EXHIBIT 8(d)
FORM OF
EXPENSE LIMITATION AGREEMENT
EXPENSE LIMITATION AGREEMENT, made as of the __th day of ________,
2000, 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"), Bache Capital
Management, 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
_________, 2000 (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:
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 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.
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.
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
Co-Manager, to Bache Capital Management, Inc. 3. Xxxxxxxxx Xxxxx, Xx
Xxxxxx, 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.
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
By:
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Secretary
ATTEST: PACIFIC GLOBAL INVESTMENT
MANAGEMENT COMPANY
By:
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Secretary
ATTEST: BACHE CAPITAL MANAGEMENT, INC.
By:
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Secretary
ATTEST: PACIFIC GLOBAL INVESTORS
SERVICES, INC.
By:
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Secretary
