ADDITIONAL COMPENSATION AGREEMENT
April __, 2003
Prudential Securities Incorporated
Xxx Xxxxxxx Xxxxx
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 Prudential
Securities Incorporated (the "Compensated Underwriter") with respect to the
additional compensation referred to in the "Underwriting" section of the
Registration Statement, payable by the Adviser to the Compensated Underwriter.
The Adviser agrees to pay to the Compensated Underwriter a fee (the "Additional
Compensation") at an aggregate rate of 0.10% per annum of the Trust's Managed
Assets (as defined in Section 3(b) hereof) attributable to purchases of Common
Shares by the Compensated Underwriter from the Trust pursuant to the
Underwriting Agreement (such Managed Assets attributable to purchases of Common
Shares by the Compensated Underwriter to be called the "Base Amount"); provided,
however, that such payments shall not, in the aggregate, exceed the "Maximum
Additional Compensation Amount" (as defined in Section 4 hereof). The number of
Common Shares purchased by the Compensated Underwriter from the Trust pursuant
to the Underwriting Agreement 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). In exchange for the Additional Compensation, the Compensated
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. Intentionally Omitted.
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 the Compensated Underwriter, Additional Compensation in an amount
equal to 0.025% of the Base Amount.
(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 the
Compensated Underwriter by wire transfer of immediately available funds within
15 days following the end of each calendar quarter to a bank account designated
by such Compensated Underwriter.
(d) The initial payment 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 Compensated Underwriter of amounts otherwise
payable hereunder. The amount of any such prepayment will be determined by
mutual agreement of the Adviser and the Compensated Underwriter.
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 the Compensated Underwriter) 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,
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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 Compensated
Underwriter is 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 the
Compensated Underwriter, and the Compensated Underwriter is 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 the
Compensated Underwriter or its 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 the 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]
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PIMCO Advisors Fund Management LLC
By:
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Name:
Title:
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Agreed and Accepted:
PRUDENTIAL SECURITIES INCORPORATED
By:
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Name:
Title:
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Schedule I
Common Shares
Compensated Underwriter Purchased
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Prudential Securities Incorporated
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