AUCTION AGENCY AGREEMENT dated as of , 2004 Relating to Auction Market Preferred Shares Series M, Series T, Series W, Series TH and Series F Of PIMCO FLOATING RATE STRATEGY FUND

PIMCO FLOATING RATE STRATEGY FUND

AUCTION AGENCY AGREEMENT

dated as of , 2004

Relating to

Auction Market Preferred Shares

Series M, Series T, Series W,

Series TH and Series F

PIMCO FLOATING RATE STRATEGY FUND

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Auction Agent

AUCTION AGENCY AGREEMENT

This Auction Agency Agreement (this “Agreement”), dated as of , 2004, is between PIMCO Floating Rate Strategy Fund (the “Fund”) and Deutsche Bank Trust Company Americas, a New York banking corporation.

The Fund proposes to issue an aggregate of 19,200 preferred shares, par value $0.00001 per share, liquidation preference $25,000 per share, designated as Auction Market Preferred Shares, Series M, Auction Market Preferred Shares, Series T, Auction Market Preferred Shares, Series W, Auction Market Preferred Shares, Series TH and Auction Market Preferred Shares Series F, (the “AMPS”), pursuant to the Fund’s Second Amended and Restated Bylaws (as defined below).

The Fund desires that Deutsche Bank Trust Company Americas perform certain duties as agent in connection with each Auction (as defined below) of AMPS (in such capacity, the “Auction Agent”), and as the transfer agent, registrar, dividend paying agent and redemption agent with respect to the AMPS (in such capacity, the “Paying Agent”), upon the terms and conditions of this Agreement, and the Fund hereby appoints Deutsche Bank Trust Company Americas as said Auction Agent and Paying Agent in accordance with those terms and conditions (hereinafter generally referred to as the “Auction Agent,” except in Sections 3 and 4 below).

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Fund and the Auction Agent agree as follows:

I.	DEFINITIONS AND RULES OF CONSTRUCTION.

1.1 Terms Defined by Reference to the Second Amended and Restated Bylaws.

Capitalized terms used herein but not defined herein shall have the respective meanings specified in the Second Amended and Restated Bylaws.

1.2 Certain Defined Terms.

As used herein and in the Settlement Procedures (as defined below), the following terms shall have the following meanings, unless the context otherwise requires:

(a) “Agent Member” shall mean a member of the Securities Depository that will act on behalf of a Beneficial Owner of one or more AMPS or on behalf of a Potential Beneficial Owner.

(b) “Auction” shall have the meaning specified in Section 2.1 hereof.

(c) “Auction Procedures” shall mean the procedures as from time to time in effect for conducting Auctions that are set forth in Section 11.10 of the Second Amended and Restated Bylaws.

(d) “Authorized Officer” shall mean each Managing Director, Vice President, Assistant Vice President and Associate of the Auction Agent assigned to its Trust & Securities Services and every other officer or employee of the Auction Agent designated as an “Authorized Officer” for purposes hereof in a written communication from the Auction Agent to the Fund.

(e) “Broker-Dealer Agreement” shall mean each agreement between the Auction Agent and a Broker-Dealer substantially in the form attached hereto as Exhibit A.

(f) “Closing” shall mean the date the Fund consummates the transactions for the issuance and sale of the AMPS.

(g) “Fund Officer” shall mean the Chairman, the President, each Vice President (whether or not designated by a number or word or words added before or after the title “Vice President”), the Secretary, the Treasurer, each Assistant Secretary and each Assistant Treasurer of the Fund and every other officer or employee of the Fund designated as a “Fund Officer” for purposes hereof in a notice from the Fund to the Auction Agent.

(h) “Holder” shall be a holder of record of one or more AMPS, listed as such in the Share Register.

(i) “Second Amended and Restated Bylaws” shall mean the Second Amended and Restated Bylaws of the Fund in effect at the time the Registration Statement relating to the AMPS is declared effective by the Securities and Exchange Commission (the “Commission”), specifying the powers, preferences and rights of the AMPS.

(j) “Settlement Procedures” shall mean the Settlement Procedures attached as Exhibit A to the Broker-Dealer Agreement.

(a) “Submission Deadline” shall mean 1:00 p.m., New York City time, on any Auction Date or such other time on any Auction Date as may be specified by the Auction Agent from time to time as the time by which each Broker-Dealer must submit to the Auction Agent in writing all Orders obtained by it for the Auction to be conducted on such Auction Date.

(k) “Submission Processing Deadline” shall mean the earlier of (i) 40 minutes after the Submission Deadline and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the Broker-Dealers.

(l) “Submission Processing Representation” shall have the meaning specified in Section 2.9 hereof.

1.3 Rules of Construction.

Unless the context or use indicates another or different meaning or intent, the following rules shall apply to the construction of this Agreement:

(a) Words importing the singular number shall include the plural number and vice versa.

(b) The captions and headings herein are solely for convenience of reference and shall not constitute a part of this Agreement nor shall they affect its meaning, construction or effect.

(d) All references herein to a particular time of day shall be to New York City time.

II.	THE AUCTION.

2.1 Purpose; Incorporation by Reference of Auction Procedures and Settlement Procedures.

(a) The Board of Trustees of the Fund has adopted a resolution appointing Deutsche Bank Trust Company Americas as Auction Agent for purposes of the Auction Procedures. The Auction Agent hereby accepts such appointment and agrees that, on each Auction Date, it shall follow the procedures set forth in this Section 2 and the Auction Procedures for the purpose of determining the Applicable Rate for the AMPS for the next Dividend Period. Each periodic operation of such procedures is hereinafter referred to as an “Auction.”

(b) All of the provisions contained in the Auction Procedures and in the Settlement Procedures are incorporated herein by reference in their entirety and shall be deemed to be a part hereof to the same extent as if such provisions were set forth fully herein.

2.2 Preparation for Each Auction; Maintenance of Registry of Existing Holders.

(a) As of the date hereof, the Fund shall provide the Auction Agent with a list of the Broker-Dealers previously approved by the Auction Agent and shall cause to be delivered to the Auction Agent for execution by the Auction Agent a Broker-Dealer Agreement signed by each such Broker-Dealer. The Auction Agent shall keep such list current and accurate and shall indicate thereon, or on a separate list, the identity of each Existing Holder, if any, whose most recent Order was submitted by a Broker-Dealer on such list and resulted in such Existing Holder continuing to hold or purchase AMPS. Not later than five Business Days prior to any Auction Date for which any change in such list of Broker-Dealers is to be effective, the Fund shall notify the Auction Agent in writing of such change and, if any such change is the addition of a Broker-Dealer to such list, the Fund shall cause to be delivered to the Auction Agent for execution by the Auction Agent a Broker-Dealer Agreement signed by such Broker-Dealer. The Auction Agent shall have entered into a Broker-Dealer Agreement with each Broker-Dealer prior to the participation of any such Broker-Dealer in any Auction.

(b) In the event that the Auction Date for any Auction shall be changed after the Auction Agent shall have given the notice referred to in clause (vii) of paragraph (a) of the Settlement Procedures, the Auction Agent, by such means as the Auction Agent reasonably

deems practicable, shall give notice of such change to the Broker-Dealers not later than the earlier of 9:15 a.m. on the new Auction Date or 9:15 a.m. on the old Auction Date.

(c) The provisions contained in Section 11.2 of the Second Amended and Restated Bylaws concerning Special Dividend Periods and the notification of a Special Dividend Period will be followed by the Fund and, to the extent applicable, the Auction Agent, and the provisions contained therein are incorporated herein by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions were set forth fully herein.

(d) (i) On each Auction Date, the Auction Agent shall determine the Maximum Applicable Rate. Not later than 9:30 a.m. on each Auction Date, the Auction Agent shall notify the Fund and the Broker-Dealers of the Maximum Applicable Rate.

(ii) If the Reference Rate is the applicable LIBOR Rate and such rate is to be based on rates supplied by LIBOR Dealers and one or more of the LIBOR Dealers shall not provide a quotation for the determination of the applicable LIBOR rate, the Auction Agent immediately shall notify the Fund so that the Fund can determine whether to select a substitute LIBOR Dealer or substitute LIBOR Dealers to provide the quotation or quotations not being supplied by any LIBOR Dealer or LIBOR Dealers. The Fund promptly shall advise the Auction Agent of any such selection. If the Fund does not select any such substitute LIBOR Dealer or substitute LIBOR Dealers, then the rates shall be supplied by the remaining LIBOR Dealer or LIBOR Dealers.

(e) (i) The Auction Agent shall maintain a current registry of the Existing Holders of the AMPS for purposes of each individual Auction. The Fund shall use commercially reasonable efforts to provide or cause to be provided to the Auction Agent within ten Business Days following the date of the Closing a list of the initial Existing Holders of AMPS, and the Broker-Dealer of each such Existing Holder through which such Existing Holder purchased such shares. The Auction Agent may rely upon, as evidence of the identities of the Existing Holders, such list, the results of each Auction and notices from any Existing Holder, the Agent Member of any Existing Holder or the Broker-Dealer of any Existing Holder with respect to such Existing Holder’s transfer of any AMPS to another Person.

(ii) In the event of any partial redemption of AMPS, upon notice by the Fund to the Auction Agent of such partial redemption, the Auction Agent promptly shall request the Securities Depository to notify the Auction Agent of the identities of the Agent Members (and the respective numbers of shares) from the accounts of which shares have been called for redemption and the person or department at such Agent Member to contact regarding such redemption. At least two Business Days prior to the Auction preceding the date of redemption, the Auction Agent shall request each Agent Member so identified to disclose to the Auction Agent (upon selection by such Agent Member of the Existing Holders whose shares are to be redeemed) the number of AMPS of each such Existing Holder, if any, to be redeemed by the Fund, provided that the Auction Agent has been furnished with the name and telephone number of a person or department at such Agent Member from which it is to request such information. In the absence of receiving any such information with respect to an Existing

Holder, from such Existing Holder’s Agent Member or otherwise, the Auction Agent may continue to treat such Existing Holder as having ownership of the number of AMPS shown in the Auction Agent’s registry of Existing Holders.

(iii) The Auction Agent shall register a transfer of the ownership of AMPS from an Existing Holder to another Existing Holder, or to another Person if permitted by the Fund, only if (A) such transfer is made pursuant to an Auction or (B) if such transfer is made other than pursuant to an Auction, the Auction Agent has been notified of such transfer in writing, in a notice substantially in the form of Exhibit C to the Broker-Dealer Agreement, by such Existing Holder or by the Agent Member of such Existing Holder. The Auction Agent is not required to accept any notice of transfer delivered for an Auction unless it is received by the Auction Agent by 12:00 noon of the Auction Date. The Auction Agent shall rescind a transfer made on the registry of the Existing Holders of any AMPS if the Auction Agent has been notified in writing, in a notice substantially in the form of Exhibit D to the Broker-Dealer Agreement, by the Agent Member or the Broker-Dealer of any Person that (i) purchased any AMPS and the seller failed to deliver such shares or (ii) sold any AMPS and the purchaser failed to make payment to such Person upon delivery to the purchaser of such shares.

(f) The Auction Agent may request that the Broker-Dealers, as set forth in Section 3.2(b) of the Broker-Dealer Agreements, provide the Auction Agent with a list of their respective customers that such Broker-Dealers believe are Beneficial Owners of AMPS. The Auction Agent shall keep confidential any such information and shall not disclose any such information so provided to any Person other than the relevant Broker-Dealer and the Fund, provided that the Auction Agent reserves the right to disclose any such information if it is advised by its counsel that its failure to do so would be unlawful.

2.3 Auction Schedule.

Subject to Article 11 of the Second Amended and Restated Bylaws, the Auction Agent shall normally conduct Auctions weekly (usually Monday for Series M, Tuesday for Series T, Wednesday for Series W, Thursday for Series TH and Friday for Series F) in accordance with the schedule set forth below. Such schedule may be changed by the Auction Agent with the consent of the Fund, which consent shall not be withheld unreasonably. The Auction Agent shall give notice of any such change to each Broker-Dealer. Such notice shall be received prior to the first Auction Date on which any such change shall be effective.


Time		Event
By 9:30 a.m.		Auction Agent shall advise the Fund and the Broker-Dealers of the Reference Rate and the Maximum Applicable Rate as set forth in Section 2.2(d)(i) hereof.

9:30 a.m. - 1:00 p.m.		Broker-Dealers assemble information received from each Bidder (Beneficial Owners or Potential Beneficial Owners) and any internally initiated Broker-Dealers’ Bids in accordance with the Auction Procedures.



Not later than Submission Processing Deadline		Auction Agent accepts any Orders submitted subject to a Submission Processing Representation and makes determinations pursuant to Section 11.10(d)(i) of the Second Amended and Restated Bylaws.

By approximately 3:00 p.m.		Auction Agent shall advise the Fund of the results of the Auction as provided in Section 11.10(d)(ii) of the Second Amended and Restated Bylaws.

		Submitted Bid Orders and Submitted Sell Orders will be accepted and rejected in whole or in part and AMPS will be allocated as provided in Section 11.10(e) of the Second Amended and Restated Bylaws. Auction Agent shall give notice of the Auction results as set forth in Section 2.4 hereof.

2.4 Notice of Auction Results.

The Auction Agent will advise each Broker-Dealer who submitted a Bid or Sell Order in an Auction whether such Bid or Sell Order was accepted or rejected in whole or in part and of the Applicable Rate for the next Dividend Period for the related AMPS by telephone or through its Auction Processing System as set forth in paragraph (a) of the Settlement Procedures.

2.5 Broker-Dealers.

(a) Not later than 3:00 p.m. on each Dividend Payment Date, the Auction Agent after each Auction will pay a service charge from funds provided by the Fund to each Broker-Dealer on the basis of the purchase price of AMPS placed by such Broker-Dealer at such Auction. The service charge shall be (i) in the case of any Auction Date immediately preceding a 7-day Dividend Period, the product of (A) a fraction the numerator of which is the number of days in such Dividend Period (calculated by counting the first day of such Dividend Period but excluding the last day thereof) and the denominator of which is 365, times (B) 1/4 of 1%, times (C) $25,000 times (D) the sum of (I) the aggregate number of AMPS placed by the Broker-Dealer in the applicable Auction that were either (x) the subject of a Submitted Bid of a Beneficial Owner submitted by the Broker-Dealer and continued to be held as a result of such submission or (y) the subject of a Submitted Bid of a Potential Beneficial Owner submitted by the Broker-Dealer and were purchased as a result of such submission plus (II) the aggregate number of AMPS subject to valid Hold Orders (determined in accordance with Section 11.10(b) of the Second Amended and Restated Bylaws) submitted to the Auction Agent by the Broker-Dealer plus (III) the number of AMPS deemed to be subject to Hold Orders by Beneficial Owners pursuant to Section 11.10(b) of the Second Amended and Restated Bylaws that were acquired by the Broker-Dealer for its own account or were acquired by such Beneficial Owners through the Broker-Dealer; and (ii) in the case of any Special Dividend Period, the amount determined by mutual consent of the Fund and any such Broker-Dealer or Broker-Dealers, based

upon a selling concession that would be applicable to an underwriting of fixed or variable rate preferred shares with a similar final maturity or variable rate dividend period, respectively, at the commencement of such Special Dividend Period. For the avoidance of doubt, only one Broker-Dealer shall be considered to have placed a particular share of AMPS at any particular Auction for purposes of this Section 2.5(a).

(b) The Fund shall not designate any Person to act as a Broker-Dealer, or permit an Existing Holder or a Potential Beneficial Owner to participate in Auctions through any Person other than a Broker-Dealer, without the prior written approval of the Auction Agent, which approval shall not be withheld unreasonably. Notwithstanding the foregoing, the Fund may designate an Affiliate or Xxxxxxx Lynch, Pierce, Xxxxxx and Xxxxx, Incorporated to act as a Broker-Dealer.

(d) Subject to Section 2.5(b) hereof, the Auction Agent from time to time shall enter into such Broker-Dealer Agreements as the Fund shall request.

(e) The Auction Agent shall maintain a list of Broker-Dealers.

2.6 Ownership of AMPS and Submission of Bids by the Fund and Its Affiliates.

Neither the Fund nor any Affiliate may submit an Order in any Auction, except that an Affiliate that is a Broker-Dealer may submit an Order. The Fund shall notify the Auction Agent if the Fund or, to the best of the Fund’s knowledge, any Affiliate becomes a Beneficial Owner of any AMPS. Pursuant to the Second Amended and Restated Bylaws of the Fund, the Fund and its Affiliates shall be prohibited from reissuing and its Affiliates (other than an Underwriter) will be prohibited from transferring (other than to the Fund or pursuant to an Auction) any AMPS they may acquire. The restrictions in this Section 2.6 shall in no way limit the activities of the Auction Agent. The Auction Agent shall have no duty or liability with respect to enforcement of this Section 2.6.

2.7 Access to and Maintenance of Auction Records.

The Auction Agent shall afford to the Fund, and its agents, independent public accountants and counsel, access at reasonable times during normal business hours to review and make extracts or copies (at the Fund’s sole cost and expense) of all books, records, documents and other information concerning the conduct and results of Auctions, provided that any such agent, accountant or counsel shall furnish the Auction Agent with a letter from the Fund requesting that the Auction Agent afford such person access. The Auction Agent shall maintain records relating to any Auction in accordance with the applicable rules and regulations of the Commission for a period of at least six years after such Auction, and such records, in reasonable detail, shall accurately and fairly reflect the actions taken by the Auction Agent hereunder. The Fund agrees to keep confidential any information regarding the customers of any Broker-Dealer received from the Auction Agent in connection with this Agreement or any Auction, and shall not disclose such information or permit the disclosure of such information without the prior

written consent of the applicable Broker-Dealer to anyone except such agent, accountant or counsel engaged to audit or review the results of Auctions as permitted by this Section 2.7. The Fund reserves the right to disclose any such information if it is advised by its counsel that its failure to do so would (i) be unlawful or (ii) expose it to liability, unless the Broker-Dealer shall have offered indemnification satisfactory to the Fund. Any such agent, accountant or counsel, before having access to such information, shall agree to keep such information confidential and not to disclose such information or permit disclosure of such information without the prior written consent of the applicable Broker-Dealer, provided that such agent, accountant or counsel may reserve the right to disclose any such information if it is advised by its counsel that its failure to do so would (i) be unlawful or (ii) expose it to liability, unless the Broker-Dealer shall have offered indemnification satisfactory to such agent, accountant or counsel.

2.8 Auction Procedures.

The provisions contained in Section 11.10 of the Second Amended and Restated Bylaws concerning Auction Procedures will be followed by the Fund and, to the extent applicable, the Auction Agent, and the provisions contained therein are incorporated herein by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions were set forth fully herein.

2.9 Submission Processing Representation.

Broker-Dealers may submit an Order after the Submission Deadline and prior to the Submission Processing Deadline if the Order was (i) received by the Broker-Dealer from Beneficial Owners or Potential Beneficial Owners prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline. Each Order submitted to the Auction Agent after the Submission Deadline and prior to the Submission Processing Deadline shall constitute a representation by the Broker-Dealer to the Auction Agent and the Fund that such Order was (i) received from a Beneficial Owner or Potential Beneficial Owner prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline (the “Submission Processing Representation”).

III.	THE AUCTION AGENT AS PAYING AGENT.

3.1 The Paying Agent.

The Board of Trustees of the Fund has adopted resolutions appointing Deutsche Bank Trust Company Americas as Auction Agent and dividend paying agent (in such capacity, the “Paying Agent”). The Paying Agent hereby accepts such appointment and agrees to act in accordance with its standard procedures and the provisions of the Second Amended and Restated Bylaws which are specified herein with respect to the AMPS and as set forth in this Section 3.

3.2 The Fund’s Notices to the Paying Agent.

Whenever any AMPS are to be redeemed, the Fund shall mail a Notice of Redemption by first-class mail, postage prepaid, to each Holder of AMPS being redeemed and to the Paying Agent pursuant to the Second Amended and Restated Bylaws.

3.3 The Fund to Provide Funds for Dividends and Redemptions.

(a) Not later than 12:00 noon on each Dividend Payment Date, the Fund shall deposit with the Paying Agent an aggregate amount of Federal Funds or similar same-day funds equal to the declared dividends to be paid to Holders on such Dividend Payment Date and shall give the Paying Agent irrevocable instructions to apply such funds to the payment of such dividends on such Dividend Payment Date.

(b) If the Fund shall give a Notice of Redemption, then by 12:00 noon on the date fixed for redemption, the Fund shall deposit in trust with the Paying Agent an aggregate amount of Federal Funds or similar same-day funds sufficient to redeem such AMPS called for redemption and shall give the Paying Agent irrevocable instructions and authority to pay the redemption price to the Holders of AMPS called for redemption upon surrender of the certificate or certificates therefor.

3.4 Disbursing Dividends and Redemption Price.

After receipt of the Federal Funds or similar same-day funds and instructions from the Fund described in Section 3.3 above, the Paying Agent shall pay to the Holders (or former Holders) entitled thereto (i) on each corresponding Dividend Payment Date, dividends on the AMPS, and (ii) on any date fixed for redemption, the redemption price of any AMPS called for redemption. The amount of dividends for any Dividend Period to be paid by the Paying Agent to Holders will be determined by the Fund as set forth in Section 11.2 of the Second Amended and Restated Bylaws. The redemption price to be paid by the Paying Agent to the Holders of any AMPS called for redemption will be determined as set forth in Section 11.4 of the Second Amended and Restated Bylaws.

IV.	THE PAYING AGENT AS TRANSFER AGENT AND REGISTRAR.

4.1 Original Issue of Share Certificates.

On the Date of Original Issue for any series of AMPS, one certificate for each series of AMPS shall be issued by the Fund and registered in the name of Cede & Co., as nominee of the Securities Depository, and countersigned by the Paying Agent.

4.2 Registration of Transfer or Exchange of Shares.

Except as provided in this Section 4.2, the shares of each series of AMPS shall be registered solely in the name of the Securities Depository or its nominee. If there is no Securities Depository, at the Fund’s option and upon its receipt of such documents as it deems appropriate, any AMPS may be registered in the Stock Register in the name of the Beneficial Owner thereof,

and such Beneficial Owner thereupon will be entitled to receive certificates therefor and required to deliver certificates thereof upon transfer or exchange thereof. If the certificate or certificates for AMPS are not held by the Securities Depository or its nominee, payment will be made in same-day funds to the Auction Agent against delivery of such certificates.

4.3

Removal of Legend.

Any request for removal of a legend indicating a restriction on transfer from a certificate evidencing AMPS shall be accompanied by an opinion of counsel stating that such legend may be removed and such shares may be transferred free of the restriction described in such legend, said opinion to be delivered under cover of a letter from a Fund Officer authorizing the Paying Agent to remove the legend on the basis of said opinion.

4.4

Lost, Stolen or Destroyed Share Certificates.

The Paying Agent shall issue and register replacement certificates for certificates represented to have been lost, stolen or destroyed, upon the fulfillment of such requirements as shall be deemed appropriate by the Fund and by the Paying Agent, subject at all times to provisions of law, the Second Amended and Restated Bylaws governing such matters and resolutions adopted by the Fund with respect to lost, stolen or destroyed securities. The Paying Agent may issue new certificates in exchange for and upon the cancellation of mutilated certificates. Any request by the Fund to the Paying Agent to issue a replacement or new certificate pursuant to this Section 4.4 shall be deemed to be a representation and warranty by the Fund to the Paying Agent that such issuance will comply with provisions of applicable law and the Second Amended and Restated Bylaws and resolutions of the Fund.

4.5

Disposition of Canceled Certificates; Record Retention.

The Paying Agent shall retain share certificates which have been canceled in transfer or in exchange and accompanying documentation in accordance with applicable rules and regulations of the Commission for at least six calendar years from the date of such cancellation. The Paying Agent, upon written request by the Fund, shall afford to the Fund, its agents and counsel access at reasonable times during normal business hours to review and make extracts or copies (at the Fund’s sole cost and expense) of such certificates and accompanying documentation. Upon the expiration of this six-year period, the Paying Agent, upon written request by the Fund, shall deliver to the Fund the canceled certificates and accompanying documentation. The Paying Agent also shall undertake to furnish to the Commission, upon demand and after notice to and authorization by the Fund of such demand, either at its principal office or at any regional office, complete, correct and current hard copies of any and all such records. Thereafter, such records shall not be destroyed by the Fund without the approval of the Paying Agent, which approval shall not be withheld unreasonably, but will be safely stored for possible future reference.

4.6

Share Register.

The Paying Agent shall maintain the share register, which shall contain a list of the Holders, the number of shares held by each Holder and the address of each Holder. The Paying

Agent shall record in the share register any change of address of a Holder upon notice by such Holder. In case of any written request or demand for the inspection of the share register or any other books of the Fund in the possession of the Paying Agent, the Paying Agent will notify the Fund and secure written instructions as to permitting or refusing such inspection. The Paying Agent reserves the right, however, to exhibit the share register or other records to any person in case it is advised by its counsel that its failure to do so would be unlawful.

4.7

Return of Funds.

Any funds deposited with the Paying Agent by the Fund for any reason under this Agreement, including for the payment of dividends or the redemption of AMPS, that remain with the Paying Agent after 90 days shall be repaid to the Fund upon written request by the Fund. Such funds, while deposited with the Auction Agent, will be held in trust for the payment of the applicable dividend, redemption price or, as may be applicable under the Second Amended and Restated Bylaws, other charges.

V.	REPRESENTATIONS AND WARRANTIES.

5.1 Representations and Warranties of the Fund.

The Fund represents and warrants to the Auction Agent that:

(i) the Fund has been duly organized and is validly existing as an unincorporated voluntary association under and by virtue of the laws of The Commonwealth of Massachusetts, and has full power to execute and deliver this Agreement and to authorize, create and issue the AMPS;

(ii) the Fund is registered with the Commission under the 1940 Act as a closed-end, diversified, management investment company;

(iii) this Agreement has been duly and validly authorized, executed and delivered by the Fund and constitutes the legal, valid and binding obligation of the Fund, enforceable against the Fund in accordance with its terms, subject to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equitable principles;

(iv) the form of the certificates evidencing the AMPS complies with all applicable laws of The Commonwealth of Massachusetts;

(v) the AMPS have been duly and validly authorized by the Fund and, upon completion of the initial sale of the AMPS and receipt of payment therefor, will be validly issued by the Fund, fully paid and nonassessable;

(vi) at the time of the offering of the AMPS, the shares offered will be registered under the Securities Act and no further action by or before any governmental body or authority of the United States or of any state thereof is required in connection with the execution

and delivery of this Agreement or will be required in connection with the issuance of the AMPS, except such action as required by applicable state securities laws;

(vii) the execution and delivery of this Agreement and the issuance and delivery of the AMPS do not and will not conflict with, violate or result in a breach of the terms, conditions or provisions of, or constitute a default under, the Agreement and Declaration of Trust, any order or decree of any court or public authority having jurisdiction over the Fund or any mortgage, indenture, contract, agreement or undertaking to which the Fund is a party or by which it is bound the effect of which conflict, violation, default or breach would be material to the Fund; and

(viii) no taxes are payable upon or in respect of the execution of this Agreement or will be payable upon or in respect of the issuance of the AMPS.

5.2

Representations and Warranties of the Auction Agent.

The Auction Agent represents and warrants to the Fund that:

(i) The Auction Agent is duly organized and is validly existing as a banking corporation in good standing under the laws of the State of New York and has the corporate power to enter into and perform its obligations under this Agreement; and

(ii) this Agreement has been duly and validly authorized, executed and delivered by the Auction Agent and constitutes the legal, valid and binding obligation of the Auction Agent, enforceable against the Auction Agent in accordance with its terms, subject only to bankruptcy, insolvency, reorganization and other laws of general applicability relating to or affecting creditors’ rights and to general equitable principles.

VI.	THE AUCTION AGENT.

6.1 Duties and Responsibilities.

(a) The Auction Agent is acting solely as agent for the Fund hereunder and owes no fiduciary duties to any Person except as provided by this Agreement.

(b) The Auction Agent undertakes to perform such duties and only such duties as are set forth specifically in this Agreement, and no implied covenants or obligations shall be read into this Agreement against the Auction Agent.

(c) In the absence of bad faith or negligence on its part, the Auction Agent shall not be liable for any action taken, suffered or omitted by it, or for any error of judgment made by it in the performance of its duties under this Agreement.

6.2

Rights of the Auction Agent.

(a) The Auction Agent may rely upon, and shall be protected in acting or refraining from acting in accordance with, any communication authorized by this Agreement and

any proper written instruction, notice, request, direction, consent, report, certificate, share certificate or other instrument, paper or document reasonably believed by it to be genuine and appropriately authorized. The Auction Agent shall not be liable for acting upon any telephone communication authorized by this Agreement which the Auction Agent reasonably believes in good faith to have been given by the Fund or by a Broker-Dealer. The Auction Agent may record telephone communications with the Fund or with the Broker-Dealers or with both, but agrees not to destroy any such recordings except in accordance with its usual and customary practices and further to provide the Fund with a copy of any such recording upon request.

(b) The Auction Agent may consult with outside independent counsel of its choice, and the written advice of such outside independent counsel, if addressed to both the Auction Agent and the Fund, shall be full and complete authorization and protection in respect of any action taken, suffered or omitted by it hereunder in good faith and in reasonable reliance thereon.

(c) The Auction Agent shall not be required to advance, expend or risk its own funds or otherwise incur or become exposed to financial liability in the performance of its duties hereunder.

(d) The Auction Agent may perform its duties and exercise its rights hereunder either directly or by or through agents or attorneys.

6.3

Compensation, Expenses and Indemnification.

(a) The Fund shall pay to the Auction Agent from time to time reasonable compensation for all services rendered by it under this Agreement and under the Broker-Dealer Agreements as shall be set forth in a separate writing signed by the Fund and the Auction Agent, subject to adjustments if the AMPS no longer are held of record by the Securities Depository or its nominee or if there shall be such other change as shall increase or decrease materially the Auction Agent’s obligations hereunder or under the Broker-Dealer Agreements.

(b) The Fund shall reimburse the Auction Agent upon its request for all reasonable expenses, disbursements and advances incurred or made by the Auction Agent in accordance with any provision of this Agreement and of the Broker-Dealer Agreements (including the reasonable compensation, expenses and disbursements of its agents and counsel), except any expense, disbursement or advance attributable to the Auction Agent’s negligence or bad faith, upon submission to the Fund of reasonable documentation thereof.

(c) The Fund shall indemnify the Auction Agent for, and hold it harmless against, any loss, liability or expense incurred without negligence or bad faith on the part of the Auction Agent arising out of or in connection with its agency under this Agreement and under the Broker-Dealer Agreements, including the costs and expenses of defending itself against any claim of liability in connection with its exercise or performance of any of its duties hereunder and thereunder, except such as may result from its negligence or bad faith.

VII.	MISCELLANEOUS.

7.1 Term of Agreement.

(a) The term of this Agreement is unlimited unless it shall be terminated as provided in this Section 7.1. The Fund may terminate this Agreement at any time by so notifying the Auction Agent, provided that, if any AMPS remain outstanding, the Fund shall have entered into an agreement with a successor auction agent. The Auction Agent may terminate this Agreement upon prior notice to the Fund on the date specified in such notice, which date shall be no earlier than 60 days after delivery of such notice.

(b) Except as otherwise provided in this Section 7.1(b), the respective rights and duties of the Fund and the Auction Agent under this Agreement shall cease upon termination of this Agreement. The Fund’s representations, warranties, covenants and obligations to the Auction Agent under Sections 5.1 and 6.3 hereof shall survive the termination hereof. The Auction Agent’s representations, warranties, covenants and obligations under Section 6.1 shall survive the termination hereof. Upon termination of this Agreement, the Auction Agent shall (i) resign as Auction Agent under the Broker-Dealer Agreements, (ii) at the Fund’s request, deliver promptly to the Fund or to another authorized party copies of all books and records maintained by it in connection with its duties hereunder, and (iii) at the request of the Fund, transfer promptly to the Fund or to any successor auction agent any funds deposited by the Fund with the Auction Agent (whether in its capacity as Auction Agent or as Paying Agent) pursuant to this Agreement which have not been distributed previously by the Auction Agent in accordance with this Agreement.

7.2

Communications.

Except for (i) communications authorized to be made by telephone pursuant to this Agreement or the Auction Procedures and (ii) communications in connection with Auctions (other than those expressly required to be in writing), all notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given to such party at its address or telecopier number set forth below:


If to the Fund, addressed to:		PIMCO Floating Rate Strategy Fund c/o PA Fund Management LLC 0000 Xxxxxx xx xxx Xxxxxxxx Xxx Xxxx, XX 00000

If to the Auction Agent, addressed to:		Deutsche Bank Trust Company Americas 00 Xxxx Xxxxxx 00xx Xxxxx Xxx Xxxx, XX 00000 Attention: Auction Rate Securities Telecopier No.: 000-000-0000 Telephone No.: 000-000-0000

or such other address or telecopier number as such party hereafter may specify for such purpose by notice to the other party. Each such notice, request or communication shall be effective when delivered at the address specified herein. Communications shall be given on behalf of the Fund by a Fund Officer and on behalf of the Auction Agent by an Authorized Officer.

7.3

Entire Agreement.

This Agreement contains the entire agreement between the parties relating to the subject matter hereof, and there are no other representations, endorsements, promises, agreements or understandings, oral, written or implied, between the parties relating to the subject matter hereof, except for agreements relating to the compensation of the Auction Agent.

7.4

Benefits.

Nothing herein, express or implied, shall give to any Person, other than the Fund, the Auction Agent and their respective successors and assigns, any benefit of any legal or equitable right, remedy or claim hereunder.

7.5

Amendment; Waiver.

(a) This Agreement shall not be deemed or construed to be modified, amended, rescinded, canceled or waived, in whole or in part, except by a written instrument signed by a duly authorized representative of the party to be charged.

(b) Failure of either party hereto to exercise any right or remedy hereunder in the event of a breach hereof by the other party shall not constitute a waiver of any such right or remedy with respect to any subsequent breach.

7.6

Successors and Assigns.

This Agreement shall be binding upon, inure to the benefit of and be enforceable by, the respective successors and permitted assigns of each of the Fund and the Auction Agent. This Agreement may not be assigned by either party hereto absent the prior written consent of the other party, which consent shall not be withheld unreasonably.

7.7

Severability.

If any clause, provision or section hereof shall be ruled invalid or unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any of the remaining clauses, provisions or sections hereof.

7.8

Execution in Counterparts.

This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

7.9

Governing Law.

This Agreement shall be governed by, and construed in accordance with, the laws of the State of New York applicable to agreements made and to be performed in said state.

7.10

Limitation of Liability.

The Fund’s Agreement and Declaration of Trust is on file with the Secretary of State of The Commonwealth of Massachusetts. This Agreement is executed on behalf of the Fund by the Fund’s officers as officers and not individually, and the obligations imposed upon the Fund by this Agreement are not binding upon any of the Fund’s Trustees, officers or shareholders individually but are binding only upon the assets and property of the Fund.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first above written.


PIMCO FLOATING RATE STRATEGY FUND

By:
Name:		Xxxxxxxx Xxxxxxxxx
Title:		Treasurer and Principal Financial and Accounting Officer

DEUTSCHE BANK TRUST COMPANY AMERICAS

By:
Name:
Title:

EXHIBIT A

FORM OF BROKER-DEALER AGREEMENT

PIMCO FLOATING RATE STRATEGY FUND

DEUTSCHE BANK TRUST COMPANY AMERICAS,

as Auction Agent

BROKER-DEALER AGREEMENT

dated as of , 2004

Relating to

Auction Market Preferred Shares (“AMPS”)

Series M, Series T, Series W, Series TH and Series F

PIMCO Floating Rate Strategy Fund

[NAME OF BROKER-DEALER]

BROKER-DEALER AGREEMENT

This Broker-Dealer Agreement dated as of , 2004 (the “Agreement”), is between DEUTSCHE BANK TRUST COMPANY AMERICAS, a New York banking corporation (the “Auction Agent”) (not in its individual capacity, but solely as agent of PIMCO Floating Rate Strategy Fund (the “Fund”), pursuant to authority granted to it in the Auction Agency Agreement dated as of the date hereof between the Fund and the Auction Agent (the “Auction Agency Agreement”) and (together with its successors and assigns, “BD”).

The Fund proposes to issue an aggregate of 19,200 auction market preferred shares, par value $0.00001 per share, liquidation preference $25,000 per share, designated as Action Market Preferred Shares, Series M, Auction Market Preferred Shares, Series T, Auction Market Preferred Shares, Series W, Auction Market Preferred Shares, Series TH, Auction Market Preferred Shares, Series F (collectively, the “AMPS”), pursuant to the Fund’s Second Restated and Amended Bylaws (as defined below).

As provided in and subject to the Fund’s Amended Bylaws, for each series of AMPS then outstanding, the Applicable Rate for AMPS for each subsequent Dividend Period shall be equal to the rate per annum that the Auction Agent advises results from the implementation of the Auction Procedures. The Board of Trustees of the Fund has adopted a resolution appointing Deutsche Bank Trust Company Americas as Auction Agent for purposes of the Auction Procedures, and pursuant to Section 2.5(d) of the Auction Agency Agreement, the Fund has requested and directed the Auction Agent to execute and deliver this Agreement. The Auction Procedures require the participation of one or more Broker-Dealers.

NOW, THEREFORE, in consideration of the premises and the mutual covenants contained herein, the Auction Agent and BD agree as follows:

I.	DEFINITIONS AND RULES OF CONSTRUCTION.

1.1

Terms Defined by Reference to the Amended Bylaws.

Capitalized terms used herein but not defined herein shall have the respective meanings ascribed thereto in the Amended Bylaws.

1.2

Terms Defined Herein.

As used herein and in the Settlement Procedures (as defined below), the following terms shall have the following meanings, unless the context otherwise requires:

(a) “Amended Bylaws” shall mean the Second Amended and Restated Bylaws of the Fund in effect at the time the Registration Statement relating to the AMPS is declared effective by the Securities and Exchange Commission specifying the powers, preferences and rights of the AMPS.

(b) “Auction” shall have the meaning specified in Section 2.1 of the Auction Agency Agreement.

(d) “Authorized Officer” of the Auction Agent shall mean each Managing Director, Vice President, Assistant Vice President and Associate of the Auction Agent assigned to its Trust & Securities Services and every other officer or employee of the Auction Agent designated as an “Authorized Officer” for purposes of this Agreement in a written communication to BD.

(e) “BD Officer” shall mean each officer or employee of BD designated as a “BD Officer” for purposes of this Agreement in a communication to the Auction Agent.

(f) “Broker-Dealer Agreement” shall mean this Agreement and any substantially similar agreement between the Auction Agent and a Broker-Dealer.

(g) “Settlement Procedures” shall mean the Settlement Procedures attached hereto as Exhibit A.

(h) “Submission Deadline” shall mean 1:00 p.m., New York City time, on any Auction Date or such other time on any Auction Date as may be specified by the Auction Agent from time to time as the time by which each Broker-Dealer must submit to the Auction Agent in writing all Orders obtained by it for the Auction to be conducted on such Auction Date.

(i) “Submission Processing Deadline” shall mean the earlier of (i) 40 minutes after the Submission Deadline and (ii) the time when the Auction Agent begins to disseminate the results of the Auction to the Broker-Dealers.

(j) “Submission Processing Representation” shall have the meaning specified in Section 3.3(e) hereof.

1.3

Rules of Construction.

Unless the context or use indicates another or different meaning or intent, the following rules shall apply to the construction of this Agreement:

(a) Words importing the singular number shall include the plural number and vice versa.

(b) The captions and headings herein are solely for convenience of reference and shall not constitute a part of this Agreement, nor shall they affect its meaning, construction or effect.

(d) All references herein to a particular time of day shall be to New York City time.

(e) Sections I and III hereof shall be read in conjunction with Article 11 of the Amended Bylaws and in the event of any conflict with Article 11 of the Amended Bylaws, then Article 11 of the Amended Bylaws shall take precedence.

II.	NOTIFICATION OF DIVIDEND.

The provisions contained in Section 11.2(c)(iii) of the Amended Bylaws concerning the notification of a Special Dividend Period will be followed by the Auction Agent and BD, and the provisions contained therein are incorporated herein by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions were set forth fully herein.

III.	THE AUCTION.

3.1

Purpose; Incorporation by Reference of Auction Procedures and Settlement Procedures.

(a) On each Auction Date, the provisions of the Auction Procedures will be followed by the Auction Agent for the purpose of determining the Applicable Rate for the AMPS for each Dividend Period. Each periodic operation of such procedures is hereinafter referred to as an “Auction.”

(b) All of the provisions contained in the Auction Procedures and the Settlement Procedures are incorporated herein by reference in their entirety and shall be deemed to be a part of this Agreement to the same extent as if such provisions were set forth fully herein.

(c) BD agrees to act as, and assumes the obligations of and limitations and restrictions placed upon, a Broker-Dealer under this Agreement. BD understands that other Persons meeting the requirements specified in the definition of “Broker-Dealer” contained in Section 11.1(a) of the Amended Bylaws may execute a Broker-Dealer Agreement and participate as Broker-Dealers in Auctions.

(d) BD and other Broker-Dealers may participate in Auctions for their own accounts provided they are not Affiliates of the Fund. However, the Fund, by notice to BD and all other Broker-Dealers, may prohibit all Broker-Dealers from submitting Bids at Auctions for their own accounts, provided that Broker-Dealer may continue to submit Hold Orders and Sell Orders.

3.2

Preparation for Each Auction.

(a) Not later than 9:30 A.M. on each Auction Date for the AMPS, the Auction Agent shall advise BD by telephone or other electronic means of communication acceptable to the parties of the Reference Rate and the Maximum Applicable Rate in effect on such Auction Date.

(b) The Auction Agent from time to time may, but shall not be obligated to, request BD to provide it with a list of the respective customers BD believes are Beneficial Owners of AMPS based upon inquiries of those Persons such Broker-Dealer reasonably believes are Beneficial Owners as of the most recent Auction. BD shall comply with any such request, and the Auction Agent shall keep confidential any such information, including information received as to the identity of Bidders in any Auction, and shall not disclose any such information so provided to any Person other than the Fund; and such information shall not be used by the Auction Agent or its officers, employees, agents or representatives for any purpose other than such purposes as are described herein; provided, however, that the Auction Agent reserves the right and is authorized to disclose any such information if it is advised by its counsel that its failure to do so would be unlawful. In the event that the Auction Agent is required to disclose information in accordance with the foregoing sentence, it shall provide written notice of such requirement to BD as promptly as practicable. The Auction Agent shall, subject to the terms of the Auction Agency Agreement, transmit any list of customers BD believes are Beneficial Owners of AMPS and information related thereto only to its officers, employees, agents or representatives who need to know such information for the purposes of acting in accordance with this Agreement, and the Auction Agent shall prevent the transmission of such information to others and shall cause its officers, employees, agents and representatives to abide by the foregoing confidentiality restrictions.

(c) BD may inquire of the Auction Agent between 3:00 P.M. on the Business Day preceding an Auction for shares of AMPS and 9:30 A.M. on the Auction Date for such Auction to ascertain the number of AMPS in respect of which the Auction Agent has determined BD to be an Existing Holder. If BD believes it is the Existing Holder of fewer AMPS than specified by the Auction Agent in response to BD’s inquiry, BD may so inform the Auction Agent of that belief. BD shall not, in

its capacity as an Existing Holder of AMPS, submit Orders in such Auction in respect of AMPS covering in the aggregate more than the number of AMPS specified by the Auction Agent in response to BD’s inquiry.

3.3

Auction Schedule; Method of Submission of Orders.

(a) Subject to the Amended Bylaws, the Fund and the Auction Agent shall conduct Auctions for AMPS weekly in accordance with the schedule set forth below. Such schedule may be changed at any time by the Auction Agent with the consent of the Fund, which consent shall not be withheld unreasonably. The Auction Agent shall give written notice of any such change to BD which shall have the right to review such change. Such notice shall be received prior to the first Auction Date on which any such change shall be effective.


Time		Event
By 9:30 A.M.		Auction Agent shall advise the Fund and the Broker-Dealers of the Reference Rate and the Maximum Applicable Rate as set forth in Section 3.2(a) hereof.

9:30 A.M. - 1:00 P.M.		Broker-Dealers assemble information received from each Bidder (Beneficial Owners or Potential Beneficial Owners) and any internally initiated Broker-Dealers’ Bids in accordance with the Auction Procedures.

Not later than Submission Processing Deadline		Auction Agent accepts any Orders submitted subject to a Submission Processing Representation and makes determinations pursuant to Section 11.10(d)(i) of the Amended Bylaws.

By approximately 3:00 P.M.		Auction Agent shall advise the Fund of the results of the Auction as provided in Section 11.10(d)(ii) of the Amended Bylaws.

		Submitted Bid Orders and Submitted Sell Orders will be accepted and rejected in whole or in part and AMPS will be allocated as provided in Section 11.10(e) of the Amended Bylaws.

		Auction Agent shall give notice of the Auction results as set forth in Section 3.4(a) hereof.

BD may designate one or more individuals in its organization who will coordinate its procedures in connection with Auctions and purchases and sales of the AMPS.

(b) BD agrees to maintain a list of customers relating to the AMPS and to use its best efforts, subject to existing laws and regulations, to contact the customers on such list whom BD believes may be interested in participating in the Auction on each Auction Date for the purposes set forth in Section 11.10 of the Amended Bylaws. Nothing herein shall require BD to submit an Order for any customer in any Auction.

(c) BD shall submit Orders to the Auction Agent in writing in substantially the form attached hereto as Exhibit B. BD shall submit separate Orders to the Auction Agent for each Potential Beneficial Owner or Beneficial Owner on whose behalf BD is submitting an Order and shall not net or aggregate the Orders of Potential Beneficial Owners or Beneficial Owners on whose behalf BD is submitting Orders. Unless otherwise permitted by the Fund, a Beneficial Owner or an Existing Holder

may sell, transfer or otherwise dispose of AMPS only in whole shares and only pursuant to a Bid or Sell Order placed with the Auction Agent in accordance with the procedures described in Section 11.10 of the Fund’s Amended Bylaws or to a Broker-Dealer; provided, however, that (a) a Beneficial Owner or an Existing Holder may otherwise sell, transfer or dispose of AMPS provided that the Broker-Dealer (or other Person, if permitted by the Fund) to whom such transfer is made shall advise the Auction Agent of such transfer and (b) a sale, transfer or other disposition of AMPS from a customer of a Broker-Dealer who is listed on the records of that Broker-Dealer as the holder of such shares to that Broker-Dealer or another customer of that Broker-Dealer shall not be deemed to be a sale, transfer or other disposition for purposes of this paragraph if such Broker-Dealer remains the Existing Holder of the shares so sold, transferred or disposed of immediately after such sale, transfer or disposition.

(d) BD shall deliver to the Auction Agent (i) a written notice, substantially in the form attached hereto as Exhibit C, of transfers of AMPS, made through BD by an Existing Holder to another Person other than pursuant to an Auction, and (ii) a written notice, substantially in the form attached hereto as Exhibit D, of the failure of AMPS to be transferred to or by any Person that purchased or sold AMPS through BD pursuant to the previous Auction. The Auction Agent is not required to accept any notice delivered pursuant to the terms of the foregoing sentence with respect to an Auction unless it is received by the Auction Agent by 12:00 noon on the Auction Date.

(e) Submission Processing Representation. Broker-Dealers may submit an Order after the Submission Deadline and prior to the Submission Processing Deadline if the Order was (i) received by the Broker-Dealer from Beneficial Owners or Potential Beneficial Owners prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline. Each Order submitted to the Auction Agent after the Submission Deadline and prior to the Submission Processing Deadline shall constitute a representation by the Broker-Dealer to the Auction Agent and the Fund that such Order was (i) received from a Beneficial Owner or Potential Beneficial Owner prior to the Submission Deadline or (ii) initiated internally by the Broker-Dealer for its own account prior to the Submission Deadline (the “Submission Processing Representation”).

3.4

Notice of Auction Results.

(a) On each Auction Date, the Auction Agent shall notify BD by telephone, facsimile or other electronic means acceptable to the parties of the Auction results as set forth in paragraph (a) of the Settlement Procedures. By approximately 11:30 A.M. on the Business Day next succeeding such Auction Date, the Auction Agent shall notify BD in writing of the disposition of all Orders submitted by BD in the Auction held on such Auction Date.

(b) BD shall notify each Beneficial Owner, Potential Beneficial Owner, Existing Holder or Potential Holder on whose behalf BD has submitted an Order as set forth in paragraph (b) of the Settlement Procedures, and take such other action as is required of BD pursuant to the Settlement Procedures.

If any Beneficial Owner or Existing Holder selling AMPS in an Auction fails to deliver such shares, the Broker-Dealer of any Person that was to have purchased AMPS in such Auction may deliver to such Person a number of whole shares of AMPS that is less than the number of shares that otherwise was to be purchased by such Person. In such event, the number of AMPS to be so delivered shall be determined by such Broker-Dealer. Delivery of such lesser number of shares shall constitute good delivery. Upon the occurrence of any such failure to deliver shares, such Broker-Dealer shall deliver to the Auction Agent the notice required by Section 3.3(d)(ii) hereof. Notwithstanding the foregoing terms of this Section 3.4(b), any delivery or non-delivery of AMPS which represents any departure from the results of an Auction, as determined by the Auction Agent, shall be of no effect unless and until the

Auction Agent shall have been notified of such delivery or non-delivery in accordance with the terms of Section 3.3(d) hereof. Neither the Fund nor the Auction Agent shall have any duty or liability with respect to enforcement of this Section 3.4(b).

3.5

Notification of Dividend.

3.6

Service Charge to be Paid to BD.

(a) Not later than 3:00 P.M. on each Dividend Payment Date, the Auction Agent shall pay to BD from moneys received from the Fund an amount equal to: (a) in the case of any Auction Date immediately preceding a 7-day Dividend Period, the product of (i) a fraction the numerator of which is the number of days in such Dividend Period (calculated by counting the first day of such Dividend Period but excluding the last day thereof) and the denominator of which is 365, times (ii) 1/4 of 1%, times (iii) $25,000, times (iv) the sum of (A) the aggregate number of AMPS placed by BD in the applicable Auction that were either (x) the subject of a Submitted Bid of a Beneficial Owner submitted by BD and continued to be held as a result of such submission or (y) the subject of a Submitted Bid of a Potential Beneficial Owner submitted by BD and were purchased as a result of such submission plus (B) the aggregate number of AMPS subject to valid Hold Orders (determined in accordance with Section 11.10(b) of the Amended Bylaws) submitted to the Auction Agent by BD plus (C) the number of AMPS deemed to be subject to Hold Orders by Beneficial Owners pursuant to Section 11.10(b) of the Amended Bylaws that were acquired by BD for its own account or were acquired by such Beneficial Owners through BD; and (b) in the case of any Special Dividend Period, that amount as mutually agreed upon by the Fund and BD, based on the selling concession that would be applicable to an underwriting of fixed or variable rate preferred shares with a similar final maturity or variable rate dividend period, at the commencement of such Special Dividend Period.

For purposes of subclause (a)(iv)(C) of the foregoing sentence, if any Beneficial Owner who acquired AMPS through BD transfers those shares to another Person other than pursuant to an Auction, then the Broker-Dealer for the shares so transferred shall continue to be BD, provided, however, that if the transfer was effected by, or if the transferee is, a Broker-Dealer other than BD, then such Broker-Dealer shall be the Broker-Dealer for such shares.

(b) Notwithstanding any provision of the Auction Procedures or the Settlement Procedures to the contrary, in the event BD is an Existing Holder with respect to any AMPS and the Auctions Procedures provide that BD shall be deemed to have submitted a Sell Order in an Auction with respect to such shares if BD fails to submit an Order in that Auction with respect to such shares, BD shall have no liability to any Person for failing to sell such shares pursuant to such a deemed Sell Order if (i) such shares were transferred by the Beneficial Owner thereof without notification of such transfer in compliance with the Auction Procedures or (ii) BD has indicated to the Auction Agent pursuant to Section 3.2(c) of this Agreement that, according to BD’s records, BD is not an Existing Holder of such shares.

IV.	MISCELLANEOUS.

4.1

Termination.

Any party may terminate this Agreement at any time upon five days’ prior written notice to the other party; provided, however, that if the Broker-Dealer is Merrill Lunch, Xxxxxx, Xxxxxx & Xxxxx Incorporated, neither Merrill Lunch, Xxxxxx, Xxxxxx & Xxxxx Incorporated nor the Auction Agent may terminate this Agreement without first obtaining the prior written consent of the Fund to such termination, which consent shall not be withheld unreasonably. The Trust may in its sole discretion direct the Auction Agent in writing to terminate this Agreement with any BD pursuant to the terms hereof, for any reason or no reason. This Agreement shall automatically terminate upon the redemption of all outstanding AMPS or upon termination of the Auction Agent Agreement.

4.2

Force Majeure.

Neither party to this Agreement shall be responsible or liable for any failure or delay in the performance of its obligations under this Agreement arising out of or caused, directly or indirectly, by circumstances beyond its reasonable control, including, without limitation, acts of God; earthquakes; fires; floods; wars; civil or military disturbances; sabotage; acts of terrorism; epidemics; riots; interruptions, loss or malfunctions or utilities; computer (hardware or software) or communications services; accidents; labor disputes; acts of civil or military authority or governmental actions; it being understood that the parties shall use reasonable efforts which are consistent with accepted practices in the banking industry to resume performance as soon as practicable under the circumstances.

4.3

Participant in Securities Depository; Payment of Dividends in Same-Day Funds.

(a) BD is, and shall remain for the term of this Agreement, a member of, or a participant in, the Securities Depository (or an affiliate of such a member or participant).

(b) BD represents that it (or if BD does not act as Agent Member, one of its affiliates) shall make all dividend payments on the AMPS available in same-day funds on each Dividend Payment Date to customers that use BD (or its affiliate) as Agent Member.

4.4

Agent Member.

At the date hereof, BD is a member, or a participant, of the Securities Depository (or an affiliate of such a member or participant).

4.5

Communications.

Except for (i) communications authorized to be made by telephone pursuant to this Agreement or the Auction Procedures and (ii) communications in connection with the Auctions (other than those expressly required to be in writing), all notices, requests and other communications to any party hereunder shall be in writing (including telecopy or similar writing) and shall be given to such party at its address or telecopier number set forth below:


If to the Auction Agent, addressed to:		Deutsche Bank Trust Company Americas 00 Xxxx Xxxxxx, 00xx Xxxxx Xxx Xxxx, XX 00000 Attention: Auction Rate Securities Telecopier No.: 000-000-0000 Telephone No.: 000-000-0000

If to the BD, addressed to:

or such other address or telecopier number as such party hereafter may specify for such purpose by notice to the other party. Each such notice, request or communication shall be effective when delivered at the address specified herein. Communications shall be given on behalf of BD by a BD Officer and on behalf of the Auction Agent by an Authorized Officer. BD may record telephone communications with the Auction Agent.

4.6

Entire Agreement.

4.7

Benefits.

Nothing in this Agreement, express or implied, shall give to any person, other than the Fund, which is a third-party beneficiary of this Agreement, the Auction Agent and BD and their respective successors and permitted assigns, any benefit of any legal or equitable right, remedy or claim under this Agreement.

4.8

Amendment; Waiver.

(b) Failure of either party to this Agreement to exercise any right or remedy hereunder in the event of a breach of this Agreement by the other party shall not constitute a waiver of any such right or remedy with respect to any subsequent breach.

4.9

Successors and Assigns.

This Agreement shall be binding upon, inure to the benefit of, and be enforceable by, the respective successors and permitted assigns of each of BD and the Auction Agent. This Agreement may not be assigned by either party hereto absent the prior written consent of the other party; provided, however, that this Agreement may be assigned by the Auction Agent to a successor Auction Agent selected by the Fund without the consent of BD.

4.10

Severability.

If any clause, provision or section of this Agreement shall be ruled invalid or unenforceable by any court of competent jurisdiction, the invalidity or unenforceability of such clause, provision or section shall not affect any remaining clause, provision or section hereof.

4.11

Execution in Counterparts.

This Agreement may be executed in several counterparts, each of which shall be an original and all of which shall constitute but one and the same instrument.

4.12

Governing Law.

This Agreement shall be governed by and construed in accordance with the laws of the State of New York applicable to agreements made and to be performed in said state.

4.13

Jurisdiction.

The parties agree that all actions and proceedings arising out of this Agreement or any of the transactions contemplated hereby shall be brought in the County of New York, and, in connection with any such action or proceeding, submit to the jurisdiction of, and venue in, such County. Each of the parties hereto also irrevocably waives all right to trial by jury in any action, proceeding or counterclaim arising out of this Agreement or the transactions contemplated hereby.

[Signature pages follow]

IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly executed and delivered by their proper and duly authorized officers as of the date first above written.


DEUTSCHE BANK TRUST COMPANY AMERICAS, As Auction Agent

By:
		Name:
		Title:

[Name of Broker-Dealer]

By:
		Name:
		Title:

EXHIBIT A

SETTLEMENT PROCEDURES

Capitalized terms used herein shall have the respective meanings specified in the Amended Bylaws.

(a) On each Auction Date, the Auction Agent shall notify by telephone or through the Auction Agent’s auction processing system the Broker-Dealers that participated in the Auction held on such Auction Date and submitted an Order on behalf of any Beneficial Owner or Potential Beneficial Owner of:

(i) the Applicable Rate fixed for the next succeeding Dividend Period;

(ii) whether Sufficient Clearing Bids existed for the determination of the Applicable Rate;

(iii) if such Broker-Dealer (a “Seller’s Broker-Dealer”) submitted a Bid or a Sell Order on behalf of a Beneficial Owner, the number of AMPS, if any, to be sold by such Beneficial Owner;

(iv) if such Broker-Dealer (a “Buyer’s Broker-Dealer”) submitted a Bid on behalf of a Potential Beneficial Owner, the number of AMPS, if any, to be purchased by such Potential Beneficial Owner;

(v) if the aggregate number of AMPS to be sold by all Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell Order exceeds the aggregate number of AMPS to be purchased by all Potential Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid, the name or names of one or more Buyer’s Broker-Dealers (and the name of the Agent Member, if any, of each such Buyer’s Broker-Dealer) acting for one or more purchasers of such excess number of AMPS and the number of such shares to be purchased from one or more Beneficial Owners on whose behalf such Broker-Dealer acted by one or more Potential Beneficial Owners on whose behalf each of such Buyer’s Broker-Dealers acted;

(vi) if the aggregate number of AMPS to be purchased by all Potential Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid exceeds the aggregate number of AMPS to be sold by all Beneficial Owners on whose behalf such Broker-Dealer submitted a Bid or a Sell Order, the name or names of one or more Seller’s Broker-Dealers (and the name of the Agent Member, if any, of each such Seller’s Broker-Dealer) acting for one or more sellers of such excess number of AMPS and the number of such shares to be sold to one or more Potential Beneficial Owners on whose behalf such Broker-Dealer acted by one or more Beneficial Owners on whose behalf each of such Seller’s Broker-Dealers acted; and

(vii) the Auction Date of the next succeeding Auction with respect to the AMPS.

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(b) On each Auction Date, each Broker-Dealer that submitted an Order on behalf of any Beneficial Owner or Potential Beneficial Owner shall:

(i) in the case of a Broker-Dealer that is a Buyer’s Broker-Dealer, instruct each Potential Beneficial Owner on whose behalf such Broker-Dealer submitted a Bid that was accepted, in whole or in part, to instruct such Potential Beneficial Owner’s Agent Member to pay to such Broker-Dealer (or its Agent Member) through the Securities Depository the amount necessary to purchase the number of AMPS to be purchased pursuant to such Bid against receipt of such shares and advise such Potential Beneficial Owner of the Applicable Rate for the next succeeding Dividend Period;

(ii) in the case of a Broker-Dealer that is a Seller’s Broker-Dealer, instruct each Beneficial Owner on whose behalf such Broker-Dealer submitted a Sell Order that was accepted, in whole or in part, or a Bid that was accepted, in whole or in part, to instruct such Beneficial Owner’s Agent Member to deliver to such Broker-Dealer (or its Agent Member) through the Securities Depository the number of AMPS to be sold pursuant to such Order against payment therefor and advise any such Beneficial Owner that will continue to hold AMPS of the Applicable Rate for the next succeeding Dividend Period;

(iii) advise each Beneficial Owner on whose behalf such Broker-Dealer submitted a Hold Order of the Applicable Rate for the next succeeding Dividend Period;

(iv) advise each Beneficial Owner on whose behalf such Broker-Dealer submitted an Order of the Auction Date for the next succeeding Auction; and

(v) advise each Potential Beneficial Owner on whose behalf such Broker-Dealer submitted a Bid that was accepted, in whole or in part, of the Auction Date for the next succeeding Auction.

(c) On the basis of the information provided to it pursuant to (a) above, each Broker-Dealer that submitted a Bid or a Sell Order on behalf of a Potential Beneficial Owner or a Beneficial Owner shall, in such manner and at such time or times as in its sole discretion it may determine, allocate any funds received by it pursuant to (b)(i) above and any AMPS received by it pursuant to (b)(ii) above among the Potential Beneficial Owners, if any, on whose behalf such Broker-Dealer submitted Bids, the Beneficial Owners, if any, on whose behalf such Broker-Dealer submitted Bids that were accepted or Sell Orders, and any Broker-Dealer or Broker-Dealers identified to it by the Auction Agent pursuant to (a)(v) or (a)(vi) above.

(d) On each Auction Date:

(i) each Potential Beneficial Owner and Beneficial Owner shall instruct its Agent Member as provided in (b)(i) or (ii) above, as the case may be;

(ii) each Seller’s Broker-Dealer which is not an Agent Member of the Securities Depository shall instruct its Agent Member to (A) pay through the Securities Depository to the Agent Member of the Beneficial Owner delivering shares to such Broker-Dealer pursuant to (b)(ii) above the amount necessary to purchase such shares against receipt of such shares, and (B) deliver such shares through the Securities Depository to a Buyer’s Broker-Dealer (or its Agent Member) identified to such Seller’s Broker-Dealer pursuant to (a)(v) above against payment therefor; and

A-2

(iii) each Buyer’s Broker-Dealer which is not an Agent Member of the Securities Depository shall instruct its Agent Member to (A) pay through the Securities Depository to a Seller’s Broker-Dealer (or its Agent Member) identified pursuant to (a)(vi) above the amount necessary to purchase the shares to be purchased pursuant to (b)(i) above against receipt of such shares, and (B) deliver such shares through the Securities Depository to the Agent Member of the purchaser thereof against payment therefor.

(e) On the day after the Auction Date:

(i) each Bidder’s Agent Member referred to in (d)(i) above shall instruct the Securities Depository to execute the transactions described in (b)(i) or (ii) above, and the Securities Depository shall execute such transactions;

(ii) each Seller’s Broker-Dealer or its Agent Member shall instruct the Securities Depository to execute the transactions described in (d)(ii) above, and the Securities Depository shall execute such transactions; and

(iii) each Buyer’s Broker-Dealer or its Agent Member shall instruct the Securities Depository to execute the transactions described in (d)(iii) above, and the Securities Depository shall execute such transactions.

(f) If a Beneficial Owner selling AMPS in an Auction fails to deliver such shares (by authorized book-entry), a Broker-Dealer may deliver to the Potential Beneficial Owner on behalf of which it submitted a Bid that was accepted a number of whole AMPS that is less than the number of shares that otherwise was to be purchased by such Potential Beneficial Owner. In such event, the number of AMPS to be so delivered shall be determined solely by such Broker-Dealer. Delivery of such lesser number of shares shall constitute good delivery. Notwithstanding the foregoing terms of this paragraph (f), any delivery or non-delivery of shares which shall represent any departure from the results of an Auction, as determined by the Auction Agent, shall be of no effect unless and until the Auction Agent shall have been notified of such delivery or non-delivery in accordance with the provisions of the Auction Agency Agreement and the Broker-Dealer Agreements.

A-3

EXHIBIT B

DEUTSCHE BANK TRUST COMPANY AMERICAS

AUCTION BID FORM

Submit To:

Issue:

Deutsche Bank Trust Company Americas

000 Xxxx Xxxxxx

0xx Xxxxx

Xxx Xxxx, Xxx Xxxx 00000

Telephone No.: (000) 000-0000

Facsimile No.: (000) 000-0000

PIMCO FLOATING RATE STRATEGY FUND

Auction Market Preferred Shares, Series M, Series T, Series W, Series TH and Series F (“AMPS”)

The undersigned Broker-Dealer submits the following Order on behalf of the Bidder listed below:

Name of Bidder:

BENEFICIAL OWNER


Shares of Series now held		HOLD
		BID at rate of
		SELL

POTENTIAL BENEFICIAL OWNER


		# of shares of Series
		BID at rate of Notes:

(1)

If submitting more than one Bid for one Bidder, use additional Auction Bid Forms.

(2)

If one or more Bids covering in the aggregate more than the number of outstanding shares held by any Beneficial Owner are submitted, such bid shall be considered valid in the order of priority set forth in the Auction Procedures on the above issue.

(3)

A Hold or Sell Order may be placed only by a Beneficial Owner covering a number of shares not greater than the number of shares currently held.

(4)

Potential Beneficial Owners may make only Bids, each of which must specify a rate. If more than one Bid is submitted on behalf of any Potential Beneficial Owner, each Bid submitted shall be a separate Bid with the rate specified.

(5)

Bids may contain no more than three figures to the right of the decimal point (.001 of 1%). Fractions will not be accepted.

(6)

An Order must be submitted in whole shares of AMPS with an aggregate liquidation preference of $25,000.

[BROKER-DEALER]





Authorized Signature

B-1

EXHIBIT C

(Note: To be used only for transfers made other than pursuant to an Auction)

TRANSFER FORM

Re:

PIMCO FLOATING RATE STRATEGY FUND

Auction Market Preferred Shares (“AMPS”)

We are (check one):

the Existing Holder named below;

the Broker-Dealer for such Existing Holder; or

the Agent Member for such Existing Holder.

We hereby notify you that such Beneficial Owner has transferred Series AMPS to

(Name of Existing Holder)

(Name of Broker-Dealer)

(Name of Agent Member)



By:
		Printed Name:
		Title:

C-1

EXHIBIT D

(Note: To be used only for failures to deliver or to pay for

AMPS sold pursuant to an Auction)

NOTICE OF A FAILURE TO DELIVER

We are a Broker-Dealer for (the “Purchaser”), which purchased Series AMPS of PIMCO FLOATING RATE STRATEGY FUND in the Auction held on from the seller of such shares.

We hereby notify you that (check one):

¨ the Seller failed to deliver such shares to the Purchaser.

¨ the Purchaser failed to make payment to the Seller upon delivery of such shares.



Name:
		[BROKER-DEALER]

By:
		Printed Name:
		Title:

D-1

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Table of Contents

AUCTION AGENCY AGREEMENT dated as of , 2004 Relating to Auction Market Preferred Shares Series M, Series T, Series W, Series TH and Series F Of PIMCO FLOATING RATE STRATEGY FUND

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