FORM OF PL INCOME FUND EXPENSE LIMITATION AGREEMENT
Exhibit (h)(3)(t)
THIS EXPENSE LIMITATION AGREEMENT II (the “Agreement”) is made as of December __, 2010, by and
between Pacific Life Funds (the “Trust”), a Delaware statutory trust, on behalf of the PL Income
Fund, and Pacific Life Fund Advisors LLC (“Adviser” or “PLFA”), a Delaware limited liability
company.
WITNESSETH:
WHEREAS, the Trust is a Delaware statutory trust and is registered with the Securities and
Exchange Commission (“SEC”) under the Investment Company Act of 1940, as amended (the “1940 Act”)
as an open-end management investment company;
WHEREAS, the Trust is authorized to issue shares of beneficial interest in separate series
with each series representing interests in a separate portfolio of securities and other assets
(each a “Fund,” and collectively, the “Funds”), the Agreement applies to the PL Income Fund;
WHEREAS, the Trust and the Adviser have entered into an Investment Advisory Agreement dated
June 13, 2001, as amended, and transferred from Pacific Life to PLFA effective May 1, 2007,
(“Advisory Agreement”), pursuant to which the Adviser is authorized to provide investment advisory
services for the Trust and each of its Funds for compensation based on the value of the average
daily net assets of the Funds;
WHEREAS, the Trust and the Adviser have determined that it is appropriate and in the best
interests of the PL Income Fund and its shareholders to maintain the expenses of the PL Income Fund
at levels agreeable to the Trust and the Adviser.
NOW THEREFORE, in consideration of the promises and mutual covenants herein contained, it is
agreed as follows:
I. Expense Limitation.
A. Fund Operating Expenses. For purposes of this Agreement “Fund Operating
Expenses” shall consist of the ordinary operating expenses incurred by the PL Income Fund in
any fiscal year, including organizational expenses and the administration fees, but
excluding the following: investment advisory fees; distribution and/or service fees;
acquired fund fees and expenses; foreign taxes on dividends, interest, or gains; interest;
taxes; brokerage commissions and other transactional expenses; dividends on securities sold
short; extraordinary expenses, such as litigation; and other expenses not incurred in the
ordinary course of the Fund’s business.
B. Operating Expense Limit. The operating expense limit with respect to the PL
Income Fund shall be 0.15% through December 31, 2013 (the “Operating Expense Limit”), based
on a percentage of the average daily net assets of the PL Income Fund for
the period described in Section I.D. The Adviser may elect to lower the expense caps and/or
extend the time period further by amending this Agreement.
C. Applicable Expense Limit. To the extent that the Fund Operating Expenses
incurred exceed the Operating Expense Limit, as defined in Section I.B. above, the Adviser
shall waive its respective fees, or a portion thereof, under the Advisory Agreement or
otherwise reimburse the PL Income Fund, as applicable, for such excess amount (the “Excess
Amount”).
D. Method of Computation. To determine the Adviser’s obligation with respect to the
Excess Amount, each day the PL Income Fund’s Operating Expenses shall be annualized. If the
annualized Fund Operating Expenses of the PL Income Fund at the end of any month during
which this Agreement is in effect exceed the Operating Expense Limit, the Adviser shall
waive or reduce its fee under the Advisory Agreement or remit to the PL Income Fund an
amount that, together with the waived or reduced investment advisory fee, is sufficient to
pay the Excess Amount computed on the last day of the month.
E. Year-End Adjustment. If necessary, on or before the last day of the first month
of each fiscal year, an adjustment payment shall be made by the appropriate party in order
that the amount of the investment advisory fees waived or reduced and other payments
remitted by the Adviser to the PL Income Fund with respect to the previous fiscal year shall
equal the Excess Amount.
F. Repayment. The PL Income Fund agrees to repay the Adviser, out of assets
belonging to the PL Income Fund, any Fund Operating Expenses in excess of the Operating
Expense Limit paid, reimbursed or otherwise absorbed by the Adviser, during the term of
this Agreement, provided that the Adviser will not be entitled to repayment for any amount
by which such repayment would cause Fund Operating Expenses, during the fiscal year of such
repayment to exceed the then current Operating Expense Limit. Except to the extent
consistent with generally accepted accounting principles and the position of the staff of
the SEC at the time, no amount will be repaid to the Adviser by the PL Income Fund more
than three fiscal years after the year in which the Adviser reduced its fee, reimbursed or
otherwise absorbed the Excess Amount. Any amounts waived by the Adviser are not subject to
repayment.
II. Term and Termination of Agreement.
The Agreement shall have an initial term of three (3) years. The
Adviser may elect to extend beyond the initial term, by amendment to
this Agreement. In addition, this Agreement shall terminate upon
termination of the Advisory Agreement, or it may be terminated by the
Trust, without payment of any penalty, upon ninety (90) days’ written
notice to the Adviser at its principal place of business. The
repayment obligations described in Section I.F. of the Agreement
shall survive for the period indicated in that Section.
III. Miscellaneous.
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A. Governing Law. This Agreement shall be governed by the laws of the State of
Delaware, provided that nothing herein shall be construed in a manner inconsistent with the
1940 Act, the Investment Advisers Act of 1940, or any rules or order of the SEC thereunder.
B. Definitions. Any question of interpretation of any term or provision of this
Agreement, including but not limited to the investment advisory fee, the administration 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 Advisory Agreement, the
Administration Agreement or the 1940 Act, shall have the same meaning as and be resolved by
reference to such Advisory Agreement or the 1940 Act.
C. 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.
D. Limitation of Liability. The Adviser shall look only to the assets of the PL
Income Fund for performance of this Agreement and repayment of any claim hereunder that the
Adviser may have with respect to the PL Income Fund, and neither any of the other Funds of
the Trust, nor any of the Trust’s trustees, officers, employees, agents or shareholders,
shall be liable therefore.
IN WITNESS WHEREOF, the parties have caused this Agreement to be executed by their respective
officers designated below on the day and year first above written.
PACIFIC LIFE FUNDS, on behalf of the PL Income Fund
By:
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