Exhibit g.2
PORTFOLIO MANAGEMENT AGREEMENT
PIMCO California 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 California 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 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,
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management service or other contracts with other organizations and
persons, and may have other interests and businesses.
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
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(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
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,
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(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.
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 CALIFORNIA 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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