DISTRIBUTION CONTRACT
PIMCO Variable Insurance Trust
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
__________, 1997
PIMCO Funds Distribution Company
0000 Xxxxxxxx Xxxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Dear Sirs:
This will confirm the agreement between the undersigned (the "Trust")
and you (the "Distributor") as follows:
1. Description of Trust and Classes of Shares. The Trust is an open-end
investment company which presently has the following ten investment portfolios:
Money Market Portfolio; Short-Term Bond Portfolio; Total Return Bond Portfolio;
Low Duration Bond Portfolio; StocksPLUS Growth and Income Portfolio; Global Bond
Portfolio; High Yield Bond Portfolio; Strategic Balanced Portfolio; Foreign Bond
Portfolio; and Emerging Markets Bond Portfolio (each a "Portfolio," and
collectively, the "Portfolios"). Additional investment portfolios may be
established in the future. This Contract shall pertain to the Portfolios and to
such additional investment portfolios as shall be designated in Supplements to
this Contract, as further agreed between the Trust and the Distributor. A
separate series of shares of beneficial interest in the Trust is offered to
investors with respect to each Portfolio. The Trust engages in the business of
investing and reinvesting the assets of the Portfolios in the manner and in
accordance with the investment objectives and restrictions specified in the
Trust's currently effective Prospectus or Prospectuses and Statement of
Additional Information (together, the "Prospectus") relating to the Portfolios
included in the Trust's Registration Statement, as amended from time to time
(the "Registration Statement"), as filed by the Trust under the Investment
Company Act of 1940, as amended (together with the rules and regulations
thereunder, the "1940 Act") and the Securities Act of 1933, as amended (together
with the rules and regulations thereunder, the "1933 Act"). Copies of the
documents referred to in the preceding sentence have been furnished to the
Distributor. Any amendments to those documents shall be furnished to the
Distributor promptly.
2. Appointment and Acceptance. The Trust hereby appoints the
Distributor as a distributor of shares of beneficial interest in the Trust (the
"shares") which may from time to time be registered under the 1933 Act and as
servicing agent of shareholders and shareholder accounts of the Trust, and the
Distributor hereby accepts such appointment in accordance with the terms and
conditions set forth herein. As the Trust's agent, the Distributor shall, except
to the extent provided in Section 4 hereof, be the exclusive distributor for the
unsold portion of the shares.
3. Sale of Shares to Distributor and Sales by Distributor. The
Distributor will have the right, as principal, to sell shares of each Portfolio
against orders therefor at the applicable public offering price. For such
purposes, the Distributor will have the right to purchase shares at net asset
value. The Distributor will also have the right, as agent, to sell shares of a
Portfolio indirectly through broker dealers who are members of the National
Association of Securities Dealers, Inc. and who are acting as introducing
brokers pursuant to clearing agreements with the Distributor ("introducing
brokers"), to broker dealers which are members of the National Association of
Securities Dealers, Inc. and who have entered into selling agreements with the
Distributor ("participating brokers") or through other financial intermediaries,
in each case against orders therefor. The price for introducing brokers,
participating brokers and other financial intermediaries shall be net asset
value.
The Trust shall sell through the Distributor, as the Trust's agent,
shares to eligible investors as described in the Prospectus. All orders through
the Distributor shall be subject to acceptance and confirmation by the Trust.
The Trust shall have the right, at its election, to deliver either shares issued
upon original issue or treasury shares.
Prior to the time of transfer of any shares by the Trust to, or on the
order of, the distributor or any introducing broker, participating broker or
other financial intermediary, the Distributor shall pay or cause to be paid to
the Trust or to its order an amount in New York clearing house funds equal to
the applicable net asset value of the shares. Upon receipt of registration
instructions in proper form, the distributor will transmit or cause to be
transmitted such instructions to the Trust or its agent for registration of the
shares purchased.
The public offering price of the shares shall be the net asset value of
such shares, plus any applicable sales charge as set forth in the Prospectus. In
no event will any applicable sales charge or underwriting discount exceed the
limitations on permissible sales loads imposed by Section 22(b) of the 1940 Act
and Rule 2830(d)(1) of the Conduct Rules of the National Association of
Securities Dealers, Inc., as either or both may be amended from time to time.
On every sale, the Trust shall receive the net asset value of the
shares. The net asset value of shares shall be determined in the manner provided
in the Trust Instrument and By-laws of the Trust as then amended. The
Distributor may retain so much of any sales charge or underwriting discount as
is not allowed by the Distributor as a concession to dealers and such sales
charge or underwriting discount shall be in addition to any fee paid to the
Distributor.
4. Sales of Shares by the Trust. In addition to sales by the
Distributor, the Trust reserves the right to issue shares at any time directly
to its shareholders as a stock dividend or stock split or to sell shares to its
shareholders or other persons at not less than net asset value to the extent
that the Trust, its officers, or other persons associated with the Trust
participate in the sale, or to the extent that the Trust or any transfer agent
for its shares receive purchase requests for shares.
5. Reservation of Right Not to Sell. The Trust reserves the right to
refuse at any time or times to sell any of its shares for any reason deemed
adequate by it.
6. Use of Sub-Agents; Non-exclusivity. The Distributor may employ such
sub-agents, including one or more participating brokers or introducing brokers,
for the purposes of selling shares of the Trust as the Distributor, in its sole
discretion, shall deem advisable or desirable. The Distributor may enter into
similar arrangements with other issuers and, except to the extent necessary to
perform its obligations hereunder, nothing herein shall be deemed to limit or
restrict the right of the Distributor, or any affiliate of the Distributor, or
any employee of the Distributor, to engage in any other business or to devote
time and attention to the management or other aspects of any other business,
whether of a similar or dissimilar nature, or to render services of any kind to
any other corporation, firm, individual or association.
7. Repurchase of Shares. The Distributor will act as agent for the
Trust in connection with the repurchase and redemption of shares by the Trust
upon the terms and conditions set forth in the Prospectus or as the Trust acting
through its Trustees may otherwise direct. The Distributor may employ such
sub-agents, including one or more participating brokers or introducing brokers,
for such purposes as the Distributor, in its sole discretion, shall deem to be
advisable or desirable. Any contingent deferred sales charge imposed on
repurchases and redemptions of shares upon the terms and conditions set forth in
the Prospectus shall be paid to the Distributor. The Trust will take such steps
as are commercially reasonable to track on a share-by-share basis the aging of
its shares for purposes of calculating any contingent deferred sales charges
and/or distribution fees.
8. Basis of Purchases and Sales of Shares. The Distributor's obligation
to sell shares hereunder shall be on a best efforts basis only and the
Distributor shall not be obligated to sell any specific number of shares. Shares
will be sold by the Distributor only against orders therefor. The Distributor
will not purchase shares from anyone other than the Trust except in accordance
with Section 7 hereof, and will not take "long" or "short" positions in shares
contrary to any applicable provisions of the Trust Instrument of the Trust, as
amended.
9. Rules of Securities Associations, etc. As the Trust's agent, the
Distributor may sell and distribute shares in such manner not inconsistent with
the provisions hereof and the Trust's Prospectus as the Distributor may
determine from time to time. In this connection, the Distributor shall comply
with all laws, rules and regulations applicable to it, including, without
limiting the generality of the foregoing, all applicable rules or regulations
under the 1940 Act and of any securities association registered under the
Securities Exchange Act of 1934, as amended (together with the rules and
regulations thereunder, the "1934 Act"). The Distributor will conform to the
Conduct Rules of the National Association of Securities Dealers, Inc. and the
securities laws of any jurisdiction in which it sells, directly or indirectly,
any shares. The Distributor also agrees to furnish to the Trust sufficient
copies of any agreement or plans it intends to use in connection with any sales
of shares in adequate time for the Trust to file and clear them with the proper
authorities before they are put in use, and not to use them until so filed and
cleared.
10. Independent Contractor. The Distributor shall be an independent
contractor and neither the Distributor nor any of its officers or employees as
such, is or shall be an employee of the Trust. The Distributor is responsible
for its own conduct and the employment, control and conduct of its agents and
employees and for injury to such agents or employees or to others through its
agents or employees. The Distributor assumes full responsibility for its agents
and employees under applicable statutes and agrees to pay all employer taxes
thereunder.
11. Registration and Qualification of Shares. The Trust agrees to
execute such papers and to do such acts and things as shall from time to time be
reasonably requested by the Distributor for the purpose of qualifying and
maintaining qualification of the shares for sale under the so-called Blue Sky
Laws or insurance laws of any state or for maintaining the registration of each
Portfolio of the Trust and the Trust under the 1933 Act and the 1940 Act, to the
end that there will be available for sale from time to time such number of
shares as the Distributor may reasonably be expected to sell. The Trust shall
advise the Distributor promptly of (a) any action of the Securities and Exchange
Commission or any authorities of any state or territory, of which it may be
advised, affecting registration or qualification of the Trust, a Portfolio or
the shares thereof, or rights to offer such shares for sale and (b) the
happening of any event which makes untrue any statement or which requires the
making of any change in the registration statement or Prospectus in order to
make the statements therein not misleading.
12. Securities Transactions. The Trust agrees that the Distributor may
effect a transaction on any national securities exchange of which it is a member
for the account of the Trust and any Portfolio of the Trust which is permitted
by Section 11(a) of the 1934 Act.
13. Expenses.
(a) The Distributor shall from time to time employ or
associate with it such persons as it believes necessary to assist it in carrying
out its obligations under this Contract. The compensation of such persons shall
be paid by the Distributor.
(b) The Distributor shall pay all expenses incurred in
connection with its qualification as a dealer or broker under Federal or state
law.
(c) The Distributor will pay all expenses of preparing,
printing and distributing advertising and sales literature as such expenses
relate to the shares (apart from expenses of registering shares under the 1933
Act and the 1940 Act and the preparation and printing of prospectuses and
reports for shareholders or others as required by said acts and the direct
expenses of the issue of shares, except that the Distributor will pay the cost
of the preparation and printing of prospectuses and shareholders' reports used
by it in the sale of Trust shares).
(d) The Trust shall pay or cause to be paid all expenses
incurred in connection with (i) the preparation, printing and distribution to
shareholders or others of the Prospectus and reports and other communications to
existing shareholders or other appropriate recipients, (ii) future registrations
of shares under the 1933 Act and the 1940 Act, (iii) amendments of the
Registration Statement subsequent to the initial public offering of shares, (iv)
qualification of shares for sale in jurisdictions designated by the Distributor,
including under the securities, insurance or so-called "blue sky" law of any
State, (v) qualification of the Trust as a dealer or broker under the laws of
jurisdictions designated by the Distributor, (vi) qualification of the Trust as
a foreign corporation authorized to do business in any jurisdiction if the
Distributor determines that such qualification is necessary or desirable for the
purpose of facilitating sales of shares, (vii) maintaining facilities for the
issue and transfer of shares, (viii) supplying information, prices and other
data to be furnished by the Trust under this Contract, (ix) any expenses assumed
by the Trust with regard to shares of each Portfolio pursuant to any
distribution and/or servicing plan (a "Plan").
(e) The Trust shall pay any original issue taxes or transfer
taxes applicable to the sale or delivery of shares or certificates therefor.
14. Indemnification of Distributor. The Trust shall prepare and furnish
to the Distributor from time to time such number of copies of the most recent
form of the Prospectus filed with the Securities and Exchange Commission as the
Distributor may reasonably request. The Trust authorizes the Distributor to use
the Prospectus, in the form furnished to the Distributor from time to time, in
connection with the sale of shares. The Trust shall indemnify, defend and hold
harmless the Distributor, its officers and trustees and any person who controls
the Distributor within the meaning of the 1933 Act, from and against any and all
claims, demands, liabilities and expenses (including the cost of investigating
or defending such claims, demands or liabilities and any counsel fees incurred
in connection therewith) which the Distributor, its officers and trustees or any
such controlling person may incur under the 1933 Act, the 1940 Act, the common
law or otherwise, arising out of or based upon any alleged untrue statement of a
material fact contained in the Registration Statement or the Prospectus or
arising out of or based upon any alleged omission to state a material fact
required to be stated in either or necessary to make the statements in either
not misleading. This Contract shall not be construed to protect the Distributor
against any liability to the Trust or its shareholders to which the Distributor
would otherwise be subject by reason of willful misfeasance, bad faith or gross
negligence in the performance of its duties or by reason of its reckless
disregard of its obligations and duties under this Contract. This indemnity
agreement is expressly conditioned upon the Trust being notified of any action
brought against the Distributor, its officers or directors or any such
controlling person, which notification shall be given by letter or by telegram
addressed to the Trust at its principal office in Newport Beach, California, and
sent to the Trust by the person against whom such action is brought within 10
days after the summons or other first legal process shall have been served. The
failure to notify the Trust of any such action shall not relieve the Trust from
any liability which it may have to the person against whom such action is
brought by reason of any such alleged untrue statement or omission otherwise
than on account of the indemnity agreement contained in this Section 14. The
Trust shall be entitled to assume the defense of any suit brought to enforce any
such claim, demand or liability, but, in such case, the defense shall be
conducted by counsel chosen by the Trust and approved by the Distributor. If the
Trust elects to assume the defense of any such suit and retain counsel approved
by the Distributor, the defendant or defendants in such suit shall bear the fees
and expenses of any additional counsel retained by any of them, but in case the
Trust does not elect to assume the defense of any such suit, or in the case the
Distributor reasonably does not approve of counsel chosen by the Trust, the
Trust will reimburse the Distributor, its officers and directors or the
controlling person or persons named as defendant or defendants in such suit, for
the reasonable fees and expenses of any counsel retained by the Distributor or
them. In addition, the Distributor shall have the right to employ counsel to
represent it, its officers and directors and any such controlling person who may
be subject to liability arising out of any claim in respect of which indemnity
may be sought by the Distributor against the Trust hereunder if in the
reasonable judgment of the Distributor it is advisable for the Distributor, its
officers and directors or such controlling person to be represented by separate
counsel, in which event the fees and expense of such separate counsel shall be
borne by the Trust. This indemnity agreement and the Trust's representations and
warranties in this contract shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Distributor, its
officers and directors or any such controlling person. This indemnity agreement
shall inure exclusively to the benefit of the Distributor and its successors,
the Distributor's officers and directors and their respective estates and any
such controlling persons and their successors and estates. The Trust shall
promptly notify the Distributor of the commencement of any litigation or
proceedings against it in connection with the issue and sale of any shares.
15. Indemnification of Trust. The Distributor agrees to indemnify,
defend and hold harmless the Trust, its officers and Trustees and any person who
controls the Trust within the meaning of the 1933 Act, from and against any and
all claims, demands, liabilities and expenses (including the cost of
investigating or defending such claims, demands or liabilities and any counsel
fees incurred in connection therewith) which the Trust, its officers or Trustees
or any such controlling person, may incur under the 1933 Act, the 1940 Act, the
common law or otherwise, but only to the extent that such liability or expense
incurred by the Trust, its officers or Trustees or such controlling person
resulting from such claims or demands shall arise out of or be based upon (a)
any alleged untrue statement of a material fact contained in information
furnished by the Distributor to the Trust for use in the Registration Statement
or the Prospectus or shall arise out of or be based upon any alleged omission to
state a material fact in connection with such information required to be stated
in the Registration Statement or the Prospectus or necessary to make such
information not misleading, (b) any alleged act or omission on the Distributor's
part as the Trust's agent that has not been expressly authorized by the Trust in
writing, and (c) any claim, action, suit or proceeding which arises out of or is
alleged to arise out of the Distributor's failure to exercise reasonable care
and diligence with respect to its services rendered in connection with
investment, reinvestment, employee benefit and other plans for shares. The
foregoing rights of indemnification shall be in addition to any other rights to
which the Trust or a Trustee may be entitled as a matter of law. This indemnity
agreement is expressly conditioned upon the Distributor being notified of an
action brought against the Trust, its officers or Trustees or any such
controlling person, which notification shall be given by letter or telegram
addressed to the Distributor at its principal office in Stamford, Connecticut,
and sent to the Distributor by the person against whom such action is brought,
within 10 days after the summons or other first legal process shall have been
served. The failure to notify the Distributor of any such action shall not
relieve the Distributor from any liability which it may have to the Trust, its
officers or Trustees or such controlling person by reason of any alleged
misstatement, omission, act or failure on the Distributor's part otherwise than
on account of the indemnity agreement contained in this Section 15. The
Distributor shall have a right to control the defense of such action with
counsel of its own choosing and approved by the Trust if such action is based
solely upon such alleged misstatement, omission, act or failure on the
Distributor's part, and in any other event the Trust, its officers and Trustees
or such controlling person shall each have the right to participate in the
defense or preparation of the defense of any such action at their own expense.
If the Distributor elects to assume the defense of any such suit and retain
counsel approved by the Trust, the defendant or defendants in such suit shall
bear the fees and expenses of any additional counsel retained by any of them,
but in case the Distributor does not elect to assume the defense of any such
suit, or in the case the Trust does not approve of counsel chosen by the
Distributor, the Distributor will reimburse the Trust, its officers and Trustees
or the controlling person or persons named as defendant or defendants in such
suit, for the fees and expenses of any counsel retained by the Trust or them. In
addition, the Trust shall have the right to employ counsel to represent it, its
officers and Trustees and any such controlling person who may be subject to
liability arising out of any claim in respect of which indemnity may be sought
by the Trust against the Distributor hereunder if in the reasonable judgment of
the Trust it is advisable for the Trust, its officers and Trustees or such
controlling person to be represented by separate counsel, in which event the
fees and expense of such separate counsel shall be borne by the Distributor.
This indemnity agreement and the Distributor's representations and warranties in
this Contract shall remain operative and in full force and effect regardless of
any investigation made by or on behalf of the Trust, its officers and Trustees
or any such controlling person. This indemnity agreement shall inure exclusively
to the benefit of the Trust and its successors, the Trust's officers and
Trustees and their respective estates and any such controlling persons and their
successors and estates. The Distributor shall promptly notify the Trust of the
commencement of any litigation and proceedings against it in connection with the
issue and sale of any shares
16. Assignment Terminates this Contract; Amendments of this Contract.
This Contract shall automatically terminate, without the payment of any penalty,
in the event of its assignment. This Contract may be amended only if such
amendment be approved either by action of the Trustees of the Trust or at a
meeting of the shareholders of the Trust by the affirmative vote of a majority
of the outstanding shares of the Trust, and by a majority of the Trustees of the
Trust who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of any Plan or this Contract by
vote cast in person at a meeting called for the purpose of voting on such
approval.
17. Effective Period and Termination of this Contract. This Contract
shall take effect upon the date first above written and shall remain in force
and effect continuously as to a Portfolio (unless terminated automatically as
set forth in Section 16 hereof) until terminated.
(a) Either by such Portfolio or the Distributor by not more
than sixty (60) days' nor less than thirty (30) days' written notice
delivered or mailed by registered mail, postage prepaid, to the other
party; or
(b) Automatically as to any Portfolio or class thereof at the
close of business two years from the date hereof, or upon the
expiration of one year from the effective date of the last continuance
of this Contract, whichever is later, if the continuance of this
Contract is not specifically approved at least annually by the Trustees
of the Trust or the shareholders of such Portfolio or such class by the
affirmative vote of a majority of the outstanding shares of such
Portfolio or such class, and by a majority of the Trustees of the Trust
who are not interested persons of the Trust and who have no direct or
indirect financial interest in the operation of any Plan or this
Contract by voting cast in person at a meeting called for the purpose
of voting on such approval.
Action by a Portfolio under (a) above may be taken either (i) by vote
of the Trustees of the Trust, or (ii) by the affirmative vote of a majority of
the outstanding shares of such Portfolio. The requirement under (b) above that
the continuance of this Contract be "specifically approved at least annually"
shall be construed in a manner consistent with the 1940 Act and the rules and
regulations thereunder.
Termination of this Contract pursuant to this Section 17 shall be
without the payment of any penalty.
If this Contract is terminated or not renewed with respect to one or
more Portfolios, it may continue in effect with respect to any Portfolio or any
class thereof as to which it has not been terminated (or has been renewed).
18. Limited Recourse. The Distributor hereby acknowledges that the
Trust's obligations hereunder with respect to any distribution fee or servicing
fee or contingent deferred sales charges payable with respect to the shares of
any Portfolio of the Trust are binding only on the assets and property belonging
to such Portfolio.
19. Certain Definitions. For the purposes of this Contract, 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 Trust, or Portfolio, 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 Trust, or Portfolio,
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
Trust, or Portfolio, as the case may be, entitled to vote at such meeting,
whichever is less.
For the purposes of this Contract, the terms "interested persons" and
"assignment" shall have the meanings defined in the 1940 Act, subject, however,
to such exemptions as may be granted by the Securities and Exchange Commission
under said Act. Certain other items used herein that are not otherwise defined
have the meaning given in the Trust's Prospectus or constituent agreements or
documents of the Trust.
The Trust Instrument establishing the Trust, dated _________, 1997
provides that the name "PIMCO Variable Insurance Trust" refers to the Trustees
under the Trust Instrument collectively as Trustees and not as individuals or
personally, and that no shareholder, Trustee, officers, employee or agent of the
Trust shall be subject to claims against or obligations of the Trust (or a
particular Portfolio) to any extent whatsoever, but that the Trust (or a
particular Portfolio) shall only be liable.
If the foregoing correctly sets forth the agreement between the Trust
and the Distributor, please so indicate by signing and returning to the Trust
the enclosed copy hereof.
Very truly yours,
PIMCO VARIABLE INSURANCE TRUST
By: _______________________________
Title:
ACCEPTED:
PIMCO FUNDS DISTRIBUTION COMPANY
By: _______________________________
Title:
