PORTFOLIO IMPLEMENTATION AGREEMENT
PIMCO EQUITY SERIES
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, Xxxxxxxxxx 00000
AGREEMENT made as of the 26th day of August 2016.
WHEREAS, Pacific Investment Management Company LLC, a Delaware limited
liability company (the Adviser) has been retained by PIMCO Equity Series
(the Trust), an open-end management investment company registered under
the Investment Company Act of 1940, as amended (the 1940 Act), as
investment adviser, to provide investment advisory services to the PIMCO
Dividend and Income Fund, a series of the Trust (the Fund), pursuant to
an investment advisory agreement (the Investment Advisory Agreement);
WHEREAS, the Fund seeks to achieve its investment objective in part by
investing a portion of its assets consistent with the Fund's RAE
Fundamental investment strategy described in the Fund's Prospectus (as
defined below), which is an investment strategy related to a Research
Affiliates Fundamental Index(r) (RAFI(r)) methodology developed by
Research Affiliates, LLC (Research Affiliates or Sub-Adviser), a
sub-adviser to the Fund pursuant to an investment sub-advisory
agreement between the Adviser and Research Affiliates (the
Investment Sub-Advisory Agreement);
WHEREAS, under the Investment Sub-Advisory Agreement, the Adviser and
Sub-Adviser agreed that they may enter into an agreement with a third
party for the provision of certain portfolio implementation services
that are consistent with the services to be provided by the Sub-
Adviser under the Investment Sub-Advisory Agreement;
WHEREAS, it is intended that an Indicative Portfolio (defined below)
with respect to a portion of the Funds portfolio (such portion, the
Equity Sleeve) developed by Research Affiliates will be communicated
to Parametric Portfolio Associates LLC, a Delaware limited
liability company (the Portfolio Implementer), which will
facilitate the appropriate implementation of the Indicative
Portfolio for the Equity Sleeve;
WHEREAS, the Adviser and Sub-Adviser wish to retain the Portfolio
Implementer to assist the Adviser and Sub-Adviser in providing portfolio
implementation services described herein (Portfolio Implementation
Services) in connection with the Indicative Portfolio for the Equity
Sleeve;
WHEREAS, the Portfolio Implementer is registered as an investment
adviser under the Investment Advisers Act of 1940, as amended, and rules
and regulations thereunder (Advisers Act); and
WHEREAS, the Portfolio Implementer is willing to provide such Portfolio
Implementation Services to the Adviser and the Sub-Adviser upon the
terms and conditions set forth below and for the compensation set forth
in Exhibit A attached hereto, as may be amended from time to time.
NOW THEREFORE, in consideration of the promises and mutual covenants
herein contained, it is agreed among the Adviser, the Sub-Adviser and
the Portfolio Implementer as follows:
1. The Trust is an open-end investment company which has separate
investment portfolios. Additional investment portfolios may be
established in the future. This Agreement shall pertain to the Fund
and to such additional investment portfolios as shall be designated
as Funds in supplements to this Agreement, as further agreed among the
Adviser, the Sub-Adviser and the Portfolio Implementer. The Trust
engages in the business of investing and reinvesting the assets of the
Fund in the manner and in accordance with the investment objective
and restrictions applicable to the Fund as specified in the currently
effective prospectus (the Prospectus) for the Trust included in the
registration statement, as amended from time to time (the
Registration Statement), filed by the Trust under the 1940 Act and the
Securities Act of 1933, as amended (the 1933 Act). Copies of the
documents referred to in the preceding sentence have been or will be
furnished to the Portfolio Implementer promptly. Any amendments to those
documents shall be furnished to the Portfolio Implementer promptly.
2. The Adviser and the Sub-Adviser hereby appoint the
Portfolio Implementer to provide the Portfolio Implementation Services
specified in this Agreement and the Portfolio Implementer hereby accepts
such appointment and agrees to render the services herein set forth.
3. (a) The Portfolio Implementer shall, at its expense:
(i) employ or associate with itself such persons as it believes
appropriate to assist it in performing its obligations under this
Agreement; and (ii) provide all services, equipment and facilities
necessary to perform its obligations under this Agreement. The Portfolio
Implementer may from time to time seek research assistance and rely on
investment management resources available to it through its affiliated
companies, but in no case shall such reliance relieve the Portfolio
Implementer of any of its obligations hereunder, nor shall the Sub-
Adviser, the Adviser or the Fund be responsible for any additional fees
or expenses hereunder as a result. In all cases, the Portfolio Implementer
shall remain liable as if such services were provided directly.
(b) The Portfolio Implementer shall not retain any other person to
serve as an investment adviser, sub-adviser or portfolio implementer to
the Fund. The Portfolio Implementer shall not pay any fee, based on the
assets of the Fund, to any person providing research and/or investment
advice to the Portfolio Implementer without the express written consent
of the Adviser.
(c) The Portfolio Implementer shall not be required to pay any
expenses of the Fund other than those specifically allocated to the
Portfolio Implementer in this Agreement. In particular, but without
limiting the generality of the foregoing, the Portfolio Implementer shall
not be responsible, except to the extent of the reasonable compensation of
such of the Trust's employees (if any) as are officers or employees of the
Portfolio Implementer whose services may be involved, for any of the
following expenses of the Fund: compensation of the Trustees who are not
affiliated with the Portfolio Implementer or any of its affiliates; taxes
and governmental fees; interest charges; fees and expenses of the Funds
independent registered public accounting firm and legal counsel; trade
association membership dues; fees and expenses of any custodian (including
maintenance of books and accounts and calculation of the net asset value
of shares of the Fund), transfer agent, registrar and dividend disbursing
agent of the Fund; expenses of issuing, selling, redeeming, registering
and qualifying for sale shares of beneficial interest in the Fund; expenses
of preparing and printing share certificates, prospectuses and reports to
shareholders, notices, proxy statements and reports to regulatory agencies;
the cost of office supplies, including stationery; travel expenses of all
officers, Trustees and employees; insurance premiums; brokerage and other
expenses of executing portfolio transactions; expenses of shareholders
meetings; organizational expenses; and extraordinary expenses.
4. (a) Subject to the direct supervision of the Sub-Adviser, and
ultimate supervision of the Adviser, the Portfolio Implementer is
responsible for effecting all portfolio transactions on behalf of the
Funds Equity Sleeve. The Sub-Adviser shall be responsible for providing
the Portfolio Implementer with a model portfolio (an Indicative Portfolio)
for each strategy of the Fund's Equity Sleeve, as further described in the
Funds Registration Statement, and, on an ongoing basis, monitoring and
supervising the implementation and any rebalancing of such Indicative
Portfolio by the Portfolio Implementer. Such Indicative Portfolio shall
include, without limitation, the information described in Section 4(h) below.
Additionally, the Sub-Adviser shall provide Portfolio Implementer with
instructions as to the frequency and timing of rebalancing the Funds
Equity Sleeve to track the Indicative Portfolio. The Sub-Adviser may
utilize the Portfolio Implementer to effect transactions for the Funds
Equity Sleeve based solely on the Indicative Portfolio created by the
Sub-Adviser and any specific restrictions or instructions communicated to
the Portfolio Implementer by the Sub-Adviser. The Portfolio Implementer
shall have discretion to execute all portfolio transactions on behalf of
the Funds Equity Sleeve necessary to implement the Indicative Portfolio
specified by the Sub-Adviser for the Equity Sleeve. In exercising such
discretion, Portfolio Implementer will seek to limit tracking error from
the Indicative Portfolio but may allow the Funds Equity Sleeve to vary
from the Indicative Portfolio subject to the supervision of the Sub-Adviser.
Additionally, Portfolio Implementer may, in its sole discretion but subject
to any restrictions communicated to the Portfolio Implementer by Sub-Adviser
in writing, decline to purchase a security specified in the Indicative
Portfolio, or decide to substitute a security specified in the Indicative
Portfolio (an Original Security) for an alternative security (a Substitute
Security), provided, however, that such Substitute Security shall provide
similar economic exposure as the Original Security. The discretion provided
to the Portfolio Implementer under this Section 4(a) shall be subject to any
guidelines, limitations or restrictions provided by the Sub-Adviser or
Adviser.
It is understood and agreed that it shall be the responsibility of the
Sub-Adviser to oversee and monitor the services the Portfolio Implementer
provides on behalf of the Equity Sleeve, as the Sub-Advisers agent
hereunder, including the compliance of such services with the investment
objectives, policies and restrictions applicable to the Equity Sleeve, as
stated in the Funds Registration Statement, the 1940 Act, the provisions
of the Internal Revenue Code relating to regulated investment companies
and other applicable laws, rules and regulations, and the Portfolio
Implementer shall reasonably cooperate with and provide such information
that is reasonably requested by Sub-Adviser and/or Adviser regarding its
services and activities on behalf of the Funds Equity Sleeve to the Sub-
Adviser (and Adviser, as applicable) to assist them in carrying out such
oversight and monitoring.
(b) In addition to effecting all portfolio transactions on behalf of
the Funds Equity Sleeve, the Portfolio Implementer shall be responsible
for providing middle and back office operational support for the Fund
with respect to the services the Portfolio Implementer provides hereunder.
Such support services are set forth in Exhibit B attached hereto, as may
be amended from time to time. Portfolio Implementer shall not have
responsibility for wiring funds, processing class action or bankruptcy
litigation claims relating to any assets held by the Fund, or
calculating the net asset value of the Fund.
(c) Unless otherwise instructed by the Trusts Board of Trustees, the
Adviser, or the Sub-Adviser, and subject to the oversight and instruction
of the Sub-Adviser, the Portfolio Implementer shall be responsible for,
as agent for the Sub-Adviser, exercising whatever powers
the Trust, the Adviser and the Sub-Adviser may possess with respect to
any of the portfolio securities or other investments of the Funds Equity
Sleeve, including, but not limited to, the right to vote proxies, the power
to exercise rights, options, warrants, conversion privileges and redemption
privileges, and to tender securities pursuant to a tender offer; provided,
however, that Portfolio Implementer shall not be required to pursue class
actions or other legal actions with respect to such securities or
investments. Additionally, the Portfolio Implementer will coordinate
with the Adviser and/or Sub-Adviser to implement a securities lending
program, provided, however, that (i) the Portfolio Implementer shall
not be responsible for determining what securities will be leant,
what short-term debt obligations to purchase, or when to recall
securities that have been leant to third parties; and (ii) the Portfolio
Implementer shall provide information as reasonably requested by the
Adviser, Sub-Adviser or the Funds securities lending agent, including
information relating to the Funds portfolio holdings. With respect to
any domestic (U.S.) securities held in the Funds Equity Sleeve,
only Portfolio Implementer will (i) exercise investment discretion with
respect to Accounts within the meaning of Section 13(f) of the Securities
Exchange Act of 1934, as amended (the Exchange Act), (ii) exercise voting
power and investment power with respect to Accounts within the meaning
of Rule 13d-3 under the Exchange Act and (iii) be responsible for filing
any required reports pursuant to Sections 13(f), 13(d) and 13(g) of the
Exchange Act and the rules thereunder. With respect to any foreign
(non-U.S.) securities held in the Funds Equity Sleeve, and pursuant to
the Advisers delegation of authority and subject to the Sub-Advisers
oversight, the Portfolio Implementer shall also be responsible for filing
on a timely basis any holdings disclosures or other reports as Portfolio
Implementer may be required by law to file with regulatory authorities in
foreign jurisdictions to the extent such requirements apply to the
entity with investment discretion/power and/or voting power with respect to
instruments held by the Fund's portfolio.
(d) The Portfolio Implementer shall not use any inside information
pertinent to investment decisions undertaken in connection with this
Agreement that may be in its possession, nor will the Portfolio
Implementer seek to obtain any such information.
(e) Upon request, the Portfolio Implementer shall provide to the
Adviser and Sub-Adviser, and also the officers of the Trust,
administrative assistance in connection with the operation of the Fund,
which shall include (i) compliance with all reasonable requests of the
Adviser and Trust for information, including information required in
connection with the Trust's filings with the Securities and Exchange
Commission (SEC) and state securities commissions, and (ii) such other
services as the Adviser and/or Sub-Adviser shall from time to time
reasonably determine to be necessary or useful to the administration of
the Fund. With respect to the services that the Portfolio Implementer is
providing to the Fund, the Portfolio Implementer will keep the Adviser
and the Sub-Adviser informed of developments materially affecting the
Fund.
(f) The Portfolio Implementer shall provide Portfolio Implementation
Services for the account of the Fund's Equity Sleeve in accordance with the
Portfolio Implementers best judgment and within the investment objectives,
policies, and restrictions set forth in the Prospectus, the 1940 Act and
the provisions of the Internal Revenue Code relating to regulated investment
companies, subject to policy decisions adopted by the Trusts Board of
Trustees. The Portfolio Implementer shall use the same skill and care in
providing services to the Fund as it uses in providing services to clients
and accounts for which it has full discretionary investment responsibility
and shall use its best efforts to seek the overall best terms for the
transactions of the Funds Equity Sleeve based on factors deemed relevant
to the Portfolio Implementer.
(g) Upon request, the Portfolio Implementer shall furnish to the Adviser
and the Trusts Board of Trustees periodic and special reports (including
any statistical information, as applicable to the Portfolio Implementers
responsibilities under this Agreement) on the execution of the transactions
of the Funds Equity Sleeve and on the performance of its obligations under
this Agreement and shall supply such additional reports and information
as the Trusts officers or Board of Trustees shall reasonably request.
(h) The Sub-Adviser will communicate to the Portfolio Implementer an
Indicative Portfolio for the Funds Equity Sleeve with such frequency as
deemed by the Sub-Adviser to be necessary or appropriate and at the
reasonable request of the Adviser. The Indicative Portfolio shall
include at least the following information: (i) the name of the Fund;
(ii) the constituent securities; (iii) the identifiers for such constituent
securities; (iv) the number of constituent securities comprising the
Indicative Portfolio; (v) the weights to be applied to such constituent
securities; and (vi) such other information as the Sub-Adviser may
reasonably believe is necessary to communicate to the Portfolio
Implementer for purposes of fulfilling the Sub-Advisers obligations
to the Adviser, on behalf of the Equity Sleeve, under the Investment Sub-
Advisory Agreement.
(i) The Portfolio Implementer will promptly review all account
reconciliation documents for the Fund, such as: (i) reports of current
security holdings in the Equity Sleeve; (ii) summary reports of
transactions; and (iii) current cash position reports (including cash
available from portfolio sales and maturities and sales of the Funds
shares less cash needed for redemptions and settlement of portfolio
purchases), all within a reasonable time after receipt thereof from the
Fund, the Adviser, the Sub-Adviser or any service provider thereto
(such as the Funds custodian) and will report any errors or discrepancies
in such reports to the Fund or its designee within three business days
after discovery of such discrepancies.
(j) Prior to entering into trades or portfolio transactions,
the Portfolio Implementer will monitor the Equity Sleeves compliance
with the investment objectives, policies and restrictions applicable
to the Equity Sleeve, including, but not limited to, the income and asset
diversification requirements of Section 851 of the Internal Revenue Code
of 1986, as amended, and the 1940 Act and the rules and regulations
promulgated thereunder, as amended, and as stated in the Funds Registration
Statement and any other applicable investment limitations or other
restrictions communicated to the Portfolio Implementer by the Adviser
and/or Sub-Adviser. The Portfolio Implementer has adopted written
policies and procedures reasonably designed to prevent violation by it,
or any of its supervised persons, of the Advisers Act and the rules under
the Advisers Act and all other laws and regulations relevant to the
performance of its duties under this Agreement (the Portfolio Implementer
Procedures), and the Portfolio Implementer has designated a chief compliance
officer responsible for administering the Portfolio Implementer Procedures.
The Portfolio Implementer will notify the Adviser and the Sub-Adviser
promptly of any violations of such objectives, policies, restrictions
and limitations.
(k) On occasions when the Portfolio Implementer is executing transactions
in a security for the Fund as well as other of its clients, the Portfolio
Implementer, to the extent permitted by applicable law, may aggregate the
securities to be so sold or purchased in order to obtain the best execution
of the order or lower brokerage commissions, if any. The Portfolio
Implementer may also on occasion purchase or sell a particular security
for one or more clients in different amounts. On either occasion, and to the
extent permitted by applicable law and regulations, allocation of the
securities so purchased or sold, as well as the expenses incurred in the
transaction, will be made by the Portfolio Implementer in the manner
described in Portfolio Implementers then current Form ADV Part 2A.
(l) The Portfolio Implementer may, as described in Portfolio Implementers
Form ADV Part 2A, cause the Fund to pay a broker which provides brokerage
and research services to the Portfolio Implementer a commission for
effecting a securities transaction in excess of the amount another broker
might have charged. Such higher commissions may not be paid unless the
Portfolio Implementer determines in good faith that the amount paid
is reasonable in relation to the services received in terms of
the particular transaction or the Portfolio Implementers overall
responsibilities to the Trust and any other of the Portfolio Implementers
clients.
(m) The Adviser and Sub-Adviser agree to take all steps necessary to
provide the Portfolio Implementer with the authority to carry out its
duties and obligations hereunder, including, but not limited to, issuing
instructions to all custodians and broker-dealers as necessary to give the
Portfolio Implementer all necessary authority to act on behalf of the Fund.
(n) Nothing herein shall relieve the Sub-Adviser of its duties or
responsibilities under the Investment Sub-Advisory Agreement. The
Sub-Adviser will develop the Indicative Portfolio and communicate such
Indicative Portfolio to the Portfolio Implementer. The Portfolio Implementer
is not authorized to exercise any discretion with respect to the Funds
assets other than as provided in this Agreement.
(o) Unless specified by separate agreement, the Portfolio Implementation
Services shall not include: (i) consultation with the Fund regarding the
appropriateness of the benchmark or strategy as related to its overall
investment objective (i.e., suitability analysis); (ii) initial and periodic
client service and reporting to the Fund, including delivery of brochures
and notices; or (iii) any form of custody of the Funds assets.
5. The Portfolio Implementer shall exercise its best judgment in rendering
the services provided by it under this Agreement. Subject to the provisions
of Section 9(a) hereof, the Portfolio Implementer shall not be liable for any
error of judgment or mistake of law or for any loss suffered by the Adviser,
the Sub-Adviser, the Trust or the Fund in connection with the matters to
which this Agreement relates, except that the Portfolio Implementer shall be
liable to the Adviser, the Sub-Adviser and the Fund for a loss resulting
from a breach of fiduciary duty by the Portfolio Implementer under the 1940
Act with respect to the receipt of compensation for services or a loss
resulting from willful misfeasance, bad faith or gross negligence on the
part of the Portfolio Implementer in the performance of its duties hereunder
or from reckless disregard by the Portfolio Implementer of its obligations or
duties under this Agreement. In no case shall the Portfolio Implementer be
liable for reasonable actions taken or reasonable non-actions with respect
to the performance of services under this Agreement based upon specific
information, instructions or requests given or made to the Portfolio
Implementer by the Adviser or the Sub-Adviser. As used in this Section,
the term Portfolio Implementer shall include any officers, directors,
employees or other affiliates of the Portfolio Implementer performing
services with respect to the Fund.
6. (a) The Portfolio Implementer agrees that it will comply with all
applicable laws, rules and regulations of all federal and state regulatory
agencies having jurisdictions over the Portfolio Implementer in performance
of its duties hereunder. The Portfolio Implementer will treat as confidential
and proprietary information of the Fund all records and information relative
to the Fund and prior, present or potential shareholders, and will not use
such records and information for any purpose other than performance of its
responsibilities and duties hereunder, except after prior notification to
and approval in writing by the Fund, which approval shall not be
unreasonably withheld, and the Portfolio Implementer shall not be exposed
to civil or criminal contempt proceedings for failure to comply, when
requested to divulge such information by duly constituted authorities,
or when so requested by the Fund.
(b) The Portfolio Implementer will notify the Fund, the Adviser and the
Sub-Adviser in the event that the Portfolio Implementer: (i) becomes aware
that it is subject to a statutory disqualification that prevents
the Portfolio Implementer from providing the Portfolio Implementation
Services pursuant to this Agreement; or (ii) becomes aware that it is the
subject of an administrative proceeding or enforcement action by the SEC or
other regulatory authority; provided, however, that to the extent such
information is required to be publicly disclosed pursuant to SEC Regulation
FD, such information has first been publicly disclosed by the Portfolio
Implementer or its ultimate parent company pursuant to Regulation FD.
7. (a) For the services provided and the expenses assumed pursuant
to this Agreement and except as provided in Section 7(b), the Adviser
will pay the Portfolio Implementer certain fees as described below.
The Adviser will pay the annual base fee to Portfolio Implementer as set
forth on Exhibit A attached hereto (the Base Fee). The Base Fee shall
be paid monthly in arrears on the first business day of each month.
Additionally, the Adviser will pay the Portfolio Implementer a fee computed
daily and paid monthly in arrears on the first business day of each month,
based upon the average daily value (as determined on each business day at
the time set forth in the Funds Prospectus for determining net asset value
per share) of the net assets of the Fund attributable to its Equity
Sleeve (the AUM Fee), equal to the lesser of: (i) a fee at the per annum
rate set forth in Exhibit A attached hereto, as may be amended from time to
time; or (ii) such fee as may from time to time be agreed upon in writing
by the Adviser and the Portfolio Implementer. The Portfolio Implementer
will accept the AUM Fee and the Base Fee as full compensation for the
services provided under this Agreement. The terms fee and/or fees
may be used interchangeably throughout this Agreement and shall
refer to both the AUM Fee and the Base Fee. If the fee payable to the
Portfolio Implementer pursuant to this paragraph begins to accrue after
the beginning of any month or if this Agreement terminates before the end of
any month, the fee for the period from such date to the end of such month or
from the beginning of such month to the date of termination, as the case
may be, shall be prorated according to the proportion which such period
bears to the full month in which such effectiveness or termination occurs.
For purposes of calculating fees, the value of the Funds net assets
attributable to its Equity Sleeve shall be computed in the manner specified
in the Funds Prospectus and the Trusts governing instruments for the
computation of the value of the Fund's net assets in connection with the
determination of the net asset value of the Funds shares. Payment of said
compensation shall be the sole responsibility of the Adviser and shall in
no way be an obligation of the Sub-Adviser, the Fund or the Trust.
(b) If any investment company, separate account, sub-advised account,
other pooled vehicle or other account, which is (i) sponsored or advised
by the Adviser, (ii) sub-advised by the Sub-Adviser pursuant to an
agreement wherein the Sub-Adviser is primarily responsible for determining
how the assets of such pooled vehicle or account are to be allocated,
(iii) provided portfolio implementation services by the Portfolio
Implementer and (iv) eligible to invest in the Fund (PIMCO Managed Account),
including, without limitation, PIMCO RAE Fundamental Global Fund and
PIMCO RAE Fundamental Global ex-US Fund, invests in the Fund, the Portfolio
Implementer shall, subject to applicable law, waive any fee to which it
would be entitled under Section 7(a) of this Agreement with respect to any
assets of a PIMCO Managed Account invested in the Fund. For the avoidance
of doubt, any assets of a PIMCO Managed Account invested in the Fund shall
be excluded when the Funds net assets attributable to its Equity Sleeve
are valued for the purpose of calculating the applicable fees payable
pursuant to the fee schedule set forth in Exhibit A to this Agreement,
as may be amended from time to time. By way of clarification, PIMCO
Managed Accounts do not include investment companies, separate accounts,
sub-advised accounts, other pooled vehicles or other accounts for which
the Sub-Adviser serves as sub-adviser but the Sub-Adviser is not
primarily responsible for asset allocation determinations. In this regard,
the Sub-Adviser would not be considered to be primarily responsible for
asset allocation determinations for a vehicle or account if the Sub-Advisers
services are limited to a component of the overall strategy of the vehicle
or account and the Sub-Adviser does not have primary asset allocation
responsibility for the vehicle or account as a whole, including where
the Sub-Adviser provides index constituents and weights for proprietary
strategies or exposures that are or may be utilized by the vehicle or
account.
8. (a) This Agreement shall become effective with respect to the Fund
as of the date hereof (and, with respect to any amendment, or with respect
to any additional Fund, the date of the amendment or supplement hereto) and
shall continue in effect with respect to the Fund for an initial period of
two years (or, with respect to any additional Fund, for a period of not more
than two years from the date of the supplement) and shall continue
thereafter only so long as the continuance is specifically approved at
least annually: (i) by the vote of a majority of the outstanding
voting securities (as defined in the 0000 Xxx) of the Fund or by the Trusts
Board of Trustees; and (ii) by the vote, cast in person at a meeting called
for the purpose, of a majority of the Trust's Trustees who are not parties
to this Agreement or interested persons (as defined in the 0000 Xxx) of any
such party.
(b) This Agreement may be terminated with respect to the Fund (or any
additional Fund) at any time, without the payment of any penalty, by:
(i) a vote of a majority of the outstanding voting securities (as defined
in the 0000 Xxx) of the Fund; (ii) a vote of a majority of the Trusts
entire Board of Trustees on sixty (60) days written notice to the
Portfolio Implementer; (iii) the Adviser and the Sub-Adviser on sixty
(60) days written notice to the Portfolio Implementer; or (iv) the
Portfolio Implementer on sixty (60) days written notice to the Trust,
Adviser and Sub-Adviser. This Agreement (or any supplement hereto) shall
terminate automatically in the event of its assignment (as defined in the
1940 Act).
9. (a) The Portfolio Implementer shall indemnify and hold harmless the
Adviser and Sub-Adviser and their respective officers, directors, trustees,
managers, partners, employees, affiliates and agents from and against any and
all liabilities, losses, claims, damages and expenses, including reasonable
attorneys fees and expenses, of any kind or nature directly or indirectly
resulting solely from or solely out of: (i) any material misrepresentation,
breach of any material representation or failure to comply with any
provision, warranty or obligation made by the Portfolio Implementer or
its agents in connection with this Agreement or any applicable laws
and regulations; (ii) any actions or failure to act by the Portfolio
Implementer or its agents in connection with this Agreement that results
in a violation of any law; or (iii) any gross negligence, willful
misfeasance, bad faith or reckless disregard by the Portfolio Implementer
or its affiliates or agents in fulfilling the Portfolio Implementers
obligations under this Agreement.
(b) The Adviser shall indemnify and hold harmless the Sub-Adviser
and the Portfolio Implementer and their respective officers, directors,
trustees, managers, partners employees, affiliates and agents from and
against any and all liabilities, losses, claims, damages and expenses,
including reasonable attorneys fees and expenses, of any kind or nature
directly or indirectly resulting solely from or solely out of: (i) any
material misrepresentation, breach of any material representation or failure
to comply with any provision, warranty or obligation made by the Adviser
in connection with this Agreement or any applicable laws and regulations;
(ii) any actions or failure to act by the Adviser in connection with this
Agreement that results in a violation of any law; or (iii) any gross
negligence, willful misfeasance, bad faith or reckless disregard of the
Adviser in fulfilling its obligations under this Agreement.
(c) The Sub-Adviser shall indemnify and hold harmless the Adviser and the
Portfolio Implementer and their respective officers, directors, trustees,
managers, partners employees, affiliates and agents from and against any
and all liabilities, losses, claims, damages and expenses, including
reasonable attorneys' fees and expenses, of any kind or nature directly
or indirectly resulting solely from or solely out of: (i) any material
misrepresentation, breach of any material representation or failure to
comply with any provision, warranty or obligation made by the Sub-Adviser
in connection with this Agreement or any applicable laws and regulations;
(ii) any actions or failure to act by the Sub-Adviser in connection with
this Agreement that results in a violation of any law; or (iii) any gross
negligence, willful misfeasance, bad faith or reckless disregard of the
Sub-Adviser in fulfilling its obligations under this Agreement.
10. Except to the extent necessary to perform the Portfolio
Implementers obligations under this Agreement and/or as otherwise agreed
to by the parties, nothing herein shall be deemed to limit or restrict the
right of the Portfolio Implementer, or any affiliate of the Portfolio
Implementer, or any employee of the Portfolio Implementer, 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, provided such other services and activities do
not, during the term of this Agreement, interfere in a material manner with
the Portfolio Implementers ability to meet its obligations to the Fund
hereunder.
11. It is understood that the names PIMCO, PIMCO Equity
Series or PIMCO Funds or any derivative thereof or logo associated
therewith are the valuable property of the Adviser and its affiliates.
The Portfolio Implementer (or any of its affiliates) agrees that it
shall not use any such names (or derivative or logo) without the prior
consent of the Adviser. It is understood that Parametric Portfolio
Associates and Parametric with the iris flower logo and any derivative
or logo associated therewith are the valuable property of Portfolio
Implementer. While Portfolio Implementer consents to the use of the marks
and logos for purposes of describing Portfolio Implementers role and
responsibilities under this Agreement, rights to such intellectual property
will remain with the Portfolio Implementer and nothing in this Agreement
shall be construed otherwise. It is understood that Research Affiliates,
RAE, RAE Fundamental, RAE Income, RAFI, Enhanced RAFI, eRAFI, RALVEI, RAFI
Low Volatility, Fundamental Index, any associated logos and the method of
formulation of the RAFI(r) series of indexes and the enhanced versions of
the RAFI series of indexes (each RAFI index and enhanced version of a RAFI
index, a RAFIIndex) are the proprietary and valuable property of the Sub-
Adviser. While the Sub-Adviser consents to the use of the marks and logos,
rights to such intellectual property will remain with the Sub-Adviser
and nothing in this Agreement shall be construed otherwise.
12. Any activities undertaken by the Portfolio Implementer on behalf
of the Fund pursuant to this Agreement shall at all times be subject to
any applicable directives of the Board of Trustees of the Trust.
13. In compliance with the requirements of Rule 31a-3 under the
1940 Act, and any other applicable federal or state rule, the
Portfolio Implementer hereby agrees that all records that it maintains
for the Trust are the property of the Trust and further agrees to surrender
promptly to the Trust any such records upon the Trusts request; provided,
however, that the foregoing shall not be construed to prohibit the
retention by the Portfolio Implementer or its representatives of archival
information including the Funds accounts data and performance record in
performance composites, assets under management, and other marketing-
related reporting documents. Further, compliance with Rule 31a-3 does not
preclude retention by the Portfolio Implementer or its representatives of
documents and records as required for the purpose of facilitating compliance
with this Agreement, applicable law or regulation, when automatically
stored or archived in electronic form pursuant to standard backup or
archival procedures. The Portfolio Implementer further agrees to
preserve for the periods prescribed by Rule 31a-2 under the 1940 Act and
any other applicable Rule, the records required to be maintained by the
Portfolio Implementer hereunder pursuant to Rule 31a-1 of the 1940 Act
and any other applicable federal or state rule. The Portfolio Implementer
further agrees that it will furnish to regulatory authorities having the
requisite authority any information or reports in connection with its
services hereunder which may be requested in order to determine whether
the operations of the Fund, as they specifically relate to the
Portfolio Implementers responsibilities under this Agreement, are being
conducted in accordance with applicable law and regulations.
14. The Portfolio Implementers obligations and liability under this
Agreement are limited by the following: Adviser represents, warrants and
agrees that, except as is expressly provided for in this Agreement and/or
the Investment Sub-Advisory Agreement, Adviser has sole responsibility
for the accuracy and completeness of the Registration Statement, except
for information regarding the Portfolio Implementer that has been
specifically approved by the Portfolio Implementer for inclusion therein.
15. This Agreement shall be construed in accordance with the
laws of the State of California without regard to the conflicts of
law principles thereof, provided that nothing herein shall be
construed in a manner inconsistent with the 1940 Act, the Advisers Act,
or rules or orders of the SEC thereunder.
16. No provision of this Agreement may be changed, discharged or
terminated orally, but only by an instrument in writing signed by the
party against which enforcement of the change, discharge or termination
is sought.
17. (a) For the term of this Agreement and for five years after
termination, the Adviser, the Sub-Adviser and the Portfolio Implementer
shall treat as confidential and shall not disclose or transmit to any third
party or use other than as expressly authorized hereunder, except to an
affiliate (as defined in the 0000 Xxx) of the Adviser, the Sub-Adviser or
the Portfolio Implementer, as the case may be, any information,
documentation or other written material with respect to the business
affairs of the other party, including but not limited to information
that is marked as Confidential by the Sub-Adviser, the Portfolio
Implementer, the Adviser or the Fund (Confidential Information). Each party
agrees to hold the Confidential Information in confidence and not to
disclose or use the Confidential Information for any purpose whatsoever
other than as contemplated by this Agreement and to require each of its
directors, officers, managers, employees, affiliates, representatives or
agents not to disclose or use Confidential Information, except as authorized
or permitted by this Agreement. Notwithstanding the foregoing, the Adviser
may disclose or transmit Confidential Information with respect to the Fund:
(i) to the Trust's Board of Trustees; or (ii) with the prior written consent
of the Portfolio Implementer or the Sub-Adviser, as applicable.
(b) Confidential Information shall not include: (i) any information that
is available to the public or to the receiving party hereunder from sources
other than the providing party (provided that such source is not, to the
knowledge of the receiving party, subject to any confidentiality agreement
with regard to such information); or (ii) any information that is
independently developed by the receiving party without use of or reference
to information from the providing party. Notwithstanding the foregoing,
the parties may reveal Confidential Information to any regulatory agency
or court of competent jurisdiction if such information to be disclosed is:
(i) approved in writing by the other party for disclosure; or (ii)
required by law, regulatory agency or court order to be disclosed by a
party, provided, if permitted by law, that notice of such required
disclosure is given to the other party prior to its disclosure if reasonably
possible or as soon thereafter as is reasonably practicable and provided
further that the providing party shall cooperate with the other party to
limit the scope of such disclosure to the extent permitted by law.
18. No party shall be liable for or to any other party for any loss caused
directly or indirectly by Acts of God (including fire, flood, earthquake,
storm, hurricane or other natural disaster), war, invasion, act of foreign
enemies, hostilities (regardless of whether war is declared), civil war,
rebellion, revolution, insurrection, military or usurped power or
confiscation, terrorist activities, nationalization, government sanction,
blockage, embargo, labor dispute, strike, lockout or interruption or
failure of electricity or telephone service, beyond a partys control.
19. If any provision of this Agreement shall be held or made
invalid by a court decision, statute, rule or otherwise, the remainder
of this Agreement shall not be affected hereby and, to this extent,
the provisions of this Agreement shall be deemed to be severable.
20. Any notice or other communication required or permitted
to be given hereunder shall be given in writing and mailed, faxed or
delivered to the applicable party at the addresses set forth below:
If to Parametric Portfolio Associates:
Parametric Portfolio Associates
0000 Xxxxxx Xxxxxx, Xxxxx 0000
Xxxxxxx, XX 00000
Attn: Legal and Compliance Department
Phone: (000) 000-0000
Fax: (000) 000-0000
If to PIMCO:
Xxxxx X. Xxxxxxx
Managing Director, General Counsel
000 Xxxxxxx Xxxxxx Xxxxx
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
If to Research Affiliates:
Xxxxxx X. Xxxxxxx
Chief Legal Officer
000 Xxxxxxx Xxxxxx Xxxxx, Xxxxx 000
Xxxxxxx Xxxxx, XX 00000
Phone: (000) 000-0000
Fax: (000) 000-0000
Notice shall be deemed given upon receipt.
21. This Agreement constitutes the entire agreement of the parties hereto
with respect to its subject matter and may be amended or modified only by a
writing signed by duly authorized officers of both parties. There are no
oral or written collateral representations, agreements or understandings
except as provided herein. The parties may mutually agree to other matters
regarding the Portfolio Implementation Services which may be represented by
other agreements between the parties.
22. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original but all of
which shall be one and the same agreement.
23. No breach, default or threatened breach of this Agreement by a party
shall relieve the other parties of their respective obligations or
liabilities under this Agreement with respect to the protection of the
property or proprietary or confidential nature of any property which is
the subject of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
executed by their officers designated below as of the day and year first
above written.
PACIFIC INVESTMENT MANAGEMENT COMPANY LLC
By:
Xxxxx Xxxxxxx
Title: Managing Director
PARAMETRIC PORTFOLIO ASSOCIATES LLC
By:
Title:
RESEARCH AFFILIATES, LLC
By:
Xxxxxxx Xxxxxxxx
Title: President & Chief Operating Officer
EXHIBIT A
(as of August 26, 2016)
Fee Rate
Fund Annual (Average Daily Assets Under
Base Fee1 Net Assets) Management (Millions)2
$10,000 0.07% $0-$50 of net assets
PIMCO Dividend and Income Fund attributable to Equity
Sleeve
0.06% $50-$100 of net assets
attributable to Equity
Sleeve
0.04% $100-$350 of net assets
attributable to Equity
Sleeve
0.035% Over $350 of net assets
attributable to Equity
Sleeve
1 The provisions of Section 7(b) shall not apply to the annual base fee.
2 As calculated pursuant to Section 7 of this Agreement.
EXHIBIT B
(as of August 26, 2016)
Middle and Back Office Operational Support to be Provided by the Portfolio
Implementer
Support Service
1.
Account reconciliation (i.e., daily reconciliation of holdings in the Funds
Equity Sleeve to the records of the Fund's custodian, including positions,
cash holdings, market value, and cost basis)
2.
Corporate action processing (i.e., voluntary election processing and
maintenance of voluntary and mandatory events and monitoring of bankruptcy
securities and potential processing)
3.
Trade posting, affirmation and settlement oversight, including
confirmation with the counterparty
4.
Daily pricing valuation
5.
Performance calculations (i.e., daily, time-weighted, rate-of-return
calculations, including gross of fee and net of fee returns).
6.
Security maintenance (i.e., new security set-up, symbol changes (such as
ISIN, CUSIP, ticker) and name changes)
7.
Client Activity - New account opening, contributions, redemptions,
closures, changes (including changes to custodial accounts)
8.
Custom client reporting and custom reporting as reasonably requested by
Adviser or Sub-Adviser
9.
Proxy voting subject to oversight by Sub-Adviser
10.
Failed trade aggregation, management and escalation with custodians and
third party brokers management; Claims management (i.e., issuing, overseeing
the claims process for overdraft charges, use of funds or penalty charges)
for both domestic and international settlements
11.
Portfolio Implementer shall not be responsible for taking any action or
rendering advice with respect to any class action claim relating to any
assets held in Fund. Portfolio Implementer will, however, forward to
Adviser any information it receives regarding any legal matters involving
any asset held in Fund. Portfolio Implementer will also provide reasonable
assistance in providing historical holdings of the Fund for the past
seven years, as applicable
12.
Benchmark management (e.g., assignment and monitoring of benchmark,
performance of benchmark reporting, change of benchmark process)
