Exhibit h.4
ADDITIONAL COMPENSATION AGREEMENT
October 28, 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 $0.00001 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 December 31, 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: _________________________________
Name: Xxxxx Xxxxxxxx
Title: Managing Director
By: _________________________________
Name: Xxxx X. Reit
Title: Executive Director
CONFIRMED AND ACCEPTED,
as of the date first above written:
[Insert Qualifying Underwriters]
By: ______________________________________
Name:
Title:
SCHEDULE A
Name of Trust
PIMCO Municipal Income Fund III
PIMCO California Municipal Income Fund III
PIMCO New York Municipal Income Fund III
SCHEDULE B
Aggregate
Purchase Price to Public Pro Rata
Name of Qualifying Underwriter of Common Shares Sold Percentage
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