EXPENSE LIMIT AGREEMENT Dated December 4, 2009 Original Expense Limit Agreement dated July 2, 2001; amended May 1, 2002; amended December 13, 2004; amended December 4, 2009, effective January 1, 2010
Dated
December 4, 2009
Original
Expense Limit Agreement dated July 2, 2001;
amended
May 1, 2002; amended December 13, 2004;
amended
December 4, 2009, effective January 1, 2010
Pearl Mutual Funds, a
Massachusetts business trust registered under the Investment Company Act of 1940
(the “1940 Act”) as an open-end diversified management investment company (the
“Trust”), and Pearl Management
Company, an Iowa corporation registered under the Investment Advisers Act
of 1940 as an investment adviser (the “Manager”), agree that:
1. Relationship with Other
Agreements. This agreement is separate from but takes into
account the Investment Management Agreement and the Administrative Services
Agreement. The Manager agrees to perform its obligations stated in
this agreement, in consideration of the Trust’s execution and continuance of the
Investment Management Agreement and the Administrative Services
Agreement. In this agreement “Investment Management Agreement” means
the Investment Management Agreement between the same parties, dated July 2,
2001, as amended from time to time. In this agreement “Administrative
Services Agreement” means the Administrative Services Agreement between the same
parties, dated July 2, 2001, as amended from time to time.
2. Funds.
(a) This
agreement applies to the Trust’s series designated Pearl Total Return Fund and
Pearl Aggressive Growth Fund (each, a “Fund”).
(b) If
the Trust establishes one or more series in addition to the Funds named above,
and if both parties desire to apply this agreement to the new series, the Trust
and the Manager may add the new series to this agreement, by written supplement
(which may be in any form of amendment as defined in Section 8) to this
agreement. The supplement shall include any mutually agreed
modifications of the terms of this agreement with respect to that series. On the
effective date stated in the supplement executed by the Trust and the Manager,
that series shall become a Fund hereunder and shall be subject to the provisions
of this agreement to the same extent as the Funds named above, except as
modified by the supplement.
3. Expense Limit for Each
Fund. This expense limit applies separately to and for the
benefit of each Fund.
(a) For
each fiscal year the Fund’s total ordinary operating expenses shall not exceed a
total amount equal to 1.20% of the Fund’s average net assets; the Manager shall
pay or reimburse the Fund for the amount by which the Fund’s total ordinary
operating expenses exceed this expense limit; and the Manager’s payments
or
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EXPENSE
LIMIT AGREEMENT Pearl Mutual
Funds December 4, 2009
reimbursements
pursuant to this agreement shall be made only if and to the extent necessary to
comply with this expense limit. (Subsection 3(a) amended December 4,
2009; effective January 1, 2010.)
(b) In
this agreement “Total ordinary operating expenses” means all of the Fund’s
expenses except for: taxes; interest; extraordinary expenses, including but not
limited to the Fund’s share of litigation expenses and any obligation which the
Trust may have to indemnify any of its Trustees or Officers; and all brokers’
commissions and other costs and charges relating to the purchase and sale of
portfolio securities for the Fund. “Total ordinary operating
expenses” includes all fees paid by the Fund to the Manager, the Fund’s share of
expenses for compensation of Trustees, and the Fund’s share of all other
expenses to be paid by the Trust pursuant to Section 4 of the Investment
Management Agreement.
(c) For
the purposes of this agreement: (1) “Average net assets”
for a Fund’s fiscal year means the average of its net assets at the beginning of
each month during the fiscal year. (2) For a partial
fiscal year, all amounts shall be annualized.
4. Manager’s Recovery of Excess Expense
Amounts.
(a) All
amounts paid or reimbursed by the Manager pursuant to Section 3 of this
agreement shall be recovered by the Manager and shall be repaid by the Fund to
the Manager in any of the five fiscal years after the fiscal year during which
the amounts were paid or reimbursed by the Manager, as soon as and to the extent
that this can be done in compliance with the Fund’s expense limit stated in
Section 3. Repayments by the Fund to the Manager pursuant to this
Section 4 shall be included in the Fund’s total ordinary operating expenses
under Section 3.
(b) For
the purposes of this agreement: (1) “Pearl Total Return Fund”
includes its predecessor, Mutual Selection Fund, Inc. (2) Amounts
paid or reimbursed by the Manager pursuant to the previous Expense Limit
Agreement between the same parties, dated July 2, 2001, or pursuant to the
expense limit provisions of the Investment Advisory Agreement between the
Manager and Mutual Selection Fund, Inc., dated September 8, 1995, shall be
deemed to be amounts paid or reimbursed by the Manager pursuant to Section 3 of
this agreement and shall be recovered from the appropriate Fund in accordance
with this Section 4.
(c) The
Manager at any time may waive in writing its right to recover any amount under
this Section 4. Any such waiver shall be final and
irrevocable.
5. Administration of the Expense Limit:
Two Methods. The Manager shall determine for each Fund and for
each fiscal year which of these two methods shall be used, unless the Board has
specified one of these two methods:
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EXPENSE
LIMIT AGREEMENT Pearl Mutual
Funds December 4, 2009
(a) Method
A: Payment by the Manager; repayment by the Fund. The
Manager shall pay all or most of the Fund’s ordinary operating expenses, except
fees paid by the Fund to the Manager. The Fund shall make monthly
payments to the Manager to repay these expenses to the extent that this can be
done in compliance with the Fund’s expense limit stated in Section
3. The Fund’s monthly payments shall also include any amount
currently required to be repaid by the Fund and recovered by the Manager
pursuant to Section 4. The amount of each monthly payment shall take
into account cumulative year-to-date amounts. Necessary adjustments
and corrections shall be made promptly during the fiscal year and as of the end
of the fiscal year.
(b) Method
B: Payment by the Fund; reimbursement by the Manager. The
Fund shall pay all of the Fund’s expenses. The Manager shall make
monthly reimbursements to the Fund, if and to the extent necessary to comply
with the Fund’s expense limit stated in Section 3. The Fund shall
make monthly payments to the Manager of any amount currently required to be
repaid by the Fund and recovered by the Manager pursuant to Section
4. The amount of each monthly reimbursement or payment shall take
into account cumulative year-to-date amounts. Necessary adjustments
and corrections shall be made promptly during the fiscal year and as of the end
of the fiscal year.
6. Effective Date; Duration;
Continuation of Previous Agreement.
(a) This
agreement continues the Expense Limit Agreement between the same parties, dated
and effective as of July 2, 2001, as amended from time to time by the parties
with approval by the Board of Trustees. (Subsection 6(a) amended December 4,
2009; effective January 1, 2010.)
(b) This
agreement shall continue in effect until and unless it is terminated as provided
in Section 7.
7.
Termination.
(a)
Unless otherwise mutually agreed in writing by the Trust and the Manager, this
agreement shall terminate automatically upon the effective date of termination
of the Investment Management Agreement or the Administrative Services Agreement
or both. In this agreement “termination” includes but is not limited to
failure to obtain the required approval of continuance of an agreement.
“Termination” does not include amendment of an agreement or its replacement by a
new agreement executed by both parties to this agreement.
(b)
This agreement may be terminated as to a Fund at any time, without payment of
any penalty, either (1) by the Board or (2) by vote of the holders of a majority
of the outstanding Shares of that Fund, upon 60 days’ written notice to the
Manager. The Manager has no right to terminate this agreement so long as
both the Investment Management Agreement and Administrative Services Agreement
remain in
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EXPENSE
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effect.
This agreement shall terminate automatically in the event of its assignment as
defined in Section 2(a)(4) of the 1940 Act.
(c)
Upon termination of this agreement in any manner, the obligations of both
parties shall continue to the close of the effective date of termination, and
all appropriate amounts shall be prorated to the close of the effective date of
termination.
8.
Amendment. This
agreement shall not be amended in any manner except by a written agreement
executed by both parties to this agreement. (In this agreement,
“amendment” and “amended” include modification, revision, restatement, addendum,
supplement, and new agreement.) In addition, this agreement shall not
be amended in any manner without approval by the Board, including by a majority
of those Trustees who are not interested persons of the Trust or of the Manager,
voting in person at a meeting called for the purpose of voting on such
approval.
9. Notices; Governing Law; Definitions.
Sections 21, 22, and 23 of the Investment Management
Agreement are incorporated by reference in this agreement.
Original
agreement executed at Muscatine, Iowa, as of July 2, 2001. Amended
agreement executed at Muscatine, Iowa, as of December 4, 2009. This
agreement is executed in multiple counterparts, each of which shall be deemed to
be an original; but all counterparts together shall constitute only one
instrument.
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PEARL
MANAGEMENT COMPANY
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By
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/s/ Xxxxxx X.
Xxxx
Xxxxxx
X. Xxxx
President
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By
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/s/ Xxxxxxx X.
Xxxxxxxx
Xxxxxxx
X. Xxxxxxxx
Vice
President
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