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EXHIBIT 9(d)
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, made as of the 17th day of November,
1997, between and among Pacific Global Fund, Inc., a Maryland corporation doing
business as Pacific Advisors Fund Inc. (the "Corporation"), on behalf of the
Income and Equity Fund (the "Fund"), Pacific Global Investment Management
Company, a California corporation (the "Investment Manager"), Xxxxxxxx & Xxxxx,
Inc., a California corporation (the "Co-Manager"; each a "Manager"), and Pacific
Global Investors Services, Inc., a California corporation (the "Transfer
Agent").
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, on behalf of the Fund, the Investment Manager
and the Co- Manager have entered into a Co-Management Agreement, dated as of
July 1, 1997 (the "Co- Management Agreement"), pursuant to which the Managers
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, on behalf of the Fund, and the Transfer Agent
have entered into a Transfer Agency, Dividend Disbursing Agency, and
Administrative Services Agreement, dated as of December 22, 1992 (the "Transfer
Agency Agreement"), pursuant to which the Transfer Agent will provide among
other things transfer agency services to the Fund and receive transfer agency
fees ("Transfer Agency Fees") in accordance with the Transfer Agency Fee
Schedule in Schedule A to the Transfer Agency Agreement; and
WHEREAS, the Corporation, the Managers, and the Transfer Agent 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.
NOW THEREFORE, the parties hereto agree as follows:
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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 Amount") shall be the
liability of the Managers, except as to certain Transfer Agency Fees with
respect to Class C, which shall be the liability of the Transfer Agent as
provided in Section 1.3.1 below. As used herein, "Class Operating Expenses"
shall mean the aggregate expenses of every character incurred by the Fund in any
fiscal year, including but not limited to investment advisory fees of the
Managers (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 1.85% 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 2.60% 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 Managers shall waive or reduce their
investment management fees 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 Class A for such quarter
will not reduce the estimated Class A Operating Expenses below the
Class A Operating Expense Limit, the Investment Manager will reimburse
the Fund, for the benefit of Class A, for the difference in accordance
with Section 1.3.2 herein. If a waiver of all of the investment
management fees with respect to Class C for such quarter will not
reduce the estimated Class C Operating Expenses below the Class C
Operating Expense Limit, then (a) the Transfer Agent shall waive or
reduce its Transfer Agency Fees for each month of such quarter with
respect to Class C by an amount sufficient to reduce the estimated
Class C Operating Expenses for such quarter to an amount no higher than
the Class C Operating Expense Limit, and if the waiver of all of the
Transfer Agency Fees with respect to Class C for such quarter will not
reduce the estimated Class C Operating Expenses below the Class C
Operating Expense Limit, the Investment Manager will reimburse the
Fund, for the benefit of Class C, for the difference in accordance with
Section 1.3.2 herein. Any waiver of investment
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management fees shall be allocated between the Investment Manager and
the Co-Manager pro rata based on the applicable investment management
fee rates (a "Pro Rata" basis).
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 Co-Manager, subject to the limitation set
forth in Section 1.5 hereof, shall pay to the Fund, for the account of
such Class, the Co- Manager's Pro Rata share of 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, and the Investment Manager shall pay to the
Fund, for the account of such Class, the additional amount necessary to
so reduce such Class Operating Expenses. 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 such Class
Operating Expense Limit, the Fund, on behalf of such Class, shall repay
to the Investment Manager, the Co-Manager, and the Transfer Agent
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
payments previously made by the Managers or the Transfer Agent
respectively with respect to such Class with respect to such fiscal
year. With respect to each Class, any such repayment amount shall be
allocated first to the Investment Manager up to the amount of its
expense reimbursement payments (if any) in excess of its investment
management fee, second to the Transfer Agent up to the amount of its
waiver (if any) of Transfer Agency Fees, and third Pro Rata between the
Managers. The first payment due under this Section 1.3.2 shall be due
no later than January 31, 1998, and any subsequent 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 and Transfer Agency Fees
waived or reduced and other payments remitted by the Managers to the Fund with
respect to each Class with respect to such fiscal year shall equal the
applicable Class Excess Amount.
1.5 Limitation of Co-Manager's Liability. In any fiscal year, the
Co-Manager's total liability for fee waivers and expense reimbursement payments
hereunder shall not exceed the investment management fee to which it would have
been entitled under the Co-Management Agreement in the absence of this
Agreement. The Co-Manager's obligations hereunder are several and not joint.
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1.6 Termination of Fee Waiver and Expense Reimbursements. At any time
upon 30 days notice to the Fund, the Investment Manager may terminate its and
the Co-Manager's obligations to make fee waivers and pay expense reimbursement
payments, and the Transfer Agent may terminate its obligations to make fee
waivers, 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 and the Co-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;
(e) the Investment Manager determines in its sole
discretion to seek the approval of the Corporation's
Board of Directors to commence repayment of prior fee
waivers and expense reimbursement payments; and
(f) 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 and the
Co-Manager may be entitled with respect to a Class (the "Class Reimbursement
Amount") shall be determined separately for each Manager and shall equal, at any
time, (a) all investment management fees previously waived or reduced by such
Manager with respect to such Class, plus (b) all net expense reimbursement
payments previously paid by such Manager with respect to such Class,
attributable to any preceding year, minus (c) all payments previously received
by such Manager with respect to such Class pursuant to Sections 1.3.2, 1.4, and
2.3 hereof. The Class A Reimbursement Amount for each Manager shall include all
net investment management fees waived or reduced and all net expense
reimbursement payments made by such Manager to or on behalf of the Fund from its
inception through 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 a Manager shall not exceed five years from the date on which the first
payment, if any, of such Class Reimbursement Amount is made to such Manager by
the Fund.
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2.2 Board Review. No reimbursement shall be paid to the Managers
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 and the Co-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
quarter each Manager, in its discretion, may receive repayment from the Fund, on
behalf of such Class, in an amount no greater than such Manager's Pro Rata share
of 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 Co-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 or the Co-Manager receives
repayment hereunder, the Investment Manager and the Co-Manager each will pay its
share of 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. Any repayment to the Fund under this
Section shall be allocated among the Managers pro rata based on the amount of
repayment received by such Manager in the prior quarter.
2.5 No Repayment with respect to Transfer Agency Fees on Class C
Shares. The Transfer Agent shall not be entitled to repayment under this Section
2 with respect to any waiver of Transfer Agency Fees with respect to Class C.
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 Managers'
respective rights 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, (b) if to the
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Co-Manager, to Xxxxxxxx & Xxxxx, Inc., 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000,
Xxxxxxxx, XX 00000, (c) if to the Transfer Agent to Pacific Global Investors
Services, Inc., 000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 000, Xxxxxxxx, XX 00000, and (d)
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.
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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 INCOME AND EQUITY
FUND
/s/ XXXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXXX
Secretary
ATTEST: PACIFIC GLOBAL INVESTMENT
MANAGEMENT COMPANY
/s/ XXXXXX X. XXXXXXX By: /s/ XXXXXX X. XXXXXX
Secretary
ATTEST: XXXXXXXX & BACHE, INC.
/s/ XXXX X. XXXXXXXX By: /s/ XXXXXXX X. XXXXX, CFA
Secretary
ATTEST: PACIFIC GLOBAL INVESTORS
SERVICES, INC.
/s/ XXXXXX X. XXXXXX By: /s/ XXXXXX X. XXXXXXX
Secretary
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