dealers to execute transactions in Securities for the Funds
         shall select broker-dealers solely on the basis of the services
         provided directly or indirectly by such broker-dealers as provided in
         the registration statements for the relevant Funds. An Employee or
         Access Person shall not directly or indirectly, receive a fee or
         commission from any source in connection with the sale or purchase of
         any security for a Fund or Managed Account.

         In addition, Employees and Access Persons shall take all actions
         reasonably calculated to ensure that they engage broker-dealers to
         transact business with each Fund or Managed Account whose partners,
         officers and Employees, and their respective affiliates, will conduct
         themselves in a manner consistent with the provisions of Article V.

   E.  SUPERVISORY RESPONSIBILITY

         Every Access Person or Employee having supervisory responsibility shall
         exercise reasonable supervision over employees subject to his or her
         control in order to prevent any violation by such persons of applicable
         laws and regulations, procedures established by the Funds or Fund
         Affiliates, as the case may be, or the provisions of this Code.

   F.  ACCOUNTABILITY

         Reports of Possible Violations - Any Access Person or Employee
         encountering evidence of any action in violation of the provisions of
         this Code shall report such

                                        8
<Page>

         evidence to the Chief Compliance Officer. The Chief Compliance Officer
         may assign a Designated Person to investigate matters brought to his or
         her attention. The Chief Compliance Officer, using his or her
         discretion, may report such matters to the Funds' Disinterested
         Directors. If, as a result of fiduciary obligations to other persons or
         entities, an Access Person believes that he or she is unable to comply
         with certain provisions of this Code, such Access Person shall so
         advise the Designated Person of any Fund or the Advisers, for which
         such person is an Access Person in writing and shall set forth with
         reasonably specificity the nature of his or her fiduciary obligations
         and the reasons why such Access Person believes that he or she cannot
         comply with the provisions of the Code.

VI. EXEMPTED TRANSACTIONS

The provisions of Article VII of this Code shall not apply as follows:

   1. To purchases or sales effected in any account over which a Covered Person
      has no direct or indirect influence or control;

   2. To purchases or sales which are non-volitional on the part of either the
      Covered Person or a Fund or Managed Account;

   3. To purchases which are part of an automatic dividend reinvestment plan or
      employee stock purchase plan;

   4. To purchases effected upon the exercise of rights issued by an issuer pro
      rata to all holders of a class of its securities, to the extent such
      rights were acquired from such issuer, and sales of such rights so
      acquired;

   5. The provisions of Article VII of this Code (other than Article VII.A)
      shall not apply (i) to a Disinterested Director.

   6. The provisions of Article VII and Article VIII.B of this Code shall not
      apply to Access Persons who are Shared Employees so long as he or she is
      subject to substantially similar provisions through his/her other
      employer, as determined by the Chief Compliance Officer.

   7. The exemptions provided in this Article VI do not apply to Article IX.

VII. RESTRICTIONS ON PERSONAL INVESTING ACTIVITIES

   A.  GENERAL

         No Covered Person shall purchase or sell, directly or indirectly or for
         any account over which a Covered Person has discretion, any Security
         (including both publicly traded and private placement Securities), in
         which he or she has, or by reason of such transaction acquires, any
         direct or indirect Beneficial Ownership and which he or she knows or
         should have known at the time of such purchase or sale (i) is being

                                        9
<Page>

         considered for purchase or sale by a Fund or Managed Account; or (ii)
         is being purchased or sold by a Fund or Managed Account.

   B.  PRE-CLEARANCE

         Every Covered Person must pre-clear all Personal Securities
         Transactions with the Compliance Department. In order to receive
         pre-clearance for Personal Securities Transactions, the Covered Person
         must complete and submit a Personal Trading Approval form (which can be
         found at P:/everyone/compliance) to a Designated Person for
         authorization. The current list of Designated Persons of the Advisers
         who are authorized to provide pre-clearance trade approval is attached
         as EXHIBIT B. Questions regarding pre-clearance procedures should be
         directed to the Compliance Department. A member of the Compliance
         Department is available each business day to respond to pre-clearance
         requests. Covered Persons are directed to identify:

            1. the subject of the transaction and the number of shares and
               principal amount of each security involved,

            2. the date on which the Covered Person desires to engage in the
               subject transaction;

            3. the nature of the transaction (i.e., purchase, sale, private
               placement, or any other type of acquisition or disposition);

            4. the approximate price at which the transaction will be effected;
               and

            5. the name of the broker, dealer, or bank with or through whom the
               transaction will be effected.

         When granted, clearance authorizations will be identified by
         authorization number and will be effective until the end of that
         calendar day (or in the case of a private placement purchase, the
         closing of the private placement transaction).

         In determining whether to grant approval of Personal Securities
         Transactions of Investment Personnel who desire to purchase or
         otherwise acquire Securities in private placement transactions
         conducted pursuant to Section 4(2) of the Securities Act, the
         appropriate Designated Person will consider, among other factors,
         whether the investment opportunity presented by such private placement
         offering should be reserved for an investment company and its
         shareholders, or a Managed Account and its shareholders, and whether
         the opportunity is being offered to an individual by virtue of his
         position with the Fund or Managed Account. In the event that Investment
         Personnel who have been authorized to acquire Securities in a private
         placement transaction later have any role in a Fund's or Managed
         Account's subsequent consideration of an investment in the issuer of
         the Securities acquired in such prior private placement transaction,
         such Investment Personnel must provide written notification of such
         prior authorization and investment to the Compliance Department,
         immediately upon learning of such Fund's or Managed Account's
         subsequent consideration. In such circumstances, the Fund's or Managed
         Account's

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<Page>

         decision to purchase Securities of such issuer will be subject to an
         independent review

         COMPLIANCE OF TRANSACTIONS WITH THIS CODE BY COVERED PERSONS MAY DEPEND
         ON THE SUBSEQUENT INVESTMENT ACTIVITIES OF THE FUNDS OR MANAGED
         ACCOUNTS. THEREFORE, PRE-CLEARANCE APPROVAL OF A TRANSACTION BY THE
         DESIGNATED PERSON DOES NOT NECESSARILY MEAN THE TRANSACTION COMPLIES
         WITH THE CODE.

   C.  RESTRICTIONS ON PURCHASE OF INITIAL PUBLIC OFFERINGS

      1. No Investment Personnel (or Employee who is a Registered
         Representative) may directly or indirectly acquire Beneficial Ownership
         in any securities in an initial public offering without first obtaining
         prior written approval from the Chief Compliance Officer. For the
         purpose of this provision, "initial public offering" means an offering
         of securities registered under the Securities Act, the issuer of which,
         immediately before the registration, was not subject to the reporting
         requirements of Sections 13 or 15(d) of the Exchange Act.

      2. The Chief Compliance Officer shall not grant approval for any
         Investment Personnel (or Employee who is a Registered Representative)
         to acquire Beneficial Ownership in any securities in an initial public
         offering, except as permitted by NASD Rule 2790. Among other
         transactions, Rule 2790 permits the purchase of securities in an
         initial public offering that qualifies as an "issuer-directed" offering
         either (i) to a specific list of purchasers, or (ii) as part of a
         spin-off or conversion offering, all in accordance with the provisions
         of Rule 2790.

   D.  RESTRICTIONS ON PURCHASE OF LIMITED OFFERINGS

         No Investment Personnel may directly or indirectly acquire Beneficial
         Ownership in any securities in a "limited offering" (sometimes referred
         to as a "private placement") except after receiving prior written
         approval from the Chief Compliance Officer. In all such instances, the
         Investment Personnel shall provide the Chief Compliance Officer with
         the full details of the proposed transaction (including written
         certification that the investment opportunity did not arise by virtue
         of the Investment Personnel's activities on behalf of advisory
         clients). Any Investment Personnel who has obtained prior approval and
         made an investment in a limited offering must disclose in writing to
         the Chief Compliance Officer immediately upon learning of such Fund's
         or Managed Account's subsequent consideration of an investment in the
         issuer by a Fund. If the Investment Personnel plays a part in any
         subsequent consideration of an investment in the issuer by a Fund, the
         Fund's decision to purchase securities of the limited offering issuer
         will be subject to an independent review by Investment Personnel with
         no investment in the issuer. For this purpose, a "limited offering"
         means an offering that is exempt from registration under the Securities
         Act pursuant to Section 4(2) or 4(6) thereof, or pursuant to Regulation
         D thereunder.

                                       11
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   E.  BLACKOUT PERIODS

      1. No Access Person or Employee may execute any Personal Securities
         Transaction on a day during which any Fund or Managed Account has a
         pending "buy" or "sell" order in that same security until such order is
         executed or withdrawn.

      2. Any purchase or sale of any Personal Security Holding by a Portfolio
         Manager which occurs within seven (7) calendar days (exclusive of the
         day of the relevant trade) from the day a Fund or Managed Account he or
         she manages trades in such security will be subject to Automatic
         Disgorgement. This seven-day blackout period also applies to any
         portfolio support staff member who recommends the purchase or sale of
         the particular security to a Fund's or Managed Account's Portfolio
         Manager.

   F.  BAN ON SHORT-TERM TRADING PROFITS

         Investment Personnel may not profit from the purchase and sale, or sale
         and purchase, of the same (or equivalent) Personal Securities Holding
         within sixty (60) calendar days, unless such Investment Personnel have
         requested and obtained an exemption from this provision from the
         Compliance Department with respect to a particular transaction.

   G.  VIOLATIONS OF THIS POLICY WILL BE SUBJECT TO AUTOMATIC DISGORGEMENT

         This prohibition shall not apply to any transaction in index futures,
         index options, including WEB's, SPDR's or similar baskets of portfolio
         securities. Nor shall it apply to the exercise of vested options in ING
         stock.

   H.  GIFTS

         Investment Personnel may not receive any fee, commission, gift or other
         thing, or services, having a value of more than $100.00 each year from
         any person or entity that does business with or on behalf of the Funds
         or a Managed Account.

   I.  SERVICES AS A DIRECTOR

         Investment Personnel may not serve on the boards of directors of
         publicly traded companies, unless

         1. the individual serving as a director has received prior
            authorization from the appropriate Designated Person based upon a
            determination that the board service would be consistent with the
            interests of the Managed Accounts, the Funds and their shareholders
            and

         2. policies and procedures have been developed and maintained by the
            Boards that are designed to isolate the individual from those making
            investment decisions (an "Ethical Wall").

   J.  NAKED OPTIONS

         Investment Personnel are prohibited from engaging in naked options
         transactions. Transactions under any incentive plan sponsored by the
         Fund Affiliates or their affiliates are exempt from this restriction.

                                       12
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   K.  SHORT SALES

         Short sales of Securities by Investment Personnel are prohibited.

   L.  PERMITTED EXCEPTION

         Purchases and sales of the following securities are exempt from the
         restrictions set forth in paragraphs A, D, and E above if such
         purchases and sales comply with the pre-clearance requirements of
         paragraph B above and are:

         1. Equity Securities of a company with a market capitalization in
            excess of $10 billion, when transactions are for 3000 shares or
            less, or

         2. $10,000 or less per calendar month, whichever is lesser.

VIII. COMPLIANCE PROCEDURES

Any person filing a required holdings or transaction report under this Article
VIII may include a statement that the report will not be construed as an
admission that such person has any direct or indirect beneficial ownership of
any securities covered by the report. Each report shall be submitted to the
Chief Compliance Officer. The Compliance Officer shall review each report
received and report to the Board as required in Section X.

   A.  DISCLOSURE OF PERSONAL HOLDINGS

         All Access Persons (other than Disinterested Directors) must disclose
         all Personal Securities Holdings upon commencement of employment and
         thereafter on an annual basis. Initial reports shall be made within 10
         days of hire or within 10 days of becoming an Access Person. Annual
         disclosure shall be made by January 30th of each year. The initial and
         annual reports are required to include the TITLE, NUMBER OF SHARES AND
         PRINCIPAL AMOUNT OF EACH SECURITY, THE EXCHANGE TICKER SYMBOL OR CUSIP
         NUMBER, THE DATE OF REPORT SUBMISSION, the name of any broker, dealer
         or bank with whom the Access Person maintained an account in which any
         securities (not limited to Securities as defined by this Code) were
         held for the direct or indirect benefit of the Access Person.

   B.  DUPLICATE TRADE CONFIRMATION STATEMENTS AND ACCOUNT STATEMENTS

         All Access Persons (other than Disinterested Directors) must cause
         duplicate trading confirmations for all Personal Securities
         Transactions and copies of periodic statements for all Securities
         accounts to be sent to the Compliance Department. A form letter that
         may be used to direct brokerage firms maintaining such accounts to send
         duplicate trade confirmations to the Compliance Department is attached
         as EXHIBIT C-1 and EXHIBIT C-2.

   C.  QUARTERLY REPORTING

         All Access Persons (except as provided below) must prepare (and report
         as required below) a quarterly report identifying any new accounts that
         were opened or any

                                       13
<Page>

         existing accounts that have been closed. This report shall contain the
         following information:

         1.   The name of the broker, dealer or bank with or through whom the
              new account was opened and the date on which the account was
              opened.

         2.   The name of the broker, dealer or bank with or through whom the
              account was closed, the account number of the closed account and
              the date on which the account was closed.

         In addition, Quarterly Transaction Reports are required as described
         below:

              1)  ACCESS PERSONS AND ADVISORY REPRESENTATIVES

         Except as provided below, all Access Persons and Advisory
         Representatives must prepare a quarterly report of all Personal
         Securities Transactions in Securities no later than 10 days following
         the end of each quarter in which such Personal Securities Transactions
         were effected. Rule 17j-1(d)(1) under the 1940 Act requires such
         reports from Access Persons and Rule 204-2 under the Advisers Act
         requires such reports from "advisory representatives" (as defined in
         Rule 204-2(a)(12) and (13)). Compliance by Access Persons and Advisory
         Representatives with the reporting requirements set forth herein will
         constitute compliance with the reporting requirements of both the 1940
         Act and the Advisers Act. An Access Person who is also an Advisory
         Representative may satisfy this reporting requirement by providing the
         report to the compliance department of the Advisers. The Quarterly
         Transaction Reports must state:

         i)   the title, exchange ticker symbol or CUSIP number , the number of
              shares and principal amount of each Security (as well as the
              interest rate and maturity date, if applicable) involved;

         ii)  the trade date and nature of the transactions (i.e., purchase,
              sale, private placement, or other acquisition or disposition);

         iii) the price of the Security at which each transaction was effected;
              and

         iv)  the name of the broker, dealer or bank with or through which each
              transaction was effected; and

         v)   the date the report is submitted.

              2)  EXCLUSIONS

         Quarterly Transaction reports are not required to include any Personal
         Securities Transaction effected in any account over which the Access
         Person or Advisory Representative has no direct or indirect influence
         or control and has certified these facts to the Chief Compliance
         Officer, in a manner satisfactory to the Chief Compliance Officer, and
         updates this certification annually and as long as all holdings and
         transactions in the account are reported in accordance with the

                                       14
<Page>

         provisions of Article VIII.A. (Disclosure of Personal Holdings) and
         Article VIII.B. (Duplicate Trade Confirmation Statements and Account
         Statements) In addition the report is not required to include shares of
         registered open-end investment companies (except for ING Fund Shares as
         provided in Article IX), securities issued by the Government of the
         United States, bankers' acceptances, bank certificates of deposit,
         commercial paper, and high quality short-term debt instruments,
         including repurchase agreements.

              3)  DISINTERESTED DIRECTORS

         Disinterested Directors do not have to provide a quarterly report
         identifying any new accounts that were opened or any existing accounts
         that have been closed. However, Disinterested Directors must submit a
         quarterly report containing the information set forth in subsection (1)
         above only with respect to those transactions for which such person
         knew or, in the ordinary course of fulfilling his or her official
         duties as a Fund director/trustee, should have known that during the
         15-day period immediately before or after the director/trustee's
         transaction in Securities that are otherwise subject to Access Person
         reporting requirements, a Fund or a Managed Account had purchased or
         sold such Securities or was actively considering the purchase or sale
         of such Securities. Disinterested Directors are not required to submit
         a report containing the information set forth in subsection (1) above
         with respect to purchases or sales that are non-volitional on the part
         of such persons, such as transactions in an account over which such
         person has delegated discretionary trading authority to another person.

              4)  ALL DIRECTORS

         In addition, solely to facilitate compliance with timely Form 4 filing
         requirements, all Directors or Trustees must submit a report of any
         transaction involving a Fund that is a closed-end investment company
         (such as the ING Prime Rate Trust or ING Senior Income Funds) on the
         trade date of such transaction.

   D.  CERTIFICATION OF COMPLIANCE WITH CODE OF ETHICS

         All Access Persons and Employees will be provided with a copy of this
         Code upon beginning his or her appointment or employment with a Fund or
         Fund Affiliate, as the case may be, and any amendments thereto and must
         certify, attached as EXHIBIT F, within 10 days that they have read and
         understand this Code, and that they recognize that they are subject to
         the terms and provisions hereof. Further, all Employees and Access
         Persons including all Directors must certify, attached as EXHIBIT D, by
         January 30th of each year that they have complied with the requirements
         of this Code for the prior calendar year.

IX. TRANSACTIONS IN ING FUND SHARES

   A.  APPLICABILITY OF ARTICLE IX

      The following restrictions and requirements apply to all purchases and
      sales of shares of any ING Fund, regardless of whether such fund is
      available for purchase directly or

                                       15
<Page>

      through one or more variable insurance products, other than exchange
      traded closed-end funds ("ING Fund Shares") and all holdings of ING Fund
      Shares by Covered Persons or in which they have a beneficial ownership
      interest ("Covered Transactions" or "Covered Holdings"), except as
      provided below. Covered Transactions and Covered Holdings include
      transactions and holdings by any person in whose transactions or holdings
      the Access Person or Employee has a Beneficial Ownership interest (as
      defined in Article II of the Code) ("Related Persons").

      1. These restrictions and requirements (except for the reporting
         requirements of Paragraph F) do not apply to purchases of ING Fund
         Shares through (1) an automatic dividend reinvestment plan or (2)
         through any other automatic investment plan, automatic payroll
         deduction plan WHERE THE ALLOCATION HAS BEEN IN EFFECT FOR 30 DAYS, or
         other automatic plan approved by the Chief Compliance Officer.

      2. Access Persons and Employees must provide the Chief Compliance Officer
         with a list of his or her Related Persons (and the name and location of
         the relevant account or variable insurance contract or policy) who hold
         ING Fund Shares. The list shall be updated to reflect changes on a
         quarterly basis.

   B.  COMPLIANCE WITH PROSPECTUS

      All Covered Transactions in ING Fund Shares must be in accordance with the
      policies and procedures set forth in the Prospectus and Statement of
      Additional Information for the relevant Fund, including but not limited to
      the Fund's policies and procedures relating to short term trading and
      forward pricing of securities.

   C.  TRANSACTIONS REQUIRED TO BE THROUGH AN APPROVED PLAN OR CONTRACT

      1. Exchanges among ING Funds acquired prior to June 1, 2004 and held in
         retirement, pension, deferred compensation and similar accounts that
         are required to be maintained by third party administrators ("Outside
         Plans"), are permitted, provided that the Covered Person informs the
         Chief Compliance Officer of these holdings of ING Fund Shares in the
         Outside Plan and cooperates with the Chief Compliance Officer in
         requiring the administrator for the Outside Plan to provide the Chief
         Compliance Officer with duplicate account statements reflecting all
         transactions in ING Fund Shares effected in the Plan (an Outside Plan
         as to which such arrangements have been made is referred to as an
         "Approved Outside Plan.").

      2. Exchanges among ING Funds portfolios that are part of an insurance
         contract ("Insurance Contracts"), provided that the Covered Person
         informs the Chief Compliance Officer of these holdings in the Insurance
         Contract and cooperates with the Chief Compliance Officer in requiring
         the insurance company for the Insurance Contract to provide the Chief
         Compliance Officer with duplicate account statements reflecting all
         transactions in ING Fund portfolios effected in the Insurance Contract
         (an Insurance Contract as to which such arrangements have been made is
         referred to as an "Approved Insurance Contract.").

                                       16
<Page>

   D.  30-DAY HOLDING PERIOD FOR ING FUND SHARES.

       1. ALL COVERED PERSONS MUST HOLD ANY INVESTMENT IN ING FUND SHARES FOR A
          MINIMUM OF 30 CALENDAR DAYS. This provision does not apply to shares
          of money market funds or other funds designed to permit short term
          trading, but does apply to movement between these funds and all other
          funds.. The 30-day holding period is measured from the time of the
          most recent purchase of shares of the relevant ING Fund by the Covered
          Person.

       2. The Chief Compliance Officer may grant exceptions to the 30-day
          holding period. Such exceptions will only include redemptions
          following death or permanent disability if made within one year of
          death or the initial determination of permanent disability, mandatory
          distributions from a tax-deferred retirement plan or IRA or for
          redemptions pursuant to an approved withdrawal plan.

       3. Exceptions to the 30-day holding period granted to Investment
          Personnel must be reported by the Chief Compliance Officer to the
          relevant Fund Board on a quarterly basis.

       4. Exceptions to the 30-day holding period will not relieve any sale of
          ING Fund Shares from the application of any redemption fee that would
          apply to any other investor redeeming ING Fund Shares in similar
          circumstances.

   E.  PRE-CLEARANCE OF TRANSACTIONS IN ING FUND SHARES.

      1. All purchases and sales of ING Fund Shares by Covered Persons must be
         pre-cleared by the Chief Compliance Officer, in accordance with the
         procedures set forth in Article VII.B of the Code. When granted,
         clearance authorizations will be effective only for that day.

      2. Pre-clearance requests must be accompanied by

         a) a representation of all transactions in ING Fund Shares of the
            applicable Fund which is the subject of the pre-clearance by the
            Covered Person in the previous 30 days which includes the dates for
            all transactions. This requirement is not necessary for ING
            employees if your holdings in the applicable fund are ONLY held at
            DST or the ING 401k Plan.

         b) a certification by the Covered Person that he or she is not in
            possession of nonpublic information THAT, IF PUBLICLY KNOWN, WOULD
            LIKELY HAVE A MATERIAL EFFECT ON THE NET ASSET VALUE PER SHARE OF
            THE RELEVANT FUND AT THE TIME OF THE TRADE (MATERIAL FOR THIS
            PURPOSE MEANS ONE CENT OR MORE PER SHARE). Any questions the Covered
            Person may have regarding materiality should be directed to in-house
            legal counsel.

      3. In determining whether to grant the pre-clearance request, the Chief
         Compliance Officer should review the proposed trade to determine
         whether the trade is conformity with the Fund's policies and procedures
         as disclosed in the prospectus and with the restrictions of the Code,
         including the restrictions imposed by this Article IX.

                                       17
<Page>

   F.  REPORTING OF TRANSACTIONS IN ING FUND SHARES

      1. Access Persons must report all their holdings of ING Fund Shares.
         Access Persons and Employees must report all their Covered Transactions
         in ING Fund Shares in accordance with the procedures set forth in
         Article VIII of the Code, provided that Access Persons and Employees
         are excused from the quarterly reporting requirements of Article VIII.C
         as to transactions in:

            a. any ING Fund Shares held by DST, the ING 401(k) Plan, an ING
               Insurance Company or an Approved Outside Plan or Approved
               Insurance Contract in the name of the Covered Person,

            b. any ING Fund Shares held in any other account for which duplicate
               trading confirmations and copies of periodic statements
               reflecting holdings of any transactions of ING Fund Shares are
               received by the Compliance Department within 10 days following
               the end of each quarter.

      2. For ING Fund Shares held in Approved Outside Plans or Insurance
         Contracts, the Chief Compliance Officer may extend the time periods for
         reporting upon a showing that the information is not available on the
         same schedule.

   G.  DISINTERESTED DIRECTORS /TRUSTEES/CONSULTANTS

         The requirements of subsections C, D. E and F of this Section IX shall
         not apply to Disinterested Directors/Trustees/Consultants, except that
         such persons may be asked periodically to sign the certification
         attached as Exhibit D to certify that they have complied with this
         Code.

   H.  QUESTIONS TO CHIEF COMPLIANCE OFFICER

         Covered Persons should direct any questions or doubt about how the Code
         of Ethics applies to a particular transaction in ING Fund Shares to the
         Chief Compliance Officer.

   I.  REVIEW BY CHIEF COMPLIANCE OFFICER

         The Chief Compliance Officer or a member of his or her staff will
         review compliance with this Article IX and will report violations,
         together with the sanction imposed, to the relevant Board at its next
         quarterly meeting.

   J.  MINIMUM SANCTIONS

         The minimum sanction for a violation of the provisions of this Article
         IX shall be disgorgement of any profit made in connection with the
         violation.

X. SANCTIONS

   A.  GENERALLY

         The Code is designed to assure compliance with applicable law and to
         maintain shareholder confidence in the Funds, the Advisers, and IFD. In
         adopting this Code, it

                                       18
<Page>

         is the intention of the Boards, the Advisers, and IFD to attempt to
         achieve 100% compliance with all requirements of the Code, but it is
         recognized that this may not be possible. Incidental failures to comply
         with the Code are not necessarily a violation of the law.

         The Designated Person shall investigate and report all apparent
         violations of the Code to the Chief Compliance Officer. If the
         Compliance Officer, in consultation with the appropriate parties,
         determines that an Covered Person has violated any provision of this
         Code, he or she may impose such sanctions as he or she deems
         appropriate, including, without limitation, one or more of the
         following: warnings, periods of "probation" during which all personal
         investment activities (except for specifically approved liquidations of
         current positions), a letter of censure, suspension with or without
         pay, termination of employment, or Automatic Disgorgement of any
         profits realized on transactions in violation of this Code. Any profits
         realized on transactions in violation of Sections D and E of Article
         VII of this Code shall be subject to Automatic Disgorgement.

   B.  PROCEDURES

         Upon discovering that a Covered Person has violated any provision of
         this Code, the Chief Compliance Officer shall report the violation, the
         corrective action taken, and any sanctions imposed to the relevant
         entity's board of directors/trustees. If a transaction in Securities of
         a Designated Person is under consideration, a senior officer of the
         relevant Fund or Fund Affiliate, as the case may be, shall act in all
         respects in the manner prescribed herein for a Designated Person.

XI. MISCELLANEOUS PROVISIONS

   A.  RECORDS

         The Funds, IFD and the Advisers shall maintain records at the principal
         place of business of IIL and shall make these records available to the
         Securities and Exchange Commission or any representative of the
         Commission to the extent set forth below, and may maintain such records
         under the conditions described in Rule 31a-2(f)(1) under the 1940 Act:

         i)    a copy of this Code and any other code of ethics which is, or at
               any time within the past five (5) years has been, in effect;
               shall be preserved in an easily accessible place;

         ii)   a record of any violation of this Code and of any action taken as
               a result of such violation shall be preserved in an easily
               accessible place for a period of not less than five (5) years
               following the end of the fiscal year in which the violation
               occurs;

         iii)  a copy of reports made by Covered Persons pursuant to this Code,
               including reports of, or information provided in lieu of these
               reports, and reports of transactions in ING Fund Shares that were
               held during the relevant period, shall

                                       19
<Page>

               be preserved for a period of not less than five (5) years from
               the end of the fiscal year in which the statement is provided,
               the first two years in an easily accessible place;

         iv)   a copy of each report disclosing Personal Securities Holdings and
               holdings of ING Fund Shares of Access Persons, made pursuant to
               this Code, shall be preserved for a period of not less than five
               (5) years from the end of the fiscal year in which the report is
               made;

         v)    a list of all persons who are, or within the past five (5) years
               have been, required to pre-clear Personal Securities Transactions
               or transactions in ING Fund Shares or make reports disclosing
               Personal Securities Holdings pursuant to this Code, or who are or
               were responsible for reviewing these reports, and each list of
               Related Persons provided to the Chief Compliance Officer pursuant
               to Article IX.A.B and must be maintained in an easily accessible
               place;

         vi)   a record of all written acknowledgements of the receipt of the
               Code and any amendments for each person who is currently, or
               within the past five years was, a supervised person of the
               Advisers. Supervised persons are the Adviser's partners,
               officers, directors, Employees as well as other persons who
               provide advice on behalf of the Adviser and are subject to the
               Adviser's supervision and control - Section 202(a)(25).

         vii)  a record of any decision, and the reasons supporting the
               decision, to approve the acquisition of securities in an IPO or
               Limited Offering for at least 5 years after the end of the fiscal
               year in which the approval was granted.

         viii) a copy of each report required by paragraph (c)(2)(ii) of Rule
               17j-1. Paragraph (c)(2)(ii) of Rule 17j-1 requires that a written
               report to be provided to the board of directors, no less than
               annually, that describes any issues arising under this Code or
               procedures since the last report to the board of directors,
               including, but not limited to, information about material
               violations of the Code or procedures and sanctions imposed in
               response to the material violations. Such a report must also
               certify that the Funds and the Advisers, as applicable, have
               adopted procedures reasonably necessary to prevent Covered
               Persons from violating the Code. A copy of such a report must be
               maintained for a period not less than five (5) yeas after the end
               of the fiscal year in which it is made, the first two years in an
               easily accessible place.

   B.  CONFIDENTIALITY

         All pre-clearance requests pertaining to Personal Securities
         Transactions, reports disclosing Personal Securities Holdings, and any
         other information filed pursuant to this Code shall be treated as
         confidential, but are subject to review as provided in the Code, review
         by the Securities and Exchange Commission and other regulators and
         self-regulatory organizations, and such internal review as may be
         requested by the Board of the relevant Fund.

                                       20
<Page>

   C.  INTERPRETATION OF PROVISIONS

         Each Fund's or Adviser's board of directors/trustees may from time to
         time adopt such interpretation of this Code as such board deems
         appropriate.

   D.  EFFECT OF VIOLATION OF THIS CODE

         In adopting Rule 17j-1, the SEC specifically noted, in Investment
         Company Act Release No. IC-11421, that a violation of any provision of
         a particular code of ethics, such as this Code, would not be considered
         a per se unlawful act prohibited by the general anti-fraud provisions
         of this Rule. In adopting this Code, it is not intended that a
         violation of this Code necessarily is or should be considered to be a
         violation of Rule 17j-1.

                                       21
<Page>

XII. EXHIBITS

                                    EXHIBIT A

  PROCEDURES TO CONTROL THE FLOW AND USE OF MATERIAL NON-PUBLIC INFORMATION IN
                      CONNECTION WITH SECURITIES ACTIVITIES

The reputation for integrity and high ethical standards in the conduct of its
affairs of the ING Investments, LLC and ING Funds Distributor, LLC ("ING") is of
paramount importance to all of us. To preserve this reputation, it is essential
that all transactions in securities are effected in conformity with securities
laws and in a manner, which avoids the appearance of impropriety. In particular,
it is a long-standing policy of ING that if an employee of ING or any of its
subsidiaries or affiliated investment companies possesses material non-public
information about a public company, the employee may not trade in or recommend
trading in the securities of that company nor disclose such information to
another person, whether within or outside the ING organization, except in
fulfillment of a legitimate business objective of ING. Violations of this policy
may result in severe civil and criminal penalties under the Federal securities
laws, as well as disciplinary action by ING. Employees should refer to ING's
Code of Conduct for a complete statement of these policies.

Material non-public information is information not known to the public that: (1)
might reasonably be expected to affect the market value of securities and (2)
influence investor decisions to buy, sell or hold securities. It is not possible
to define with precision what constitutes "material" information. However,
advance information about the following:

        -      a merger, acquisition or joint venture;

        -      a stock split or stock dividend;

        -      earnings or dividends of an unusual nature;

        -      the acquisition or loss of a significant contract;

        -      a significant new product or discovery;

        -      a change in control or a significant change in management;

        -      a call of securities for redemption;

        -      the public or private sale of a significant amount of additional
               securities;

        -      the purchase or sale of a significant asset;

        -      a significant labor dispute;

                                       22
<Page>

        -      establishment of a program to make purchases of the issuer's own
               shares;

        -      a tender offer for another issuer's securities; and

        -      an event requiring the filing of a current report under the
               federal securities laws.

         REPORTING MATERIAL NON-PUBLIC INFORMATION TO CHIEF COMPLIANCE OFFICER

        From time-to-time, a director, officer or employee of The Firm, may come
        into possession of material non-public information (of the type
        described above) about a company. If such information is obtained in
        connection with the performance of such person's responsibilities as a
        director, officer or employee of The Firm, then he or she must
        immediately report the information as follows:

        1) A director, officer or employee, must report such information
           immediately to the Chief Compliance Officer, who is responsible for
           taking appropriate action, which may include restricting trading in
           the affected securities. Depending on the nature of such information,
           such director, officer or employee may have an ongoing duty to inform
           the Chief Compliance Officer of material changes in the information
           or the status of the transaction to which it relates to allow the
           Chief Compliance Officer to take appropriate action, including
           restricting or terminating restrictions on trading in the affected
           securities.

        2) Such information need not be reported if, after reasonable inquiry,
           the director, officer or employee is satisfied that the Chief
           Compliance Officer has already received such information.

                                       23
<Page>

                                    EXHIBIT B

       DESIGNATED PERSONS OF ING INVESTMENTS ABLE TO PROVIDE PRE-CLEARANCE


Lauren Bensinger - Primary AZ

Rhonda Ervin

Kathy Hinck

Meryl Brown

Maryann White

                                       24
<Page>

                                   EXHIBIT C-1

             SAMPLE LETTER TO BROKERAGE FIRM TO ESTABLISH DUPLICATE
                        CONFIRMS AND PERIODIC STATEMENTS


January 2, 1996


Merrill Lynch, Pierce, Fenner & Smith, Inc.
111 W. Ocean Blvd., 24th Floor
Long Beach, CA  90802


RE: The Brokerage Account of ACCOUNT REGISTRATION

Account No.  YOUR ACCOUNT NUMBER
AE           NAME OF YOUR REGISTERED REPRESENTATIVE


Dear Ladies/Gentlemen:

In accordance with the policies of ING Funds Services, LLC, a financial services
firm with which I have become associated, effective immediately, please forward
duplicate trade confirmations and periodic statements on the above-captioned
accounts as follows:

             ING Funds Services, LLC
             ATTN:  LAUREN D. BENSINGER
             VP & CHIEF COMPLIANCE OFFICER
             7337 E. Doubletree Ranch Road
             Scottsdale, AZ 85258


Sincerely,


Your Name

                                       25
<Page>

                                   EXHIBIT C-2

             SAMPLE LETTER TO BROKERAGE FIRM TO ESTABLISH DUPLICATE
                        CONFIRMS AND PERIODIC STATEMENTS

Today's Date


BROKERAGE
ADDRESS
CITY, STATE ZIP


RE:      The Brokerage Account of
         ACCOUNT REGISTRATION

         Account No.  YOUR ACCOUNT NUMBER
         AE NAME OF YOUR REGISTERED REPRESENTATIVE


Dear Ladies/Gentlemen:

In accordance with the policies of ING Funds Distributor, LLC. ("IFD"), an NASD
member firm with which I have become associated, effective immediately, please
forward duplicate trade confirmations and periodic statements on the
above-captioned accounts as follows:

                           ING Funds Distributor, LLC.
               ATTN: LAUREN D. BENSINGER, CHIEF COMPLIANCE OFFICER
                          7337 E. Doubletree Ranch Road
                              Scottsdale, AZ 85258

IFD's Chief Compliance Officer has also signed below indicating her approval of
my opening a cash or margin account with your firm. (407 Letter)

Sincerely,

 (REGISTERED REPRESENTATIVE'S SIGNATURE)
- -------------------------------------------------------
Registered Representative's Name

(LAUREN'S SIGNATURE)
- -------------------------------------------------------
Lauren D. Bensinger
V.P & Chief Compliance Officer

                                       26
<Page>

                                    EXHIBIT D

    [ANNUAL CERTIFICATION OF CODE OF ETHICS COMPLIANCE BY ALL ACCESS PERSONS,
                            EMPLOYEES AND DIRECTORS]

                                       27
<Page>

                                    EXHIBIT E

            CERTIFICATION REGARDING EXEMPTION FROM CERTAIN REPORTING
                     REQUIREMENTS OF THE ING CODE OF ETHICS


Name:
      ---------------------------------------


Position/Department:
                     ------------------------


Article VI.1. of the ING Code of Ethics exempts transactions in "any account
over which an Access Person has no direct or indirect influence or control" from
the provisions regarding Restrictions on Personal Investing Activities in
Article VII of the Code. Article VIII.C.. provides an exemption from quarterly
transaction reporting requirements for such accounts.


To take advantage of the exemptions provided above, I hereby certify as follows:


1.    I have no direct or indirect influence or control over any transaction
   effected in the following account(s):

<Table>
<Caption>
          BROKER, DEALER OR BANK WHO HOLDS DISCRETION.     ACCOUNT NUMBER
          --------------------------------------------     --------------
          <S>                                              <C>


</Table>

2. I have attached accurate, full, and complete copies of all documents
establishing the account(s) listed above, including any instructions or
investment guidelines.

                                       28
<Page>

3. I will not communicate directly or indirectly with anyone who exercises
discretion to effect transactions in the account(s), other than (a) the receipt
of quarterly and annual account statements, (b) amendments to the account
documentation, including to the investment guidelines (which amendments will
promptly be provided to the Chief Compliance Officer), or (c) communications
relating to ministerial non-investment-related matters.

4. I understand that in order to take advantage of these exemptions, I am still
required to comply with the provisions of Article VIII.A. (Disclosure of
Personal Holdings) and Article VIII.B. (Duplicate Trade Confirmation Statements
and Account Statements) with respect to all holdings and transactions in these
accounts.

5. I will provide such additional documents or information, as the Chief
Compliance Officer shall request.


Signature:                                        Date:
           -------------------------------              ---------------

                                       29
<Page>

                                    EXHIBIT F

                     INITIAL CERTIFICATION OF CODE OF ETHICS


I am fully familiar with the effective code of ethics as adopted by each of the
ING Funds, ING Investments, LLC, and ING Funds Distributor, LLC and will comply
with such code at all times during the forthcoming calendar year.


Name (print):
                ----------------------------------------


Signature:
                ----------------------------------------


Date:
                ----------------------------------------

                                       30

</TEXT>
</DOCUMENT>
</SEC-DOCUMENT>
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