EXHIBIT 99(e)(5)
FORM OF
DISTRIBUTION CONTRACT
PIMCO Funds
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
May 5, 2000
PIMCO Funds Distributors LLC
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 twenty-nine publicly
offered investment portfolios: the Money Market Fund; the Short-Term Fund; the
Low Duration Fund; the Low Duration Fund II; the Low Duration Fund III; the Low
Duration Mortgage Fund; the Moderate Duration Fund; the Real Return Bond Fund;
the Total Return Fund; the Total Return Fund II; the Total Return Fund III; the
Total Return Mortgage Fund; the High Yield Fund; the Investment Grade Corporate
Bond Fund; the Long-Term U.S. Government Fund; the Long Duration Fund; the Short
Duration Municipal Income Fund; the Municipal Bond Fund; the California
Intermediate Municipal Bond Fund; the New York Intermediate Municipal Bond Fund;
the Global Bond Fund; the Global Bond Fund II; the Foreign Bond Fund; the
Emerging Markets Bond Fund; the Strategic Balanced Fund; the Convertible Fund;
the StocksPLUS Fund; the Commercial Mortgage Securities Fund; the StocksPLUS
Short Strategy Fund (each a "Fund," and collectively, the "Funds") and the
following twelve privately offered investment portfolios: the Short-Term
Portfolio; the Short-Term Portfolio II; the U.S. Government Sector Portfolio;
the U.S. Government Sector Portfolio II; the Mortgage Portfolio; the Mortgage
Portfolio II; the Investment Grade Corporate Portfolio; the High Yield
Portfolio; the Municipal Sector Portfolio; the International Portfolio; the
Emerging Markets Portfolio; and the Real Return Bond Portfolio (each a
"Portfolio," and collectively, the "Portfolios"). Additional investment
portfolios may be established in the future. This Contract shall pertain to the
both the Funds and 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 Fund and
Portfolio, and each Fund currently offers its shares with respect to up to eight
classes: Class A shares, Class B shares, and Class C shares (together, the
"Retail Classes"), and Class D shares, Class J shares, Class K shares,
Institutional Class shares, and Administrative Class shares. The Trust engages
in the business of investing and reinvesting the assets of the Funds and
Portfolios in the manner and in accordance with the investment objectives and
restrictions specified in the Trust's currently effective Prospectuses and/or
Offering Memoranda, and Statement(s) of Additional
Information and/or Offering Memoranda Supplement(s), (together, the
"Prospectus") relating to the Retail Classes, Class D, Class J, Class K,
Institutional Class and Administrative Class shares of the Funds and the shares
of 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. The Trust has adopted separate
Distribution and Servicing Plans pursuant to Rule 12b-1 under the 1940 Act with
respect to each of the Retail Classes (the "Retail Class Plans"), Class J shares
(the "Class J Plan") and Class K shares (the "Class K Plan"); has adopted a
distribution plan, also pursuant to Rule 12b-1, with respect to Class D shares
(the "Defensive Plan") as part of an Amended and Restated Administration
Agreement (the "Administration Agreement") between the Trust and Pacific
Investment Management Company (the "Administrator"), and has adopted a
Distribution Plan, also pursuant to Rule 12b-1, with respect to the
Administrative Class shares of the Funds (the "Administrative Distribution
Plan"). The Trust has also adopted an Administrative Services Plan with respect
to the Administrative Class shares of the Funds, in conformity with Rule 12b-1,
as if the expenditures made thereunder were subject to Rule 12b-1, excepting the
shareholder voting rights under Rule 12b-1 (the "Administrative Services Plan,"
and together with the Retail Class Plans, Class J Plan, Class K Plan, the
Administrative Distribution Plan and the Defensive Plan, the "Plans").
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 Class of
each Fund directly to the public against orders therefor at the applicable
public offering price as described below in the case of Class A shares, Class J
shares and Class K shares, and at net asset value in the case of Class B shares,
Class C shares, Class D shares, Institutional Class shares and Administrative
Class shares. 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 Fund indirectly to the public 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, in the case of Class A shares, Class J shares and Class
K shares, the applicable public offering price less a concession to be
determined by the Distributor, which concession will not exceed the amount of
the sales charge or underwriting discount, if any, described below and, in the
case of Class B shares, Class C shares, Class D shares, Institutional Class
shares and Administrative Class shares, 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 Class A shares, Class J shares and Class K 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) 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
Declaration of Trust and By-laws of the Trust as then amended. In the case of
Class A shares, Class J shares and Class K shares, 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 the fee paid to the Distributor in respect of
Class A shares, Class J shares and Class K shares as described in Section 5
hereof.
The Distributor agrees that shares of the Portfolios shall be distributed only
in accordance with Regulation D of the 1933 Act, and methods consistent
therewith. Prior to any investor's purchase of Portfolio shares, the
Distributor or its affiliate shall obtain from the investor a representation
that the investor is an "accredited investor," as defined in Regulation D under
the 1933 Act, and either (i) a "qualified purchaser" as defined in Section
2(a)(51) of the 1940 Act, or (ii) a "qualified institutional buyer," as defined
in Rule 144A(a)(1) of the 1933 Act.
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 the transfer agent for its shares
receive purchase requests for shares.
5. Fees. Except with respect to the PIMCO Money Market Fund, for its
services as servicing agent of a Fund's Class A shareholders and Class A
shareholder accounts, the Trust shall pay the Distributor on behalf of the Funds
a servicing fee at the annual rate of 0.25% of the Fund's average daily net
assets (0.10% in the case of the PIMCO Money Market Fund) attributable to its
Class A shares upon the terms and conditions set forth in the Distribution and
Servicing Plan attached as Exhibit A hereto, and as amended from time to time,
and may retain so much of any sales charge or underwriting discount as is not
allowed by the Distributor as a concession to dealers, and shall receive any
contingent deferred sales charge as provided in Section 8 hereof.
For its services as distributor of a Fund's Class B shares and as servicing
agent of Class B shareholders and Class B shareholder accounts, the Trust shall
pay the Distributor on behalf of the Fund a distribution fee at the annual rate
of 0.75% of the Fund's average daily net assets, and a servicing fee at the
annual rate of 0.25% of the Fund's average daily net assets, attributable to the
Fund's Class B shares upon the terms and conditions set forth in the relevant
Distribution and Servicing Plans attached as Exhibit B hereto, as amended from
time to time, and shall receive any contingent deferred sales charge as provided
in Section 8 hereof. The respective distribution and servicing fees shall be
accrued daily and paid monthly to the Distributor as soon as practicable after
the end of the calendar month in which they accrue, but in any event within 5
business days following the last calendar day of each month.
For its services as distributor of a Fund's Class C shares and as servicing
agent of Class C shareholders and Class C shareholder accounts, the Trust shall
pay the Distributor on behalf of the Fund a distribution fee at the annual rate
of 0.75% of the Fund's average daily net assets (except with respect to the
Short-Term Fund, Low Duration Fund, Real Return Bond Fund, and StocksPLUS Fund
for which Class C shareholders pay 0.30%, 0.50%, 0.50% and 0.50%, respectively),
and a servicing fee at the annual rate of 0.25% of the Fund's average daily net
assets, (except with respect to the Money Market Fund which pays 0.10%)
attributable to the Fund's Class C shares, upon the terms and conditions set
forth in the relevant Distribution and Servicing Plans attached as Exhibit C
hereto, as amended from time to time, and shall receive any contingent deferred
sales charge as provided in Section 8 hereof. The respective distribution and
servicing fees shall be accrued daily and paid monthly to the Distributor as
soon as practicable after the end of the calendar month in which they accrue,
but in any event within 5 business days following the last calendar day of each
month.
For its services as distributor of a Fund's Class J shares and as servicing
agent of Class J shareholders and Class J shareholder accounts, the Trust shall
pay the Distributor on behalf of the Fund a distribution fee at the annual rate
of 0.45% of the Fund's average daily net assets, and a servicing fee at the
annual rate of 0.25% of the Fund's average daily net assets, attributable to the
Fund's Class J shares, respectively, upon the terms and conditions set forth in
the Distribution and Servicing Plan attached as Exhibit D hereto, as amended
from time to time, and
may retain so much of any sales charge or underwriting discount as is not
allowed by the Distributor as a concession to dealers. The respective
distribution and servicing fees shall be accrued daily and paid monthly to the
Distributor as soon as practicable after the end of the calendar month in which
they accrue, but in any event within 5 business days following the last calendar
day of each month.
For its services as distributor of a Fund's Class K shares and as servicing
agent of Class K shareholders and Class K shareholder accounts, the Trust shall
pay the Distributor on behalf of the Fund a distribution fee at the annual rate
of 0.75% of the Fund's average daily net assets, and a servicing fee at the
annual rate of 0.25% of the Fund's average daily net assets, attributable to the
Fund's Class K shares, respectively, upon the terms and conditions set forth in
the Distribution and Servicing Plan attached as Exhibit E hereto, as amended
from time to time, and may retain so much of any sales charge or underwriting
discount as is not allowed by the Distributor as a concession to dealers. The
respective distribution and servicing fees shall be accrued daily and paid
monthly to the Distributor as soon as practicable after the end of the calendar
month in which they accrue, but in any event within 5 business days following
the last calendar day of each month.
The Trust shall reimburse the Distributor at an annual rate not to exceed 0.25%
of the Fund's average daily net assets attributable to its Administrative Class
shares for payments made by the Distributor to various financial intermediaries
in connection with the distribution of Administrative Class shares upon the
terms and conditions set forth in the Administrative Distribution Plan set forth
as Exhibit F hereto.
The Distributor shall receive no compensation from the Trust for services as
distributor of the Institutional Class or Class D shares, although the
Administrator may choose, in respect of Class D shares, to make payments to the
Distributor pursuant to the Defensive Plan or otherwise.
6. 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.
7. 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.
8. 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
Class A, Class B and Class C shares upon the terms and conditions set forth in
the Prospectus shall be paid to the Distributor in addition to the fees with
respect to Class A, Class B and Class C shares set forth in Section 5 hereof.
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.
9. 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 8 hereof, and will not take "long" or "short" positions in shares
contrary to any applicable provisions of the Declaration of Trust of the Trust,
as amended.
10. 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.
11. 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.
12. 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 of any state or for maintaining the registration of each Fund and 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 Fund, 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.
13. 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 Fund of the Trust which is permitted by
Section 11(a) of the 1934 Act.
14. 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 Retail
Class 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 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). The Trust may enter into arrangements with affiliates of the
Distributor providing for the payment by such affiliates of some or all of these
expenses as they relate to Class D, Class J, Class K, Institutional Class and/or
Administrative Class 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
of the Prospectus and reports and other communications to existing shareholders,
(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 or so-called "Blue
Sky" laws 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
Retail Class of each Fund pursuant to the Retail Class Plan applicable to that
class; (x) any expenses assumed by the Trust with regard to Class J shares of
each Fund pursuant to the Class J Plan; (xi) any expenses assumed by the Trust
with regard to Class K shares of each
Fund pursuant to the Class K Plan; (xii) any expenses assumed by the Trust with
regard to the Administrative Class shares of each Fund pursuant to the
Administrative Distribution Plan; (xiii) any expenses assumed by the Trust with
regard to the Administrative Class shares of each Fund pursuant to the
Administrative Services Plan; and (xiv) any expenses assumed by the Trust with
regard to the Class D shares pursuant to the Administration Agreement and the
Defensive Plan.
(e) The Trust shall pay any original issue taxes or transfer taxes
applicable to the sale or delivery of shares or certificates therefor.
15. 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 15. 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 the case
the Trust does not elect to assume the defense of any such suit, or in the case
the Distributor 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 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 expenses 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.
16. 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 in writing by the Distributor to the Trust specifically 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 any 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 16. 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 or proceedings against it in connection with the issue and sale of
any shares.
17. 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 the Plans or this Contract by vote cast
in person at a meeting called for the purpose of voting on such approval.
18. Effective Period and Termination of this Contract. This Contract shall
take effect upon the date first above written and shall remain in full force and
effect continuously as to a Fund, a class of Fund shares, or a Portfolio,
(unless terminated automatically as set forth in Section 17 hereof) until
terminated:
(a) Either by such Fund, Fund class, 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 Fund or class thereof, or Portfolio, at
the close of business one year 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 Fund, Fund class, or Portfolio, by the
affirmative vote of a majority of the outstanding shares of such Fund,
Fund class, or Portfolio; 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 the Plans or
this Contract by vote cast in person at a meeting called for the
purpose of voting on such approval.
Action by a Fund or a class thereof, or 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 Fund or such
class or 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 18 shall be without
the payment of any penalty.
If this Contract is terminated or not renewed with respect to one or more
Funds or classes thereof, or one or more Portfolios, it may continue in effect
with respect to any Fund or any class thereof, or any Portfolio, as to which it
has not been terminated (or has been renewed).
19. Limited Recourse. The Distributor hereby acknowledges that the Trust's
obligations hereunder with respect to the distribution fee or servicing fee or
contingent deferred sales charges payable with respect to the shares of any Fund
of the Trust, or a particular class of shares of a Fund, or a Portfolio are
binding only on the assets and property belonging to such Fund, allocated to
such class, or Portfolio.
20. 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, Fund, Fund class, 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,
Fund, Fund class, 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, Fund, Fund class, 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 Declaration of Trust establishing the Trust, dated March 31, 2000, a
copy of which, together with all amendments thereto (the "Declaration"), is on
file in the Office of the Secretary of State of the Commonwealth of
Massachusetts, provides that the name "PIMCO Funds" refers to the Trustees under
the Declaration collectively as Trustees and not as individuals or personally,
and that no shareholder, trustee, officer, employee or agent of the Trust shall
be subject to claims against or obligations of the Trust (or a particular Fund,
class of Fund shares, or a particular Portfolio) to any extent whatsoever, but
that the Trust (or a particular Fund, or class of Fund shares, or 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 FUNDS
By: ___________________________________
Title:
ACCEPTED:
PIMCO FUNDS DISTRIBUTORS LLC
By: ___________________________________
Title:
