EXHIBIT h.1
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
[ ] Common Shares of Beneficial Interest
Par Value $0.00001 per Share
UNDERWRITING AGREEMENT
March [ ] , 2003
UNDERWRITING AGREEMENT
March [ ], 2003
UBS Warburg LLC
Prudential Securities Incorporated
Wachovia Securities, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
Advest, Inc.
H&R Block Financial Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇ Investments Inc., a KeyCorp Company
Wedbush ▇▇▇▇▇▇ Securities Inc.
c/o UBS Warburg LLC
as Managing Representative
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
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 common
shares of beneficial interest (the "Firm Shares"), par value $0.00001 per share
(the "Common Shares"), of the Fund. In addition, solely for the purpose of
covering over-allotments, the Fund proposes to grant to the Underwriters the
option to purchase from the Fund up to an additional Common Shares (the
"Additional Shares"). The Firm Shares and the Additional Shares are hereinafter
collectively sometimes referred to as the Shares. The Shares are described in
the Prospectus which is referred to below.
The Fund has filed, in accordance with the provisions of the Securities Act
of 1933, as amended, and the rules and regulations thereunder (collectively
called the "Act"), and with the provisions of the Investment Company Act of
1940, as amended, and the rules and regulations thereunder (collectively called
the "Investment Company Act"), with the Securities and Exchange Commission (the
"Commission") a registration statement on Form N-2 (File Nos. 333-102624 and
811-21284), including a prospectus and a statement of additional information,
relating to the Shares. The Fund has furnished to you, for use by the
Underwriters and by dealers, copies of one or more preliminary prospectuses
(including a preliminary statement of additional information) (each thereof,
including such preliminary statement of additional information, being herein
called a "Preliminary Prospectus") relating to the Shares. Except where the
context otherwise requires, the registration statement, as amended when it
becomes effective (the "Effective Date"), including all documents filed as a
part thereof or incorporated by reference therein, and including any information
contained in a prospectus subsequently filed with the Commission pursuant to
Rule 497 under the Act and deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the Act is
herein called the Registration Statement, and the prospectus (including the
statement of additional information), in the form filed by the Fund with the
Commission pursuant to Rule 497 under the Act or, if no such filing is required,
the form of final prospectus (including the form of final statement of
additional information) included in the Registration Statement at the time it
became effective, is herein called the Prospectus. In addition, the Fund has
filed a Notification of Registration on Form N-8A (the "Notification") pursuant
to Section 8 of the Investment Company Act. UBS Warburg LLC (the "Managing
Representative") will act as managing representative for the Underwriters.
PIMCO Advisors Fund Management LLC ("PIMCO Advisors," or the "Investment
Manager") will act as the Fund's investment manager pursuant to an Investment
Management Agreement by and between the Fund and the Investment Manager, dated
as of March 12, 2003 (the "Investment Management Agreement"). ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇
Capital Management LLC ("NACM," or the "Portfolio Manager") will act as the
Fund's portfolio manager pursuant to a Portfolio Management Agreement by and
between the Investment Manager and NACM, as accepted and agreed to by the Fund,
dated as of March 12, 2003. Brown Brothers ▇▇▇▇▇▇▇▇ & Co. will act as the
custodian (the "Custodian") of the Fund's cash and portfolio assets pursuant to
a Custodian Agreement, dated as of March [ ], 2003 (the "Custodian Agreement").
PFPC Inc. will act as the Fund's transfer agent, registrar and dividend
disbursing agent (the "Transfer Agent") pursuant to a Transfer Agency Services
Agreement, dated as of March [ ], 2003 (the "Transfer Agency Agreement"). UBS
Warburg LLC will act as a shareholder servicing agent for the Fund pursuant to a
Shareholder Servicing Agreement by and between UBS Warburg LLC and the
Investment Manager, dated as of March [ ], 2003 (the "Shareholder Servicing
Agreement"). The Investment Manager and the Managing representative have also
entered into an Additional Compensation Agreement, dated March [ ], 2003. In
addition, the Fund has adopted a dividend reinvestment plan (the "Dividend
Reinvestment Plan") pursuant to which holders of Shares shall have their
dividends automatically reinvested in additional Common Shares of the Fund
unless they elect to receive such dividends in cash.
The Fund, the Investment Manager and the Underwriters agree as follows:
1. Sale and Purchase. Upon the basis of the warranties and representations and
subject to the terms and conditions herein set forth, the Fund agrees to
sell to the respective Underwriters and each of the Underwriters, severally
and not jointly, agrees to purchase from the Fund the aggregate number of
Firm Shares set forth opposite the name of such Underwriter in Schedule A
attached hereto in each case at a purchase price of $14.325 per Share. The
Fund is advised that the Underwriters intend (i) to make a public offering
of their respective portions of the Firm Shares as soon after the effective
date of the Registration Statement as is advisable and (ii) initially to
offer the Firm Shares upon the terms set forth in the Prospectus. The
Underwriters may from time to time increase or decrease the public offering
price after the initial public offering to such extent as they may
determine.
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In addition, the Fund hereby grants to the several Underwriters the
option to purchase, and upon the basis of the warranties and
representations and subject to the terms and conditions herein set forth,
the Underwriters shall have the right to purchase, severally and not
jointly, from the Fund, ratably in accordance with the number of Firm
Shares to be purchased by each of them, all or a portion of the Additional
Shares as may be necessary to cover over-allotments made in connection with
the offering of the Firm Shares, at the same purchase price per share to be
paid by the Underwriters to the Fund for the Firm Shares. This option may
be exercised by you on behalf of the several Underwriters at any time and
from time to time on or before the forty-fifth day following the date
hereof, by written notice to the Fund. Such notice shall set forth the
aggregate number of Additional Shares as to which the option is being
exercised, and the date and time when the Additional Shares are to be
delivered (such date and time being herein referred to as the "Additional
Time of Purchase"); provided, however, that the Additional Time of Purchase
shall not be earlier than the Time of Purchase (as defined below) nor
earlier than the second business day after the date on which the option
shall have been exercised nor later than the tenth business day after the
date on which the option shall have been exercised. The number of
Additional Shares to be sold to each Underwriter shall be the number which
bears the same proportion to the aggregate number of Additional Shares
being purchased as the number of Firm Shares set forth opposite the name of
such Underwriter on Schedule A hereto bears to the total number of Firm
Shares (subject, in each case, to such adjustment as you may determine to
eliminate fractional shares).
The Fund also agrees, subject to the terms and conditions set forth
herein, to sell to the Investment Manager, and, upon the basis of the
representations, warranties and agreements of the Fund contained herein,
the Investment Manager shall have the right to purchase from the Fund, at
the same purchase price per share as the Underwriters shall pay for the
Additional Shares, up to an aggregate of 1,000 Shares (the "Investment
Manager Shares").
2. Payment and Delivery. Payment of the purchase price for the Firm Shares
shall be made by the Underwriters to the Fund by Federal Funds wire
transfer, against delivery of the certificates for the Firm Shares to you
through the facilities of the Depository Trust Company ("DTC") for the
respective accounts of the Underwriters. Such payment and delivery shall be
made at 10:00 A.M., New York City time on the third business day following
the date of this Underwriting Agreement (unless another date or time shall
be agreed to by you and the Fund). The time at which such payment and
delivery are actually made is hereinafter sometimes called the Time of
Purchase. Certificates for the Firm Shares shall be delivered to you in
definitive form in such names and in such denominations as you shall
specify on the second business day preceding the Time of Purchase. For the
purpose of expediting the checking of the certificates for the Firm Shares
by you, the Fund agrees to make such certificates available to you for such
purpose at least one full business day preceding the Time of Purchase.
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Payment of the purchase price for the Additional Shares shall be made
at the Additional Time of Purchase in the same manner and at the same
office as the payment for the Firm Shares. Certificates for the Additional
Shares shall be delivered to you in definitive form in such names and in
such denominations as you shall specify no later than the second business
day preceding the Additional Time of Purchase. For the purpose of
expediting the checking of the certificates for the Additional Shares by
you, the Fund agrees to make such certificates available to you for such
purpose at least one full business day preceding the Additional Time of
Purchase. The Time of Purchase and the Additional Time of Purchase are
sometimes referred to herein as the Closing Dates.
The place and time of the closing for the Investment Manager Shares
shall be as agreed upon by the Investment Manager and the Fund; provided,
however, that the date of such closing for the Investment Manager Shares
shall in no event be earlier than the Time of Purchase.
3. Representations and Warranties of the Fund and the Investment Manager. Each
of the Fund and the Investment Manager jointly and severally represents and
warrants to each Underwriter as follows:
(a) On (A) the Effective Date and the date on which the Prospectus is
first filed with the Commission pursuant to Rule 497(b), (h) or (j)
under the Act, as the case may be, (B) the date on which any
post-effective amendment to the Registration Statement (except any
post-effective amendment which is filed with the Commission after the
later of (x) one year from the date of this Underwriting Agreement or
(y) the date on which the distribution of the Shares is completed)
became or becomes effective or any amendment or supplement to the
Prospectus was or is filed with the Commission and (C) the Closing
Dates, the Registration Statement, the Prospectus and any such
amendment or supplement thereto and the Notification complied or will
comply in all material respects with the requirements of the Act and
the Investment Company Act, as the case may be. On the Effective Date
and on the date that any post-effective amendment to the Registration
Statement (except any post-effective amendment which is filed with the
Commission after the later of (x) one year from the date of this
Underwriting Agreement or (y) the date on which the distribution of
the Shares is completed) became or becomes effective, neither the
Registration Statement nor any such amendment did or will contain any
untrue statement of a material fact or omit to state a material fact
required to be stated in it or necessary to make the statements in it
not misleading. At the Effective Date and, if applicable, the date the
Prospectus or any amendment or supplement to the Prospectus was or is
filed with the Commission and at the Closing Dates, the Prospectus did
not or will not, as the case may be, contain any untrue statement of a
material fact or omit to state a material fact required to be stated
in it or necessary to make the statements in it, in light of the
circumstances under which they were made, not misleading. The
foregoing representations in
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this Section 3(a) do not apply to statements or omissions relating to
the Underwriters made in reliance on and in conformity with
information furnished in writing to the Fund by the Underwriters
expressly for use in the Registration Statement, the Prospectus, or
any amendments or supplements thereto, as described in Section 9(f)
hereof.
(b) The Fund has been duly formed, is validly existing as an
unincorporated voluntary association under the laws of The
Commonwealth of Massachusetts (commonly known as a "Massachusetts
business trust"), with full power and authority to conduct all the
activities conducted by it, to own or lease all assets owned or leased
by it and to conduct its business as described in the Registration
Statement and Prospectus, and the Fund is duly licensed and qualified
to do business and in good standing in each jurisdiction in which its
ownership or leasing of property or its conducting of business
requires such qualification, except where the failure to be so
qualified or be in good standing would not have a material adverse
effect on the Fund, and the Fund owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in the
Prospectus. The Fund has no subsidiaries.
(c) The capitalization of the Fund is as set forth in the Registration
Statement and the Prospectus. The Common Shares conform in all
material respects to the description of them in the Prospectus. All
the outstanding Common Shares have been duly authorized and are
validly issued, fully paid and nonassessable (except as described in
the Registration Statement). The Shares to be issued and delivered to
and paid for by the Underwriters in accordance with this Underwriting
Agreement against payment therefor as provided by this Underwriting
Agreement have been duly authorized and when issued and delivered to
the Underwriters will have been validly issued and will be fully paid
and nonassessable (except as described in the Registration Statement).
Other than the right of the Investment Manager to purchase Shares as
set forth in Section 1 hereof, no person is entitled to any preemptive
or other similar rights with respect to the Shares.
(d) The Fund is duly registered with the Commission under the Investment
Company Act as a diversified, closed-end management investment
company, and, subject to the filing of any final amendment to the
Registration Statement (a "Final Amendment"), if not already filed,
all action under the Act and the Investment Company Act, as the case
may be, necessary to make the public offering and consummate the sale
of the Shares as provided in this Underwriting Agreement has or will
have been taken by the Fund.
(e) The Fund has full power and authority to enter into each of this
Underwriting Agreement, the Investment Management Agreement, the
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Custodian Agreement, the Transfer Agency Agreement and the Dividend
Reinvestment Plan (collectively, the "Fund Agreements") and to perform
all of the terms and provisions hereof and thereof to be carried out
by it and (i) each Fund Agreement has been duly and validly
authorized, executed and delivered by or on behalf of the Fund, (ii)
each Fund Agreement does not violate in any material respect any of
the applicable provisions of the Investment Company Act or the
Investment Advisers Act of 1940, as amended, and the rules and
regulations thereunder (collectively called the "Advisers Act"), as
the case may be, and (iii) assuming due authorization, execution and
delivery by the other parties thereto, each Fund Agreement constitutes
the legal, valid and binding obligation of the Fund enforceable in
accordance with its terms, (A) subject, as to enforcement, to
applicable bankruptcy, insolvency and similar laws affecting
creditors' rights generally and to general equitable principles
(regardless of whether enforcement is sought in a proceeding in equity
or at law) and (B) except as rights to indemnity thereunder may be
limited by federal or state securities laws.
(f) None of (i) the execution and delivery by the Fund of the Fund
Agreements, (ii) the issue and sale by the Fund of the Shares as
contemplated by this Underwriting Agreement and (iii) the performance
by the Fund of its obligations under any of the Fund Agreements or
consummation by the Fund of the other transactions contemplated by the
Fund Agreements conflicts with or will conflict with, or results or
will result in a breach of, the Agreement and Declaration of Trust or
the Bylaws of the Fund, each as amended from time to time, or any
agreement or instrument to which the Fund is a party or by which the
Fund is bound, except where such violation does not have a material
adverse effect on the condition (financial or other), business
prospects, properties, net assets or results of operations of the
Fund, or any law, rule or regulation, or order of any court,
governmental instrumentality, securities exchange or association or
arbitrator, whether foreign or domestic, applicable to the Fund, other
than state securities or "blue sky" laws applicable in connection with
the purchase and distribution of the Shares by the Underwriters
pursuant to this Underwriting Agreement.
(g) The Fund is not currently in breach of, or in default under, any
written agreement or instrument to which it is a party or by which it
or its property is bound or affected, except where such violation does
not have a material adverse effect on the condition (financial or
other), business prospects, properties, net assets or results of
operations of the Fund.
(h) No person has any right to the registration of any securities of the
Fund because of the filing of the Registration Statement.
(i) No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or association,
whether foreign or
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domestic, is required by the Fund for the consummation by the Fund of
the transactions to be performed by the Fund or the performance by the
Fund of all the terms and provisions to be performed by or on behalf
of it in each case as contemplated in the Fund Agreements, except such
as (i) have been obtained under the Act, the Investment Company Act or
the Advisers Act, and (ii) may be required by the New York Stock
Exchange or under state securities or "blue sky" laws, in connection
with the purchase and distribution of the Shares by the Underwriters
pursuant to this Underwriting Agreement.
(j) The Shares are duly authorized for listing, subject to official notice
of issuance, on the New York Stock Exchange and the Fund's
Registration Statement on Form 8-A, under the Securities Exchange Act
of 1934, as amended, and the rules and regulations thereunder
(collectively called the "Exchange Act"), has become effective.
(k) PricewaterhouseCoopers LLP, whose report appears in the Prospectus,
are independent public accountants with respect to the Fund as
required by the Act and the Investment Company Act.
(l) To the knowledge of the Fund and the Investment Manager after due
inquiry, based on representations from PricewaterhouseCoopers LLP, the
statement of assets and liabilities included in the Registration
Statement and the Prospectus presents fairly in all material respects,
in accordance with generally accepted accounting principles in the
United States applied on a consistent basis, the financial position of
the Fund as of the date indicated.
(m) The Fund will maintain a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with
management's general or specific authorization; and (iv) the recorded
accountability for assets is compared with existing assets through an
asset reconciliation procedure or otherwise at reasonable intervals
and appropriate action is taken with respect to any differences.
(n) Since the date as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (i)
there has been no material adverse change in the condition, financial
or otherwise, business affairs or business of the Fund, whether or not
arising in the ordinary course of business, (ii) there have been no
transactions entered into by the Fund other than those in the ordinary
course of its business and (iii) there has been no dividend or
distribution of any kind declared, paid or made on any class of its
capital shares.
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(o) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending, or, to
the knowledge of the Fund, threatened against or affecting the Fund,
which (i) might result in any material adverse change in the
condition, financial or otherwise, business affairs or business
prospects of the Fund or might materially adversely affect the
properties or assets of the Fund or (ii) is of a character required to
be described in the Registration Statement or the Prospectus; and
there are no contracts, franchises or other documents that are of a
character required to be described in, or that are required to be
filed as exhibits to, the Registration Statement that have not been
described or filed as required.
(p) Except for stabilization transactions conducted by the Managing
Representative, and except for tender offers, Share repurchases and
the issuance or purchase of Shares pursuant to the Dividend
Reinvestment Plan effected following the date on which the
distribution of the Shares is completed in accordance with the
policies of the Fund as set forth in the Prospectus, the Fund has not
taken and will not take, directly or indirectly, any action designed
or which might be reasonably expected to cause or result in, or which
will constitute, stabilization or manipulation of the price of the
Common Shares in violation of applicable federal securities laws,
provided that, for the sake of clarity, no action taken by an
Underwriter that is an affiliate of the Fund shall be deemed to be
action taken, directly or indirectly, by the Fund for purposes of this
Section 3(p).
(q) The Fund intends to direct the investment of the proceeds of the
offering of the Shares in such a manner as to comply with the
requirements of Subchapter M of the Internal Revenue Code of 1986, as
amended (the "Code").
(r) No advertising, sales literature or other promotional materials
(excluding road show slides or road show tapes) were authorized or
prepared by or on behalf of the Fund, the Investment Manager or the
Portfolio Manager or any representative thereof for use in connection
with the public offering or sale of the Shares other than the
definitive client brochure and the broker selling memo which were
filed with the National Association of Securities Dealers, Inc. (the
"NASD") on February 14, 2003 and February 18, 2003, respectively
(collectively referred to as the "sales materials"); the sales
materials and any road show slides or road show tapes complied and
comply in all material respects with the applicable requirements of
the Act and the rules and interpretations of the NASD; and no broker
kits, road show slides, road show tapes or sales materials authorized
or prepared by the Fund or authorized or prepared on behalf of the
Fund by the Investment Manager, the Portfolio Manager or any
representative thereof for use in connection with the public offering
or sale of the Shares contained or contains any
8
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 Advisory Agreement, the
Registration Statement and the Prospectus.
(c) The Investment Manager has full power and authority to enter into each
of this Underwriting Agreement, the Investment Management Agreement,
the Shareholder Servicing Agreement and the Portfolio Management
Agreement (collectively, this Underwriting Agreement, the Investment
Management Agreement and the Portfolio Management Agreement being
referred to as the "Investment Manager Agreements") and to carry out
all the terms and provisions hereof and thereof to be carried out by
it; and each Investment Manager Agreement has been duly and validly
authorized, executed and delivered by the Investment Manager; none of
the Investment Manager Agreements violate in any material respect any
of the applicable provisions of the Investment Company Act or the
Advisers Act; and assuming due authorization, execution and delivery
by the other parties thereto, each Investment Manager Agreement
constitutes a legal, valid and binding obligation of the Investment
Manager, enforceable in accordance with its terms, (i) subject, as to
enforcement, to applicable bankruptcy, insolvency and similar laws
affecting creditors' rights generally and to general equitable
principles (regardless of whether enforcement is sought in a
proceeding in equity or at law) and (ii) except
9
as rights to indemnity thereunder may be limited by federal or state
securities laws.
(d) Neither (i) the execution and delivery by the Investment Manager of
any Investment Manager Agreement nor (ii) the consummation by the
Investment Manager of the transactions contemplated by, or the
performance of its obligations under, any Investment Manager Agreement
conflicts or will conflict with, or results or will result in a breach
of, the limited liability company agreement or other organizational
documents of the Investment Manager or any agreement or instrument to
which the Investment Manager is a party or by which the Investment
Manager is bound, or any law, rule or regulation, or order of any
court, governmental instrumentality, securities exchange or
association or arbitrator, whether foreign or domestic, applicable to
the Investment Manager.
(e) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Investment
Manager of its obligations under, any Investment Manager Agreement, as
the case may be, except such as (i) have been obtained under the Act,
the Investment Company Act or the Advisers Act, and (ii) may be
required by the New York Stock Exchange or under state securities or
"blue sky" laws, in connection with the purchase and distribution of
the Shares by the Underwriters pursuant to this Underwriting
Agreement.
(f) The description of the Investment Manager and its business, and the
statements attributable to the Investment Manager, in the Registration
Statement and the Prospectus comply with the requirements of the Act
and the Investment Company Act and do not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(g) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Investment Manager, threatened against or
affecting the Investment Manager of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably
be expected to result in any material adverse change in the ability of
the Investment Manager to fulfill its respective obligations under any
Investment Manager Agreement.
(h) Except for stabilization activities conducted by the Managing
Representative and except for tender offers, Share repurchases and the
issuance or purchase of Shares pursuant to the Dividend Reinvestment
Plan effected following the date on which the distribution of the
Shares is completed in accordance with the policies of the Fund as set
forth in the
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Prospectus, the Investment Manager has not taken and will not take,
directly or indirectly, any action designed, or which might reasonably
be expected to cause or result in, or which will constitute,
stabilization or manipulation of the price of the Common Shares in
violation of applicable federal securities laws, provided that, for
the sake of clarity, no action taken by an Underwriter that is an
affiliate of the Investment Manager shall be deemed to be action
taken, directly or indirectly, by the Investment Manager for purposes
of this Section 4(h).
(i) In the event that the Fund or the Investment Manager has made
available any promotional materials (other than the sales materials)
intended for use only by qualified broker-dealers and registered
representatives thereof by means of an Internet web site or similar
electronic means, pre-qualification and password-protection or similar
procedures were used effectively prohibiting access to such
promotional materials by persons other than qualified broker-dealers
and registered representatives thereof.
(j) The Portfolio Manager has been duly formed, is validly existing as a
limited liability company under the laws of Delaware with full power
and authority to conduct all of the activities conducted by it, to own
or lease all of the assets owned or leased by it and to conduct its
business as described in the Registration Statement and Prospectus,
and the Portfolio Manager is duly licensed and qualified to do
business and in good standing in each jurisdiction in which it is
required to be so qualified, except to the extent that failure to be
so qualified or be in good standing would not have a material adverse
affect on the Portfolio Manager's ability to provide services to the
Fund; and the Portfolio Manager owns, possesses or has obtained and
currently maintains all governmental licenses, permits, consents,
orders, approvals and other authorizations, whether foreign or
domestic, necessary to carry on its business as contemplated in the
Registration Statement and the Prospectus.
(k) The Portfolio Manager is (i) duly registered as an investment adviser
under the Advisers Act and (ii) not prohibited by the Advisers Act or
the Investment Company Act from acting as the investment sub-adviser
for the Fund as contemplated by the Portfolio Management Agreement,
the Registration Statement and the Prospectus.
(l) The Portfolio Manager has full power and authority to enter into 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
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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.
(m) Neither (i) the execution and delivery by the Portfolio Manager of the
Portfolio Management Agreement nor (ii) the consummation by the
Portfolio Manager of the transactions contemplated by, or the
performance of its obligations under, the 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.
(n) No consent, approval, authorization or order of any court,
governmental agency or body or securities exchange or association,
whether foreign or domestic, is required for the consummation of the
transactions contemplated in, or the performance by the Portfolio
Manager of its obligations under, the 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 by the New York Stock Exchange or under state securities or
"blue sky" laws, in connection with the purchase and distribution of
the Shares by the Underwriters pursuant to this Underwriting
Agreement.
(o) The description of the Portfolio Manager and its business, and the
statements attributable to the Portfolio Manager, in the Registration
Statement and the Prospectus comply with the requirements of the Act
and the Investment Company Act and do not contain any untrue statement
of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein
not misleading.
(p) There is no action, suit or proceeding before or by any court,
commission, regulatory body, administrative agency or other
governmental agency or body, foreign or domestic, now pending or, to
the knowledge of the Portfolio Manager, threatened against or
affecting the Portfolio Manager of a nature required to be disclosed
in the Registration Statement or Prospectus or that might reasonably
be expected to result in any material adverse change in the ability of
the Portfolio Manager to fulfill its respective obligations under the
Portfolio Management Agreement.
12
(q) Except for stabilization activities conducted by the Managing
Representative and except for tender offers, Share repurchases and the
issuance or purchase of Shares pursuant to the Dividend Reinvestment
Plan effected following the date on which the distribution of the
Shares is completed in accordance with the policies of the Fund as set
forth in the Prospectus, the Portfolio Manager has not taken and will
not take, directly or indirectly, any action designed, or which might
reasonably be expected to cause or result in, or which will
constitute, stabilization or manipulation of the price of the Common
Shares in violation of applicable federal securities laws.
5. Agreements of the Parties.
(a) If the registration statement relating to the Shares has not yet
become effective, the Fund will promptly file any Final Amendment, if
not previously filed, with the Commission, and will use its best
efforts to cause such registration statement to become effective and,
as soon as the Fund is advised, will advise the Managing
Representative when the Registration Statement or any amendment
thereto has become effective. If the Registration Statement has become
effective and the Prospectus contained therein omits certain
information at the time of effectiveness pursuant to Rule 430A under
the Act, the Fund will file a 430A Prospectus pursuant to Rule 497(h)
under the Act as promptly as practicable, but no later than the second
business day following the earlier of the date of the determination of
the offering price of the Shares or the date the Prospectus is first
used after the Effective Date. If the Registration Statement has
become effective and the Prospectus contained therein does not so omit
such information, the Fund will file a Prospectus pursuant to Rule
497(b) or a certification pursuant to Rule 497(j) under the Act as
promptly as practicable, but no later than the fifth business day
following the date of the later of the Effective Date or the
commencement of the public offering of the Shares after the Effective
Date. In either case, the Fund will provide you satisfactory evidence
of the filing. The Fund will not file with the Commission any
Prospectus or any other amendment (except any post-effective amendment
which is filed with the Commission after the later of (x) one year
from the date of this Underwriting Agreement or (y) the date on which
distribution of the Shares is completed) or supplement to the
Registration Statement or the Prospectus unless a copy has first been
submitted to the Managing Representative a reasonable time before its
filing and the Managing Representative has not objected to it in
writing within a reasonable time after receiving the copy.
(b) For the period of three years from the date hereof, the Fund will
advise the Managing Representative promptly (1) of the issuance by the
Commission of any order in respect of the Fund, the Investment Manager
or the Portfolio Manager which relates to the Fund, or which relates
to any material arrangements or proposed material arrangements
involving the
13
Fund, the Investment Manager or the Portfolio Manager, (2) of the
initiation or threatening of any proceedings for, or receipt by the
Fund of any notice with respect to, any suspension of the
qualification of the Shares for sale in any jurisdiction or the
issuance of any order by the Commission suspending the effectiveness
of the Registration Statement, (3) of receipt by the Fund, or any
representative or attorney of the Fund, of any other communication
from the Commission relating in any material way to the Fund, the
Registration Statement, the Notification, any Preliminary Prospectus,
the Prospectus or to the transactions contemplated by this
Underwriting Agreement and (4) the issuance by any court, regulatory
body, administrative agency or other governmental agency or body,
whether foreign or domestic, of any order, ruling or decree, or the
threat to initiate any proceedings with respect thereto, regarding the
Fund, which relates in any material way to the Fund or any material
arrangements or proposed material arrangements involving the Fund. The
Fund will make every reasonable effort to prevent the issuance of any
order suspending the effectiveness of the Registration Statement and,
if any such order is issued, to obtain its lifting as soon as
possible.
(c) If not delivered prior to the date of this Underwriting Agreement, the
Fund will deliver to the Managing Representative, without charge, a
signed copy of the Registration Statement and the Notification and of
any amendments (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the date of
this Underwriting Agreement or (y) the date on which the distribution
of the Shares is completed) to either the Registration Statement or
the Notification (including all exhibits filed with any such document)
and as many conformed copies of the Registration Statement and any
amendments thereto (except any post-effective amendment which is filed
with the Commission after the later of (x) one year from the date of
this Underwriting Agreement or (y) the date on which the distribution
of the Shares is completed) (excluding exhibits) as the Managing
Representative may reasonably request.
(d) During such period as a prospectus is required by law to be delivered
by an underwriter or a dealer, the Fund will deliver, without charge,
to you, the Underwriters and any dealers, at such office or offices as
you may designate, as many copies of the Prospectus as you may
reasonably request, and, if any event occurs during such period as a
result of which it is necessary to amend or supplement the Prospectus,
in order to make the statements therein, in light of the circumstances
under which they were made, not misleading in any material respect, or
if during such period it is necessary to amend or supplement the
Prospectus to comply with the Act or the Investment Company Act, the
Fund promptly will prepare, submit to the Managing Representative,
file with the Commission and deliver, without charge, to the
Underwriters and to dealers (whose names and addresses the Managing
Representative will furnish to the Fund) to whom
14
Shares may have been sold by the Underwriters, and to other dealers on
request, amendments or supplements to the Prospectus so that the
statements in such Prospectus, as so amended or supplemented, will
not, in light of the circumstances under which they were made, be
misleading in any material respect and will comply with the Act and
the Investment Company Act; provided that if the amendment or
supplement is required exclusively as a result of a misstatement in or
omission from the information provided to the Fund in writing by the
Underwriters expressly for use in the Prospectus, the Fund may deliver
such amendment or supplement to the Underwriters and dealers at a
reasonable charge not to exceed the actual cost thereof to the Fund.
Delivery by the Underwriters of any such amendments or supplements to
the Prospectus will not constitute a waiver of any of the conditions
in Section 6 hereof.
(e) The Fund will make generally available to holders of the Fund's
securities, as soon as practicable but in no event later than the last
day of the 18th full calendar month following the calendar quarter in
which the Effective Date falls, an earnings statement, if applicable,
satisfying the provisions of the last paragraph of Section 11(a) of
the Act and, at the option of the Fund, Rule 158 under the Act.
(f) If the transactions contemplated by this Underwriting Agreement are
consummated, the Fund shall pay all costs and expenses incident to the
performance of the obligations of the Fund under this Underwriting
Agreement (to the extent such expenses do not, in the aggregate,
exceed $0.03 per Share), including but not limited to costs and
expenses of or relating to (1) the preparation, printing and filing of
the Registration Statement and exhibits to it, each Preliminary
Prospectus, the Prospectus and all amendments and supplements thereto,
(2) the issuance of the Shares and the preparation and delivery of
certificates for the Shares, (3) the registration or qualification of
the Shares for offer and sale under the securities or "blue sky" laws
of the jurisdictions referred to in the foregoing paragraph, including
the fees and disbursements of counsel for the Underwriters in that
connection, and the preparation and printing of any preliminary and
supplemental "blue sky" memoranda, (4) the furnishing (including costs
of design, production, shipping and mailing) to the Underwriters and
dealers of copies of each Preliminary Prospectus relating to the
Shares, the sales materials, the Prospectus, and all amendments or
supplements to the Prospectus, and of the other documents required by
this Section to be so furnished, (5) the filing requirements of the
NASD, in connection with its review of the financing, including filing
fees and the disbursements of counsel for the Underwriters in that
connection, (6) all transfer taxes, if any, with respect to the sale
and delivery of the Shares to the Underwriters, (7) the listing of the
Shares on the New York Stock Exchange, and (8) the transfer agent for
the Shares. To the extent the foregoing costs and expenses incident to
the performance of the obligations of the Fund under this Underwriting
Agreement exceed,
15
in the aggregate, $0.03 per Share, the Investment Manager or an
affiliate will pay all such excess costs and expenses.
(g) If the transactions contemplated by this Underwriting Agreement are
not consummated, except as otherwise provided herein, no party will be
under any liability to any other party, except that (i) if this
Underwriting Agreement is terminated (A) by the Fund or the Investment
Manager pursuant to any of the provisions hereof or (B) by you or the
Underwriters because of any inability, failure or refusal on the part
of the Fund or the Investment Manager to comply with any material
terms or because any of the conditions in Section 6 are not satisfied,
the Investment Manager or an affiliate and the Fund, jointly and
severally, will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees, disbursements and other
charges of their counsel) reasonably incurred by them in connection
with the proposed purchase and sale of the Shares and (ii) no
Underwriter who has failed or refused to purchase the Shares agreed to
be purchased by it under this Underwriting Agreement, in breach of its
obligations pursuant to this Underwriting Agreement, will be relieved
of liability to the Fund, the Investment Manager and the other
Underwriters for damages occasioned by its default.
(h) Without the prior written consent of the Managing Representative, the
Fund will not offer, sell or register with the Commission, or announce
an offering of, any equity securities of the Fund, within 180 days
after the Effective Date, except for the Shares as described in the
Prospectus and any issuances of Common Shares pursuant to the Dividend
Reinvestment Plan and except in connection with any offering of
preferred shares of beneficial interest as contemplated by the
Prospectus.
(i) The Fund will use its best efforts to cause the Shares to be duly
authorized for listing by the New York Stock Exchange prior to the
date the Shares are issued.
(j) The Fund will direct the investment of the net proceeds of the
offering of the Shares in such a manner as to comply with the
investment objective and policies of the Fund as described in the
Prospectus.
6. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters to purchase the Shares are subject to the accuracy on the date
of this Underwriting Agreement, and on each of the Closing Dates, of the
representations of the Fund and the Investment Manager in this Underwriting
Agreement, to the accuracy and completeness of all material statements made
by the Fund and the Investment Manager or any of their respective officers
in any certificate delivered to the Managing Representative or its counsel
pursuant to this Underwriting Agreement, to performance by the Fund and the
Investment Manager of their respective obligations under this Underwriting
Agreement and to each of the following additional conditions:
16
(a) The Registration Statement must have become effective by 5:30 p.m.,
New York City time, on the date of this Underwriting Agreement or such
later date and time as the Managing Representative consents to in
writing. The Prospectus must have been filed in accordance with Rule
497(b) or (h) or a certificate must have been filed in accordance with
Rule 497(j), as the case may be, under the Act.
(b) No order suspending the effectiveness of the Registration Statement
may be in effect and no proceedings for such purpose may be pending
before or, to the knowledge of counsel to the Underwriters, threatened
by the Commission, and any requests for additional information on the
part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) must be complied with or waived to the
reasonable satisfaction of the Managing Representative.
(c) Since the dates as of which information is given in the Registration
Statement and the Prospectus, (i) there must not have been any
material change in the Common Shares or liabilities of the Fund except
as set forth in or contemplated by the Prospectus; (ii) there must not
have been any material adverse change in the general affairs,
prospects, management, business, financial condition or results of
operations of the Fund, the Investment Manager or the Portfolio
Manager whether or not arising from transactions in the ordinary
course of business as set forth in or contemplated by the Prospectus
which in the opinion of the Managing Representative would materially
adversely affect the market for the Shares; (iii) the Fund must not
have sustained any material loss or interference with its business
from any court or from legislative or other governmental action, order
or decree, whether foreign or domestic, or from any other occurrence
not described in the Registration Statement and Prospectus; and (iv)
there must not have occurred any event that makes untrue or incorrect
in any material respect any statement or information contained in the
Registration Statement or Prospectus or that is not reflected in the
Registration Statement or Prospectus but should be reflected therein
in order to make the statements or information therein (in the case of
the Prospectus, in light of the circumstances in which they were made)
not misleading in any material respect.
(d) The Managing Representative must have received on each Closing Date a
certificate, dated such date, of the President, a Vice-President or
Managing Director and the chief financial or accounting officer of
each of the Fund and the Investment Manager certifying that (i) the
signers have carefully examined the Registration Statement, the
Prospectus, and this Underwriting Agreement, (ii) the representations
of the Fund (with respect to the certificates from such Fund officers)
and the representations of the Investment Manager (with respect to the
certificates from such officers of the Investment Manager) in this
Underwriting Agreement are accurate on and as of the date of the
certificate, (iii) there has not been any material
17
adverse change in the general affairs, prospects, management,
business, financial condition or results of operations of the Fund
(with respect to the certificates from such Fund officers) or the
Investment Manager (with respect to the certificates from such
officers of the Investment Manager), which change would materially and
adversely affect the ability of the Fund or the Investment Manager, as
the case may be, to fulfill its obligations under this Underwriting
Agreement or the Investment Management Agreement, whether or not
arising from transactions in the ordinary course of business, (iv)
with respect to the Fund only, to the knowledge of such officers after
reasonable investigation, no order suspending the effectiveness of the
Registration Statement, prohibiting the sale of any of the Shares or
otherwise having a material adverse effect on the Fund has been issued
and no proceedings for any such purpose are pending before or
threatened by the Commission or any other regulatory body, whether
foreign or domestic, (v) to the knowledge of the officers of the
Investment Manager, after reasonable investigation, no order having a
material adverse effect on the ability of the Investment Manager to
fulfill its obligations under this Underwriting Agreement or the
Investment 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 such Closing Date (to
the extent not waived in writing by the Managing Representative).
(e) You must have received on each Closing Date the opinions dated such
Closing Date substantially in the form of Schedules B, C and D to this
Underwriting Agreement from the counsel identified in each such
Schedules, or in such other form as is acceptable to counsel for the
Underwriters.
(f) You must have received on each Closing Date from Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP and its affiliated entities an opinion dated such
Closing Date with respect to the Fund, the Shares, the Registration
Statement and the Prospectus, this Underwriting Agreement and the form
and sufficiency of all proceedings taken in connection with the sale
and delivery of the Shares. Such opinion and proceedings shall fulfill
the requirements of this Section 6(f) only if such opinion and
proceedings are satisfactory in all respects to the Managing
Representative. The Fund, the Investment Manager and the Portfolio
Manager must have furnished to such counsel such documents as counsel
may reasonably request for the purpose of enabling them to render such
opinion.
18
(g) The Managing Representative must have received on the date this
Underwriting Agreement is signed and delivered by you a signed letter,
dated such date, substantially in the form of Schedule E to this
Underwriting Agreement from the firm of accountants designated in such
Schedule. The Managing Representative also must have received on each
Closing Date a signed letter from such accountants, dated as of such
Closing Date, confirming on the basis of a review in accordance with
the procedures set forth in their earlier letter that nothing has come
to their attention during the period from a date not more than five
business days before the date of this Underwriting Agreement,
specified in the letter, to a date not more than five business days
before such Closing Date, that would require any change in their
letter referred to in the foregoing sentence.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Underwriting Agreement will comply only if they are in
form and scope reasonably satisfactory to counsel for the Underwriters,
provided that any such documents, forms of which are annexed hereto, shall
be deemed satisfactory to such counsel if substantially in such form.
7. Termination. This Underwriting Agreement may be terminated by the Managing
Representative by notifying the Fund at any time:
(a) before the later of the effectiveness of the Registration Statement
and the time when any of the Shares are first generally offered
pursuant to this Underwriting Agreement by the Managing Representative
to dealers by letter or telegram;
(b) at or before any Closing Date if, in the sole judgment of the Managing
Representative, payment for and delivery of any Shares is rendered
impracticable or inadvisable because (i) trading in the equity
securities of the Fund is suspended by the Commission or by the
principal exchange that lists the Shares, (ii) trading in securities
generally on the New York Stock Exchange or the Nasdaq Stock Market
shall have been suspended or limited or minimum or maximum prices
shall have been generally established on such exchange or
over-the-counter market, (iii) additional material governmental
restrictions, not in force on the date of this Underwriting Agreement,
have been imposed upon trading in securities or trading has been
suspended on any U.S. securities exchange, (iv) a general banking
moratorium has been established by U.S. federal or New York
authorities or (v) any material adverse change in the financial or
securities markets in the United States or in political, financial or
economic conditions in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a
national emergency or war or other calamity or crisis shall have
occurred the effect of any of which is such as to make it, in the sole
judgment of the Managing
19
Representative, impracticable or inadvisable to market the Shares on
the terms and in the manner contemplated by the Prospectus; or
(c) at or before any Closing Date, if any of the conditions specified in
Section 6 have not been fulfilled when and as required by this
Underwriting Agreement.
8. Substitution of Underwriters. If one or more of the Underwriters fails
(other than for a reason sufficient to justify the termination of this
Underwriting Agreement) to purchase on any Closing Date the Shares agreed
to be purchased on such Closing Date by such Underwriter or Underwriters,
the Managing Representative may find one or more substitute underwriters to
purchase such Shares or make such other arrangements as the Managing
Representative deems advisable, or one or more of the remaining
Underwriters may agree to purchase such Shares in such proportions as may
be approved by the Managing Representative, in each case upon the terms set
forth in this Underwriting Agreement. If no such arrangements have been
made within 36 hours after such Closing Date, and
(a) the number of Shares to be purchased by the defaulting Underwriters on
such Closing Date does not exceed 10% of the Shares that the
Underwriters are obligated to purchase on such Closing Date, each of
the nondefaulting Underwriters will be obligated to purchase such
Shares on the terms set forth in this Underwriting Agreement in
proportion to their respective obligations under this Underwriting
Agreement, or
(b) the number of Shares to be purchased by the defaulting Underwriters on
such Closing Date exceeds 10% of the Shares to be purchased by all the
Underwriters on such Closing Date, the Fund will be entitled to an
additional period of 24 hours within which to find one or more
substitute underwriters reasonably satisfactory to the Managing
Representative to purchase such Shares on the terms set forth in this
Underwriting Agreement.
Upon the occurrence of the circumstances described in the foregoing
paragraph (b), either the Managing Representative or the Fund will have the
right to postpone the applicable Closing Date for not more than five
business days in order that necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
the Prospectus) may be effected by the Managing Representative and the
Fund. If the number of Shares to be purchased on such Closing Date by such
defaulting Underwriter or Underwriters exceeds 10% of the Shares that the
Underwriters are obligated to purchase on such Closing Date, and none of
the nondefaulting Underwriters or the Fund makes arrangements pursuant to
this Section within the period stated for the purchase of the Shares that
the defaulting Underwriters agreed to purchase, this Underwriting Agreement
will terminate without liability on the part of any nondefaulting
Underwriter, the Fund, the Investment Manager or the Portfolio
20
Manager, except as provided in Sections 5(g) and 9 hereof. Any action taken
under this Section will not affect the liability of any defaulting
Underwriter to the Fund or the Investment Manager or to any 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 entire Section 9 being deemed to include any Preliminary
Prospectus, the sales materials, the Prospectus and the Prospectus as
amended or supplemented by the Fund), or arises out of or is based
upon any omission or alleged omission to state a material fact
required to be stated in either such Registration Statement or
Prospectus or necessary to make the statements made therein (with
respect to the Prospectus, in light of the circumstances under which
they were made) not misleading, except insofar as any such loss,
damage, expense, liability or claim arises out of or is based upon any
untrue statement or alleged untrue statement of a material fact
contained in and in conformity with information furnished in writing
by or on behalf of any Underwriter to the Fund, the Investment Manager
or the Portfolio Manager expressly for use with reference to any
Underwriter in such Registration Statement or such Prospectus or
arises out of or is based upon any omission or alleged omission to
state a material fact in connection with such information required to
be stated in such Registration Statement or such Prospectus or
necessary to make such information (with respect to the Prospectus, in
light of the circumstances under which they were made) not misleading,
provided, however, that the indemnity agreement contained in this
subsection (a) with respect to any Preliminary Prospectus or amended
Preliminary Prospectus shall not inure to the benefit of any
Underwriter (or to the benefit of any person controlling such
Underwriter) from whom the person asserting any such loss, damage,
expense, liability or claim purchased the Shares which is the subject
thereof if the Prospectus corrected any such alleged untrue statement
or omission and if such
21
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
Shares to such person, unless the failure is the result of
noncompliance by the Fund with Section 5(d) hereof.
If any action, suit or proceeding (together, a "Proceeding") is
brought against an Underwriter or any such person in respect of which
indemnity may be sought against the Fund or the Investment Manager
pursuant to the foregoing paragraph, such Underwriter or such person
shall promptly notify the Fund and the Investment Manager in writing
of the institution of such Proceeding and the Fund or the Investment
Manager shall assume the defense of such Proceeding, including the
employment of counsel reasonably satisfactory to such indemnified
party and payment of all fees and expenses; provided, however, that
the omission to so notify the Fund or the Investment Manager shall not
relieve the Fund or the Investment Manager from any liability which
the Fund or the Investment Manager may have to any Underwriter or any
such person or otherwise. Such Underwriter or such person shall have
the right to employ its or their own counsel in any such case, but the
reasonable fees and expenses of such counsel shall be at the expense
of such Underwriter or of such person unless the employment of such
counsel shall have been authorized in writing by the Fund or the
Investment Manager, as the case may be, in connection with the defense
of such Proceeding or the Fund or the Investment Manager shall not
have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such
Proceeding or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from, additional to or in conflict with those available to
the Fund or the Investment Manager (in which case the Fund, the
Investment Manager shall not have the right to direct the defense of
such Proceeding on behalf of the indemnified party or parties), in any
of which events such reasonable fees and expenses shall be borne by
the Fund or the Investment Manager and paid as incurred (it being
understood, however, that the Fund or the Investment Manager shall not
be liable for the expenses of more than one separate counsel (in
addition to any local counsel) in any one Proceeding or series of
related Proceedings in the same jurisdiction representing the
indemnified parties who are parties to such Proceeding). Neither the
Fund nor the Investment Manager shall be liable for any settlement of
any Proceeding effected without its written consent but if settled
with the written consent of the Fund or the Investment Manager, the
Fund or the Investment Manager, as the case may be, agrees to
indemnify and hold harmless any Underwriter and any such person from
and against any loss or liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the
indemnified party for reasonable fees and expenses of counsel as
contemplated by the second sentence of this paragraph, then the
22
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.
(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
23
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 own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of the Fund, the Investment
Manager or such person, as the case may be, unless the employment of
such counsel shall have been authorized in writing by such Underwriter
in connection with the defense of such Proceeding or such Underwriter
shall not have, within a reasonable period of time in light of the
circumstances, employed counsel to have charge of the defense of such
Proceeding or such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to or in conflict with those available to
such Underwriter (in which case such Underwriter shall not have the
right to direct the defense of such Proceeding on behalf of the
indemnified party or parties, but such Underwriter may employ counsel
and participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such Underwriter), in any of
which events such fees and expenses shall be borne by such Underwriter
and paid as incurred (it being understood, however, that such
Underwriter shall not be liable for the expenses of more than one
separate counsel (in addition to any local counsel) in any one
Proceeding or series of related Proceedings in the same jurisdiction
representing the indemnified parties who are parties to such
Proceeding). No Underwriter shall be liable for any settlement of any
such Proceeding effected without the written consent of such
Underwriter but if settled with the written consent of such
Underwriter, such Underwriter agrees to indemnify and hold harmless
the Fund, the Investment Manager and any such person from and against
any loss or liability by reason of such settlement. Notwithstanding
the foregoing sentence, if at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel as contemplated by the second sentence of
this paragraph, then the indemnifying party agrees that it shall be
liable for any settlement of any Proceeding effected without its
written consent if (i) such settlement is entered into more than 60
business days after receipt by such indemnifying party of the
aforesaid request, (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior
to the date of such settlement and (iii) such indemnified party shall
have given the indemnifying party at least 30 days' prior notice of
its intention to settle. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement
of any pending or threatened Proceeding in respect of which any
indemnified party is or could have been a party and indemnity could
have been sought hereunder by such
24
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 Shares or (ii) if the allocation
provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault
of the Fund and the Investment Manager on the one hand and of the
Underwriters on the other in connection with the statements or
omissions which resulted in such losses, damages, expenses,
liabilities or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Fund and the
Investment Manager on the one hand and the Underwriters on the other
shall be deemed to be in the same respective proportions as the total
proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Fund and
the total underwriting discounts and commissions received by the
Underwriters, bear to the aggregate public offering price of the
Shares. The relative fault of the Fund and the Investment Manager on
the one hand and of the Underwriters on the other shall be determined
by reference to, among other things, whether the untrue statement or
alleged untrue statement of a material fact or omission or alleged
omission relates to information supplied by the Fund or the Investment
Manager or by the Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such statement or omission. The amount paid or payable by a party as a
result of the losses, damages, expenses, liabilities and claims
referred to in this subsection shall be deemed to include any legal or
other fees or expenses reasonably incurred by such party in connection
with investigating, preparing to defend or defending any Proceeding.
(d) The Fund, the Investment Manager and the Underwriters agree that it
would not be just and equitable if contribution pursuant to this
Section 9 were determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take account of the equitable
considerations referred to in subsection (c) above. Notwithstanding
the provisions of this
25
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 Shares. The Fund
and the Investment Manager and each Underwriter agree promptly to
notify each other of the commencement of any Proceeding against it
and, in the case of the Fund or the Investment Manager, against any of
the Fund's or the Investment Manager's shareholders, partners,
managers, members, trustees, directors or officers in connection with
the issuance and sale of the Shares, or in connection with the
Registration Statement or Prospectus.
(f) The Fund and the Investment Manager each acknowledge that the
statements with respect to (1) the public offering of the Shares as
set forth on the cover page of the Prospectus and (2) stabilization
and selling concessions and reallowances of selling concessions and
payment of fees to Underwriters that meet certain minimum sales
thresholds 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.
26
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 ▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇
▇▇▇▇▇.
11. Governing Law; Construction. This Agreement and any claim, counterclaim or
dispute of any kind or nature whatsoever arising out of or in any way
relating to this Agreement ("Claim"), directly or indirectly, shall be
governed by, and construed in accordance with, the laws of the State of New
York. The Section headings in this Agreement have been inserted as a matter
of convenience of reference and are not a part of this Agreement.
12. Submission to Jurisdiction. Except as set forth below, no Claim may be
commenced, prosecuted or continued in any court other than the courts of
the State of New York located in the City and County of New York or in the
United States District Court for the Southern District of New York, which
courts shall have jurisdiction over the adjudication of such matters, and
the Fund and UBS Warburg LLC each consent to the jurisdiction of such
courts and personal service with respect thereto. The Fund and UBS Warburg
hereby consent to personal jurisdiction, service and venue in any court in
which any Claim arising out of or in any way relating to this Agreement is
brought by any third party against UBS Warburg LLC or any indemnified
party. Each of UBS Warburg LLC, the Fund (on its behalf and, to the extent
permitted by applicable law, on behalf of its stockholders and affiliates)
and the Investment Manager (on its behalf and, to the extent permitted by
applicable law, on behalf of its unitholders and affiliates) waives all
right to trial by jury in any action, proceeding or counterclaim (whether
based upon contract, tort or otherwise) in any way arising out of or
relating to this Agreement. Each of the Fund and the Investment Manager
agrees that a final judgment in any such action, proceeding or counterclaim
brought in any such court shall be conclusive and binding upon the Fund and
the Investment Manager, as the case may be, and may be enforced in any
other courts in the jurisdiction of which the Fund or the Investment
Manager, as the case may be, is or may be subject, by suit upon such
judgment.
13. Parties at Interest. The Agreement herein set forth has been and is made
solely for the benefit of the Underwriters, the Fund and the Investment
Manager and to the extent provided in Section 9 hereof the controlling
persons, shareholders, partners, members, trustees, managers, directors and
officers referred to in such section, and their respective successors,
assigns, heirs, personal representatives and executors and administrators.
No other person, partnership, association or
27
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.
28
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:
29
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
By: UBS WARBURG LLC
--------------------------
By: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Title: Managing Director
--------------------------
By: ▇▇▇▇ ▇. ▇▇▇▇
Title: Executive Director
30
SCHEDULE A
------------------------------------------------------------------------------
Name Number of Shares to be Purchased
------------------------------------------------------------------------------
UBS Warburg LLC
------------------------------------------------------------------------------
Prudential Securities Incorporated
------------------------------------------------------------------------------
Wachovia Securities, Inc.
------------------------------------------------------------------------------
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
------------------------------------------------------------------------------
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
------------------------------------------------------------------------------
▇▇▇▇▇ Fargo Securities, LLC
------------------------------------------------------------------------------
Advest, Inc.
------------------------------------------------------------------------------
H&R Block Financial Advisors, Inc.
------------------------------------------------------------------------------
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
------------------------------------------------------------------------------
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
------------------------------------------------------------------------------
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
------------------------------------------------------------------------------
McDonald Investments Inc., a KeyCorp Company
------------------------------------------------------------------------------
Wedbush ▇▇▇▇▇▇ Securities Inc.
------------------------------------------------------------------------------
TOTAL
------------------------------------------------------------------------------
A-1
SCHEDULE B
FORM OF OPINION OF
ROPES & ▇▇▇▇ REGARDING THE FUND
March [ ], 2003
UBS Warburg LLC
Prudential Securities Incorporated
Wachovia Securities, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
Advest, Inc.
H&R Block Financial Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇ Investments Inc., a KeyCorp Company
Wedbush ▇▇▇▇▇▇ Securities Inc.
as Managing Underwriters
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Ladies and Gentlemen:
We have acted as counsel to ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
(the "Fund") in connection with the proposed issuance of [ ] common shares
of beneficial interest, with a par value of $0.00001 per share (the "Shares").
This opinion is furnished to you pursuant to Section 6(e) of the Underwriting
Agreement dated as of March [26], 2003 (the "Underwriting Agreement") among the
Fund, PIMCO Advisors Fund Management LLC (formerly, PIMCO Funds Advisors LLC)
(the "Investment Manager") and UBS Warburg LLC, Prudential Securities
Incorporated, Wachovia Securities, Inc., ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated,
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated, ▇▇▇▇▇ Fargo Securities, LLC, Advest, Inc., H&R
Block Financial Advisors, Inc., ▇▇▇▇▇▇▇▇▇▇ & Co. Inc., ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Incorporated, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
B-1
▇▇▇▇▇ LLC, McDonald Investments Inc., a KeyCorp Company, and Wedbush ▇▇▇▇▇▇
Securities Inc., as representatives of the underwriters listed on Schedule A
thereto (the "Underwriters"). Capitalized terms used in this opinion, unless
otherwise defined, have the meanings specified in the Underwriting Agreement.
We have examined signed copies of the registration statement of the Fund on
Form N-2 (File No. 333-102624) under the Securities Act of 1933, as amended (the
"Securities Act"), and 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 January 21, 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 February 24, 2003 ("Pre-Effective Amendment No. 1"),
Pre-Effective Amendment No. 2 to the Original Registration Statement, including
all exhibits thereto, as filed with the Commission on March [ ], 2003
("Pre-Effective Amendment No. 2"), Pre-Effective Amendment No. 3 to the Original
Registration Statement, including all exhibits thereto, as filed with the
Commission on March [ ], 2003 ("Pre-Effective Amendment No. 3"), and, together
with the Original Registration Statement, Pre-Effective Amendment No. 1 and
Pre-Effective Amendment No. 2, 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 Registration Statement on Form 8-A
under the Securities Exchange Act of 1934, as amended (the "Exchange Act"), as
filed with the Commission on March 14, 2003 (the "Exchange Act Registration
Statement"); the Fund's Agreement and Declaration of Trust, as amended and
restated to the date hereof (the "Declaration of Trust"), on file in the offices
of the Secretary of State of The Commonwealth of Massachusetts and the Clerk of
the City of Boston; the By-laws of the Fund, as amended and restated to the date
hereof (the "By-laws"); a copy of the Prospectus dated March [26], 2003,
relating to the Shares and the Statement of Additional Information of the Fund
dated March [26], 2003, each as filed with the Commission pursuant to Rule 497
under the Securities Act on March [ ], 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 [ ], 2003, between the Fund and Brown
Brothers ▇▇▇▇▇▇▇▇ & Co. (the "Custodian Agreement"); the Accounting Agency
Agreement dated as of March [ ], 2003, between the Fund and Brown Brothers
▇▇▇▇▇▇▇▇ & Co. (the "Accounting Agency Agreement"); and the Transfer Agency
Services Agreement dated as of March [ ], 2003, between the Fund and PFPC Inc.
(the "Transfer Agency Agreement," and, together with the Custodian Agreement and
the Accounting Agency Agreement, the "Fund Agreements"); the Terms and
Conditions of the Fund's Dividend Reinvestment Plan (the "Dividend Reinvestment
Plan"); and the Underwriting Agreement. Additionally, we have relied upon the
oral representation of ▇▇. ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ of the Commission staff to the
effect that the Registration
B-2
Statement became effective as of [2:30] p.m. on March [26], 2003; a letter dated
March 10, 2003, from ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President of the New
York Stock Exchange, authorizing the Shares for listing on such Exchange; and
the oral representation by a member of the Commission staff on the date hereof
that as of [8:00] 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 written
consents of 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 March [ ], 2003, certifying copies of (a) a
Certificate of Designation by the Fund dated March [ ], 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 [ ], 2003
relating to the Fund and (4) a LEXIS search on March 31, 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 opinions regarding the effectiveness of the Registration Statement and
the Exchange Act Registration Statement, we are relying solely on the oral
representations of the Commission staff.
We express no opinion as to the laws of any jurisdiction other than The
Commonwealth of Massachusetts and the United States of America. We call your
attention to the fact that the Underwriting Agreement provides that it is to be
governed by and construed in accordance with the laws of the State of New York
and the Transfer Agency Agreement provides that it is to be governed by and
construed in accordance with the laws of the State of Delaware, and to the fact
that the Investment Management Agreement does not provide that it is to be
governed by the laws of any particular jurisdiction. In rendering the opinion as
to enforceability expressed in paragraph 5 below, we have limited the scope of
our opinion to the conclusions that would be reached by a Massachusetts court
that had determined that each of the 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
B-3
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 also 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 11 below, we have not searched the dockets of any court, administrative
body or other filing office in any jurisdiction.
Based upon and subject to the foregoing, we are of the opinion that:
1. The Registration Statement and all post-effective amendments on or
before the Closing Date, if any, are effective under the Securities Act; the
filing of the Prospectus pursuant to Rule 497 under the Securities Act has been
made in the manner 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 Shares
conform in all material respects as to legal matters to the description of them
under each section entitled "Description of shares" in the Prospectus. All
outstanding common shares of beneficial interest of the Fund have been duly
authorized and are validly issued, fully paid and, subject to the penultimate
paragraph of this opinion letter, non-assessable. The Shares have been duly
authorized and, when issued and delivered to the Underwriters against payment
therefor in accordance with the terms of the Underwriting Agreement, will be
validly issued, fully paid and, subject to the penultimate paragraph of this
opinion letter,
B-4
non-assessable. Except as contemplated by the Underwriting Agreement, no person
is entitled to any preemptive or other similar rights with respect to the
Shares.
4. To the best of our knowledge after due inquiry, the Fund was deemed to
be registered under Section 8(a) of the Investment Company Act upon receipt by
the Commission of the Notification of Registration. To our knowledge, 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, all required action has been taken by the Fund under the
Securities Act, the Investment Company Act and the rules and regulations
thereunder in connection with the issuance and sale of the Shares to make the
public offering and consummate the sale of the Shares pursuant to the
Underwriting Agreement.
5. The Fund has full power and authority to enter into each of the Fund
Agreements and to perform all of the terms and provisions thereof to be carried
out by it. Each Fund Agreement has been duly and validly authorized, executed
and delivered by the Fund. Each Fund Agreement complies in all material respects
with all applicable provisions of the Investment Company Act and the Investment
Advisers Act of 1940, as amended, as the case may be. Assuming due
authorization, execution and delivery by the other parties thereto, each Fund
Agreement constitutes the legal, valid and binding obligation of the Fund
enforceable in accordance with its terms, subject as to enforcement to
bankruptcy, insolvency, moratorium, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general equity
principles (regardless of whether enforceability is considered in a proceeding
in equity or at law).
6. The Fund has full power and authority to enter into each of the
Investment Management Agreement and the Underwriting Agreement and to perform
all of the terms and provisions thereof to be carried out by it. The Investment
Management Agreement and the Underwriting Agreement have been duly and validly
authorized, executed and delivered by the Fund.
7. None of (a) the execution and delivery by the Fund of the Investment
Management Agreement, the Underwriting Agreement or any of the Fund Agreements,
(b) the issue and sale by the Fund of the Shares as contemplated by the
Underwriting Agreement or (c) the performance by the Fund of its obligations
under the Investment Management Agreement, the Underwriting Agreement, the
Dividend Reinvestment Plan or any of the Fund Agreements, or consummation by the
Fund of the other transactions contemplated by the Investment Management
Agreement, the Underwriting Agreement or any of the Fund Agreements conflicts or
will conflict with, or results or will result in a breach of, the Declaration of
Trust or the By-laws or, to our knowledge, any agreement or instrument to which
the Fund is a party or by which the Fund is bound, or violates or will violate
any federal statute, law or regulation or any judgment, injunction, order or
decree of any federal governmental agency or body that is applicable to the Fund
and that is known to us, which violation would have a material adverse effect on
the condition or business of the Fund.
B-5
8. To the best of our knowledge, the Fund is not currently in breach of, or
in default under, any material written agreement or instrument to which it is a
party or by which it or its property is bound or affected.
9. No consent, approval, authorization or order of any court or
governmental agency or body or securities exchange or securities association is
required by the Fund for the consummation by the Fund of the transactions
contemplated in the Investment Management Agreement, the Underwriting Agreement
and the Fund Agreements, except such as (a) have been obtained under the
Securities Act, the Investment Company Act or the Exchange Act and (b) may be
required by the New York Stock Exchange or the National Association of
Securities Dealers, Inc. or under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the Underwriters
pursuant to the Underwriting Agreement.
10. To the best of our knowledge after due inquiry, based upon a letter
dated March 10, 2003, from ▇▇. ▇▇▇▇▇▇ ▇▇▇▇▇▇▇, Executive Vice President of the
New York Stock Exchange, authorizing the Shares for listing on such Exchange,
the Shares have been authorized for listing on the New York Stock Exchange,
subject to official notice of issuance, and to the best of our knowledge after
due inquiry, including oral inquiries of the Commission staff on March [26],
2003, the Exchange Act Registration Statement has become effective.
11. 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.
12. To the best of our knowledge after due inquiry, there are no
agreements, contracts, indentures, leases or other instruments that are required
to be described in the Registration Statement or the Prospectus or to be filed
as an exhibit to the Registration Statement which have not been so described or
filed as an exhibit or incorporated therein by reference.
13. Each of the sections in the Prospectus entitled "Tax matters," to the
extent that it states matters of United States law or legal conclusions with
respect thereto, presents a fair summary of the principal federal income tax
rules currently in effect applicable to the Fund and to the purchase, ownership
and disposition of the Shares.
14. The Registration Statement (except for the financial statements and
schedules, the notes thereto and any schedules and other financial data
contained or incorporated by reference therein or omitted therefrom, as to which
we express no opinion), at the effective time set forth above, and the
Prospectus (except as aforesaid), as of the date thereof, complied as to form in
all material respects with 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
B-6
Prospectus and, except in the respects and to the extent set forth in paragraphs
3, 13 and 14 above, we are not passing upon and do not assume any responsibility
therefor. In the course of the preparation by the Fund of the Registration
Statement and the Prospectus, we have participated in discussions with your
representatives and employees and officers of the Fund, the Investment Manager
and the Portfolio Manager and in discussions with the Fund's independent
accountants, in which the business and the affairs of the Fund, the Investment
Manager and the Portfolio Manager and the contents of the Registration Statement
and the Prospectus were discussed. There is no assurance that all material facts
as to the Fund, the Investment Manager, the Portfolio Manager and their affairs
were disclosed to us or that our familiarity with the Fund and the Investment
Manager or any familiarity with the Portfolio Manager is such that we 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 March [26], 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.
B-7
This letter and the opinions expressed herein are furnished by us to you
and are solely for benefit of the Underwriters, except that ▇▇▇▇▇▇▇, Arps,
Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇ (Illinois) may rely on this letter as to all matters
governed by the laws of The Commonwealth of Massachusetts in delivering its
opinion to you on the date hereof.
Very truly yours,
Ropes & Gray
B-8
SCHEDULE C
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING PIMCO ADVISORS FUND MANAGEMENT LLC
March __, 2003
UBS Warburg LLC
Prudential Securities Incorporated
Wachovia Securities, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
Advest Inc.
H&R Block Financial Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇ Investments Inc., a KeyCorp Company
Wedbush ▇▇▇▇▇▇ Securities Inc.
as Managing Underwriters
c/o UBS Warburg LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Re: ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
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 issuance to you today 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 __________ common shares of beneficial interest, par value $0.00001
per share, of the Fund, pursuant to a registration statement on Form N-2 under
the Securities Act of 1933, as amended (the "Act") and the Investment Company
Act of 1940, as amended (the "Investment Company Act"), filed with the
Securities and Exchange Commission (the "Commission") on January 21, 2003 (Act
File No. 333-102624 and Investment Company Act File No. 811-21284), as amended
by Pre-Effective Amendment No. 1 filed with the Commission on February 24, 2003,
Pre-Effective Amendment No. 2 filed with the Commission on March __ , 2003, and
Pre-Effective Amendment No. 3 filed with the commission on March __, 2003 (such
registration statements collectively referred to herein as the "Registration
Statement"), and an underwriting agreement dated March __, 2003 by and among
you, the Fund and PAFM (the "Underwriting Agreement") relating to the issuance
and sale by
C-1
the Fund of _______ of its common shares of beneficial interest and up to
_______ additional common shares of beneficial interest pursuant to an
over-allotment option.
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:
(a) the Underwriting Agreement;
(b) that certain Investment Management Agreement by and between the Fund
and PAFM, dated as of March __, 2003;
(c) that certain Portfolio Management Agreement by and between
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Capital Management Company LLC and PAFM, as
accepted and agreed to by the Fund, dated as of March __, 2003;
(d) that certain Shareholder Servicing Agreement with respect to the Fund
by and between PAFM and UBS Warburg LLC, dated as of March __, 2003;
and
(e) that certain Additional Compensation Agreement with respect to the
Fund by and between PAFM and UBS Warburg LLC, dated as of March __,
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
C-2
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:
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 ss.. 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
C-3
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.
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.
C-4
The opinions expressed in paragraph 3 above are subject to the following
limitations, qualifications and exceptions:
(a) the effect of bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to or affecting
the rights or remedies of creditors generally;
(b) the effect of general principles of equity, whether enforcement is
considered in a proceeding in equity or at law, and the discretion of
the court before which any proceeding therefor may be brought;
(c) the unenforceability under certain circumstances under law or court
decisions of provisions providing for the indemnification of or
contribution to a party with respect to a liability where such
indemnification or contribution is contrary to public policy; and
(d) the unenforceability of any provision requiring the payment of
attorney's fees, except to the extent that a court determines such
fees to be reasonable.
In rendering the opinions expressed in paragraph 4 insofar as they require
interpretation of the Material Agreements (i) I have assumed with your
permission that all courts of competent jurisdiction would enforce such
agreements as written but would apply the internal laws of the State of New York
without giving effect to any choice of law provisions contained therein or any
choice of law principles which would result in application of the internal laws
of any other state and (ii) to the extent that any questions of legality or
legal construction have arisen in connection with my review, I have applied 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
C-5
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-6
Special Counsel for the Investment Adviser shall separately opine that, assuming
the Investment Manager is duly registered as an investment adviser under the
Advisers Act and is not prohibited by the Advisers Act or the Investment Company
Act from acting as investment adviser for the Fund as contemplated by the
Investment Management Agreement, the Registration Statement and the Prospectus,
neither the execution and delivery of the Underwriting Agreement, the Investment
Management Agreement, the Shareholder Servicing Agreement or the Portfolio
Management Agreement by the Investment Manager, nor the consummation by the
Investment Manager of the transactions contemplated thereby, nor compliance by
the Investment Manager with any of the terms and provisions thereof will violate
the provisions of the Investment Company Act or the Advisers Act; provided,
however, that such opinion may specifically disclaim any opinion as to (a) the
reasonableness of the fees to be paid to the Investment Manager under the
Investment Management Agreement and (b) the compliance by the Investment Manager
with its indemnification and contribution obligations set forth in the
Underwriting Agreement.
C-7
SCHEDULE D
FORM OF OPINION OF INTERNAL COUNSEL
REGARDING ▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LLC
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ CAPITAL MANAGEMENT LLC
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇
March __, 2003
UBS Warburg LLC
Prudential Securities Incorporated
Wachovia Securities, Inc.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, Incorporated
RBC ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇ Fargo Securities, LLC
Advest, Inc.
H&R Block Financial Advisors, Inc.
▇▇▇▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Incorporated
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ LLC
▇▇▇▇▇▇▇▇ Investments Inc., a KeyCorp Company
Wedbush ▇▇▇▇▇▇ Securities Inc.
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 an aggregate of __________ common shares of
beneficial interest, par value $0.00001 per share, of the Fund, pursuant to a
registration statement on Form N-2 under the Securities Act of 1933, as amended
(the "Act") and the Investment Company Act of 1940, as amended (the
D-1
"Investment Company Act"), filed with the Securities and Exchange Commission
(the "Commission") on January 21, 2003 (Act File No. 333-102624 and Investment
Company Act File No. 811-21284), as amended by Pre-Effective Amendment No. 1
filed with the Commission on February 24, 2003, and Pre-Effective Amendment No.
2 filed with the Commission on March __, 2003 (such registration statements
collectively referred to herein as the "Registration Statement"), and an
underwriting agreement dated March __, 2003, by and among you, the Fund and
PIMCO Advisors Fund Management LLC, a Delaware limited liability company
("PAFM") (the "Underwriting Agreement").
This opinion is rendered to you pursuant to Section 6(e) of the
Underwriting Agreement. Capitalized terms used herein without definition have
the meanings assigned to them in the Underwriting Agreement.
As 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 NACM and PAFM, as accepted and agreed to by the Fund,
dated as of March __, 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.
D-2
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 ss.. 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 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
D-3
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, 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.
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.
D-4
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
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.
D-5
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-6
SCHEDULE E
FORM OF ACCOUNTANT'S LETTER
[_______], 2003
The Board of Trustees of
▇▇▇▇▇▇▇▇-▇▇▇▇▇▇▇▇▇ Convertible & Income Fund
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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 (the "Act") (File No. 333-102624) and under the
Investment Company Act of 1940 (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.
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
E-1
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