FORM OF AMENDED AND RESTATED
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, made as of the ___ day of ___________,
1997, as amended and restated as of the __ day of ________, 2002, by and between
Pacific Global Fund, Inc., a Maryland corporation doing business as Pacific
Advisors Fund Inc. (the "Corporation"), on behalf of the Government Securities
Fund (the "Fund"), and Pacific Global Investment Management Company, a
California corporation (the "Investment Manager").
W I T N E S S E T H:
WHEREAS, the Corporation, on behalf of the Fund, and the Investment
Manager have entered into an Investment Management Agreement, dated October 16,
1992 (the "Management Agreement"), pursuant to which the Investment Manager will
render investment management and advisory services to the Fund for compensation
based on the value of the average daily net assets of the Fund; and
WHEREAS, the Corporation and the Investment Manager have determined
that it is appropriate and in the best interests of the Fund and its
shareholders to maintain Fund expenses at a level below the level to which the
Fund would normally be subject during its start-up period; and
WHEREAS, the Corporation, on behalf of the Fund, the Investment
Manager, and Pacific Global Investors Services, Inc., a California corporation
(the "Transfer Agent"), entered into an Expense Limitation Agreement, dated as
of __________ __, 1999; and
WHEREAS, the Corporation and the Investment Manager have deemed it
appropriate to amend and restate the Expense Limitation Agreement, as set forth
below:
NOW THEREFORE, the parties hereto agree as follows:
1 EXPENSE LIMITATION
1.1 APPLICABLE EXPENSE LIMIT. For each Class of the Fund, to the
extent that the Class Operating Expenses in any fiscal year exceed the
applicable Class Operating Expense Limit, such excess amount (the "Class Excess
Amount") shall be the liability of the Investment Manager. As used herein,
"Class Operating Expenses" of a Class shall mean that the aggregate expenses of
every character incurred by the Fund in any fiscal year, including but not
limited to investment advisory fees of the Investment Manager (but excluding
interest, taxes, brokerage commissions, and other expenditures which are
capitalized in accordance with generally accepted accounting principles, other
extraordinary expenses not incurred in the ordinary course of the Fund's
business, and repayments pursuant to Section 2 hereof) attributable to such
Class in accordance with the Corporation's Multi-Class Plan pursuant to Rule
18f-3 under the 1940 Act, as such Plan is in effect from time to time (the
"Multi-Class Plan").
1.2 CLASS OPERATING EXPENSE LIMIT. The Class Operating Expense
Limit for the Fund's Class A Shares shall equal 1.65% of the average daily net
assets of the Fund attributable to Class A Shares. The Class Operating Expense
Limit for the Fund's Class C Shares shall equal 2.40% of the average daily net
assets of the Fund attributable to Class C Shares.
1.3 METHOD OF COMPUTATION.
1.3.1 FEE WAIVER. Fee Waivers will be determined separately
for each Class as follows. For each Class, as of the first day of each
fiscal quarter, the annual Class Operating Expenses for the Fund's
current fiscal year shall be estimated by adding (a) the Class
Operating Expenses actually incurred as of the first day of such
quarter to (b) an estimate of the Class Operating Expenses for the
remainder of such fiscal year. If such estimate exceeds the applicable
Class Operating Expense Limit, the Investment Manager shall waive or
reduce its investment management fee for each month of such quarter
with respect to such Class by an amount sufficient to reduce the
estimated Class Operating Expenses for such quarter to an amount no
higher than the applicable Class Operating Expense Limit. If a waiver
of all of the investment management fees with respect to such Class for
such quarter will not reduce the estimated Class Operating Expenses
below the Class A Operating Expense Limit, the Investment Manager will
reimburse the Fund, for the benefit of such Class, for the difference
in accordance with Section 1.3.2 herein.
1.3.2 EXPENSE REIMBURSEMENT. Expense reimbursement payments
will be determined separately for each Class as follows. For each
Class, as of the last day of each fiscal quarter, the Investment
Manager shall determine the actual year-to-date Class Operating
Expenses and the actual year-to-date average daily net assets of the
Fund attributable to such Class. If at that time the actual
year-to-date Class Operating Expenses (net of any fee waiver or
reduction) exceed the year-to-date portion of the applicable Class
Operating Expense Limit, the Investment Manager shall pay to the Fund,
for the account of such Class, an amount sufficient to reduce the
year-to-date Class Operating Expenses (net of any fee waiver or
reduction) to the year-to-date portion of the applicable Class
Operating Expense Limit. If at that time the actual year-to-date Class
Operating Expenses (net of any fee waiver or reduction) are less than
the year-to-date portion of the applicable Class Operating Expense
Limit, the Fund, on behalf of such Class, shall repay to the Investment
Manager previously paid expense reimbursement amounts and/or fee
waivers in an amount such that the year-to-date Class Operating
Expenses (net of any remaining amount attributable to fee waiver or
reduction) shall be no greater than the year-to-date portion of the
applicable Class Operating Expense Limit, provided that the total of
such repayments by the Fund shall not exceed the total fee waivers and
expense reimbursement previously made by the Investment Manager with
respect to such Class for such fiscal year. Each payment hereunder
shall be due no later than 30 days after the end of the relevant fiscal
quarter.
1.4 YEAR-END ADJUSTMENT. Each year, if necessary, within
30 days after the completion of the audit of the Company's financial
statements for such fiscal year, an adjustment payment shall be made by
the appropriate party in order that the amount of the investment
management fees waived or reduced and other payments remitted by the
Investment Manager to the Fund with respect to each Class for such
fiscal year shall equal the applicable Class Excess Amount.
1.5 TERMINATION OF FEE WAIVER AND EXPENSE REIMBURSEMENTS. At any time
upon 90 days notice to the Fund, the Investment Manager and/or the Transfer
Agent may terminate their respective obligations to make fee waivers and/or pay
expense reimbursement payments pursuant to Section 1 hereof.
2 REPAYMENT OF FEE WAIVERS AND EXPENSE REIMBURSEMENTS.
2.1 REPAYMENT. With respect to each Class, in any fiscal
year in which the following conditions are met, the Investment Manager
shall be entitled to reimbursement by the Fund, on behalf of such
Class, in whole or in part as provided below, of the applicable Class
Reimbursement Amount:
(a) the Fund's total assets at the beginning of such
fiscal year are greater than $20 million;
(b) the Management Agreement is in effect;
(c) prior to any quarter in which repayments are to be
made, the Investment Manager has exercised its right
pursuant to Section 1.5 hereof to terminate all fee
waivers and expense reimbursement payments under this
Agreement;
(d) aggregate Class Operating Expenses for the fiscal
year are less than 2.50% of average daily net assets
attributable to such Class; and
(e) the Corporation's Board of Directors has reviewed
such repayments on a quarterly basis as provided in
Section 2.2 below.
The total amount of reimbursement to which the Investment Manager may be
entitled with respect to a Class (the "Class Reimbursement Amount") shall equal,
at any time, (a) all investment management fees previously waived or reduced by
the Investment Manager with respect to such Class, plus (b) all net expense
reimbursement payments previously paid by the Investment Manager with respect to
such Class attributable to any preceding year, minus (c) all payments previously
received by the Investment Manager pursuant to Sections 1.3.2, 1.4, and 2.3
hereof with respect to such Class. The Class A Reimbursement Amount shall
include all net investment management fees waived or reduced and all net expense
reimbursement payments made by the Investment Manager to or on behalf of the
Fund from its inception through the implementation date of the Multi-Class Plan.
The Class Reimbursement Amounts shall not, however, include any additional
charges or fees whatsoever, including, E.G., interest accruable on such Class
Reimbursement Amount. The period during which a Class Reimbursement Amount may
be paid by the Fund to the Investment Manager shall not exceed five years from
the date on which the first payment, if any, of such Class Reimbursement Amount
is made by the Fund.
2.2 BOARD REVIEW. No reimbursement shall be paid to the Investment
Manager pursuant to this provision in any fiscal quarter, unless the
Corporation's Board of Directors has first reviewed such payment for consistency
with this Agreement.
2.3 METHOD OF COMPUTATION. To determine the Fund's payments, if
any, on behalf of a Class to reimburse the Investment Manager for the applicable
Class Reimbursement Amount, as of the first day of each fiscal quarter the
annual Class Operating Expenses for the Fund's current fiscal year shall be
estimated as described in Section 1.3.1 above. If such estimate is less than
2.50% of average daily net assets attributable to such Class, during such fiscal
quarter the Investment Manager in its discretion may receive repayment from the
Fund, on behalf of such Class, in an amount no greater than the difference
between .625% of average daily net assets attributable to such Class and the
estimated Class Operating Expenses for such quarter, payable at the time and in
the manner provided in the Investment Management Agreement for the payment of
investment management fees.
2.4 QUARTER-END ADJUSTMENT. If necessary, within thirty days after
the end of each quarter in which the Investment Manager receives repayment
hereunder, the Investment Manager will make an adjustment payment to the Fund
such that the actual Class Operating Expenses for each Class for such quarter do
not exceed .625% of average daily net assets attributable to such Class.
3 TERM AND TERMINATION OF AGREEMENT.
This Agreement shall continue in effect for a period of one year from
the date of its execution and from year to year thereafter provided such
continuance is specifically approved by a majority of the Directors of the
Corporation who (i) are not "interested persons" of the Corporation or any other
party to this Agreement, as defined in the Act, and (ii) have no direct or
indirect financial interest in the operation of this Agreement ("Non-Interested
Directors"). Nevertheless, this Agreement may be terminated by either party
hereto, without payment of any penalty, upon 90 days' prior written notice to
the other party at its principal place of business; provided that, in the case
of termination by the Fund, such action shall be authorized by resolution of a
majority of the Non-Interested Directors of the Corporation or a vote of a
majority of the outstanding voting securities of the Fund. The Investment
Manager's right to repayment of prior fee waivers and expense reimbursements
pursuant to Section 2 hereof shall survive the termination of this Agreement.
4 MISCELLANEOUS.
4.1 NOTICES. Any notice under this Agreement shall be given in
writing, addressed and delivered, or mailed postpaid, (a) if to the Investment
Manager, to Pacific Global Investment Management Company, 000 Xxxxx Xxxxxxx
Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, and (b) if to the Corporation, at the
foregoing office of the Investment Manager.
4.2 CAPTIONS. The captions in this Agreement are included for
convenience of reference only and in no other way define or delineate any of the
provisions hereof or otherwise affect their construction or effect.
4.3 INTERPRETATION. Nothing herein contained shall be deemed to
require the Fund or the Corporation to take any action contrary to the its
Articles of Incorporation or By-Laws, or any applicable statutory or regulatory
requirement to which it is subject or by which it is bound, or to relieve or
deprive the Board of Directors of its responsibility for and control of the
conduct of the affairs of the Corporation or the Fund.
4.4 DEFINITIONS. Any question of interpretation of any term or
provision of this Agreement, including but not limited to the investment
advisory fee, the computations of net asset values, and the allocation of
expenses, having a counterpart in or otherwise derived from the terms and
provisions of the Management Agreement, shall have the same meaning as and be
resolved by reference to such Agreement.
4.5 GOVERNING LAW. Except insofar as the 1940 Act or other federal
laws or regulations may be controlling, this Agreement shall be governed by, and
construed and enforced in accordance with the laws of the State of Maryland.
IN WITNESS WHEREOF, the parties have caused this Agreement to be signed
by their respective officers thereunto duly authorized and their respective
corporate seals to be hereunto affixed, as of the day and year first above
written.
ATTEST: PACIFIC GLOBAL FUND, INC.
d/b/a PACIFIC ADVISORS FUND INC.
ON BEHALF OF THE GOVERNMENT
SECURITIES FUND
By:
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Secretary
ATTEST: PACIFIC GLOBAL INVESTMENT
MANAGEMENT COMPANY
By:
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Secretary
