Exhibit h.4
ADDITIONAL COMPENSATION AGREEMENT
June , 2002
Qualifying Underwriters
Listed on Schedule B hereto
Ladies and Gentlemen:
Reference is made to each Underwriting Agreement dated the date hereof
(each, an "Underwriting Agreement"), by and among each respective closed-end
management investment company listed on Schedule A hereto (each a "Trust" and
collectively, the "Trusts"), PIMCO Funds Advisors LLC (the "Manager") and each
of the respective Underwriters named therein, with respect to the issue and sale
of each Trust's common shares of beneficial interest, par value $0.0001 per
share (the "Common Shares"), as described therein. Reference is also made to (i)
the Investment Management Agreements (the "Investment Management Agreements") to
be entered into between the Manager and each Trust and (ii) the registration
statements on Form N-2 regarding the Common Shares of each Trust (the
"Registration Statements"). Capitalized terms used herein and not otherwise
defined shall have the meanings given to them in the respective Underwriting
Agreements.
UBS Warburg LLC ("UBS Warburg") hereby confirms its agreement with each
Qualifying Underwriter (as defined in Section 1 hereof) with respect to the
additional compensation referred to in the "Underwriting" section of the
Registration Statements, payable by UBS Warburg to each of the Qualifying
Underwriters. UBS Warburg agrees to pay to each Qualifying Underwriter
additional compensation (collectively, the "Additional Compensation") as
provided for in Section 3 hereof, provided, however, that such Additional
Compensation shall not exceed an amount equal to 0.10% per annum of the
aggregate average daily net asset values of the Funds (including assets
attributable to any preferred shares of the Funds that may be outstanding)
multiplied by the aggregate Pro Rata Percentages (as defined in Section 2
hereof) applicable to the Qualifying Underwriters (as defined in Section 1); and
provided, further, that such payments shall not, in the aggregate, exceed the
"Maximum Additional Compensation Amount" (as defined in Section 4 hereof). The
Additional Compensation shall be payable as set forth in Section 3 hereof.
SECTION 1. Qualifying Underwriters. For the purposes of this Additional
Compensation Agreement, each Underwriter which sells Common Shares of the Trusts
with an aggregate purchase price to the public of at least $50,000,000 (which
amount shall equal the aggregate purchase price to the public of any Firm Shares
and Option Shares sold by such Underwriter, as determined in the sole discretion
of UBS Warburg and set forth in Schedule B hereto) shall be a "Qualifying
Underwriter"; provided, however, that UBS Warburg shall not be included in the
term "Qualifying Underwriter." UBS Warburg may, in its sole and absolute
discretion, waive such $50,000,000 sales requirement with respect to any
Underwriter and determine such Underwriter to be a Qualifying Underwriter
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SECTION 2. Pro Rata Percentage. Each Qualifying Underwriter shall be
assigned a "Pro Rata Percentage," the numerator of which shall be the aggregate
purchase price to the public of the Common Shares sold by such Underwriter as
set forth on Schedule B hereto and the denominator of which shall equal the
aggregate purchase price to the public of all of the Common Shares purchased by
the Underwriters pursuant to the Underwriting Agreements.
SECTION 3. Payment of Additional Compensation.
(a) UBS Warburg shall pay the Additional Compensation, quarterly in
arrears, to each Qualifying Underwriter in an amount equal to the product of
such Underwriter's Pro Rata Percentage multiplied by 0.025% of the Trusts'
aggregate average daily net asset values (including assets attributable to any
preferred shares of the Trusts that may be outstanding) for such quarter. For
the purposes of determining amounts due to each Qualifying Underwriter, the
average daily net asset value for each Trust shall be the average net asset
value as calculated by the Manager for the applicable quarter. Nothing herein
shall in any way obligate UBS Warburg to calculate the average daily net asset
values of the Funds for any quarter and UBS Warburg shall be entitled to rely
exclusively on the Manager's calculations. No Qualifying Underwriter shall have
the right to challenge the calculation of the average daily net asset values of
the Funds nor shall any Qualifying Underwriter have the right to obligate UBS
Warburg to calculate the average daily net asset values for the Funds.
(b) All fees payable hereunder shall be paid by wire transfer of
immediately available funds within 15 days following the end of each calendar
quarter to a bank account designated by the payee.
(c) The initial payments of Additional Compensation hereunder shall be with
respect to the calendar quarter ending [September 30], 2002. 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 which is a business day.
SECTION 4. Maximum Additional Compensation Amount. The "Maximum Additional
Compensation Amount" payable by UBS Warburg hereunder shall be, with respect to
each Qualifying Underwriter, such amount as, when taken together with the amount
of all underwriting compensation other than the Additional Compensation received
by such Underwriter in connection with the offerings of the Common Shares of the
Trusts, equals the maximum compensation allowed under the conduct rules of the
National Association of Securities Dealers, Inc., as such rules are then in
effect.
SECTION 5. Term. This Additional Compensation Agreement shall continue
coterminously with and so long as the Investment Management Agreement, dated
June 2002, remains in effect between the Fund and PIMCO Funds Advisors or any
successor in interest or affiliate of PIMCO Funds Advisors, as, and to the
extent, that such Investment Management Agreement is renewed periodically in
accordance with the 1940 Act. This
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Additional Compensation Agreement shall terminate on the earliest to occur of
(a) with respect to any Qualifying Underwriter, the payment by UBS Warburg to
such Qualifying Underwriter of the Maximum Additional Compensation Amount, (b)
with respect to any Trust, the dissolution and winding up of that Trust and (c)
with respect to any Trust, the date on which the Investment Management Agreement
or other advisory agreement between that Trust and the Manager or any successor
in interest to the Manager, including but not limited to an affiliate of the
Manager.
SECTION 6. Not Exclusive. Nothing herein shall be construed as prohibiting
any Underwriter or its respective affiliates from acting as such for any other
clients (including other registered investment companies or other investment
managers).
SECTION 7. Assignment. This Additional Compensation Agreement may not be
assigned by any party without the prior written consent of each other party.
SECTION 8. 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.
SECTION 9. Governing Law. This Additional Compensation Agreement shall be
governed by, and construed in accordance with, the laws of the State of New
York.
SECTION 10. 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 this Additional Compensation Agreement by
facsimile transmission shall be effective as delivery of a manually executed
counterpart hereof.
If the foregoing is in accordance with your understanding of our agreement,
please sign and return to us a counterpart hereof, whereupon this instrument,
along with all counterparts, will become a binding agreement among UBS Warburg
and the Qualifying Underwriters in accordance with its terms.
Very truly yours,
UBS WARBURG LLC
By:
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Name: Xxxxx Xxxxxxxx
Title: Managing Director
CONFIRMED AND ACCEPTED,
as of the date first above written:
XXXXXXX LYNCH, PIERCE, XXXXXX
& XXXXX INCORPORATED
By:
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Name:
Title:
[List of other Qualifying Underwriters to come]
SCHEDULE A
Name of Trust
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PIMCO Municipal Income Fund II
PIMCO California Municipal Income Fund II
PIMCO New York Municipal Income Fund II
SCHEDULE B
Aggregate
Purchase Price to Public Pro Rata
Name of Qualifying Underwriter of Common Shares Sold Percentage
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