EXHIBIT h.5
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
Auction Preferred Shares
Par Value $0.00001 Per Share
UNDERWRITING AGREEMENT
May 21, 2003
UNDERWRITING AGREEMENT
May 21, 2003
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Prudential Securities Incorporated
c/o UBS Warburg LLC
as Managing Underwriter
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund, 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 4,200 preferred shares of beneficial interest of the Fund, par
value $0.00001 per share, designated Series A Auction Preferred Shares of the
Fund, preferred shares of beneficial interest of the Fund, par value $0.00001
per share, designated Series B Auction Preferred Shares of the Fund, 4,200
preferred shares of beneficial interest of the Fund, par value $0.00001 per
share, designated Series C Auction Preferred Shares of the Fund, 4,200 preferred
shares of beneficial interest of the Fund, par value $0.00001 per share,
designated Series D Auction Preferred Shares of the Fund, and 4,200 preferred
shares of beneficial interest of the Fund, par value $0.00001 per share,
designated Series E Auction Preferred Shares of the Fund, each with a
liquidation preference of $25,000 per share (the "APS").
The Fund has filed with the Securities and Exchange Commission
(the "Commission"), 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"), a registration statement on Form N-2 (File Nos.
333-104221 and 811-21284), including a prospectus and a statement of additional
information, relating to the APS. 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 "Preliminary Prospectus") relating to the APS. 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
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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 Advisors Fund Management LLC ("PAFM" or the "Investment
Manager") acts as the Fund's investment manager pursuant to an Investment
Management Agreement by and between the Fund and the Investment Manager, dated
as of March 12, 2003 (the "Investment Management Agreement"). ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Capital Management LLC ("NACM," or the "Portfolio Manager") acts as the Fund's
portfolio manager pursuant to a Portfolio Management Agreement by and between
the Investment Manager and NACM, as accepted and agreed to by the Fund, dated as
of March 12, 2003 (the "Portfolio Management Agreement"). ▇▇▇▇▇ Brothers
▇▇▇▇▇▇▇▇ & Co. acts as the custodian (the "Custodian") of the Fund's cash and
portfolio assets pursuant to a Custodian Agreement, dated as of March 19, 2003
(the "Custodian Agreement"). PFPC Inc. acts as the Fund's transfer agent,
registrar and dividend disbursing agent with respect to the common shares of the
Fund (the "Transfer Agent") pursuant to a Transfer Agency Services Agreement,
dated as of March 31, 2003 (the "Transfer Agency Agreement"). Deutsche Bank
Trust Company Americas will act as the Fund's auction agent (the "Auction
Agent") for the APS pursuant to an Auction Agency Agreement, dated as of May 23,
2003 (the "Auction Agency Agreement"). The Fund will enter into a Letter
Agreement, dated as of May 23, 2003, with the Depository Trust Company (the "DTC
Agreement").
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 APS set forth opposite the name of such
Underwriter in Schedule A attached hereto in each case at a purchase
price per share of $24,750. The Fund is advised that the Underwriters
intend (i) to make a public offering of their respective portions of the
APS as soon after the Effective Date as is advisable and (ii) initially
to offer the APS 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.
2. PAYMENT AND DELIVERY. Payment of the purchase price for the APS shall be
made by the Underwriters to the Fund by Federal Funds wire transfer,
against delivery of the certificates for the APS 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 second 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" or the "Closing Date." Certificates for the APS shall be
delivered to you in definitive form in such names and in such
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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 APS 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.
A certificate in definitive form representing the APS registered
in the name of Cede & Co., as nominee for DTC, shall be delivered by or
on behalf of the Fund to DTC for the account of the Underwriters.
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) or
(h) under the Act or a certification is first filed with the
Commission pursuant to Rule 497(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 APS 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 Date, 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 APS 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. On the Effective Date, on
the Closing Date, and, if applicable, on the date the Prospectus
or any amendment or supplement to the Prospectus was or is filed
with the Commission, 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 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 and 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
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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 of
beneficial interest of the Fund, par value $0.00001 per share
(the "Common Shares"), and the APS conform in all material
respects to the description of them in the Prospectus. All
outstanding Common Shares have been duly authorized and are
validly issued, fully paid and nonassessable (except as
described in the Registration Statement). The APS 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). No person is entitled to any preemptive or other
similar rights in connection with the issuance of the APS.
(d) The Fund is duly registered with the Commission under the
Investment Company Act as a 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 APS as
provided in this Underwriting Agreement has or will have been
taken by the Fund.
(e) The Fund has, or at the relevant time had, full power and
authority to enter into each of this Underwriting Agreement, the
Investment Management Agreement, the Custodian Agreement, the
Transfer Agency Agreement, the Auction Agency Agreement and the
DTC Agreement (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
5
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 APS 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 of the Fund, as amended
through the date hereof (the "Declaration of Trust"), and the
Second Amended and Restated Bylaws of the Fund, adopted in
connection with the issuance of the APS and as amended through
the date hereof (the "Amended Bylaws"), 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 APS 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 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 under state
securities or "blue sky" laws, in connection with the purchase
and distribution of the APS by the Underwriters pursuant to this
Underwriting Agreement.
(j) To the knowledge of the Fund and the Investment Manager after
due inquiry, based on representations from
PricewaterhouseCoopers LLP, whose report
6
appears in the Prospectus, PricewaterhouseCoopers LLP are
independent public accountants with respect to the Fund as
required by the Act and the Investment Company Act.
(k) 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.
(l) 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.
(m) 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.
(n) 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.
(o) The Fund intends to direct the investment of the proceeds of the
offering of the APS in such a manner as to comply with the
requirements of Subchapter M of the Internal Revenue Code of
1986, as amended (the "Code").
(p) The Common Shares are listed on the New York Stock Exchange.
7
(q) The APS have been, or prior to the Closing Date will be,
assigned a rating of "Aaa" by ▇▇▇▇▇'▇ Investors Service, Inc.
(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 APS
(collectively referred to as the "Sales Materials"); 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 National Association of
Securities Dealers, Inc.; 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 APS contained or contains any untrue statement of a
material 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 Management Agreement, the Registration Statement and
the Prospectus.
(c) The Investment Manager has, or at the relevant time had, 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
8
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 violates 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 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 under
state securities or "blue sky" laws, in connection with the
purchase and distribution of the APS 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
9
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) 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.
(i) 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.
(j) 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.
(k) The Portfolio Manager has, or at the relevant time had, full
power and authority to enter into the Portfolio Management
Agreement and to carry out all the terms and provisions hereof
and thereof to be carried out by it; and the Portfolio
Management Agreement has been duly and validly authorized,
executed and delivered by the Portfolio Manager; the Portfolio
Management Agreement does not 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, the Portfolio
Management Agreement constitutes a legal, valid and binding
obligation of the Portfolio 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 equity or at
law) and (ii) except as rights to indemnity thereunder may be
limited by federal or state securities laws.
(l) Neither (i) the execution and delivery by the Portfolio Manager
of any Portfolio Management Agreement nor (ii) the consummation
by the Portfolio Manager of the transactions contemplated by, or
the performance of its obligations under, any
10
Portfolio Management 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.
(m) 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 Management 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 under
state securities or "blue sky" laws, in connection with the
purchase and distribution of the APS by the Underwriters
pursuant to this Underwriting Agreement.
(n) 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.
(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 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
Management Agreement.
5. AGREEMENTS OF THE PARTIES.
(a) If the registration statement relating to the APS 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 UBS Warburg LLC (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 APS or the
date the
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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 APS 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 APS 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 of (1) 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 Fund, the
Investment Manager or the Portfolio Manager, (2) 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 APS for sale in any jurisdiction or the issuance of any
order by the Commission suspending the effectiveness of the
Registration Statement, (3) 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 APS 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
12
the later of (x) one year from the date of this Underwriting
Agreement or (y) the date on which the distribution of the APS
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 APS 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) The Fund will pay or cause to be paid the following: (i) the
fees, disbursements and expenses of the Fund's counsel and
accountants in connection with the registration of the APS and
all other expenses in connection with the preparation, printing
and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) the cost of printing or
reproducing this Underwriting Agreement and any other documents
in connection with the offering, purchase, sale and delivery of
the APS (including advertising expenses of the Underwriters, if
any); (iii) the cost of preparing share certificates; (iv) the
expenses (including, but not limited to, travel, hotels and
other accommodations) incurred by the Fund's directors,
officers, employees and other personnel in connection with
meetings held with registered brokers in
13
connection with the offering of the APS, the preparing to market
and the marketing of the APS; (v) any fees charged by securities
rating services for rating the APS; (vi) the fees and expenses
of the DTC and its nominee, the Custodian and the Auction Agent;
and (vii) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise
specifically provided for. It is understood, however, that,
except as provided in this Section 5 and Section 7 hereof, the
Underwriters will pay all of their own costs and expenses,
including the fees of their counsel and stock transfer taxes, if
any, on resale of any of the APS by them, except any advertising
expenses connected with any offers they may make.
(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 APS and
(ii) no Underwriter who has failed or refused to purchase the
APS 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 APS as described in the Prospectus and any
issuance of Common Shares pursuant to the dividend reinvestment
plan established by the Fund.
(i) The Fund will direct the investment of the net proceeds of the
offering of the APS in such a manner as to comply with the
investment objective and policies of the Fund as described in
the Prospectus.
(j) No later than the Closing Date, the Underwriters will provide,
and will cause any selling group member to whom they have sold
APS to provide, the Auction Agent with a list of the record
names of the persons to whom they have sold APS, the number of
APS sold to each such person, and the number of APS they are
holding as of the Closing Date; provided that in lieu of
thereof, an Underwriter may provide the Auction Agent with a
list indicating itself as the sole holder of all the APS sold by
such Underwriter.
14
6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters to purchase the APS are subject to the accuracy on the date
of this Underwriting Agreement, and on the Closing Date, 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 the performance by the Fund and the Investment Manager of their
respective obligations under this Underwriting Agreement and to each of
the following additional conditions:
(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, the APS or
the 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 APS; (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 the 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
15
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 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 APS 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 Management 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 the Closing Date (to the extent not
waived in writing by the Managing Representative).
(e) You must have received on the Closing Date the opinions, dated
the Closing Date, substantially in the form of Schedules B, C
and D to this Underwriting Agreement from the counsel identified
in each such Schedule, or in such other form as is acceptable to
counsel for the Underwriters.
(f) You must have received on the Closing Date from Skadden, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) an opinion, dated the Closing
Date, with respect to the Fund, the APS, 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 APS. 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.
16
(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 the Closing Date a signed letter from such
accountants, dated as of the 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 the
Closing Date, that would require any change in their letter
referred to in the foregoing sentence.
(h) The APS shall have been accorded a rating of "Aaa" by ▇▇▇▇▇'▇
Investors Service, Inc., and a letter to such effect, dated on
or before the Closing Date, shall have been delivered to the
Managing Representative.
(i) As of the Closing Date, and assuming the receipt of the net
proceeds from the sale of the APS, the 1940 Act APS Asset
Coverage and the APS Basic Maintenance Amount (each as defined
in the Prospectus) each will be met.
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 APS are first generally
offered pursuant to this Underwriting Agreement by the Managing
Representative to dealers by letter or telegram;
(b) at or before the Closing Date if, in the sole judgment of the
Managing Representative, payment for and delivery of any APS is
rendered impracticable or inadvisable because (i) trading in the
APS or the Common Shares of the Fund is suspended by the
Commission or the principal exchange that lists the Common
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
17
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 Representative, impracticable or inadvisable to market
the APS on the terms and in the manner contemplated by the
Prospectus; or
(c) at or before the 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 the Closing Date the APS agreed
to be purchased on the Closing Date by such Underwriter or Underwriters,
the Managing Representative may find one or more substitute underwriters
to purchase such APS or make such other arrangements as the Managing
Representative deems advisable, or one or more of the remaining
Underwriters may agree to purchase such APS 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 the Closing Date, and
(a) the number of APS to be purchased by the defaulting Underwriters
on the Closing Date does not exceed 10% of the APS that the
Underwriters are obligated to purchase on such Closing Date,
each of the nondefaulting Underwriters will be obligated to
purchase such APS on the terms set forth in this Underwriting
Agreement in proportion to their respective obligations under
this Underwriting Agreement, or
(b) the number of APS to be purchased by the defaulting Underwriters
on the Closing Date exceeds 10% of the APS to be purchased by
all the Underwriters on the 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 APS 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 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 APS to be purchased on the
Closing Date by such defaulting Underwriter or Underwriters exceeds 10%
of the APS that the Underwriters are obligated to purchase on the
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 APS 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 Manager, except as provided in Sections 5(g)
and 9 hereof. Any action taken under this Section will not affect the
18
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, any 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 APS 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 copy of the Prospectus to such person at or prior
to the written confirmation of the sale of such APS 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
19
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
neither the Fund nor the Investment Manager shall have the right
to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but the Fund or the Investment
Manager, as the case may be, may employ counsel and participate
in the defense thereof but such fees and expenses of such
counsel shall be at the expense of the Fund or the Investment
Manager, as the case may be), 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 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
20
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 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 or their 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
21
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 such 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 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 APS 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
22
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 APS. 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 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 APS. 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
23
Manager's shareholders, partners, managers, members, trustees,
directors or officers in connection with the issuance and sale
of the APS, 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 APS as
set forth on the cover page of, and (2) 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, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇, 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 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇
▇▇▇▇ ▇▇▇▇▇ and, if to or the Portfolio Manager, shall be sufficient in
all respects if delivered or sent to the Portfolio Manager at the
offices of the Portfolio 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
24
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.
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.
25
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,
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
CONVERTIBLE & INCOME FUND
--------------------------
By:
Title:
PIMCO ADVISORS
FUND MANAGEMENT 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
PRUDENTIAL SECURITIES INCORPORATED
By: UBS WARBURG LLC
--------------------------
By:
Title:
--------------------------
By:
Title:
SCHEDULE A
Number of Shares
Name to be Purchased
------------------------------------- ----------------
UBS Warburg LLC 12,600
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated 5,250
Prudential Securities Incorporated 3,150
======
Total 21,000
A-1
SCHEDULE B
FORM OF OPINION OF
ROPES & ▇▇▇▇ LLP REGARDING THE FUND
May 23, 2003
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Dear Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible &
Income Fund (the "Fund") in connection with the proposed issuance of 4,200
Auction Preferred Shares, Series A, Auction Preferred Shares, Series B, 4,200
Auction Preferred Shares, Series C, 4,200 Auction Preferred Shares, Series D,
and 4,200 Auction Preferred Shares, Series E (together, the "APS"). This opinion
is furnished to you pursuant to Section 6(e) of the Underwriting Agreement dated
as of May 21, 2003 (the "Underwriting Agreement") among the Fund, PIMCO Advisors
Fund Management LLC (the "Investment Manager") and UBS Warburg LLC, on behalf of
itself and the other underwriters named therein (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. 333-104224) under the Securities Act of 1933, as
amended (the "Securities Act") (which also constitutes Amendment No. 4 to the
Fund's Registration Statement on Form N-2 (File No. 811-21284) under the
Investment Company Act of 1940, as amended (the "Investment Company Act")),
including all exhibits thereto, as filed with the Securities and Exchange
Commission (the "Commission") on April 1, 2003 (the "Original Registration
Statement"), Pre-Effective Amendment No. 1 to the Original Registration
Statement, including all exhibits thereto, as filed with the Commission on _____
__, 2003 ("Pre-Effective Amendment No. 1") and Pre-Effective Amendment No. 2 to
the Original Registration Statement, including all exhibits thereto, as filed
with the Commission on _____ __, 2003 ("Pre-Effective Amendment No. 2," and
together with Pre-Effective Amendment No. 1 and the Original Registration
Statement, the "Registration Statement"); the Fund's Notification of
Registration on Form N-8A (File No. 811-21284) under the Investment Company Act,
as filed with the Commission on January 21, 2003 (the "Notification of
Registration"); 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;
B-1
the Bylaws of the Fund, as amended to the date hereof (the "Bylaws"); a copy of
the Prospectus dated _____ __, 2003, relating to the APS and the Statement of
Additional Information of the Fund dated _____ __, 2003, each as filed with the
Commission pursuant to Rule 497 under the Securities Act on _____ __, 2003
(together, the "Prospectus"); the Investment Management Agreement dated as of
March 12, 2003, between the Fund and the Investment Manager (the "Investment
Management Agreement"); the Portfolio Management Agreement dated as of March 12,
2003, between ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital Management LLC (the "Portfolio
Manager") and the Investment Manager (the "Portfolio Management Agreement"), as
agreed to and accepted by the Fund; the Custodian Agreement dated as of March
19, 2003, between the Fund and ▇▇▇▇▇ Brothers ▇▇▇▇▇▇▇▇ & Co. (the "Custodian
Agreement"); and the Auction Agency Agreement dated as of _____ __, 2003,
between the Fund and Deutsche Bank Trust Company Americas (the "Auction Agency
Agreement," and, together with the Custodian Agreement, the "Fund Agreements");
and the Underwriting Agreement. Additionally, we have relied upon the oral
representation of ▇▇. ▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ of the staff of the Commission to the
effect that the Registration Statement became effective as of ____ p.m. on_____
__, 2003,] and the oral representation by a member of the staff of the
Commission on the date hereof 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 shareholders and the Board of
Trustees of the Fund, and copies of resolutions of the Board of Trustees of the
Fund certified by the Secretary 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 other documents, including
certificates of officers and Trustees of the Fund, as we have deemed necessary
for purposes of rendering our opinions below. For purposes of paragraph 2 below,
we have relied solely on (1) the certificate of recent date of the Secretary of
State of the State of California as to the entitlement of the Fund to transact
intrastate business in the State of California, (2) a Certificate of the Special
Deputy Secretary of State of the State of New York dated May , 2003, certifying
copies of (a) a Certificate of Designation by the Fund dated March 17, 2003 and
(b) a Statement under Section 18 of the New York General Associations Law, (3) a
Filing Receipt of the Department of State of the State of New York dated March
19, 2003 relating to the Fund and (4) a LEXIS search on May, 2003, of the New
York Department of State, Corporate Record, showing the "status" of the Fund as
"active" and noting that "good standing status can only be determined by
performing a search in the records of both the Department of State Corporation
Records and the Department of Tax and Franchise." 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. For purposes
of our opinion regarding the effectiveness of the Registration Statement, we are
relying solely on the oral representations of the staff of the Commission.
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 each of the Underwriting Agreement, the Auction
Agency Agreement and the Custodian Agreement provides that it is to be governed
by and construed in accordance with the laws of the State of New York 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
B-2
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 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 inter alia 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. Where our
opinion relates to our "knowledge," that term means the conscious awareness of
facts or other information by any lawyer in our firm giving substantive
attention to the representation of the Fund with respect to the transactions
contemplated by the Underwriting Agreement, and does not require or imply (i)
any examination of this firm's, any such lawyer's or any other person's or
entity's files, or (ii) that any inquiry was made of any lawyer (other than the
lawyers described above). In respect of our opinions set forth in paragraphs 7,
9 and 10 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 and within the time period required by Rule 497; and based
upon oral inquiries to the Commission staff on the date hereof, 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 Certificate of Designation
relating to the Fund's conduct of business in the State of New York is on file
with the Department of State of the State of New York, and the Fund is entitled
to transact intrastate business in the State of 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 APS conform in all material respects as to
B-3
legal matters to the description of them under the caption entitled "Description
of APS" and "Description of capital structure" 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 of this opinion letter, non-assessable. The APS 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 of this
opinion letter, non-assessable. No person is entitled to any preemptive or other
similar rights with respect to the APS.
4. To the best of our knowledge after due inquiry, the Fund was
deemed to be registered with the Commission under Section 8(a) of the Investment
Company Act upon receipt by the Commission of the Notification of Registration.
To our knowledge after the inquiry described above, the Commission has not
issued to the Fund notice of any hearing or other proceeding to consider
suspension or revocation of any such registration. To the best of our knowledge
after due inquiry, 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 APS to make the
public offering and consummate the sale of the APS pursuant to the Underwriting
Agreement.
5. The Fund has, or at the relevant time had, 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, and, 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, or at the relevant time had, full power and
authority to enter into each of the Investment Management Agreement and the
Underwriting Agreement and to perform all of the terms 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 APS 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 Second Amended and
Restated Bylaws 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
B-4
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 under state securities or Blue Sky laws in connection with the purchase
and distribution of the APS by the Underwriters pursuant to the Underwriting
Agreement.
10. To our knowledge after due inquiry, 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.
11. 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 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.
12. 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 APS.
13. 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 effective time set forth above, 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, 12 and 13 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.
B-5
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, the Investment Manager or the Portfolio Manager
is such that we would have necessarily recognized the materiality of such facts
as were disclosed to us, and we have to a large extent relied upon statements 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
connection 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 _____ __, 2003, 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).
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 Skadden,
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 & ▇▇▇▇ LLP
B-6
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO ADVISORS FUND MANAGEMENT LLC
May 23, 2003
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: PIMCO Advisors Fund Management LLC
Ladies and Gentlemen:
I am the Chief Legal Officer of PIMCO Advisors Fund Management
LLC, a Delaware limited liability company ("PAFM"), and have counseled PAFM in
such capacity in connection with the sale to you by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Convertible & Income Fund, 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 4,200 Auction Preferred Shares, Series A, 4,200 Auction Preferred
Shares, Series B, 4,200 Auction Preferred Shares, Series C, 4,200 Auction
Preferred Shares, Series D, and 4,200 Auction Preferred Shares, Series E, of the
Fund (the "APS"), 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 1, 2003 (Act File No.
333-104224), and Investment Company Act File No. 811-21284), as amended by
Pre-Effective Amendment No. 1 filed with the Commission on _____ __, 2003, and
Pre-Effective Amendment No. 2 filed with the Commission on _____ __, 2003 (such
registration statements collectively referred to herein as the "Registration
Statement"), and an underwriting agreement dated _____ __, 2003 by and among
you, the Fund and PAFM (the "Underwriting Agreement") relating to the issuance
and sale by the Fund of the APS.
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 legal officer, 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:
C-1
(a) the Underwriting Agreement;
(b) that certain Investment Management Agreement by and
between the Fund and PAFM, dated as of March 12, 2003;
and
(c) that certain Portfolio Management Agreement by and
between ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital Management LLC and
PAFM, as accepted and agreed to by the Fund, dated as of
March 12, 2003;
(d) that certain Shareholder Servicing Agreement with
respect to the Fund by and between PAFM and UBS Warburg
LLC, dated as of March 31, 2003; and
(e) that certain Additional Compensation Agreement with
respect to the Fund by and between PAFM, UBS Warburg
LLC, and [ ________ ] dated as of _____ __, 2003.
The documents described in subsections (a)-(e) 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 PAFM 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 PAFM 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 4 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 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 Chief Legal Officer of PAFM.
Subject to the foregoing and the other matters set forth herein,
it is my opinion that, as of the date hereof:
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1. PAFM is a limited liability company and is validly
existing and in good standing under the Delaware Limited Liability Company Act
(6 Del. C Section. 18-101, et seq.) with all necessary limited liability company
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 PAFM is qualified to do
business in the following States: California, New York and Connecticut, such
States being those in which its ownership or leasing of property or its
conducting of business may require such qualification and where failure to so
qualify would have a material adverse effect on the ability of PAFM 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 PAFM have been duly authorized by all necessary limited
liability company action of PAFM and no other actions on the part of PAFM or its
unitholders or any subsidiary of PAFM or its unitholders is necessary to
authorize and consummate the transactions contemplated thereby, and the
Transaction Documents have been duly executed and delivered by PAFM.
3. Each of the Investment Management Agreement, the
Portfolio Management Agreement, the Shareholder Servicing Agreement and the
Additional Compensation Agreement constitutes a legally valid and binding
agreement of PAFM, enforceable against PAFM in accordance with its terms.
4. Neither the execution and delivery of the Transaction
Documents by PAFM, nor the consummation by PAFM of transactions contemplated
thereby, nor compliance by PAFM with any of the terms and provisions thereof
will:
(i) violate any provision of the Limited Liability
Company Agreement of PAFM, effective May 23, 2000, as amended on July 1,
2001, December 12, 2001, and October 31, 2002, which is still in full
force and effect and which has not been further amended or supplemented
through the date hereof,
(ii) violate any federal, Delaware or New York statute,
rule or regulation applicable to PAFM (other than federal and state
securities or blue sky laws, the Investment Company Act, and the
Investment Advisers Act of 1940, as amended (the "Advisers Act"), as to
which I express no opinion),
(iii) violate any agreement to which PAFM is a party or
by which it is bound and which is material to PAFM's businesses taken as
a whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree,
known to me and applicable to PAFM, or
(v) to the best of my knowledge, require any consents,
approvals, authorizations, registrations, declarations or filings by
PAFM under any federal or Delaware statute, rule or regulation
applicable to PAFM, except as have been obtained under the Act, the
Investment Company Act or the Advisers Act.
C-3
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 PAFM's businesses.
5. PAFM 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.
6. The description of PAFM and its business, and the
statements attributable to PAFM, set forth in the Registration Statement or 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 PAFM of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of PAFM to fulfill its obligations under either 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;
(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
C-4
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 PAFM may be dependent upon
such matters, I assume for purposes of this opinion that: (i) all parties to the
Transaction Documents other than PAFM 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 PAFM 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 PAFM are a party have been duly
authorized, executed and delivered by such parties and, other than PAFM,
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 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,
C-5
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LLC
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
May 23, 2003
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Prudential Securities Incorporated
as Managing Underwriters
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital Management LLC
Ladies and Gentlemen:
I am the General Counsel of ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital
Management LLC, a Delaware limited liability company ("NACM"). I am licensed to
practice law in the State of California. In my capacity as General Counsel of
NACM, I am rendering this opinion on behalf of NACM in connection with the sale
to you by ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund, 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 4,200 Auction Preferred Shares, Series A, 4,200
Auction Preferred Shares, Series B, 4,200 Auction Preferred Shares, Series C,
4,200 Auction Preferred Shares, Series D, and 4,200 Auction Preferred Shares,
Series E, of the Fund (the "APS"), 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 1, 2003 (Act File
No. 333- 104224), and Investment Company Act File No. 811-21284), as amended by
Pre-Effective Amendment No. 1 filed with the Commission on _____ __, 2003, and
Pre-Effective Amendment No. 2 filed with the Commission on _____ __, 2003 (such
registration statements collectively referred to herein as the "Registration
Statement"), and an underwriting agreement dated May 21, 2003, by and among you,
the Fund and PIMCO Advisors Fund Management LLC, a Delaware limited liability
company ("PAFM") (the "Underwriting Agreement") relating to the issuance and
sale by the Fund of the APS.
D-1
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 General Counsel of NACM, 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 PAFM and NACM, as accepted and agreed to by
the Fund, dated as of March 12, 2003 (the "Portfolio Management Agreement").
In my examination, I have assumed the genuineness of all
signatures (other than those of officers of NACM 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 NACM 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 California and, to the extent
consistent with the laws of the State of California, 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 4 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 NACM.
Subject to the foregoing and the other matters set forth herein,
it is my opinion that, as of the date hereof:
1. NACM is a limited liability company and is validly
existing and in good standing under the Delaware Limited Liability Company Act
(6 Del. C Section. 18-101, et seq.) with all necessary limited liability company
power and authority to enter into and deliver the 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 NACM is qualified to do
business in the following States: California, Illinois and New York, such States
being those in which its
D-2
ownership or leasing of property or its conducting of business may require such
qualification and where failure to so qualify would have a material adverse
effect on the ability of NACM to perform its obligations under the Portfolio
Management Agreement.
2. The execution, delivery and performance of the Portfolio
Management Agreement by NACM have been duly authorized by all necessary limited
liability company action of NACM and no other actions on the part of NACM or its
sole member or any subsidiary of NACM or its sole member is necessary to
authorize and consummate the transactions contemplated thereby, and the
Portfolio Management Agreement has been duly executed and delivered by NACM.
3. The Portfolio Management Agreement constitutes a legally
valid and binding agreement of NACM, enforceable against NACM in accordance with
its terms.
4. Neither the execution and delivery of the Portfolio
Management Agreement by NACM, nor the consummation by NACM of transactions
contemplated thereby, nor compliance by NACM with any of the terms and
provisions thereof will:
(i) violate any provision of the Limited Liability
Company Agreement of NACM, effective January 1, 2002,
(ii) violate any federal, California or, to my
knowledge, Delaware statute, rule or regulation applicable to NACM
(other than federal and state securities or blue sky laws, the
Investment Company Act, and the Investment Advisers Act of 1940, as
amended (the "Advisers Act"), as to which I express no opinion),
(iii) violate any agreement to which NACM is a party
or by which it is bound and which is material to NACM's businesses taken
as a whole (the "Material Agreements"),
(iv) violate any order, writ, injunction or decree,
known to me and applicable to NACM, or
(v) to the best of my knowledge, require any
consents, approvals, authorizations, registrations, declarations or
filings by NACM under any federal statute, rule or regulation applicable
to NACM, except as have been obtained under the Act, the Investment
Company Act or the Advisers Act.
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 NACM's businesses.
5. NACM 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.
D-3
6. The description of NACM and its business, and the
statements attributable to NACM, 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 NACM of a nature required to be disclosed in the Registration Statement
or Prospectus or that might reasonably result in any material adverse change in
the ability of NACM 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
California 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 California 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 NACM may be dependent upon
such matters, I assume for purposes of this opinion that: (i) all parties to the
Portfolio Management Agreement other than NACM 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
D-4
the Portfolio Management Agreement other than NACM 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; and (iii) the Portfolio
Management Agreement has been duly authorized, executed and delivered by such
parties other than NACM and, other than NACM, 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,
D-5
SCHEDULE E
FORM OF ACCOUNTANT'S LETTER
May 23, 2003
The Board of Trustees of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
UBS Warburg LLC
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
Prudential Securities Incorporated
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
as Managing Representative of the Underwriters
Ladies and Gentlemen:
We have audited the statement of assets and liabilities of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund (the "Fund") as of [ ], 2003
included in the Registration Statement on Form N-2 filed by the Fund under the
Securities Act of 1933, as amended (the "Act") (File No. 333- ), and under the
Investment Company Act of 1940, as amended (the "1940 Act") (File No.
811-21284); 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 [ ], 2003
were set forth therein.
E-1
4. Fund officials have advised us that no financial
statements as of any date subsequent to [ ], 2003 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 [ ], 2003 in the capital shares or net
assets of the Fund as compared with amounts shown in the [ ], 2003,
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
E-2