Exhibit g.2
PORTFOLIO MANAGEMENT AGREEMENT
PIMCO Municipal Income Fund II
This Portfolio Management Agreement is executed as of June 18, 2002 by and
between PIMCO FUNDS ADVISORS LLC, a Delaware limited liability company (the
"Manager"), and PACIFIC INVESTMENT MANAGEMENT COMPANY LLC, a Delaware limited
liability company (the "Portfolio Manager").
WITNESSETH:
That in consideration of the mutual covenants herein contained, it is
agreed as follows:
1. SERVICES TO BE RENDERED BY THE PORTFOLIO MANAGER TO THE FUND.
(a) Subject always to the direction and oversight of the Trustees of PIMCO
Municipal Income Fund II (the "Fund"), a Massachusetts business
trust, the Portfolio Manager, at its expense, will furnish
continuously an investment program for the Fund and will make
investment decisions on behalf of the Fund and place all orders for
the purchase and sale of portfolio securities and all other
investments. In the performance of its duties, the Portfolio Manager
(1) will comply with the provisions of the Fund's Agreement and
Declaration of Trust and Bylaws, including any amendments thereto
(upon receipt of such amendments by the Portfolio Manager), and the
investment objectives, policies and restrictions of the Fund as set
forth in its current Prospectus and Statement of Additional
Information (copies of which will be supplied to the Portfolio Manager
upon filing with the Securities and Exchange Commission (the "SEC")),
(2) will use its best efforts to safeguard and promote the welfare of
the Fund and (3) will comply with other policies which the Trustees or
the Manager, as the case may be, may from time to time determine as
promptly as practicable after such policies have been communicated to
the Portfolio Manager in writing. The Portfolio Manager and the
Manager shall each make its officers and employees available to the
other from time to time at reasonable times to review investment
policies of the Fund and to consult with each other regarding
investment affairs of the Fund.
(b) The Portfolio Manager, at its expense, will furnish (i) all necessary
investment and management facilities, including salaries of personnel,
required for it to execute its duties hereunder faithfully and (ii)
administrative facilities, including bookkeeping, clerical personnel
and equipment necessary for the efficient conduct of the investment
affairs of the Fund, including verification and oversight of the
pricing of the Fund's portfolio (but excluding determination of net
asset value and shareholder accounting services).
(c) In the selection of brokers or dealers and the placing of orders for
the purchase and sale of portfolio investments for the Fund, the
Portfolio Manager shall use its
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best efforts to obtain for the Fund the most favorable price and
execution available, except to the extent it may be permitted to pay
higher brokerage commissions for brokerage and research services as
described below. In using its best efforts to obtain for the Fund the
most favorable price and execution available, the Portfolio Manager,
bearing in mind the Fund's best interests at all times, shall consider
all factors it deems relevant, including, by way of illustration,
price, the size of the transaction, the nature of the market for the
security, the amount of the commission, the timing of the transaction
taking into account market prices and trends, the reputation,
experience and financial stability of the broker or dealer involved
and the quality of service rendered by the broker or dealer in other
transactions. Subject to such policies as the Trustees of the Fund may
determine and communicate to the Portfolio Manager in writing, the
Portfolio Manager shall not be deemed to have acted unlawfully or to
have breached any duty created by this Agreement or otherwise solely
by reason of its having caused the Fund to pay a broker or dealer that
provides brokerage and research services to the Portfolio Manager or
its affiliates an amount of commission for effecting a portfolio
investment transaction in excess of the amount of commission another
broker or dealer would have charged for effecting that transaction, if
the Portfolio Manager determines in good faith that such amount of
commission was reasonable in relation to the value of the brokerage
and research services provided by such broker or dealer, viewed in
terms of either that particular transaction or the Portfolio Manager's
overall responsibilities with respect to the Fund and to other clients
of the Portfolio Manager and its affiliates as to which the Portfolio
Manager and its affiliates exercise investment discretion. The Fund
agrees that any entity or person associated with the Portfolio Manager
or its affiliates which is a member of a national securities exchange
is expressly authorized to effect any transaction on such exchange for
the account of the Fund which is permitted by Section 11(a) of the
Securities Exchange Act of 1934 (the "1934 Act").
(d) The Portfolio Manager shall not be obligated to pay any expenses of or
for the Fund not expressly assumed by the Portfolio Manager pursuant
to this Section 1.
2. OTHER AGREEMENTS, ETC.
It is understood that any of the shareholders, Trustees, officers and
employees of the Fund may be a shareholder, member, director, officer or
employee of, or be otherwise interested in, the Portfolio Manager, and in
any person controlled by or under common control with the Portfolio
Manager, and that the Portfolio Manager and any person controlled by or
under common control with the Portfolio Manager may have an interest in the
Fund. It is also understood that the Portfolio Manager and persons
controlled by or under common control with the Portfolio Manager have and
may have advisory, management service or other contracts with other
organizations and persons, and may have other interests and businesses.
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3. COMPENSATION TO BE PAID BY THE MANAGER TO THE PORTFOLIO MANAGER.
The Manager will pay the Portfolio Manager as compensation for the
Portfolio Manager's services rendered and for the expenses borne by the
Portfolio Manager pursuant to Section 1, a fee computed and paid monthly at
the annual rate of 0.50% of the average daily net asset value of the Fund
(including daily net assets attributable to any preferred shares of the
Fund that may be outstanding). Such fee shall be payable for each month
within 10 business days after the end of such month.
In the event that the Portfolio Manager has agreed to a fee waiver
arrangement with the Manager, subject to such terms and conditions as the
Manager and the Portfolio Manager may set forth in such agreement, the
compensation due the Portfolio Manager hereunder shall be reduced to the
extent required by such fee waiver arrangement.
If the Portfolio Manager shall serve for less than the whole of a month,
the foregoing compensation shall be prorated.
4. ASSIGNMENT TERMINATES THIS AGREEMENT; AMENDMENTS OF THIS AGREEMENT.
This Agreement shall automatically terminate, without the payment of any
penalty, in the event of its assignment or in the event that the Investment
Management Agreement between the Manager and the Fund shall have terminated
for any reason; and this Agreement shall not be amended unless such
amendment is approved at a meeting by the affirmative vote of a majority of
the outstanding shares of the Fund, and by the vote, cast in person at a
meeting called for the purpose of voting on such approval, of a majority of
the Trustees of the Fund who are not interested persons of the Fund or of
the Manager or the Portfolio Manager.
5. EFFECTIVE PERIOD AND TERMINATION OF THIS AGREEMENT.
This Agreement shall become effective upon its execution, and shall remain
in full force and effect as to the Fund continuously thereafter (unless
terminated automatically as set forth in Section 4) until terminated as
follows:
(a) The Fund may at any time terminate this Agreement by written notice
delivered or mailed by registered mail, postage prepaid, to the
Manager and the Portfolio Manager, or
(b) If (i) the Trustees of the Fund or the shareholders by the affirmative
vote of a majority of the outstanding shares of the Fund, and (ii) a
majority of the Trustees of the Fund who are not interested persons of
the Fund or of the Manager or of the Portfolio Manager, by vote cast
in person at a meeting called for the purpose of voting on such
approval, do not specifically approve at least annually the
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continuance of this Agreement, then this Agreement shall automatically
terminate at the close of business on the second anniversary of its
execution, or upon the expiration of one year from the effective date
of the last such continuance, whichever is later; provided, however,
that if the continuance of this Agreement is submitted to the
shareholders of the Fund for their approval and such shareholders fail
to approve such continuance of this Agreement as provided herein, the
Portfolio Manager may continue to serve hereunder in a manner
consistent with the Investment Company Act of 1940, as amended from
time to time, and the rules and regulations thereunder (the "1940
Act"), or
(c) The Manager may at any time terminate this Agreement by not less than
60 days' written notice delivered or mailed by registered mail,
postage prepaid, to the Portfolio Manager, and the Portfolio Manager
may at any time terminate this Agreement by not less than 60 days'
written notice delivered or mailed by registered mail, postage
prepaid, to the Manager.
Action by the Fund under (a) above may be taken either (i) by vote of
a majority of the Trustees, or (ii) by the affirmative vote of a
majority of the outstanding shares of the Fund.
Termination of this Agreement pursuant to this Section 5 shall be
without the payment of any penalty.
6. CERTAIN INFORMATION.
The Portfolio Manager shall promptly notify the Manager in writing of the
occurrence of any of the following events: (a) the Portfolio Manager shall
fail to be registered as an investment adviser under the Investment
Advisers Act of 1940, as amended from time to time, (b) the Portfolio
Manager shall have been served or otherwise have notice of any action,
suit, proceeding, inquiry or investigation, at law or in equity, before or
by any court, public board or body, involving the affairs of the Fund, (c)
there is a change in control of the Portfolio Manager or any parent of the
Portfolio Manager within the meaning of the 1940 Act, or (d) there is a
material adverse change in the business or financial position of the
Portfolio Manager.
7. CERTAIN DEFINITIONS.
For the purposes of this Agreement, the "affirmative vote of a majority of
the outstanding shares" means the affirmative vote, at a duly called and
held meeting of shareholders, (a) of the holders of 67% or more of the
shares of the Fund, as the case may be, present (in person or by proxy) and
entitled to vote at such meeting, if the holders of more than 50% of the
outstanding shares of the Fund, as the case may be, entitled to vote at
such meeting are present in person or by proxy, or (b) of the holders of
more than 50% of the outstanding shares of the Fund, as the case may be,
entitled to vote at such meeting, whichever is less.
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For the purposes of this Agreement, the terms "affiliated person,"
"control," "interested person" and "assignment" shall have their
respective meanings defined in the 1940 Act; the term "specifically
approve at least annually" shall be construed in a manner consistent
with the 1940 Act and the rules and regulations thereunder, subject,
however, to such exemptions as may be granted by the SEC under the 1940
Act and the rules and regulations thereunder; and the term "brokerage
and research services" shall have the meaning given in the 1934 Act and
the rules and regulations thereunder.
8. NONLIABILITY OF PORTFOLIO MANAGER.
Notwithstanding any other provisions of this Agreement, in the absence
of willful misfeasance, bad faith or gross negligence on the part of
the Portfolio Manager, or reckless disregard of its obligations and
duties hereunder, the Portfolio Manager, including its officers,
directors and members, shall not be subject to any liability to the
Manager, to the Fund, or to any shareholder, officer, director, partner
or Trustee thereof, for any act or omission in the course of, or
connected with, rendering services hereunder.
9. LIMITATION OF LIABILITY OF THE TRUSTEES AND SHAREHOLDERS.
A copy of the Agreement and Declaration of Trust of the Fund is on file
with the Secretary of State of The Commonwealth of Massachusetts, and
notice is hereby given that this instrument is executed on behalf of
the Trustees of the Fund as Trustees and not individually and that the
obligations of this instrument are not binding upon any of the Trustees
or shareholders individually but are binding only upon the assets and
property of the Fund.
10. EXERCISE OF VOTING RIGHTS.
Except with the agreement or on the specific instructions of the
Trustees of the Fund or the Manager, the Portfolio Manager shall not
exercise or procure the exercise of any voting right attaching to
investments of the Fund.
11. COUNTERPARTS.
This Agreement may be signed in one or more counterparts, each of
which shall be deemed to be an original.
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IN WITNESS WHEREOF, PIMCO FUNDS ADVISORS LLC and PACIFIC INVESTMENT
MANAGEMENT COMPANY LLC have each caused this instrument to be signed on its
behalf by its duly authorized representative, all as of the day and year first
above written.
PIMCO FUNDS ADVISORS LLC PACIFIC INVESTMENT MANAGEMENT
COMPANY LLC
By: /s/ Xxxxxxx X. Xxxxxxxx By: /s/ Xxxxx X. Xxxxxxxx
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Name: Xxxxxxx X. Xxxxxxxx Name: Xxxxx X. Xxxxxxxx
Title: Managing Director Title: Managing Director
Accepted and agreed to as of the
day and year first above written:
PIMCO MUNICIPAL INCOME FUND II
By: /s/ Xxxxxx X. Xxxxxx, Xx.
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Name: Xxxxxx X. Xxxxxx, Xx.
Title: Vice President and Secretary
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