Exhibit h.1
PIMCO Municipal Income Fund II
[______] Common Shares of Beneficial Interest
Par Value $0.00001 per Share
UNDERWRITING AGREEMENT
June [___], 2002
UNDERWRITING AGREEMENT
June [___], 2002
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
First Union Securities, Inc.
Prudential Securities Incorporated
Quick & ▇▇▇▇▇▇, Inc. A FleetBoston Financial Company
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
McDonald Investments, Inc. A KeyCorp Company
as Managing Underwriters
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
PIMCO Municipal Income Fund II, a voluntary association with
transferable shares organized and existing under and by virtue of the laws of
The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), proposes to issue and sell to the underwriters
named in Schedule A annexed hereto (the "Underwriters") an aggregate of
[__________] common shares of beneficial interest (the "Firm Shares"), par value
$0.00001 per share (the "Common Shares"), of the Fund. In addition, solely for
the purpose of covering over-allotments, the Fund proposes to grant to the
Underwriters the option to purchase from the Fund up to an additional
[_________] Common Shares (the "Additional Shares"). The Firm Shares and the
Additional Shares are hereinafter collectively sometimes referred to as the
Shares. The Shares are described in the Prospectus which is referred to below.
The Fund has filed, in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations thereunder
(collectively called the "Act"), and with the provisions of the Investment
Company Act of 1940, as amended, and the rules and regulations thereunder
(collectively called the "Investment Company Act"), with the Securities and
Exchange Commission (the "Commission") a registration statement on Form N-2
(File Nos. 333-86282 and 811-21076), including a prospectus and a statement of
additional information, relating to the Shares. The Fund has furnished to you,
for use by the Underwriters and by dealers, copies of one or more preliminary
prospectuses (including a preliminary statement of additional information) (each
thereof, including such preliminary statement of additional information, being
herein called a
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"Preliminary Prospectus") relating to the Shares. Except where the context
otherwise requires, the registration statement, as amended when it becomes
effective (the "Effective Date"), including all documents filed as a part
thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Act is herein called
the Registration Statement, and the prospectus (including the statement of
additional information), in the form filed by the Fund with the Commission
pursuant to Rule 497 under the Act or, if no such filing is required, the form
of final prospectus (including the form of final statement of additional
information) included in the Registration Statement at the time it became
effective, is herein called the Prospectus. In addition, the Fund has filed a
Notification of Registration on Form N-8A (the "Notification") pursuant to
Section 8 of the Investment Company Act.
PIMCO Funds Advisors LLC ("PIMCO Funds Advisors," or the
"Investment Manager") will act as the Fund's investment manager pursuant to an
Investment Management Agreement by and between the Fund and the Investment
Manager, dated as of June [___], 2002 (the "Investment Management Agreement").
Pacific Investment Management Company LLC ("PIMCO," or the "Portfolio Manager")
will act as the Fund's portfolio manager pursuant to a Portfolio Management
Agreement by and between the Investment Manager and PIMCO, as accepted and
agreed to by the Fund, dated as of June [___], 2002. State Street Bank & Trust
Co. will act as the custodian (the "Custodian") of the Fund's cash and portfolio
assets pursuant to a Custodian Agreement, dated as of June [___], 2002 (the
"Custodian Agreement"). PFPC Inc. will act as the Fund's transfer agent,
registrar, shareholder servicing agent and dividend disbursing agent (the
"Transfer Agent") pursuant to a Transfer Agency Services Agreement, dated as of
June [___], 2002 (the "Transfer Agency Agreement"). In addition, the Fund has
adopted a dividend reinvestment plan (the "Dividend Reinvestment Plan") pursuant
to which holders of Shares shall have their dividends automatically reinvested
in additional Common Shares of the Fund unless they elect to receive such
dividends in cash. UBS Warburg LLC (the "Managing Representative") will act as
managing representative for the Underwriters.
The Fund, the Investment Manager and the Underwriters agree as
follows:
1. Sale and Purchase. Upon the basis of the warranties and representations
and subject to the terms and conditions herein set forth, the Fund
agrees to sell to the respective Underwriters and each of the
Underwriters, severally and not jointly, agrees to purchase from the
Fund the aggregate number of Firm Shares set forth opposite the name of
such Underwriter in Schedule A attached hereto in each case at a
purchase price of $14.325 per Share. The Fund is advised that the
Underwriters intend (i) to make a public offering of their respective
portions of the Firm Shares as soon after the effective date of the
Registration Statement as is advisable and (ii) initially to offer the
Firm Shares upon the terms set forth in the Prospectus. The
Underwriters may from time to time increase or decrease the public
offering price after the initial public offering to such extent as they
may determine.
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In addition, the Fund hereby grants to the several
Underwriters the option to purchase, and upon the basis of the
warranties and representations and subject to the terms and conditions
herein set forth, the Underwriters shall have the right to purchase,
severally and not jointly, from the Fund, ratably in accordance with
the number of Firm Shares to be purchased by each of them, all or a
portion of the Additional Shares as may be necessary to cover
over-allotments made in connection with the offering of the Firm
Shares, at the same purchase price per share to be paid by the
Underwriters to the Fund for the Firm Shares. This option may be
exercised by you on behalf of the several Underwriters at any time and
from time to time on or before the forty-fifth day following the date
hereof, by written notice to the Fund. Such notice shall set forth the
aggregate number of Additional Shares as to which the option is being
exercised, and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the
"Additional Time of Purchase"); provided, however, that the Additional
Time of Purchase shall not be earlier than the Time of Purchase (as
defined below) nor earlier than the second business day after the date
on which the option shall have been exercised nor later than the tenth
business day after the date on which the option shall have been
exercised. The number of Additional Shares to be sold to each
Underwriter shall be the number which bears the same proportion to the
aggregate number of Additional Shares being purchased as the number of
Firm Shares set forth opposite the name of such Underwriter on Schedule
A hereto bears to the total number of Firm Shares (subject, in each
case, to such adjustment as you may determine to eliminate fractional
shares).
The Fund also agrees, subject to the terms and conditions set
forth herein, to sell to the Investment Manager, and, upon the basis of
the representations, warranties and agreements of the Fund contained
herein, the Investment Manager shall have the right to purchase from
the Fund, at the same purchase price per share as the Underwriters
shall pay for the Additional Shares, up to an aggregate of 1,000 Shares
(the "Investment Manager Shares").
2. Payment and Delivery. Payment of the purchase price for the Firm
Shares shall be made by the Underwriters to the Fund by Federal Funds
wire transfer, against delivery of the certificates for the Firm
Shares to you through the facilities of the Depository Trust Company
("DTC") for the respective accounts of the Underwriters. Such payment
and delivery shall be made at 10:00 A.M., New York City time on the
third business day following the date of this Underwriting Agreement
(unless another date or time shall be agreed to by you and the Fund).
The time at which such payment and delivery are actually made is
hereinafter sometimes called the Time of Purchase. Certificates for
the Firm Shares shall be delivered to you in definitive form in such
names and in such denominations as you shall specify on the second
business day preceding the Time of Purchase. For the purpose of
expediting the checking of the certificates for the Firm Shares by
you, the Fund agrees to make such certificates available to you for
such purpose at least one full business day preceding the Time of
Purchase.
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Payment of the purchase price for the Additional Shares shall
be made at the Additional Time of Purchase in the same manner and at
the same office as the payment for the Firm Shares. Certificates for
the Additional Shares shall be delivered to you in definitive form in
such names and in such denominations as you shall specify no later than
the second business day preceding the Additional Time of Purchase. For
the purpose of expediting the checking of the certificates for the
Additional Shares by you, the Fund agrees to make such certificates
available to you for such purpose at least one full business day
preceding the Additional Time of Purchase. The Time of Purchase and the
Additional Time of Purchase are sometimes referred to herein as the
Closing Dates.
The place and time of the closing for the Investment Manager
Shares shall be as agreed upon by the Investment Manager and the Fund;
provided, however, that the date of such closing for the Investment
Manager Shares shall in no event be earlier than the Time of Purchase.
3. Representations and Warranties of the Fund and the Investment Manager.
Each of the Fund and the Investment Manager jointly and severally
represents and warrants to each Underwriter as follows:
(a) On (A) the Effective Date and the date on which the Prospectus
is first filed with the Commission pursuant to Rule 497(b),
(h) or (j) under the Act, as the case may be, (B) the date on
which any post-effective amendment to the Registration
Statement (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the
date of this Underwriting Agreement or (y) the date on which
the distribution of the Shares is completed) became or becomes
effective or any amendment or supplement to the Prospectus was
or is filed with the Commission and (C) the Closing Dates, the
Registration Statement, the Prospectus and any such amendment
or supplement thereto and the Notification complied or will
comply in all material respects with the requirements of the
Act and the Investment Company Act, as the case may be. On the
Effective Date and on the date that any post-effective
amendment to the Registration Statement (except any
post-effective amendment which is filed with the Commission
after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the
distribution of the Shares is completed) became or becomes
effective, neither the Registration Statement nor any such
amendment did or will contain any untrue statement of a
material fact or omit to state a material fact required to be
stated in it or necessary to make the statements in it not
misleading. At the Effective Date and, if applicable, the date
the Prospectus or any amendment or supplement to the
Prospectus was or is filed with the Commission and at the
Closing Dates, the Prospectus did not or will not, as the case
may be, contain any untrue statement of a material fact or
omit to state a material fact required to be stated in it or
necessary to make the statements in it, in light of the
circumstances under which they were made, not misleading. The
foregoing representations in
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this Section 3(a) do not apply to statements or omissions relating to
the Underwriters made in reliance on and in conformity with
information furnished in writing to the Fund by the Underwriters
expressly for use in the Registration Statement, the Prospectus, or
any amendments or supplements thereto, as described in Section 9(f)
hereof.
(b) The Fund has been duly formed, is validly existing as an
unincorporated voluntary association under the laws of The
Commonwealth of Massachusetts (commonly known as a "Massachusetts
business trust"), with full power and authority to conduct all the
activities conducted by it, to own or lease all assets owned or leased
by it and to conduct its business as described in the Registration
Statement and Prospectus, and the Fund is duly licensed and qualified
to do business and in good standing in each jurisdiction in which its
ownership or leasing of property or its conducting of business
requires such qualification, except where the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Fund, and the Fund owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in the
Prospectus. The Fund has no subsidiaries.
(c) The capitalization of the Fund is as set forth in the Registration
Statement and the Prospectus. The Common Shares conform in all
material respects to the description of them in the Prospectus. All
the outstanding Common Shares have been duly authorized and are
validly issued, fully paid and nonassessable (except as described in
the Registration Statement). The Shares to be issued and delivered to
and paid for by the Underwriters in accordance with this Underwriting
Agreement against payment therefor as provided by this Underwriting
Agreement have been duly authorized and when issued and delivered to
the Underwriters will have been validly issued and will be fully paid
and nonassessable (except as described in the Registration Statement).
Other than the right of the Investment Manager to purchase Shares as
set forth in Section 1 hereof, no person is entitled to any preemptive
or other similar rights with respect to the Shares.
(d) The Fund is duly registered with the Commission under the Investment
Company Act as a non-diversified, closed-end management investment
company, and, subject to the filing of any final amendment to the
Registration Statement (a "Final Amendment"), if not already filed,
all action under the Act and the Investment Company Act, as the case
may be, necessary to make the public offering and consummate the sale
of the Shares as provided in this Underwriting Agreement has or will
have been taken by the Fund.
(e) The Fund has full power and authority to enter into each of this
Underwriting Agreement, the Investment Management Agreement, the
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Custodian Agreement, the Transfer Agency Agreement and the Dividend
Reinvestment Plan (collectively, the "Fund Agreements") and to perform
all of the terms and provisions hereof and thereof to be carried out
by it and (i) each Fund Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the Fund, (ii)
each Fund Agreement does not violate in any material respect any of
the applicable provisions of the Investment Company Act or the
Investment Advisers Act of 1940, as amended, and the rules and
regulations thereunder (collectively called the "Advisers Act"), as
the case may be, and (iii) assuming due authorization, execution and
delivery by the other parties thereto, each Fund Agreement constitutes
the legal, valid and binding obligation of the Fund enforceable in
accordance with its terms, (A) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and (B) except as rights to indemnity thereunder may be
limited by federal or state securities laws.
(f) None of (i) the execution and delivery by the Fund of the Fund
Agreements, (ii) the issue and sale by the Fund of the Shares as
contemplated by this Underwriting Agreement and (iii) the performance
by the Fund of its obligations under any of the Fund Agreements or
consummation by the Fund of the other transactions contemplated by the
Fund Agreements conflicts with or will conflict with, or results or
will result in a breach of, the Agreement and Declaration of Trust or
the Bylaws of the Fund, each as amended from time to time, or any
agreement or instrument to which the Fund is a party or by which the
Fund is bound, except where such violation does not have a material
adverse effect on the condition (financial or other), business
prospects, properties, net assets or results of operations of the
Fund, or any law, rule or regulation, or order of any court,
governmental instrumentality, securities exchange or association or
arbitrator, whether foreign or domestic, applicable to the Fund, other
than state securities or "blue sky" laws applicable in connection with
the purchase and distribution of the Shares by the Underwriters
pursuant to this Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default under, any
written agreement or instrument to which it is a party or by which it
or its property is bound or affected, except where such violation does
not have a material adverse effect on the condition (financial or
other), business prospects, properties, net assets or results of
operations of the Fund.
(h) No person has any right to the registration of any securities of the
Fund because of the filing of the Registration Statement.
(i) No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or association,
whether foreign or
7
domestic, is required by the Fund for the consummation by the Fund of
the transactions to be performed by the Fund or the performance by the
Fund of all the terms and provisions to be performed by or on behalf
of it in each case as contemplated in the Fund Agreements, except such
as (i) have been obtained under the Act, the Investment Company Act or
the Advisers Act, and (ii) may be required by the New York Stock
Exchange or under state securities or "blue sky" laws, in connection
with the purchase and distribution of the Shares by the Underwriters
pursuant to this Underwriting Agreement.
(j) The Shares are duly authorized for listing, subject to official notice
of issuance, on the New York Stock Exchange and the Fund's
Registration Statement on Form 8-A, under the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder
(collectively called the "Exchange Act"), has become effective.
(k) To the knowledge of the Fund and the Investment Manager after due
inquiry, based on representations from PricewaterhouseCoopers LLP,
whose report appears in the Prospectus, are independent public
accountants with respect to the Fund as required by the Act and the
Investment Company Act.
(l) The statement of assets and liabilities included in the Registration
Statement and the Prospectus presents fairly in all material respects,
in accordance with generally accepted accounting principles in the
United States applied on a consistent basis, the financial position of
the Fund as of the date indicated.
(m) The Fund will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets through an
asset reconciliation procedure or otherwise at reasonable intervals
and appropriate action is taken with respect to any differences.
(n) Since the date as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (i)
there has been no material adverse change in the condition, financial
or otherwise, business affairs or business of the Fund, whether or not
arising in the ordinary course of business, (ii) there have been no
transactions entered into by the Fund other than those in the ordinary
course of its business and (iii) there has been no dividend or
distribution of any kind declared, paid or made on any class of its
capital shares.
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(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or, to
the knowledge of the Fund, threatened against or affecting the Fund,
which (i) might result in any material adverse change in the
condition, financial or otherwise, business affairs or business
prospects of the Fund or might materially adversely affect the
properties or assets of the Fund or (ii) is of a character required to
be described in the Registration Statement or the Prospectus; and
there are no contracts, franchises or other documents that are of a
character required to be described in, or that are required to be
filed as exhibits to, the Registration Statement that have not been
described or filed as required.
(p) Except for stabilization transactions conducted by the Managing
Representative, and except for tender offers, Share repurchases and
the issuance or purchase of Shares pursuant to the Dividend
Reinvestment Plan effected following the date on which the
distribution of the Shares is completed in accordance with the
policies of the Fund as set forth in the Prospectus, the Fund has not
taken and will not take, directly or indirectly, any action designed
or which might be reasonably expected to cause or result in, or which
will constitute, stabilization or manipulation of the price of the
Common Shares in violation of applicable federal securities laws,
provided that, for the sake of clarity, no action taken by an
Underwriter that is an affiliate of the Fund shall be deemed to be
action taken, directly or indirectly, by the Fund for purposes of this
Section 3(p).
(q) The Fund intends to direct the investment of the proceeds of the
offering of the Shares in such a manner as to comply with the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").
(r) No advertising, sales literature or other promotional materials
(excluding road show slides or road show tapes) were authorized or
prepared by or on behalf of the Fund, the Investment Manager or the
Portfolio Manager or any representative thereof for use in connection
with the public offering or sale of the Shares other than the
definitive client brochure and the broker selling memo which were
filed with the National Association of Securities Dealers, Inc. (the
"NASD") on May 20, 2002 and the prospecting letter filed with the NASD
on May 31, 2002 (collectively referred to as the "sales materials");
the sales materials and any road show slides or road show tapes
complied and comply in all material respects with the applicable
requirements of the Act and the rules and interpretations of the NASD;
and no broker kits, road show slides, road show tapes or sales
materials authorized or prepared by the Fund or authorized or prepared
on behalf of the Fund by the Investment Manager, the Portfolio Manager
or any representative thereof for use in connection with the public
offering or sale of the Shares contained or contains any untrue
statement of a material
9
fact or omitted or omits to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
4. Representations and Warranties of the Investment Manager. The Investment
Manager represents to each Underwriter and, in the case of paragraph (f)
also to the Fund, as follows:
(a) The Investment Manager has been duly formed, is validly existing as a
limited liability company under the laws of the State of Delaware with
full power and authority to conduct all of the activities conducted by
it, to own or lease all of the assets owned or leased by it and to
conduct its business as described in the Registration Statement and
Prospectus, and the Investment Manager is duly licensed and qualified
to do business and in good standing in each jurisdiction in which it
is required to be so qualified, except to the extent that failure to
be so qualified or be in good standing would not have a material
adverse effect on the Investment Manager's ability to provide services
to the Fund; and the Investment Manager owns, possesses or has
obtained and currently maintains all governmental licenses, permits,
consents, orders, approvals and other authorizations, whether foreign
or domestic, necessary to carry on its business as contemplated in the
Registration Statement and the Prospectus.
(b) The Investment Manager is (i) duly registered as an investment adviser
under the Advisers Act and (ii) not prohibited by the Advisers Act or
the Investment Company Act from acting as the investment adviser for
the Fund as contemplated by the Investment Advisory Agreement, the
Registration Statement and the Prospectus.
(c) The Investment Manager has full power and authority to enter into each
of this Underwriting Agreement, the Investment Management Agreement
and the Portfolio Management Agreement (collectively, this
Underwriting Agreement, the Investment Management Agreement and the
Portfolio Management Agreement being referred to as the "Investment
Manager Agreements") and to carry out all the terms and provisions
hereof and thereof to be carried out by it; and each Investment
Manager Agreement has been duly and validly authorized, executed and
delivered by the Investment Manager; none of the Investment Manager
Agreements violate in any material respect any of the applicable
provisions of the Investment Company Act or the Advisers Act; and
assuming due authorization, execution and delivery by the other
parties thereto, each Investment Manager Agreement constitutes a
legal, valid and binding obligation of the Investment Manager,
enforceable in accordance with its terms, (i) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a
proceeding in
10
equity or at law) and (ii) except as rights to indemnity thereunder
may be limited by federal or state securities laws.
(d) Neither (i) the execution and delivery by the Investment Manager of
any Investment Manager Agreement nor (ii) the consummation by the
Investment Manager of the transactions contemplated by, or the
performance of its obligations under, any Investment Manager Agreement
conflicts or will conflict with, or results or will result in a breach
of, the limited liability company agreement or other organizational
documents of the Investment Manager or any agreement or instrument to
which the Investment Manager is a party or by which the Investment
Manager is bound, or any law, rule or regulation, or order of any
court, governmental instrumentality, securities exchange or
association or arbitrator, whether foreign or domestic, applicable to
the Investment Manager.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Investment
Manager of its obligations under, any Investment Manager Agreement, as
the case may be, except such as (i) have been obtained under the Act,
the Investment Company Act or the Advisers Act, and (ii) may be
required by the New York Stock Exchange or under state securities or
"blue sky" laws, in connection with the purchase and distribution of
the Shares by the Underwriters pursuant to this Underwriting
Agreement.
(f) The description of the Investment Manager and its business, and the
statements attributable to the Investment Manager, in the Registration
Statement and the Prospectus comply with the requirements of the Act
and the Investment Company Act and do not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(g) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Investment Manager, threatened against or
affecting the Investment Manager of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably
be expected to result in any material adverse change in the ability of
the Investment Manager to fulfill its respective obligations under any
Investment Manager Agreement.
(h) Except for stabilization activities conducted by the Managing
Representative and except for tender offers, Share repurchases and the
issuance or purchase of Shares pursuant to the Dividend Reinvestment
Plan effected following the date on which the distribution of the
Shares is completed in accordance with the policies of the Fund as set
forth in the
11
Prospectus, the Investment Manager has not taken and will not
take, directly or indirectly, any action designed, or which
might reasonably be expected to cause or result in, or which
will constitute, stabilization or manipulation of the price of
the Common Shares in violation of applicable federal
securities laws, provided that, for the sake of clarity, no
action taken by an Underwriter that is an affiliate of the
Investment Manager shall be deemed to be action taken,
directly or indirectly, by the Investment Manager for purposes
of this Section 4(h).
(i) None of the Fund, the Investment Manager or the Portfolio
Manager has made available any promotional materials intended
for use only by qualified broker-dealers and registered
representatives thereof by means of an Internet web site or
similar electronic means.
(j) The Portfolio Manager has been duly formed, is validly
existing as a limited liability company under the laws of
Delaware with full power and authority to conduct all of the
activities conducted by it, to own or lease all of the assets
owned or leased by it and to conduct its business as described
in the Registration Statement and Prospectus, and the
Portfolio Manager is duly licensed and qualified to do
business and in good standing in each jurisdiction in which it
is required to be so qualified, except to the extent that
failure to be so qualified or be in good standing would not
have a material adverse affect on the Portfolio Manager's
ability to provide services to the Fund; and the Portfolio
Manager owns, possesses or has obtained and currently
maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated
in the Registration Statement and the Prospectus.
(k) The Portfolio Manager is (i) duly registered as an investment
adviser under the Advisers Act and (ii) not prohibited by the
Advisers Act or the Investment Company Act from acting as the
investment sub-adviser for the Fund as contemplated by the
Portfolio Management Agreement, the Registration Statement and
the Prospectus.
(l) The Portfolio Manager has full power and authority to enter
into each of this Underwriting Agreement and the Portfolio
Management Agreement (collectively, this Underwriting
Agreement and the Portfolio Management Agreement being
referred to as the "Portfolio Manager Agreements") and to
carry out all the terms and provisions hereof and thereof to
be carried out by it; and each Portfolio Manager Agreement has
been duly and validly authorized, executed and delivered by
the Portfolio Manager; none of the Portfolio Manager
Agreements violate in any material respect any of the
applicable provisions of the Investment Company Act or the
Advisers Act; and assuming due authorization, execution and
delivery by the other parties thereto, each Portfolio Manager
Agreement constitutes a legal, valid and binding obligation of
the Portfolio Manager, enforceable
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in accordance with its terms, (i) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in
equity or at law) and (ii) except as rights to indemnity
thereunder may be limited by federal or state securities laws.
(m) Neither (i) the execution and delivery by the Portfolio Manager
of any Portfolio Manager Agreement nor (ii) the consummation by
the Portfolio Manager of the transactions contemplated by, or the
performance of its obligations under, any Portfolio Manager
Agreement conflicts or will conflict with, or results or will
result in a breach of, the limited liability company agreement or
other organizational documents of the Portfolio Manager or any
agreement or instrument to which the Portfolio Manager is a party
or by which the Portfolio Manager is bound, or any law, rule or
regulation, or order of any court, governmental instrumentality,
securities exchange or association or arbitrator, whether foreign
or domestic, applicable to the Portfolio Manager.
(n) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or
association, whether foreign or domestic, is required for the
consummation of the transactions contemplated in, or the
performance by the Portfolio Manager of its obligations under,
any Portfolio Manager Agreement, as the case may be, except such
as (i) have been obtained under the Act, the Investment Company
Act or the Advisers Act, and (ii) may be required by the New York
Stock Exchange or under state securities or "blue sky" laws, in
connection with the purchase and distribution of the Shares by
the Underwriters pursuant to this Underwriting Agreement.
(o) The description of the Portfolio Manager and its business, and
the statements attributable to the Portfolio Manager, in the
Registration Statement and the Prospectus comply with the
requirements of the Act and the Investment Company Act and do
not contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading.
(p) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending
or, to the knowledge of the Portfolio Manager, threatened
against or affecting the Portfolio Manager of a nature
required to be disclosed in the Registration Statement or
Prospectus or that might reasonably be expected to result in
any material adverse change in the ability of the Portfolio
Manager to fulfill its respective obligations under any
Portfolio Manager Agreement.
13
(q) Except for stabilization activities conducted by the Managing
Representative and except for tender offers, Share repurchases
and the issuance or purchase of Shares pursuant to the Dividend
Reinvestment Plan effected following the date on which the
distribution of the Shares is completed in accordance with the
policies of the Fund as set forth in the Prospectus, the
Portfolio Manager has not taken and will not take, directly or
indirectly, any action designed, or which might reasonably be
expected to cause or result in, or which will constitute,
stabilization or manipulation of the price of the Common Shares
in violation of applicable federal securities laws.
5. Agreements of the Parties.
(a) If the registration statement relating to the Shares has not yet
become effective, the Fund will promptly file any Final
Amendment, if not previously filed, with the Commission, and will
use its best efforts to cause such registration statement to
become effective and, as soon as the Fund is advised, will advise
the Managing Representative when the Registration Statement or
any amendment thereto has become effective. If the Registration
Statement has become effective and the Prospectus contained
therein omits certain information at the time of effectiveness
pursuant to Rule 430A under the Act, the Fund will file a 430A
Prospectus pursuant to Rule 497(h) under the Act as promptly as
practicable, but no later than the second business day following
the earlier of the date of the determination of the offering
price of the Shares or the date the Prospectus is first used
after the Effective Date. If the Registration Statement has
become effective and the Prospectus contained therein does not so
omit such information, the Fund will file a Prospectus pursuant
to Rule 497(b) or a certification pursuant to Rule 497(j) under
the Act as promptly as practicable, but no later than the fifth
business day following the date of the later of the Effective
Date or the commencement of the public offering of the Shares
after the Effective Date. In either case, the Fund will provide
you satisfactory evidence of the filing. The Fund will not file
with the Commission any Prospectus or any other amendment (except
any post-effective amendment which is filed with the Commission
after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which distribution of
the Shares is completed) or supplement to the Registration
Statement or the Prospectus unless a copy has first been
submitted to the Managing Representative a reasonable time before
its filing and the Managing Representative has not objected to it
in writing within a reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the Fund will
advise the Managing Representative promptly (1) of the
issuance by the Commission of any order in respect of the
Fund, the Investment Manager or the Portfolio Manager which
relates to the Fund, or which relates to any material
arrangements or proposed material arrangements involving the
14
Fund, the Investment Manager or the Portfolio Manager, (2) of the
initiation or threatening of any proceedings for, or receipt by
the Fund of any notice with respect to, any suspension of the
qualification of the Shares for sale in any jurisdiction or the
issuance of any order by the Commission suspending the
effectiveness of the Registration Statement, (3) of receipt by
the Fund, or any representative or attorney of the Fund, of any
other communication from the Commission relating in any material
way to the Fund, the Registration Statement, the Notification,
any Preliminary Prospectus, the Prospectus or to the transactions
contemplated by this Underwriting Agreement and (4) the issuance
by any court, regulatory body, administrative agency or other
governmental agency or body, whether foreign or domestic, of any
order, ruling or decree, or the threat to initiate any
proceedings with respect thereto, regarding the Fund, which
relates in any material way to the Fund or any material
arrangements or proposed material arrangements involving the
Fund. The Fund will make every reasonable effort to prevent the
issuance of any order suspending the effectiveness of the
Registration Statement and, if any such order is issued, to
obtain its lifting as soon as possible.
(c) If not delivered prior to the date of this Underwriting
Agreement, the Fund will deliver to the Managing Representative,
without charge, a signed copy of the Registration Statement and
the Notification and of any amendments (except any post-effective
amendment which is filed with the Commission after the later of
(x) one year from the date of this Underwriting Agreement or (y)
the date on which the distribution of the Shares is completed) to
either the Registration Statement or the Notification (including
all exhibits filed with any such document) and as many conformed
copies of the Registration Statement and any amendments thereto
(except any post-effective amendment which is filed with the
Commission after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the distribution
of the Shares is completed) (excluding exhibits) as the Managing
Representative may reasonably request.
(d) During such period as a prospectus is required by law to be
delivered by an underwriter or a dealer, the Fund will
deliver, without charge, to you, the Underwriters and any
dealers, at such office or offices as you may designate, as
many copies of the Prospectus as you may reasonably request,
and, if any event occurs during such period as a result of
which it is necessary to amend or supplement the Prospectus,
in order to make the statements therein, in light of the
circumstances under which they were made, not misleading in
any material respect, or if during such period it is necessary
to amend or supplement the Prospectus to comply with the Act
or the Investment Company Act, the Fund promptly will prepare,
submit to the Managing Representative, file with the
Commission and deliver, without charge, to the Underwriters
and to dealers (whose names and addresses the Managing
Representative will furnish to the Fund) to whom
15
Shares may have been sold by the Underwriters, and to other
dealers on request, amendments or supplements to the
Prospectus so that the statements in such Prospectus, as so
amended or supplemented, will not, in light of the
circumstances under which they were made, be misleading in any
material respect and will comply with the Act and the
Investment Company Act; provided that if the amendment or
supplement is required exclusively as a result of a
misstatement in or omission from the information provided to
the Fund in writing by the Underwriters expressly for use in
the Prospectus, the Fund may deliver such amendment or
supplement to the Underwriters and dealers at a reasonable
charge not to exceed the actual cost thereof to the Fund.
Delivery by the Underwriters of any such amendments or
supplements to the Prospectus will not constitute a waiver of
any of the conditions in Section 6 hereof.
(e) The Fund will make generally available to holders of the
Fund's securities, as soon as practicable but in no event
later than the last day of the 18th full calendar month
following the calendar quarter in which the Effective Date
falls, an earnings statement, if applicable, satisfying the
provisions of the last paragraph of Section 11(a) of the Act
and, at the option of the Fund, Rule 158 under the Act.
(f) If the transactions contemplated by this Underwriting Agreement
are consummated, the Fund shall pay all costs and expenses
incident to the performance of the obligations of the Fund
under this Underwriting Agreement (to the extent such expenses
do not, in the aggregate, exceed $0.03 per Share), including
but not limited to costs and expenses of or relating to (1)
the preparation, printing and filing of the Registration
Statement and exhibits to it, each Preliminary Prospectus, the
Prospectus and all amendments and supplements thereto, (2) the
issuance of the Shares and the preparation and delivery of
certificates for the Shares, (3) the registration or
qualification of the Shares for offer and sale under the
securities or "blue sky" laws of the jurisdictions referred to
in the foregoing paragraph, including the fees and
disbursements of counsel for the Underwriters in that
connection, and the preparation and printing of any
preliminary and supplemental "blue sky" memoranda, (4) the
furnishing (including costs of design, production, shipping
and mailing) to the Underwriters and dealers of copies of each
Preliminary Prospectus relating to the Shares, the sales
materials, the Prospectus, and all amendments or supplements
to the Prospectus, and of the other documents required by this
Section to be so furnished, (5) the filing requirements of the
NASD, in connection with its review of the financing,
including filing fees and the disbursements of counsel for the
Underwriters in that connection, (6) all transfer taxes, if
any, with respect to the sale and delivery of the Shares to
the Underwriters, (7) the listing of the Shares on the New
York Stock Exchange, and (8) the transfer agent for the
Shares. To the extent the foregoing costs and expenses
incident to the performance of the obligations of the Fund
under this Underwriting Agreement exceed,
16
in the aggregate, $0.03 per Share, PIMCO Funds Advisors or an
affiliate will pay all such excess costs and expenses.
(g) If the transactions contemplated by this Underwriting Agreement
are not consummated, except as otherwise provided herein, no
party will be under any liability to any other party, except that
(i) if this Underwriting Agreement is terminated by (A) the Fund
or the Investment Manager pursuant to any of the provisions
hereof or (B) by you or the Underwriters because of any
inability, failure or refusal on the part of the Fund or the
Investment Manager to comply with any material terms or because
any of the conditions in Section 6 are not satisfied, the
Investment Manager or an affiliate and the Fund, jointly and
severally, will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees, disbursements and other
charges of their counsel) reasonably incurred by them in
connection with the proposed purchase and sale of the Shares and
(ii) no Underwriter who has failed or refused to purchase the
Shares agreed to be purchased by it under this Underwriting
Agreement, in breach of its obligations pursuant to this
Underwriting Agreement, will be relieved of liability to the
Fund, the Investment Manager and the other Underwriters for
damages occasioned by its default.
(h) Without the prior written consent of the Managing Representative,
the Fund will not offer, sell or register with the Commission, or
announce an offering of, any equity securities of the Fund,
within 180 days after the Effective Date, except for the Shares
as described in the Prospectus and any issuances of Common Shares
pursuant to the Dividend Reinvestment Plan and except in
connection with any offering of preferred shares of beneficial
interest as contemplated by the Prospectus.
(i) The Fund will use its best efforts to cause the Shares to be duly
authorized for listing by the New York Stock Exchange prior to
the date the shares are issued.
(j) The Fund will direct the investment of the net proceeds of the
offering of the Shares in such a manner as to comply with the
investment objective and policies of the Fund as described in the
Prospectus.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Shares are subject to the accuracy on the
date of this Underwriting Agreement, and on each of the Closing Dates,
of the representations of the Fund and the Investment Manager in this
Underwriting Agreement, to the accuracy and completeness of all
material statements made by the Fund and the Investment Manager or any
of their respective officers in any certificate delivered to the
Managing Representative or its counsel pursuant to this Underwriting
Agreement, to performance by the Fund and the Investment Manager of
their respective obligations under this Underwriting Agreement and to
each of the following additional conditions:
17
(a) The Registration Statement must have become effective by 5:30
p.m., New York City time, on the date of this Underwriting
Agreement or such later date and time as the Managing
Representative consents to in writing. The Prospectus must have
been filed in accordance with Rule 497(b) or (h) or a certificate
must have been filed in accordance with Rule 497(j), as the case
may be, under the Act.
(b) No order suspending the effectiveness of the Registration
Statement may be in effect and no proceedings for such purpose
may be pending before or, to the knowledge of counsel to the
Underwriters, threatened by the Commission, and any requests for
additional information on the part of the Commission (to be
included in the Registration Statement or the Prospectus or
otherwise) must be complied with or waived to the reasonable
satisfaction of the Managing Representative.
(c) Since the dates as of which information is given in the
Registration Statement and the Prospectus, (i) there must not
have been any material change in the Common Shares or liabilities
of the Fund except as set forth in or contemplated by the
Prospectus; (ii) there must not have been any material adverse
change in the general affairs, prospects, management, business,
financial condition or results of operations of the Fund, the
Investment Manager or the Portfolio Manager whether or not
arising from transactions in the ordinary course of business as
set forth in or contemplated by the Prospectus which in the
opinion of the Managing Representative would materially adversely
affect the market for the Shares; (iii) the Fund must not have
sustained any material loss or interference with its business
from any court or from legislative or other governmental action,
order or decree, whether foreign or domestic, or from any other
occurrence not described in the Registration Statement and
Prospectus; and (iv) there must not have occurred any event that
makes untrue or incorrect in any material respect any statement
or information contained in the Registration Statement or
Prospectus or that is not reflected in the Registration Statement
or Prospectus but should be reflected therein in order to make
the statements or information therein (in the case of the
Prospectus, in light of the circumstances in which they were
made) not misleading in any material respect.
(d) The Managing Representative must have received on each Closing
Date a certificate, dated such date, of the President, a
Vice-President or Managing Director and the chief financial or
accounting officer of each of the Fund and the Investment Manager
certifying that (i) the signers have carefully examined the
Registration Statement, the Prospectus, and this Underwriting
Agreement, (ii) the representations of the Fund (with respect to
the certificates from such Fund officers) and the representations
of the Investment Manager (with respect to the certificates from
such officers of the Investment Manager) in this Underwriting
Agreement are accurate on and as of the date of the certificate,
(iii) there has not been any material
18
adverse change in the general affairs, prospects, management,
business, financial condition or results of operations of the
Fund (with respect to the certificates from such Fund officers)
or the Investment Manager (with respect to the certificates from
such officers of the Investment Manager), which change would
materially and adversely affect the ability of the Fund or the
Investment Manager, as the case may be, to fulfill its
obligations under this Underwriting Agreement or the Investment
Management Agreement, whether or not arising from transactions in
the ordinary course of business, (iv) with respect to the Fund
only, to the knowledge of such officers after reasonable
investigation, no order suspending the effectiveness of the
Registration Statement, prohibiting the sale of any of the Shares
or otherwise having a material adverse effect on the Fund has
been issued and no proceedings for any such purpose are pending
before or threatened by the Commission or any other regulatory
body, whether foreign or domestic, (v) to the knowledge of the
officers of the Investment Manager, after reasonable
investigation, no order having a material adverse effect on the
ability of the Investment Manager to fulfill its obligations
under this Underwriting Agreement or the Investment Advisory
Agreement, as the case may be, has been issued and no proceedings
for any such purpose are pending before or threatened by the
Commission or any other regulatory body, whether foreign or
domestic, and (vi) each of the Fund (with respect to the
certificates from such Fund officers) and the Investment Manager
(with respect to the certificates from such officers of the
Investment Manager) has performed all of its respective
agreements that this Underwriting Agreement requires it to
perform by such Closing Date (to the extent not waived in writing
by the Managing Representative).
(e) You must have received on each Closing Date the opinions dated
such Closing Date substantially in the form of Schedules B, C and
D and to this Underwriting Agreement from the counsel identified
in each such Schedules, or in such other form as is acceptable to
counsel for the Underwriters.
(f) You must have received on each Closing Date from Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ LLP and its affiliated entities an opinion
dated such Closing Date with respect to the Fund, the Shares, the
Registration Statement and the Prospectus, this Underwriting
Agreement and the form and sufficiency of all proceedings taken
in connection with the sale and delivery of the Shares. Such
opinion and proceedings shall fulfill the requirements of this
Section 6(f) only if such opinion and proceedings are
satisfactory in all respects to the Managing Representative. The
Fund, the Investment Manager and the Portfolio Manager must have
furnished to such counsel such documents as counsel may
reasonably request for the purpose of enabling them to render
such opinion.
19
(g) The Managing Representative must have received on the date this
Underwriting Agreement is signed and delivered by you a signed
letter, dated such date, substantially in the form of Schedule E
to this Underwriting Agreement from the firm of accountants
designated in such Schedule. The Managing Representative also
must have received on each Closing Date a signed letter from such
accountants, dated as of such Closing Date, confirming on the
basis of a review in accordance with the procedures set forth in
their earlier letter that nothing has come to their attention
during the period from a date not more than five business days
before the date of this Underwriting Agreement, specified in the
letter, to a date not more than five business days before such
Closing Date, that would require any change in their letter
referred to in the foregoing sentence.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Underwriting Agreement will comply only if they
are in form and scope reasonably satisfactory to counsel for the
Underwriters, provided that any such documents, forms of which are
annexed hereto, shall be deemed satisfactory to such counsel if
substantially in such form.
7. Termination. This Underwriting Agreement may be terminated by the
Managing Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration
Statement and the time when any of the Shares are first generally
offered pursuant to this Underwriting Agreement by the Managing
Representative to dealers by letter or telegram;
(b) at or before any Closing Date if, in the sole judgment of the
Managing Representative, payment for and delivery of any Shares
is rendered impracticable or inadvisable because (i) trading in
the equity securities of the Fund is suspended by the Commission
or by the principal exchange that lists the Shares, (ii) trading
in securities generally on the New York Stock Exchange or the
Nasdaq Stock Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established
on such exchange or over-the-counter market, (iii) additional
material governmental restrictions, not in force on the date of
this Underwriting Agreement, have been imposed upon trading in
securities or trading has been suspended on any U.S. securities
exchange, (iv) a general banking moratorium has been established
by U.S. federal or New York authorities or (v) any material
adverse change in the financial or securities markets in the
United States or in political, financial or economic conditions
in the United States or any outbreak or material escalation of
hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred
the effect of any of which is such as to make it, in the sole
judgment of the Managing
20
Representative, impracticable or inadvisable to market the Shares
on the terms and in the manner contemplated by the Prospectus; or
(c) at or before any Closing Date, if any of the conditions specified
in Section 6 have not been fulfilled when and as required by this
Underwriting Agreement.
8. Substitution of Underwriters. If one or more of the Underwriters fails
(other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on any Closing Date the Shares
agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Managing Representative may find one or more
substitute underwriters to purchase such Shares or make such other
arrangements as the Managing Representative deems advisable, or one or
more of the remaining Underwriters may agree to purchase such Shares
in such proportions as may be approved by the Managing Representative,
in each case upon the terms set forth in this Underwriting Agreement.
If no such arrangements have been made within 36 hours after such
Closing Date, and
(a) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date does not exceed 10% of the
Shares that the Underwriters are obligated to purchase on such
Closing Date, each of the nondefaulting Underwriters will be
obligated to purchase such Shares on the terms set forth in this
Underwriting Agreement in proportion to their respective
obligations under this Underwriting Agreement, or
(b) the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date exceeds 10% of the Shares to be
purchased by all the Underwriters on such Closing Date, the Fund
will be entitled to an additional period of 24 hours within which
to find one or more substitute underwriters reasonably
satisfactory to the Managing Representative to purchase such
Shares on the terms set forth in this Underwriting Agreement.
Upon the occurrence of the circumstances described in the
foregoing paragraph (b), either the Managing Representative or the
Fund will have the right to postpone the applicable Closing Date for
not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or the Prospectus) may be effected by the
Managing Representative and the Fund. If the number of Shares to be
purchased on such Closing Date by such defaulting Underwriter or
Underwriters exceeds 10% of the Shares that the Underwriters are
obligated to purchase on such Closing Date, and none of the
nondefaulting Underwriters or the Fund makes arrangements pursuant to
this Section within the period stated for the purchase of the Shares
that the defaulting Underwriters agreed to purchase, this Underwriting
Agreement will terminate without liability on the part of any
nondefaulting Underwriter, the Fund, the Investment Manager or the
Portfolio
21
Manager, except as provided in Sections 5(g) and 9 hereof. Any action taken
under this Section will not affect the liability of any defaulting
Underwriter to the Fund or to the nondefaulting Underwriters arising out of
such default. A substitute underwriter will become an Underwriter for all
purposes of this Underwriting Agreement.
9. Indemnity and Contribution.
(a) Each of the Fund and the Investment Manager, jointly and severally,
agrees to indemnify, defend and hold harmless each Underwriter, its
partners, directors and officers, and any person who controls any
Underwriter within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, and the successors and assigns of all of the
foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation)
which, jointly or severally, any such Underwriter or any such person
may incur under the Act, the Exchange Act, the Investment Company Act,
the Advisers Act, the common law or otherwise, insofar as such loss,
damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Fund) or in a Prospectus (the term "Prospectus" for the purpose of
this Section 9 being deemed to include any Preliminary Prospectus, the
sales materials, the Prospectus and the Prospectus as amended or
supplemented by the Fund), or arises out of or is based upon any
omission or alleged omission to state a material fact required to be
stated in either such Registration Statement or Prospectus or
necessary to make the statements made therein (with respect to the
Prospectus, in light of the circumstances under which they were made)
not misleading, except insofar as any such loss, damage, expense,
liability or claim arises out of or is based upon any untrue statement
or alleged untrue statement of a material fact contained in and in
conformity with information furnished in writing by or on behalf of
any Underwriter to the Fund, the Investment Manager or the Portfolio
Manager expressly for use with reference to any Underwriter in such
Registration Statement or such Prospectus or arises out of or is based
upon any omission or alleged omission to state a material fact in
connection with such information required to be stated in such
Registration Statement or such Prospectus or necessary to make such
information (with respect to the Prospectus, in light of the
circumstances under which they were made) not misleading, provided,
however, that the indemnity agreement contained in this subsection (a)
with respect to any Preliminary Prospectus or amended Preliminary
Prospectus shall not inure to the benefit of any Underwriter (or to
the benefit of any person controlling such Underwriter) from whom the
person asserting any such loss, damage, expense, liability or claim
purchased the Shares which is the subject thereof if the Prospectus
corrected any such alleged untrue statement or omission and if such
Underwriter failed to send or give a
22
copy of the Prospectus to such person at or prior to the written
confirmation of the sale of such Shares to such person, unless the
failure is the result of noncompliance by the Fund with Section 5(d)
hereof.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Fund or the Investment Manager
pursuant to the foregoing paragraph, such Underwriter or such person
shall promptly notify the Fund and the Investment Manager in writing
of the institution of such Proceeding and the Fund or the Investment
Manager shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that
the omission to so notify the Fund or the Investment Manager shall not
relieve the Fund or the Investment Manager from any liability which
the Fund or the Investment Manager may have to any Underwriter or any
such person or otherwise. Such Underwriter or such person shall have
the right to employ its or their own counsel in any such case, but the
reasonable fees and expenses of such counsel shall be at the expense
of such Underwriter or of such person unless the employment of such
counsel shall have been authorized in writing by the Fund or the
Investment Manager, as the case may be, in connection with the defense
of such Proceeding or the Fund or the Investment Manager shall not
have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such
Proceeding or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from, additional to or in conflict with those available to
the Fund or the Investment Manager (in which case the Fund, the
Investment Manager shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties), in any
of which events such reasonable fees and expenses shall be borne by
the Fund or the Investment Manager and paid as incurred (it being
understood, however, that the Fund or the Investment Manager shall not
be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). Neither the
Fund nor the Investment Manager shall be liable for any settlement of
any Proceeding effected without its written consent but if settled
with the written consent of the Fund or the Investment Manager, the
Fund or the Investment Manager, as the case may be, agrees to
indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
indemnifying party agrees that it shall be liable for any settlement
of any
23
Proceeding effected without its written consent if (i) such settlement
is entered into more than 60 business days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying
party shall not have reimbursed the indemnified party in accordance
with such request prior to the date of such settlement and (iii) such
indemnified party shall have given the indemnifying party at least 30
days' prior notice of its intention to settle. No indemnifying party
shall, without the prior written consent of the indemnified party,
effect any settlement of any pending or threatened Proceeding in
respect of which any indemnified party is or could have been a party
and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the
subject matter of such Proceeding and does not include an admission of
fault, culpability or a failure to act, by or on behalf of such
indemnified party.
(b) Each Underwriter severally agrees to indemnify, defend and hold
harmless the Fund and the Investment Manager, and each of their
respective shareholders, partners, managers, members, trustees,
directors and officers, and any person who controls the Fund or the
Investment Manager within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, and the successors and assigns of all
of the foregoing persons from and against any loss, damage, expense,
liability or claim (including the reasonable cost of investigation)
which, jointly or severally, the Fund or the Investment Manager or any
such person may incur under the Act, the Exchange Act, the Investment
Company Act, the Advisers Act, the common law or otherwise, insofar as
such loss, damage, expense, liability or claim arises out of or is
based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information
furnished in writing by or on behalf of such Underwriter to the Fund
or the Investment Manager expressly for use with reference to such
Underwriter in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the
Fund) or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection
with such information required to be stated in such Registration
Statement or such Prospectus or necessary to make such information not
misleading (with respect to the Prospectus, in light of the
circumstances under which they were made).
If any Proceeding is brought against the Fund, the Investment
Manager or any such person in respect of which indemnity may be sought
against any Underwriter pursuant to the foregoing paragraph, the Fund,
the Investment Manager or such person shall promptly notify such
Underwriter in writing of the institution of such Proceeding and such
Underwriter shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified
party
24
and payment of all fees and expenses; provided, however, that the
omission to so notify such Underwriter shall not relieve such
Underwriter from any liability which such Underwriter may have to the
Fund, the Investment Manager or any such person or otherwise. The
Fund, the Investment Manager or such person shall have the right to
employ its own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Fund, the Investment
Manager or such person, as the case may be, unless the employment of
such counsel shall have been authorized in writing by such Underwriter
in connection with the defense of such Proceeding or such Underwriter
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such
Proceeding or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to or in conflict with those available to
such Underwriter (in which case such Underwriter shall not have the
right to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but such Underwriter may employ counsel
and participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such Underwriter), in any of
which events such fees and expenses shall be borne by such Underwriter
and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such
Proceeding). No Underwriter shall be liable for any settlement of any
such Proceeding effected without the written consent of such
Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold harmless
the Fund, the Investment Manager and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its
written consent if (i) such settlement is entered into more than 60
business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall
have given the indemnifying party at least 30 days' prior notice of
its intention to settle. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement
of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such indemnified party, unless such
settlement includes an unconditional
25
release of such indemnified party from all liability on claims
that are the subject matter of such Proceeding and does not
include an admission of fault, culpability or a failure to act,
by or on behalf of such indemnified party.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b)
of this Section 9 in respect of any losses, damages, expenses,
liabilities or claims referred to therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, damages, expenses,
liabilities or claims (i) in such proportion as is appropriate to
reflect the relative benefits received by the Fund and the
Investment Manager on the one hand and the Underwriters on the
other hand from the offering of the Shares or (ii) if the
allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (i) above
but also the relative fault of the Fund and the Investment
Manager on the one hand and of the Underwriters on the other in
connection with the statements or omissions which resulted in
such losses, damages, expenses, liabilities or claims, as well as
any other relevant equitable considerations. The relative
benefits received by the Fund and the Investment Manager on the
one hand and the Underwriters on the other shall be deemed to be
in the same respective proportions as the total proceeds from the
offering (net of underwriting discounts and commissions but
before deducting expenses) received by the Fund and the total
underwriting discounts and commissions received by the
Underwriters, bear to the aggregate public offering price of the
Shares. The relative fault of the Fund and the Investment Manager
on the one hand and of the Underwriters on the other shall be
determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact
or omission or alleged omission relates to information supplied
by the Fund or the Investment Manager or by the Underwriters and
the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission.
The amount paid or payable by a party as a result of the losses,
damages, expenses, liabilities and claims referred to in this
subsection shall be deemed to include any legal or other fees or
expenses reasonably incurred by such party in connection with
investigating, preparing to defend or defending any Proceeding.
(d) The Fund, the Investment Manager and the Underwriters agree that
it would not be just and equitable if contribution pursuant to
this Section 9 were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of
the equitable considerations referred to in subsection (c) above.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in
26
excess of the fees and commissions received by such Underwriter.
No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to
contribute pursuant to this Section 9 are several in proportion
to their respective underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section 9 and the covenants, warranties and representations of
the Fund contained in this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf
of any Underwriter, its partners, directors or officers or any
person (including each partner, officer or director of such
person) who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, or by or
on behalf of the Fund or the Investment Manager, its
shareholders, partners, managers, members, trustees, directors or
officers or any person who controls the Fund or the Investment
Manager within the meaning of Section 15 of the Act or Section 20
of the Exchange Act, and shall survive any termination of this
Agreement or the issuance and delivery of the Shares. The Fund
and the Investment Manager and each Underwriter agree promptly to
notify each other of the commencement of any Proceeding against
it and, in the case of the Fund or the Investment Manager,
against any of the Fund's or the Investment Manager's
shareholders, partners, managers, members, trustees, directors or
officers in connection with the issuance and sale of the Shares,
or in connection with the Registration Statement or Prospectus.
(f) The Fund and the Investment Manager each acknowledge that the
statements with respect to (1) the public offering of the Shares
as set forth on the cover page of and (2) stabilization and
selling concessions and reallowances of selling concessions under
the caption "Underwriting" in the Prospectus constitute the only
information furnished in writing to the Fund by the Underwriters
expressly for use in such document. The Underwriters severally
confirm that these statements are correct in all material
respects and were so furnished by or on behalf of the
Underwriters severally for use in the Prospectus.
(g) Notwithstanding any other provisions in this Section 9, no party
shall be entitled to indemnification or contribution under this
Underwriting Agreement against any loss, claim, liability,
expense or damage arising by reason of such person's willful
misfeasance, bad faith, gross negligence or reckless disregard of
its duties in the performance of its duties hereunder.
(10) Notices. Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram
and, if to the Underwriters, shall be sufficient in all respects if
delivered or sent to UBS Warburg LLC, 299
27
Park Avenue, New York, NY 10171-0026, Attention: Syndicate Department and,
if to the Fund or the Investment Manager, shall be sufficient in all
respects if delivered or sent to the Fund or the Investment Manager, as the
case may be, at the offices of the Fund or the Investment Manager at ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇.
11. Governing Law; Construction. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter
of convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and
the Fund and UBS Warburg LLC each consent to the jurisdiction of such
courts and personal service with respect thereto. The Fund and UBS Warburg
hereby consent to personal jurisdiction, service and venue in any court in
which any Claim arising out of or in any way relating to this Agreement is
brought by any third party against UBS Warburg LLC or any indemnified
party. Each of UBS Warburg LLC, the Fund (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates)
and the Investment Manager (on its behalf and, to the extent permitted by
applicable law, on behalf of its unitholders and affiliates) waives all
right to trial by jury in any action, proceeding or counterclaim (whether
based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. Each of the Fund and the Investment Manager
agrees that a final judgment in any such action, proceeding or counterclaim
brought in any such court shall be conclusive and binding upon the Fund and
the Investment Manager, as the case may be, and may be enforced in any
other courts in the jurisdiction of which the Fund or the Investment
Manager, as the case may be, is or may be subject, by suit upon such
judgment.
13. Parties at Interest. The Agreement herein set forth has been and is made
solely for the benefit of the Underwriters, the Fund and the Investment
Manager and to the extent provided in Section 9 hereof the controlling
persons, shareholders, partners, members, trustees, managers, directors and
officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators.
No other person, partnership, association or corporation (including a
purchaser, as such purchaser, from any of the Underwriters) shall acquire
or have any right under or by virtue of this Agreement.
28
14. Counterparts. This Agreement may be signed by the parties in one or more
counterparts which together shall constitute one and the same agreement
among the parties.
15. Successors and Assigns. This Agreement shall be binding upon the
Underwriters, the Fund and the Investment Manager, and any successor or
assign of any substantial portion of the Fund's, the Investment Manager's,
or any of the Underwriters' respective businesses and/or assets.
16. Disclaimer of Liability of Trustees and Beneficiaries. A copy of the
Agreement and Declaration of Trust of the Fund is on file with the
Secretary of State of The Commonwealth of Massachusetts, and notice hereby
is given that this Underwriting Agreement is executed on behalf of the Fund
by an officer or Trustee of the Fund in his or her capacity as an officer
or Trustee of the Fund and not individually and that the obligations under
or arising out of this Underwriting Agreement are not binding upon any of
the Trustees, officers or shareholders individually but are binding only
upon the assets and properties of the Fund.
29
If the foregoing correctly sets forth the understanding among the Fund, the
Investment Manager and the Underwriters, please so indicate in the space
provided below, whereupon this letter and your acceptance shall constitute a
binding agreement among the Fund, the Investment Manager and the Underwriters,
severally.
Very truly yours,
PIMCO MUNICIPAL INCOME FUND II
________________________
By:
Title:
PIMCO FUNDS ADVISORS LLC
_________________________
By:
Title:
Accepted and agreed to as of the
date first above written, on
behalf of themselves and
the other several Underwriters
named in Schedule A
UBS WARBURG LLC
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
FIRST UNION SECURITIES, INC.
PRUDENTIAL SECURITIES INCORPORATED
QUICK & ▇▇▇▇▇▇, INC. A FLEETBOSTON FINANCIAL COMPANY
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ INCORPORATED
▇▇▇▇▇ FARGO SECURITIES, LLC
▇▇▇▇▇▇▇▇▇▇ & CO. INC.
MCDONALD INVESTMENTS, INC. A KEYCORP COMPANY
By: UBS WARBURG LLC
30
____________________________
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
____________________________
By: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Director
31
SCHEDULE A
Number of Shares
Name to be Purchased
UBS Warburg [_______]
▇▇▇▇▇▇▇ Lynch, ▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated [_______]
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. [_______]
First Union Securities [_______]
Prudential Securities Incorporated [_______]
Quick & ▇▇▇▇▇▇, Inc. A FleetBoston Financial Company [_______]
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. [_______]
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated [_______]
▇▇▇▇▇ Fargo Securities, LLC [_______]
▇▇▇▇▇▇▇▇▇▇ & Co., Inc. [_______]
McDonald Investments, Inc. A KeyCorp Company [_______]
Total [_______]
SCHEDULE B
FORM OF OPINION OF
ROPES & ▇▇▇▇ REGARDING THE FUND
June [___], 2002
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
First Union Securities, Inc.
Prudential Securities Incorporated
Quick & ▇▇▇▇▇▇, Inc. A FleetBoston Financial Company
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
McDonald Investments, Inc. A KeyCorp Company
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to PIMCO Municipal Income Fund II (the "Fund")
in connection with the proposed issuance of [ ] common shares of beneficial
interest (the "Shares"). This opinion is furnished to you pursuant to Section
7(e) of the Underwriting Agreement dated as of June [___], 2002 (the
"Underwriting Agreement") among the Fund, PIMCO Funds Advisors LLC (the
"Investment Manager") and UBS Warburg LLC, CIBC World Markets Corp. and ▇.▇.
▇▇▇▇▇▇▇ & Sons, Inc., as representatives of the underwriters listed on Schedule
A thereto (the "Underwriters"). Capitalized terms used in this opinion, unless
otherwise defined, have the meanings specified in the Underwriting Agreement.
We have examined signed copies of the Registration Statement of the
Fund on Form N-2 (File No. 333-86282) under the Securities Act of 1933, as
amended (the "Securities Act") (which also constitutes the Fund's Registration
Statement on Form N-2 (File No. 811-21076) under the Investment Company Act of
1940, as amended (the "Investment Company Act")), including all exhibits
thereto, as filed with the Securities
A-2
and Exchange Commission (the "Commission") on April 15, 2002 (the "Original
Registration Statement"), Pre-Effective Amendment No. 1 to the Original
Registration Statement, including all exhibits thereto, as filed with the
Commission on May 29, 2002 ("Pre-Effective Amendment No. 1"), Pre-Effective
Amendment No. 2 to the Original Registration Statement, including all exhibits
thereto, as filed with the Commission on June [___], 2002 ("Pre-Effective
Amendment No. 2") and Pre-Effective Amendment No. 3 to the Original Registration
Statement, including all exhibits thereto, as filed with the Commission on June
[___], 2002 ("Pre-Effective Amendment No. 3," and together with Pre-Effective
Amendment No. 1, Pre-Effective Amendment No. 2 and the Original Registration
Statement, the "Registration Statement"); the Fund's Notification of
Registration on Form N-8A under the Investment Company Act, as filed with the
Commission on April 15, 2002 (the "Notification of Registration"); the Fund's
Registration Statement on Form 8-A under the Securities Exchange Act of 1934, as
amended (the "Exchange Act"), as filed with the Commission on June [___], 2002
(the "Exchange Act Registration Statement"); the Fund's Agreement and
Declaration of Trust, as amended to the date hereof (the "Declaration of
Trust"), on file in the offices of the Secretary of State of The Commonwealth of
Massachusetts and the Clerk of the City of Boston; the By-laws of the Fund, as
amended to the date hereof (the "By-laws"); a copy of the Prospectus dated June
[___], 2002, relating to the Shares and the Statement of Additional Information
of the Fund dated June [___], 2002, each as filed with the Commission pursuant
to Rule 497 under the Securities Act on June [___], 2002 (together, the
"Prospectus"); the Investment Management Agreement dated as of June [___], 2002,
between the Fund and the Investment Manager (the "Investment Management
Agreement"); the Portfolio Management Agreement dated as of June [___], 2002,
between Pacific Investment Management Company LLC (the "Portfolio Manager") and
the Investment Manager (the "Portfolio Management Agreement"); the Custodian
Agreement dated as of June [___], 2002, between the Fund and State Street Bank
and Trust Company (the "Custodian Agreement") and the Transfer Agency Services
Agreement dated as of June [___], 2002, between the Fund and PFPC Inc. (the
"Transfer Agency Agreement," and together with the Custodian Agreement, the
"Fund Agreements"); the Terms and Conditions of the Fund's Dividend Reinvestment
Plan; and the Underwriting Agreement. Additionally, we have relied upon the oral
representation of Mr. ▇▇▇▇▇ ▇'▇▇▇▇▇▇ of the Commission staff to the effect that
the Registration Statement and the Exchange Act Registration Statement became
effective as of [___ a.m./p.m.] on June [___], 2002; a letter dated June [___],
2002, from ▇▇. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, Executive Vice President of the New York Stock
Exchange, authorizing the Shares for listing on such Exchange; and the oral
representation by the [_________] of the Commission [staff] that as of [ ]
[a.m.], no stop order suspending the effectiveness of the Registration Statement
had been issued and no proceeding for any such purpose was pending or
threatened.
We have also examined and relied upon the original or copies of minutes of
the meetings or written consents of the sole shareholder and the Board of
Trustees of the Fund, the documents delivered to the Underwriters by the Fund
and the Investment Manager dated as of the date hereof pursuant to the
Underwriting Agreement and such
A-3
other documents, including certificates of officers of the Fund and certificates
of the Secretary of State of the State of New York as to the qualification and
good standing of the Fund as a foreign entity in New York and the Secretary of
State of the State of California as to the qualification and good standing of
the Fund as a foreign entity in California, as we have deemed necessary for
purposes of rendering our opinions below. We have assumed the genuineness of the
signatures on all documents examined by us, the authenticity of all documents
submitted to us as originals and the conformity to the corresponding originals
of all documents submitted to us as copies.
We express no opinion as to the laws of any jurisdiction other than The
Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that the Underwriting Agreement provides that it is to be
governed by and construed in accordance with the laws of the State of New York
and the Transfer Agency Agreement provides that it is to be governed by and
construed in accordance with the laws of the State of Delaware, and to the fact
that the Investment Management Agreement does not provide that it is to be
governed by the laws of any particular jurisdiction. In rendering the opinion as
to enforceability expressed in paragraph [5] below, we have limited the scope of
our opinion to the conclusions that would be reached by a Massachusetts court
that had determined that each of the Underwriting Agreement, the Investment
Management Agreement and the Fund Agreements would be governed by, and construed
in accordance with, the internal laws of The Commonwealth of Massachusetts.
Further, we express no opinion as to the state securities or Blue Sky laws of
any jurisdiction, including The Commonwealth of Massachusetts.
For purposes of our opinion set forth in paragraph [2] below with respect
to the power and authority of the Fund to own, lease and operate its properties
and conduct its business, we have relied upon certificates of officers of the
Fund as to the states in which the Fund leases or owns real property or in which
it conducts material operations.
Insofar as this opinion relates to factual matters, we have made inquiries
to officers of the Fund, the Investment Manager and the Portfolio Manager to the
extent we believe reasonable with respect to such matters and have relied upon
representations made by the Fund and the Investment Manager in the Underwriting
Agreement, representations made by the Portfolio Manager to the Investment
Manager and representations made to us by one or more officers of the Fund, the
Investment Manager or the Portfolio Manager. We have not independently verified
the accuracy of such representations. In respect of our opinions set forth in
paragraphs [7], [9] and [11] below, we have not searched the dockets of any
court, administrative body or other filing office in any jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Registration Statement and all post-effective amendments on or
before the Closing Date, if any, are effective under the Securities Act; the
filing of the Prospectus pursuant to Rule 497 under the Securities Act has been
made in the manner
A-4
and within the time period required by Rule 497; and based upon oral inquiries
to the Commission staff on June [___], 2002, and on this date, no stop order
suspending the effectiveness of the Registration Statement has been issued and
no proceeding for any such purpose is pending or threatened by the Commission.
2. The Fund has been duly organized and is validly existing and in good
standing as an unincorporated voluntary association under and by virtue of the
laws of The Commonwealth of Massachusetts and has full power and authority to
own or lease its properties and to conduct its business as described in the
Registration Statement and the Prospectus. The Fund is duly qualified to do
business and is in good standing as a foreign [entity] in New York and
California.
3. The Fund's authorized capitalization is as set forth in the Registration
Statement and the Prospectus. The Fund has an indefinite number of authorized
common shares of beneficial interest, par value $0.00001 per share. The Shares
conform in all material respects as to legal matters to the description of them
under the captions "Description of shares" in the Prospectus. All outstanding
common shares of beneficial interest of the Fund have been duly authorized and
are validly issued, fully paid and, subject to the penultimate paragraph below,
non-assessable. The Shares have been duly authorized and, when issued and
delivered to the Underwriters against payment therefor in accordance with the
terms of the Underwriting Agreement, will be validly issued, fully paid and,
subject to the penultimate paragraph below, non-assessable. Except as
contemplated by the Underwriting Agreement, no person is entitled to any
preemptive or other similar rights with respect to the Shares.
4. To the best of our knowledge after due inquiry, including oral inquiries
of the Commission staff on June [___], 2002, the Fund is duly registered with
the Commission under the Investment Company Act as a closed-end management
investment company, and all required action has been taken by the Fund under the
Securities Act, the Investment Company Act and the rules and regulations
thereunder in connection with the issuance and sale of the Shares to make the
public offering and consummate the sale of the Shares pursuant to the
Underwriting Agreement.
5. The Fund has full power and authority to enter into each of the Fund
Agreements and to perform all of the terms and provisions thereof to be carried
out by it. Each Fund Agreement has been duly and validly authorized, executed
and delivered by the Fund. Each Fund Agreement complies in all material respects
with all applicable provisions of the Investment Company Act and the Investment
Advisers Act of 1940, as amended, as the case may be. Assuming due
authorization, execution and delivery by the other parties thereto, each Fund
Agreement constitutes the legal, valid and binding obligation of the Fund
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, moratorium, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law).
6. The Fund has full power and authority to enter into each of the
Investment Management Agreement and the Underwriting Agreement and to perform
all of the terms
A-5
and provisions thereof to be carried out by it. The Investment Management
Agreement and the Underwriting Agreement have been duly and validly authorized,
executed and delivered by the Fund.
7. None of (a) the execution and delivery by the Fund of the Investment
Management Agreement, the Underwriting Agreement or any of the Fund Agreements,
(b) the issue and sale by the Fund of the Shares as contemplated by the
Underwriting Agreement and (c) the performance by the Fund of its obligations
under the Investment Management Agreement, the Underwriting Agreement or any of
the Fund Agreements or consummation by the Fund of the other transactions
contemplated by the Investment Management Agreement, the Underwriting Agreement
or any of the Fund Agreements conflicts or will conflict with, or results or
will result in a breach of, the Declaration of Trust or the By-laws or, to our
knowledge, any agreement or instrument to which the Fund is a party or by which
the Fund is bound, or violates or will violate any federal statute, law or
regulation or any judgment, injunction, order or decree of any federal
governmental agency or body that is applicable to the Fund and that is known to
us, which violation would have a material adverse effect on the condition or
business of the Fund.
8. To the best of our knowledge, the Fund is not currently in breach of,
or in default under, any material written agreement or instrument to which it is
a party or by which it or its property is bound or affected.
9. No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or securities association is
required by the Fund for the consummation by the Fund of the transactions
contemplated in the Investment Management Agreement, the Underwriting Agreement
and the Fund Agreements, except such as (a) have been obtained under the
Securities Act, the Investment Company Act or the Exchange Act and (b) may be
required by the New York Stock Exchange or the National Association of
Securities Dealers, Inc. or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
pursuant to the Underwriting Agreement.
10. To the best of our knowledge after due inquiry, including oral
inquiries of an employee of the New York Stock Exchange on June [___], 2002, the
Shares have been authorized for listing on the New York Stock Exchange, subject
to official notice of issuance, and to the best of our knowledge after due
inquiry, including oral inquiries of the Commission staff on June [___], 2002,
the Exchange Act Registration Statement has become effective.
11. To our knowledge, there are no legal or governmental proceedings
pending or threatened against the Fund, or to which the Fund or any of its
properties is subject, that are required to be described in the Registration
Statement or the Prospectus but are not described therein as required.
12. To the best of our knowledge after due inquiry, there are no
agreements, contracts, indentures, leases or other instruments that are required
to be described in the
A-6
Registration Statement or the Prospectus or to be filed as an exhibit to the
Registration Statement which have not been so described or filed as an exhibit
or incorporated therein by reference.
13. Each of the sections in the Prospectus entitled "Tax matters," to the
extent that it states matters of United States law or legal conclusions with
respect thereto, presents a fair summary of the principal federal income tax
rules currently in effect applicable to the Fund and to the purchase, ownership
and disposition of the Shares.
14. The Registration Statement (except for the financial statements and
schedules, the notes thereto and any schedules and other financial data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), at the time it became effective, and the Prospectus
(except as aforesaid), as of the date thereof, complied as to form in all
material respects to the applicable requirements of the Securities Act and the
Investment Company Act.
We have not independently verified the accuracy, completeness or fairness
of the statements made or the information contained in the Registration
Statement or the Prospectus and, except in the respects and to the extent set
forth in paragraphs [3] and [14] above, we are not passing upon and do not
assume any responsibility therefor. In the course of the preparation by the Fund
of the Registration Statement and the Prospectus, we have participated in
discussions with your representatives and employees and officers of the Fund,
the Investment Manager and the Portfolio Manager and in discussions with the
Fund's independent accountants, in which the business and the affairs of the
Fund, the Investment Manager and the Portfolio Manager and the contents of the
Registration Statement and the Prospectus were discussed. There is no assurance
that all material facts as to the Fund, the Investment Manager, the Portfolio
Manager and their affairs were disclosed to us or that our familiarity with the
Fund and the Investment Manager or any familiarity with the Portfolio Manager is
such that we have necessarily recognized the materiality of such facts as were
disclosed to us, and we have to a large extent relied upon statement of
representatives of the Fund, the Investment Manager and the Portfolio Manager as
to the materiality of the facts disclosed to us. On the basis of information
that we have gained in the course of our representation of the Fund in
connections with its preparation of the Registration Statement and the
Prospectus and our participation in the discussions referred to above, no facts
have come to our attention that would lead us to believe that as of June [___],
2002, the Registration Statement contained any untrue statement of a material
fact or omitted to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading, or that as of
the date of the Prospectus and the date hereof the Prospectus contained an
untrue statement of material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein, in light, in
each case, of the circumstances under which they were made, not misleading (in
each case, other than the financial statements and schedules, the notes thereto
and any schedules and other financial data contained or incorporated by
reference therein or omitted therefrom, as to which we express no opinion).
A-7
Under Massachusetts law, shareholders could, under certain circumstances,
be held personally liable for the obligations of the Fund. However, the Fund's
Declaration of Trust disclaims shareholder liability for acts or obligations of
the Fund and requires that notice of such disclaimer be given in each agreement,
obligation, and instrument entered into or executed by the Fund or the Trustees.
The Declaration of Trust provides for indemnification out of the property of the
Fund for all loss and expense of any shareholder held personally liable solely
by reason of being or having been a shareholder of the Fund. Thus, the risk of a
shareholder's incurring financial loss on account of being a shareholder is
limited to circumstances in which the Fund itself would be unable to meet its
obligations.
This letter and the opinions expressed herein are furnished by us to you
and are solely for benefit of the Underwriters, except that ▇▇▇▇▇▇▇, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) may rely on this letter as to all matters
governed by the laws of The Commonwealth of Massachusetts in delivering its
opinion to you on the date hereof.
Very truly yours,
Ropes & Gray
A-8
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO FUNDS ADVISORS LLC
June [___], 2002
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
First Union Securities, Inc.
Prudential Securities Incorporated
Quick & ▇▇▇▇▇▇, Inc. A FleetBoston Financial Company
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
McDonald Investments, Inc. A KeyCorp Company
as Managing Underwriters
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: PIMCO Funds Advisors LLC
Ladies and Gentlemen:
I am the General Counsel of PIMCO Funds Advisors LLC, a
Delaware limited liability company ("PIMCO Funds Advisors"), and have counseled
PIMCO Funds Advisors in such capacity in connection with the sale to you by
PIMCO [California] [New York] Municipal Income Fund II, a voluntary association
with transferable shares organized and existing under and by virtue of the laws
of The Commonwealth of Massachusetts (commonly referred to as a Massachusetts
business trust) (the "Fund"), of an aggregate of [____] common shares of
beneficial interest, of the Fund, pursuant to a registration statement on Form
N-2 under the Securities Act of 1933, as amended (the "Act") and the Investment
Company Act of 1940, as amended (the "Investment Company Act"), filed with the
Securities and Exchange Commission (the "Commission") on April 15, 2002
(Securities Act File No. 333-86282, and Investment Company Act File No.
811-21076), as amended by Amendment No. 1 filed with the Commission on May 29,
2002, Amendment No. 2 filed with the Commission on June [___], 2002 and
Amendment No. 3 filed with the Commission on June [___], 2002 [, and a
registration statement on Form N-2 under the Act and the Investment Company Act,
filed with the Commission on June [___], 2002 pursuant to Rule 462(b) under the
Act ([such registration statements collectively referred to herein as] the
"Registration
Statement"), and an underwriting agreement dated June [___], 2002 by and among
you, the Fund and PIMCO Funds Advisors (the "Underwriting Agreement").
This opinion is rendered to you pursuant to Section 6(e) of
the Underwriting Agreement. Capitalized terms used herein without definition
have the meanings assigned to them in the Underwriting Agreement.
As such counsel, I have examined such matters of fact and
questions of law as I have considered appropriate for purposes of rendering the
opinions expressed below, except where a statement is qualified as to knowledge
or awareness, in which case I have made no or limited inquiry as specified
below. I have examined, among other things, the following:
(a) the Underwriting Agreement;
(b) that certain Investment Management Agreement by and
between the Fund and the PIMCO Funds Advisors, dated as
of June [___], 2002, and;
(c) that certain Portfolio Management Agreement by and among
Pacific Investment Management Company LLC and PIMCO funds
Advisors, as accepted and agreed to by the Fund, dated as
of June [___], 2002.
The documents described in subsection (a)-(c) above are
referred to herein collectively as the "Transaction Documents."
In my examination, I have assumed the genuineness of all
signatures (other than those of officers of PIMCO Funds Advisors on the
Transaction Documents), the authenticity of all documents submitted to me as
originals, and the conformity to authentic original documents of all documents
submitted to me as copies.
I have been furnished with, and with your consent have relied
upon, certificates of officers of PIMCO Funds Advisors with respect to certain
factual matters. In addition, I have obtained and relied upon such certificates
and assurances from public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of
the United States, the internal laws of the State of New York and the internal
laws of the State of Delaware, and I express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or country or as to any matters of municipal law or the laws of any
other local agencies within any state or country. My opinions set forth in
paragraph 3 below are based upon my consideration of only those statutes, rules
and regulations which, in my experience, are normally applicable to transactions
similar to those contemplated by the Transaction Documents, generally.
Whenever a statement herein is qualified by "to my knowledge"
or a similar phrase, it is intended to indicate that I do not have current
actual knowledge of the
A-2
inaccuracy of such statement. However, except as otherwise expressly indicated,
I have not undertaken any independent investigation to determine the accuracy of
any such statement, and no inference that I have any knowledge of any matters
pertaining to such statement should be drawn from my position as General Counsel
of PIMCO Funds Advisors.
Subject to the foregoing and the other matters set forth
herein, it is my opinion that, as of the date hereof:
1. PIMCO Funds Advisors is a limited liability company and is
validly existing and in good standing under the Delaware Limited Liability
Company Act (6 Del. C (S). 18-101, et seq.) with all necessary power and
authority to enter into and deliver the Transaction Documents and perform its
obligations thereunder and to carry on its business as it is now being conducted
and as described in the Registration Statement. Based solely on certificates
from public officials, I confirm that PIMCO Funds Advisors is qualified to do
business in the following States: California, New York, Connecticut, Texas and
Washington, such States being those jurisdictions in which its ownership or
leasing of property or its conducting of business requires such qualification
and where failure to so qualify would have a material adverse effect on the
ability of the Investment Manager to perform its obligations under the
Investment Management Agreement and the Portfolio Management Agreement.
2. The execution, delivery and performance of the Transaction
Documents by PIMCO Funds Advisors have been duly authorized by all necessary
action of PIMCO Funds Advisors and no other actions on the part of PIMCO Funds
Advisors or its unitholders or any subsidiary of PIMCO Funds Advisors or its
unitholders is necessary to authorize and consummate the transactions
contemplated thereby, and the Transaction Documents have been duly executed and
delivered by PIMCO Funds Advisors.
3. Each of the Investment Management Agreement and the
Portfolio Management Agreement constitutes a legally valid and binding agreement
of PIMCO Funds Advisors, enforceable against PIMCO Funds Advisors in accordance
with its terms.
4. Neither the execution and delivery of the Transaction
Documents by PIMCO Funds Advisors, nor the consummation by PIMCO Funds Advisors
of transactions contemplated thereby, nor compliance by PIMCO Funds Advisors
with any of the terms and provisions thereof will:
(i) violate any provision of the Limited Liability Company
Agreement of PIMCO Funds Advisors LLC, effective [ ],
(ii) violate any federal, California or New York statute,
rule or regulation applicable to PIMCO Funds Advisors (other than
federal and state securities or blue sky laws, the Investment Company
Act of 1940, as amended, and the Investment Advisers Act of 1940, as
amended, as to which I express no opinion),
A-3
(iii) violate any agreement to which PIMCO Funds Advisors
is a party or by which it is bound and which is material to PIMCO Funds
Advisors' businesses taken as a whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known
to me and applicable to PIMCO Funds Advisors, or
(v) to the best of my knowledge, require any consents,
approvals, authorizations, registrations, declarations or filings by
PIMCO Funds Advisors under any federal statute, rule or regulation
applicable to PIMCO Funds Advisors, except as have been obtained under
the Act, the Investment Company Act or the Investment Advisers Act of
1940.
No opinion is expressed in this paragraph 4 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state or foreign law or of any antifraud laws, antitrust or trade
regulation laws. No opinion is expressed in this paragraph 4 with respect to the
operating licenses necessary for PIMCO Funds Advisors' businesses.
5. PIMCO Funds Advisors is duly registered as an investment
adviser under the Advisers Act and is not prohibited by the Advisers Act or the
Investment Company Act from acting as investment adviser for the Fund as
contemplated by the Investment Advisory Agreement, the Registration Statement
and the Prospectus.
6. The description of PIMCO Funds Advisors and its business,
and the statements attributable to PIMCO Funds Advisors, set forth in the
Registration Statement and the Prospectus under the headings "Prospectus Summary
- Investment Manager" and "Management of the Fund" do not contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading.
7. There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other governmental
agency or body, foreign or domestic, now pending or, to my knowledge, threatened
against PIMCO Funds Advisors of a nature required to be disclosed in the
Registration Statement or Prospectus or the ability of PIMCO Funds Advisors to
fulfill its obligations under the Investment Management Agreement or the
Portfolio Management Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors generally;
A-4
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law
or court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the
payment of attorney's fees, except to the extent that a court determines such
fees to be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as
they require interpretation of the Material Agreements (i) I have assumed with
your permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied the
laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.
To the extent that the obligations of PIMCO Funds Advisors may
be dependent upon such matters, I assume for purposes of this opinion that: (i)
all parties to the Transaction Documents other than PIMCO Funds Advisors are
duly incorporated or organized, validly existing and in good standing under the
laws of their respective jurisdictions of incorporation or organization; (ii)
all parties to the Transaction Documents other than PIMCO Funds Advisors have
the requisite power and authority and, in the case of natural persons, legal
capacity to execute and deliver the Transaction Documents and to perform their
respective obligations under the Transaction Documents to which they are a
party; and (iii) the Transaction Documents to which such parties other than
PIMCO Funds Advisors are a party have been duly authorized, executed and
delivered by such parties and, other than PIMCO Funds Advisors, constitute their
legally valid and binding obligations, enforceable against them in accordance
with their terms. I express no opinion as to compliance by any parties to the
Transaction Documents with any state or federal laws or regulations applicable
to the subject transactions because of the nature of their business and I
express no opinion as to compliance by any parties to the Transaction Documents
with any foreign laws or regulations applicable to the transactions contemplated
by the Transaction Documents or which may affect the Transaction Documents'
enforceability.
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may not
be relied upon by
A-5
you for any other purpose, or furnished to, quoted to or relied upon by any
other person, firm or corporation for any purpose, without my prior written
consent.
Very truly yours,
* * *
Special Counsel for the Investment Adviser shall separately opine that, assuming
the Investment Manager is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser for the Fund as contemplated by the
Investment Management Agreement, the Registration Statement and the Prospectus,
neither the execution and delivery of the Underwriting Agreement, the Investment
Management Agreement or the Portfolio Management Agreement by the Investment
Manager, nor the consummation by the Investment Manager of the transactions
contemplated thereby, nor compliance by the Investment Manager with any of the
terms and provisions thereof will violate the provisions of the Investment
Company Act or the Advisers Act; provided, however, that such opinion may
specifically disclaim any opinion as to (a) the reasonableness of the fees to be
paid to the Investment Manager under the Investment Management Agreement and (b)
the compliance by the Investment Manager with its indemnification and
contribution obligations set forth in the Underwriting Agreement.
A-6
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO
June [___], 2002
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
First Union Securities, Inc.
Prudential Securities Incorporated
Quick & ▇▇▇▇▇▇, Inc. A FleetBoston Financial Company
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
McDonald Investments, Inc. A KeyCorp Company
as Managing Underwriters
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: Pacific Investment Management Company LLC
Ladies and Gentlemen:
I am the General Counsel of PIMCO Funds Advisors LLC, a
Delaware limited liability company ("PIMCO Funds Advisors"), managing member of
Pacific Investment Management Company LLC, a Delaware limited liability company
("PIMCO"), and have counseled PIMCO in such capacity in connection with the sale
to you by PIMCO [California] [New York] Municipal Income Fund II, a voluntary
association with transferable shares organized and existing under and by virtue
of the laws of The Commonwealth of Massachusetts (commonly referred to as a
Massachusetts business trust) (the "Fund"), of an aggregate of [____] common
shares of beneficial interest, of the Fund, pursuant to a registration statement
on Form N-2 under the Securities Act of 1933, as amended (the "Act") and the
Investment Company Act of 1940, as amended (the "Investment Company Act"), filed
with the Securities and Exchange Commission (the "Commission") on April 15, 2002
(Act File No. 333-86282, and Investment Company Act File No. 811-21076), as
amended by Amendment No. 1 filed with the Commission on May 29, 2002, Amendment
No. 2 filed with the Commission on June [___], 2002 and Amendment No. 3 filed
with the Commission on June [___], 2002 [, and a registration statement on Form
N-2 under the Act and the Investment Company Act, filed with the Commission on
June [___], 2002 pursuant to Rule 462(b) under the Act ([such registration
statements collectively referred to herein as] the "Registration Statement"),
and an underwriting agreement dated June [___], 2002
A-7
by and among you, the Fund and PIMCO Funds Advisors (the "Underwriting
Agreement").
This opinion is rendered to you pursuant to Section 6(e) of
the Underwriting Agreement. Capitalized terms used herein without definition
have the meanings assigned to them in the Underwriting Agreement.
As such counsel, I have examined such matters of fact and questions of
law as I have considered appropriate for purposes of rendering the opinions
expressed below, except where a statement is qualified as to knowledge or
awareness, in which case I have made no or limited inquiry as specified below. I
have examined, among other things, that certain Portfolio Management Agreement
by and between PIMCO and PIMCO Funds Advisors LLC, as accepted and agreed to by
the Fund, dated as of June [___], 2002 (the "Portfolio Management Agreement").
In my examination, I have assumed the genuineness of all
signatures (other than those of officers of PIMCO on the Portfolio Management
Agreement), the authenticity of all documents submitted to me as originals, and
the conformity to authentic original documents of all documents submitted to me
as copies.
I have been furnished with, and with your consent have relied
upon, certificates of officers of PIMCO with respect to certain factual matters.
In addition, I have obtained and relied upon such certificates and assurances
from public officials as I have deemed necessary.
I am opining herein as to the effect of the federal laws of
the United States, the internal laws of the State of New York and the internal
laws of the State of Delaware, and I express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or country or as to any matters of municipal law or the laws of any
other local agencies within any state or country. My opinions set forth in
paragraph 3 below are based upon my consideration of only those statutes, rules
and regulations which, in my experience, are normally applicable to transactions
similar to those contemplated by the Portfolio Management Agreement, generally.
Whenever a statement herein is qualified by "to my knowledge"
or a similar phrase, it is intended to indicate that I do not have current
actual knowledge of the inaccuracy of such statement. However, except as
otherwise expressly indicated, I have not undertaken any independent
investigation to determine the accuracy of any such statement, and no inference
that I have any knowledge of any matters pertaining to such statement should be
drawn from my position as General Counsel of PIMCO Funds Advisors.
Subject to the foregoing and the other matters set forth
herein, it is my opinion that, as of the date hereof:
1. PIMCO is a limited liability company and is validly
existing and in good standing under the Delaware Limited Liability Company Act
(6 Del. C(S). 18-101, et seq.) with all necessary partnership power and
authority to enter into and deliver the
A-8
Portfolio Management Agreement and perform its obligations thereunder and to
carry on its business as it is now being conducted and as described in the
Registration Statement. Based solely on certificates from public officials, I
confirm that PIMCO is qualified to do business in the following States:
______________, such States being those jurisdictions in which its ownership or
leasing of property or its conducting of business requires such qualification
and where failure to so qualify would have a material adverse effect on the
ability of the Investment Manager to perform its obligations under the
Investment Management Agreement and the Portfolio Management Agreement.
2. The execution, delivery and performance of the Portfolio
Management Agreement by PIMCO have been duly authorized by all necessary
partnership action of PIMCO and no other actions on the part of PIMCO or its
unitholders or any subsidiary of PIMCO or its unitholders is necessary to
authorize and consummate the transactions contemplated thereby, and the
Portfolio Management Agreement has been duly executed and delivered by PIMCO.
3. The Portfolio Management Agreement constitutes a legally
valid and binding agreement of PIMCO , enforceable against PIMCO in accordance
with its terms.
4. Neither the execution and delivery of the Portfolio
Management Agreement by PIMCO , nor the consummation by PIMCO of transactions
contemplated thereby, nor compliance by PIMCO with any of the terms and
provisions thereof will:
(i) violate any provision of the [Limited Liability
Company Agreement] of PIMCO, effective [ ],
(ii) violate any federal, California or New York statute,
rule or regulation applicable to PIMCO (other than federal and state
securities or blue sky laws, the Investment Company Act of 1940, as
amended, and the Investment Advisers Act of 1940, as amended, as to
which I express no opinion),
(iii) violate any agreement to which PIMCO is a party or by
which it is bound and which is material to PIMCO's businesses taken as
a whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree, known
to me and applicable to PIMCO, or
(v) to the best of my knowledge, require any consents,
approvals, authorizations, registrations, declarations or filings by
PIMCO under any federal statute, rule or regulation applicable to PIMCO
, except as have been obtained under the Act, the Investment Company
Act or the Investment Advisers Act of 1940.
No opinion is expressed in this paragraph 4 as to the
application of Section 548 of the federal Bankruptcy Code and comparable
provisions of state or foreign law or
A-9
of any antifraud laws, antitrust or trade regulation laws. No opinion is
expressed in this paragraph 4 with respect to the operating licenses necessary
for PIMCO's businesses.
5. PIMCO is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment sub-adviser for the Fund as contemplated by the
Portfolio Management Agreement, the Registration Statement and the Prospectus.
6. The description of PIMCO and its business, and the
statements attributable to PIMCO, set forth in the Registration Statement and
the Prospectus under the headings "Prospectus Summary - Portfolio Manager" and
"Management of the Fund" do not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
7. There is no action, suit or proceeding before or by any
court, commission, regulatory body, administrative agency or other governmental
agency or body, foreign or domestic, now pending or, to my knowledge, threatened
against PIMCO of a nature required to be disclosed in the Registration Statement
or Prospectus or the ability of PIMCO to fulfill its obligations under the
Portfolio Management Agreement.
The opinions expressed in paragraph 3 above are subject to the
following limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect relating to or
affecting the rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether
enforcement is considered in a proceeding in equity or at law, and the
discretion of the court before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law
or court decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such indemnification
or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the
payment of attorney's fees, except to the extent that a court determines such
fees to be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as
they require interpretation of the Material Agreements (i) I have assumed with
your permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied
A-10
the laws of the State of New York in resolving such questions. I advise you that
certain of the Material Agreements may be governed by other laws, that such laws
may vary substantially from the law assumed to govern for purposes of this
opinion, and that this opinion may not be relied upon as to whether or not a
breach or default would occur under the law actually governing such Material
Agreements.
To the extent that the obligations of PIMCO may be dependent
upon such matters, I assume for purposes of this opinion that: (i) all parties
to the Portfolio Management Agreement other than PIMCO are duly incorporated or
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or organization; (ii) all parties to
the Portfolio Management Agreement other than PIMCO have the requisite power and
authority and, in the case of natural persons, legal capacity to execute and
deliver the Portfolio Management Agreement and to perform their respective
obligations under the Portfolio Management Agreement to which they are a party;
and (iii) the Portfolio Management Agreement has been duly authorized, executed
and delivered by such parties other than PIMCO and, other than PIMCO, constitute
their legally valid and binding obligations, enforceable against them in
accordance with their terms. I express no opinion as to compliance by any
parties to the Portfolio Management Agreement with any state or federal laws or
regulations applicable to the subject transactions because of the nature of
their business and I express no opinion as to compliance by any parties to the
Portfolio Management Agreement with any foreign laws or regulations applicable
to the transactions contemplated by the Portfolio Management Agreement or which
may affect the Portfolio Management Agreement's enforceability.
This opinion is rendered only to you and is solely for your
benefit in connection with the transactions covered hereby. This opinion may not
be relied upon by you for any other purpose, or furnished to, quoted to or
relied upon by any other person, firm or corporation for any purpose, without my
prior written consent.
Very truly yours,
A-11
SCHEDULE E
FORM OF ACCOUNTANT'S LETTER
June [___], 2002
The Board of Trustees of
PIMCO Municipal Income Fund II
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
PIMCO Municipal Income Fund II (the "Fund") as of June [___], 2002 included in
the Registration Statement on Form N-2 filed by the Fund under the Securities
Act of 1933 (the "Act") (File No. 333-86282) and under the Investment Company
Act of 1940 (the "1940 Act") (File No. 811-21076); such statement and our report
with respect to such statement are included in the Registration Statement.
In connection with the Registration Statement:
1. We are independent public accountants with respect to the
Fund within the meaning of the Act and the applicable rules and
regulations thereunder.
2. In our opinion, the statement of assets and liabilities
included in the Registration Statement and audited by us complies as to
form in all respects with the applicable accounting requirements of the
Act, the 1940 Act and the respective rules and regulations thereunder.
3. For purposes of this letter we have read the minutes of all
meetings of the Shareholders, the Board of Trustees and all Committees
of the Board of Trustees of the Fund as set forth in the minute books
at the offices of the Fund, officials of the Fund having advised us
that the minutes of all such meetings through June [___], 2002, were
set forth therein.
4. Fund officials have advised us that no financial statements
as of any date subsequent to June [___], 2002, are available. We have
made inquiries of certain officials of the Fund who have responsibility
for financial and accounting
matters regarding whether there was any change at June [___], 2002, in
the capital shares or net assets of the Fund as compared with amounts
shown in the June [___], 2002, statement of assets and liabilities
included in the Registration Statement, except for changes that the
Registration Statement discloses have occurred or may occur. On the
basis of our inquiries and our reading of the minutes as described in
Paragraph 3, nothing came to our attention that caused us to believe
that there were any such changes.
The foregoing procedures do not constitute an audit made in accordance
with generally accepted auditing standards. Accordingly, we make no
representations as to the sufficiency of the foregoing procedures for your
purposes.
This letter is solely for the information of the addressees and to
assist the underwriters in conducting and documenting their investigation of the
affairs of the Fund in connection with the offering of the securities covered by
the Registration Statement, and is not to be used, circulated, quoted or
otherwise referred to within or without the underwriting group for any other
purpose, including but not limited to the registration, purchase or sale of
securities, nor is it to be filed with or referred to in whole or in part in the
Registration Statement or any other document, except that reference may be made
to it in the underwriting agreement or in any list of closing documents
pertaining to the offering of the securities covered by the Registration
Statement.
Very Truly Yours,
PRICEWATERHOUSECOOPERS LLP
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