Exhibit h.4
ADDITIONAL COMPENSATION AGREEMENT
April __, 2003
CITIGROUP GLOBAL MARKETS INC.
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
UBS WARBURG LLC
c/o Citigroup Global Markets Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement dated the date hereof (the
"Underwriting Agreement"), by and among PIMCO High Income Fund (the "Trust"),
PIMCO Advisors Fund Management LLC (the "Adviser") and each of the Underwriters
named therein, with respect to the issue and sale of the Trust's Common Shares,
as described therein. Reference is also made to (i) the Investment Management
Agreement (the "Investment Management Agreement") between the Adviser and the
Trust and (ii) the registration statement on Form N-2 regarding the Common
Shares of the Trust (the "Registration Statement"). Capitalized terms used
herein and not otherwise defined shall have the meanings given to them in the
Underwriting Agreement.
1. Agreement. The Adviser hereby confirms its agreement with each of
Citigroup Global Markets Inc., Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated and UBS Warburg LLC (collectively, the "Primary Underwriters") with
respect to the additional compensation referred to in the "Underwriting" section
of the Registration Statement, payable by the Adviser to the Primary
Underwriters. The Adviser agrees to pay to the Primary Underwriters a fee
(collectively, the "Additional Compensation") at an aggregate rate of 0.15% per
annum of the Trust's Managed Assets (as defined in Section 3(b) hereof);
provided, however, that such payments shall not, in the aggregate, exceed the
"Maximum Additional Compensation Amount" (as defined in Section 4 hereof). In
exchange for the Additional Compensation, each Primary Underwriter will provide
to the Adviser certain after-market shareholder support services on an ongoing
basis designed to maintain the visibility of the Trust in the investor community
and will provide relevant information, studies or reports regarding the Trust
and the closed-end investment company industry.
2. Pro Rata Percentage. Each Primary Underwriter shall be assigned a "Pro
Rata Percentage," the numerator of which shall equal the number of Common Shares
purchased by such Primary Underwriter (including any Firm Shares and Additional
Shares purchased by such Primary Underwriter) pursuant to the Underwriting
Agreement and the denominator of which shall equal the aggregate number of
Common Shares
-1-
(including all Firm Shares and Additional Shares) purchased by the Primary
Underwriters pursuant to the Underwriting Agreement. The Pro Rata Percentage of
each Primary Underwriter is listed on Schedule I (which Schedule shall be
updated within 45 days from the date hereof to reflect the purchase of any
Additional Shares).
3. Payment of Additional Compensation. (a) The Adviser shall pay the
Additional Compensation, payable in arrears at the end of each calendar quarter,
as follows: to each Primary Underwriter, Additional Compensation in an amount
equal to such Primary Underwriter's Pro Rata Percentage multiplied by 0.0375% of
the Trust's Managed Assets for such quarter.
(b) For the purposes of this Additional Compensation Agreement, "Managed
Assets" means the average weekly net asset value of the Trust's total assets
minus the sum of the Trust's liabilities, which liabilities exclude debt
relating to leverage, short-term debt and the aggregate liquidation preference
of any outstanding preferred stock.
(c) All Additional Compensation payable hereunder shall be paid to each
Primary Underwriter by wire transfer of immediately available funds within 15
days following the end of each calendar quarter to a bank account designated
such Primary Underwriter. At the time of each payment of Additional Compensation
hereunder, the Adviser shall deliver to each Primary Underwriter receiving an
installment of Additional Compensation a statement indicating the amount of
Managed Assets on which such payment was based.
(d) The initial payments of Additional Compensation hereunder shall be with
respect to the calendar quarter ending June 30, 2003, pro-rated in respect of
the period from the Closing Date to June 30, 2003. In the event that this
Additional Compensation Agreement terminates prior to the end of a calendar
quarter, the Additional Compensation required to be paid hereunder shall be due
and payable within 15 days following the termination hereof and shall be
pro-rated in respect of the period prior to such termination. Notwithstanding
the foregoing, if any payment hereunder would otherwise fall on a day which is
not a business day, it shall be due on the next day that is a business day. All
Additional Compensation payable hereunder shall be in addition to any fees paid
by the Adviser pursuant to the Underwriting Agreement.
(e) The Adviser shall be permitted to terminate this agreement at any time
upon making a prepayment to the Primary Underwriters of amounts otherwise
payable hereunder. The amount of any such prepayment will be determined by
mutual agreement of the Adviser and the Primary Underwriters.
4. Maximum Additional Compensation Amount. The "Maximum Additional
Compensation Amount" payable by the Adviser hereunder shall be four and one-half
percent (4.5%) of the aggregate initial public offering price for the Common
Shares purchased pursuant to the Underwriting Agreement (including all Firm
Shares and Additional Shares), minus (i) the amount payable by the Trust to the
Underwriters pursuant to Section 12(j) of the Underwriting Agreement for partial
reimbursement of certain Underwriter expenses and (ii) any compensation paid to
Underwriters (other than
-2-
the Primary Underwriters) as described in the "Underwriting" section of the
Registration Statement.
5. Term. This Additional Compensation Agreement shall terminate on the
earliest to occur of (a) the payment by the Adviser hereunder of the Maximum
Additional Compensation Amount, (b) the prepayment by the Adviser of an agreed
upon amount in accordance with Section 3(e) hereof, (c) the dissolution and
winding up of the Trust and (d) the date on which the Investment Management
Agreement or other advisory agreement between that Trust and the Adviser or any
successor in interest to the Adviser, including but not limited to an affiliate
of the Adviser, shall no longer be in full force and effect.
6. Not an Investment Adviser. The Adviser acknowledges that the Primary
Underwriters are not providing any advice hereunder as to the value of
securities or regarding the advisability of purchasing or selling any securities
for the Trust's portfolio. No provision of this Agreement shall be considered as
creating, nor shall any provision create, any obligation on the part of any
Primary Underwriter, and the Primary Underwriters are not hereby agreeing, to:
(i) furnish any advice or make any recommendations regarding the purchase or
sale of portfolio securities or (ii) render any opinions, valuations or
recommendations of any kind to perform any such similar services.
7. Not Exclusive. Nothing herein shall be construed as prohibiting any
Primary Underwriter or its respective affiliates from acting as an underwriter
for any other persons (including other registered investment companies or other
investment managers).
8. Assignment. This Additional Compensation Agreement may not be assigned
by any party without prior written consent of each other party.
9. Amendment; Waiver. No provision of this Additional Compensation
Agreement may be amended or waived except by an instrument in writing signed by
the parties hereto.
10. Governing Law. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
11. Counterparts. This Additional Compensation Agreement may be executed in
any number of counterparts, each of which shall be an original, and all of
which, when taken together, shall constitute one agreement. Delivery of an
executed signature page of the Additional Compensation Agreement by facsimile
transmission shall be effective as delivery of a manually executed counterpart
hereof.
This Agreement shall be effective as of the date first written above.
[END OF TEXT]
-3-
PIMCO ADVISORS FUND
MANAGEMENT LLC
By:______________________
Name:
Title:
-4-
Agreed and Accepted:
CITIGROUP GLOBAL MARKETS INC.
By:
--------------------------------------------
Xxxxxx X. Xxxx -- Director
XXXXXXX LYNCH, PIERCE, XXXXXX & XXXXX
INCORPORATED
By:
--------------------------------------------
Authorized Signatory
UBS WARBURG LLC
By:
--------------------------------------------
Authorized Signatory
-5-
Schedule I
Common
Shares Pro Rata
Name of Primary Underwriter Purchased Percentage
--------------------------- --------- ----------
Citigroup Global Markets Inc.
Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx
Incorporated
UBS Warburg LLC
-6-
